G.R. No.

167614

March 24, 2009

ANTONIO M. SERRANO, Petitioner,

vs.
Gallant MARITIME SERVICES, INC. and MARLOW
NAVIGATION CO., INC., Respondents.

DECISION

AUSTRIA-MARTINEZ, J.:

For decades, the toil of solitary migrants has helped lift

entire families and communities out of poverty. Their
earnings have built houses, provided health care,
equipped schools and planted the seeds of businesses.
They have woven together the world by transmitting
ideas and knowledge from country to country. They
have provided the dynamic human link between
cultures, societies and economies. Yet, only recently
have we begun to understand not only how much
international migration impacts development, but how
smart public policies can magnify this effect.

limiting their entitlement in case of illegal dismissal to

their lump-sum salary either for the unexpired portion
of their employment contract "or for three months for
every year of the unexpired term, whichever is less"
(subject clause). Petitioner claims that the last clause
violates the OFWs' constitutional rights in that it
impairs the terms of their contract, deprives them of
equal protection and denies them due process.

By way of Petition for Review under Rule 45 of the

Rules of Court, petitioner assails the December 8, 2004
Decision3 and April 1, 2005 Resolution4 of the Court of
Appeals (CA), which applied the subject clause,
entreating this Court to declare the subject clause
unconstitutional.

Petitioner was hired by Gallant Maritime Services, Inc.

and Marlow Navigation Co., Ltd. (respondents) under a
Philippine Overseas Employment Administration
(POEA)-approved Contract of Employment with the
following terms and conditions:

Duration of contract

12 months

Position Chief Officer

Basic monthly salary

US$1,400.00

United Nations Secretary-General Ban Ki-Moon

Hours of work

48.0 hours per week

Global Forum on Migration and Development

Overtime

US$700.00 per month

Brussels, July 10, 20071

Vacation leave with pay7.00 days per month5

For Antonio Serrano (petitioner), a Filipino seafarer, the

last clause in the 5th paragraph of Section 10, Republic
Act (R.A.) No. 8042,2 to wit:

On March 19, 1998, the date of his departure,

petitioner was constrained to accept a downgraded
employment contract for the position of Second Officer
with a monthly salary of US$1,000.00, upon the
assurance and representation of respondents that he
would be made Chief Officer by the end of April 1998.6

Sec. 10. Money Claims. - x x x In case of termination of

overseas employment without just, valid or authorized
cause as defined by law or contract, the workers shall
be entitled to the full reimbursement of his placement
fee with interest of twelve percent (12%) per annum,
plus his salaries for the unexpired portion of his
employment contract or for three (3) months for every
year of the unexpired term, whichever is less.

x x x x (Emphasis and underscoring supplied)

Respondents did not deliver on their promise to make

petitioner Chief Officer.7 Hence, petitioner refused to
stay on as Second Officer and was repatriated to the
Philippines on May 26, 1998.8

Petitioner's employment contract was for a period of 12

months or from March 19, 1998 up to March 19, 1999,
but at the time of his repatriation on May 26, 1998, he
had served only two (2) months and seven (7) days of
his contract, leaving an unexpired portion of nine (9)
months and twenty-three (23) days.

does not magnify the contributions of overseas Filipino

workers (OFWs) to national development, but
exacerbates the hardships borne by them by unduly

1 | Labor Standards Case Assignment | 27 June 2016

Petitioner filed with the Labor Arbiter (LA) a Complaint9

against respondents for constructive dismissal and for
payment of his money claims in the total amount of
US$26,442.73, broken down as follows:

SEVENTY U.S. DOLLARS (US $8,770.00), representing

the complainants salary for three (3) months of the
unexpired portion of the aforesaid contract of
employment.1avvphi1

May 27/31, 1998 (5 days) incl. Leave pay

413.90

The respondents are likewise ordered to pay the

complainant [petitioner], jointly and severally, in
Philippine Currency, based on the rate of exchange
prevailing at the time of payment, the amount of
FORTY FIVE U.S. DOLLARS (US$ 45.00),12 representing
the complainants claim for a salary differential. In
addition, the respondents are hereby ordered to pay
the complainant, jointly and severally, in Philippine
Currency, at the exchange rate prevailing at the time
of payment, the complainants (petitioner's) claim for
attorneys fees equivalent to ten percent (10%) of the
total amount awarded to the aforesaid employee under
this Decision.

June 01/30, 1998

2,590.00

July 01/31, 1998

2,590.00

August 01/31, 1998

2,590.00

Sept. 01/30, 1998

2,590.00

Oct. 01/31, 1998

2,590.00

Nov. 01/30, 1998

2,590.00

Dec. 01/31, 1998

2,590.00

Jan. 01/31, 1999

2,590.00

Feb. 01/28, 1999

2,590.00

US$

Mar. 1/19, 1999 (19 days) incl. leave pay

1,640.00
-------------------------------------------------------------------------------

The claims of the complainant for moral and exemplary

damages are hereby DISMISSED for lack of merit.

All other claims are hereby DISMISSED.

SO ORDERED.13 (Emphasis supplied)

25,382.23
Amount adjusted to chief mate's salary
(March 19/31, 1998 to April 1/30, 1998) +
1,060.5010
--------------------------------------------------------------------------------------------TOTAL CLAIM

US$ 26,442.7311

as well as moral and exemplary damages and

attorney's fees.

The LA rendered a Decision dated July 15, 1999,

declaring the dismissal of petitioner illegal and
awarding him monetary benefits, to wit:

WHEREFORE, premises considered, judgment is hereby

rendered declaring that the dismissal of the
complainant (petitioner) by the respondents in the
above-entitled case was illegal and the respondents
are hereby ordered to pay the complainant [petitioner],
jointly and severally, in Philippine Currency, based on
the rate of exchange prevailing at the time of payment,
the amount of EIGHT THOUSAND SEVEN HUNDRED

In awarding petitioner a lump-sum salary of

US$8,770.00, the LA based his computation on the
salary period of three months only -- rather than the
entire unexpired portion of nine months and 23 days of
petitioner's employment contract - applying the subject
clause. However, the LA applied the salary rate of
US$2,590.00, consisting of petitioner's "[b]asic salary,
US$1,400.00/month + US$700.00/month, fixed
overtime pay, + US$490.00/month, vacation leave pay
= US$2,590.00/compensation per month."14

Respondents appealed15 to the National Labor

Relations Commission (NLRC) to question the finding of
the LA that petitioner was illegally dismissed.

Petitioner also appealed16 to the NLRC on the sole

issue that the LA erred in not applying the ruling of the
Court in Triple Integrated Services, Inc. v. National
Labor Relations Commission17 that in case of illegal
dismissal, OFWs are entitled to their salaries for the
unexpired portion of their contracts.18

In a Decision dated June 15, 2000, the NLRC modified

the LA Decision, to wit:

2 | Labor Standards Case Assignment | 27 June 2016

WHEREFORE, the Decision dated 15 July 1999 is

MODIFIED. Respondents are hereby ordered to pay
complainant, jointly and severally, in Philippine
currency, at the prevailing rate of exchange at the time
of payment the following:

1. Three (3) months salary

$1,400 x 3

US$4,200.00

2. Salary differential

The Court of Appeals and the labor tribunals have

decided the case in a way not in accord with applicable
decision of the Supreme Court involving similar issue of
granting unto the migrant worker back wages equal to
the unexpired portion of his contract of employment
instead of limiting it to three (3) months

45.00

US$4,245.00

II

3. 10% Attorneys fees 424.50

TOTAL US$4,669.50
The other findings are affirmed.

SO ORDERED.19

The NLRC corrected the LA's computation of the lumpsum salary awarded to petitioner by reducing the
applicable salary rate from US$2,590.00 to
US$1,400.00 because R.A. No. 8042 "does not provide
for the award of overtime pay, which should be proven
to have been actually performed, and for vacation
leave pay."20

Petitioner filed a Motion for Partial Reconsideration, but

this time he questioned the constitutionality of the
subject clause.21 The NLRC denied the motion.22

Petitioner filed a Petition for Certiorari23 with the CA,

reiterating the constitutional challenge against the
subject clause.24 After initially dismissing the petition
on a technicality, the CA eventually gave due course to
it, as directed by this Court in its Resolution dated
August 7, 2003 which granted the petition for
certiorari, docketed as G.R. No. 151833, filed by
petitioner.

In a Decision dated December 8, 2004, the CA affirmed

the NLRC ruling on the reduction of the applicable
salary rate; however, the CA skirted the constitutional
issue raised by petitioner.25

His Motion for Reconsideration26 having been denied

by the CA,27 petitioner brings his cause to this Court
on the following grounds:

In the alternative that the Court of Appeals and the

Labor Tribunals were merely applying their
interpretation of Section 10 of Republic Act No. 8042, it
is submitted that the Court of Appeals gravely erred in
law when it failed to discharge its judicial duty to
decide questions of substance not theretofore
determined by the Honorable Supreme Court,
particularly, the constitutional issues raised by the
petitioner on the constitutionality of said law, which
unreasonably, unfairly and arbitrarily limits payment of
the award for back wages of overseas workers to three
(3) months.

III

Even without considering the constitutional limitations

[of] Sec. 10 of Republic Act No. 8042, the Court of
Appeals gravely erred in law in excluding from
petitioners award the overtime pay and vacation pay
provided in his contract since under the contract they
form part of his salary.28

On February 26, 2008, petitioner wrote the Court to

withdraw his petition as he is already old and sickly,
and he intends to make use of the monetary award for
his medical treatment and medication.29 Required to
comment, counsel for petitioner filed a motion, urging
the court to allow partial execution of the undisputed
monetary award and, at the same time, praying that
the constitutional question be resolved.30

Considering that the parties have filed their respective

memoranda, the Court now takes up the full merit of
the petition mindful of the extreme importance of the
constitutional question raised therein.

On the first and second issues

3 | Labor Standards Case Assignment | 27 June 2016

The unanimous finding of the LA, NLRC and CA that the

dismissal of petitioner was illegal is not disputed.
Likewise not disputed is the salary differential of
US$45.00 awarded to petitioner in all three fora. What
remains disputed is only the computation of the lumpsum salary to be awarded to petitioner by reason of his
illegal dismissal.

Applying the subject clause, the NLRC and the CA

computed the lump-sum salary of petitioner at the
monthly rate of US$1,400.00 covering the period of
three months out of the unexpired portion of nine
months and 23 days of his employment contract or a
total of US$4,200.00.

Impugning the constitutionality of the subject clause,

petitioner contends that, in addition to the
US$4,200.00 awarded by the NLRC and the CA, he is
entitled to US$21,182.23 more or a total of
US$25,382.23, equivalent to his salaries for the entire
nine months and 23 days left of his employment
contract, computed at the monthly rate of
US$2,590.00.31

The Arguments of Petitioner

Petitioner contends that the subject clause is

unconstitutional because it unduly impairs the freedom
of OFWs to negotiate for and stipulate in their overseas
employment contracts a determinate employment
period and a fixed salary package.32 It also impinges
on the equal protection clause, for it treats OFWs
differently from local Filipino workers (local workers) by
putting a cap on the amount of lump-sum salary to
which OFWs are entitled in case of illegal dismissal,
while setting no limit to the same monetary award for
local workers when their dismissal is declared illegal;
that the disparate treatment is not reasonable as there
is no substantial distinction between the two groups;33
and that it defeats Section 18,34 Article II of the
Constitution which guarantees the protection of the
rights and welfare of all Filipino workers, whether
deployed locally or overseas.35

Moreover, petitioner argues that the decisions of the

CA and the labor tribunals are not in line with existing
jurisprudence on the issue of money claims of illegally
dismissed OFWs. Though there are conflicting rulings
on this, petitioner urges the Court to sort them out for
the guidance of affected OFWs.36

Petitioner further underscores that the insertion of the

subject clause into R.A. No. 8042 serves no other
purpose but to benefit local placement agencies. He
marks the statement made by the Solicitor General in
his Memorandum, viz.:

Often, placement agencies, their liability being

solidary, shoulder the payment of money claims in the
event that jurisdiction over the foreign employer is not
acquired by the court or if the foreign employer
reneges on its obligation. Hence, placement agencies
that are in good faith and which fulfill their obligations
are unnecessarily penalized for the acts of the foreign
employer. To protect them and to promote their
continued helpful contribution in deploying Filipino
migrant workers, liability for money claims was
reduced under Section 10 of R.A. No. 8042. 37
(Emphasis supplied)

Petitioner argues that in mitigating the solidary liability

of placement agencies, the subject clause sacrifices
the well-being of OFWs. Not only that, the provision
makes foreign employers better off than local
employers because in cases involving the illegal
dismissal of employees, foreign employers are liable
for salaries covering a maximum of only three months
of the unexpired employment contract while local
employers are liable for the full lump-sum salaries of
their employees. As petitioner puts it:

In terms of practical application, the local employers

are not limited to the amount of backwages they have
to give their employees they have illegally dismissed,
following well-entrenched and unequivocal
jurisprudence on the matter. On the other hand, foreign
employers will only be limited to giving the illegally
dismissed migrant workers the maximum of three (3)
months unpaid salaries notwithstanding the unexpired
term of the contract that can be more than three (3)
months.38

Lastly, petitioner claims that the subject clause violates

the due process clause, for it deprives him of the
salaries and other emoluments he is entitled to under
his fixed-period employment contract.39

The Arguments of Respondents

In their Comment and Memorandum, respondents

contend that the constitutional issue should not be
entertained, for this was belatedly interposed by
petitioner in his appeal before the CA, and not at the

4 | Labor Standards Case Assignment | 27 June 2016

earliest opportunity, which was when he filed an

appeal before the NLRC.40

The Court sustains petitioner on the first and second

issues.

The Arguments of the Solicitor General

When the Court is called upon to exercise its power of

judicial review of the acts of its co-equals, such as the
Congress, it does so only when these conditions obtain:
(1) that there is an actual case or controversy involving
a conflict of rights susceptible of judicial
determination;47 (2) that the constitutional question is
raised by a proper party48 and at the earliest
opportunity;49 and (3) that the constitutional question
is the very lis mota of the case,50 otherwise the Court
will dismiss the case or decide the same on some other
ground.51

The Solicitor General (OSG)41 points out that as R.A.

No. 8042 took effect on July 15, 1995, its provisions
could not have impaired petitioner's 1998 employment
contract. Rather, R.A. No. 8042 having preceded
petitioner's contract, the provisions thereof are
deemed part of the minimum terms of petitioner's
employment, especially on the matter of money
claims, as this was not stipulated upon by the
parties.42

Moreover, the OSG emphasizes that OFWs and local

workers differ in terms of the nature of their
employment, such that their rights to monetary
benefits must necessarily be treated differently. The
OSG enumerates the essential elements that
distinguish OFWs from local workers: first, while local
workers perform their jobs within Philippine territory,
OFWs perform their jobs for foreign employers, over
whom it is difficult for our courts to acquire jurisdiction,
or against whom it is almost impossible to enforce
judgment; and second, as held in Coyoca v. National
Labor Relations Commission43 and Millares v. National
Labor Relations Commission,44 OFWs are contractual
employees who can never acquire regular employment
status, unlike local workers who are or can become
regular employees. Hence, the OSG posits that there
are rights and privileges exclusive to local workers, but
not available to OFWs; that these peculiarities make for
a reasonable and valid basis for the differentiated
treatment under the subject clause of the money
claims of OFWs who are illegally dismissed. Thus, the
provision does not violate the equal protection clause
nor Section 18, Article II of the Constitution.45

Lastly, the OSG defends the rationale behind the

subject clause as a police power measure adopted to
mitigate the solidary liability of placement agencies for
this "redounds to the benefit of the migrant workers
whose welfare the government seeks to promote. The
survival of legitimate placement agencies helps
[assure] the government that migrant workers are
properly deployed and are employed under decent and
humane conditions."46

The Court's Ruling

Without a doubt, there exists in this case an actual

controversy directly involving petitioner who is
personally aggrieved that the labor tribunals and the
CA computed his monetary award based on the salary
period of three months only as provided under the
subject clause.

The constitutional challenge is also timely. It should be

borne in mind that the requirement that a
constitutional issue be raised at the earliest
opportunity entails the interposition of the issue in the
pleadings before a competent court, such that, if the
issue is not raised in the pleadings before that
competent court, it cannot be considered at the trial
and, if not considered in the trial, it cannot be
considered on appeal.52 Records disclose that the
issue on the constitutionality of the subject clause was
first raised, not in petitioner's appeal with the NLRC,
but in his Motion for Partial Reconsideration with said
labor tribunal,53 and reiterated in his Petition for
Certiorari before the CA.54 Nonetheless, the issue is
deemed seasonably raised because it is not the NLRC
but the CA which has the competence to resolve the
constitutional issue. The NLRC is a labor tribunal that
merely performs a quasi-judicial function its function
in the present case is limited to determining questions
of fact to which the legislative policy of R.A. No. 8042 is
to be applied and to resolving such questions in
accordance with the standards laid down by the law
itself;55 thus, its foremost function is to administer and
enforce R.A. No. 8042, and not to inquire into the
validity of its provisions. The CA, on the other hand, is
vested with the power of judicial review or the power to
declare unconstitutional a law or a provision thereof,
such as the subject clause.56 Petitioner's interposition
of the constitutional issue before the CA was
undoubtedly seasonable. The CA was therefore remiss
in failing to take up the issue in its decision.

5 | Labor Standards Case Assignment | 27 June 2016

The third condition that the constitutional issue be

critical to the resolution of the case likewise obtains
because the monetary claim of petitioner to his lumpsum salary for the entire unexpired portion of his 12month employment contract, and not just for a period
of three months, strikes at the very core of the subject
clause.

Thus, the stage is all set for the determination of the

constitutionality of the subject clause.

Does the subject clause violate Section 10,

Article III of the Constitution on non-impairment
of contracts?

The answer is in the negative.

But even if the Court were to disregard the timeline,

the subject clause may not be declared
unconstitutional on the ground that it impinges on the
impairment clause, for the law was enacted in the
exercise of the police power of the State to regulate a
business, profession or calling, particularly the
recruitment and deployment of OFWs, with the noble
end in view of ensuring respect for the dignity and
well-being of OFWs wherever they may be
employed.61 Police power legislations adopted by the
State to promote the health, morals, peace, education,
good order, safety, and general welfare of the people
are generally applicable not only to future contracts
but even to those already in existence, for all private
contracts must yield to the superior and legitimate
measures taken by the State to promote public
welfare.62

Does the subject clause violate Section 1,

Article III of the Constitution, and Section 18,

Petitioner's claim that the subject clause unduly

interferes with the stipulations in his contract on the
term of his employment and the fixed salary package
he will receive57 is not tenable.

Section 10, Article III of the Constitution provides:

No law impairing the obligation of contracts shall be

passed.

The prohibition is aligned with the general principle

that laws newly enacted have only a prospective
operation,58 and cannot affect acts or contracts
already perfected;59 however, as to laws already in
existence, their provisions are read into contracts and
deemed a part thereof.60 Thus, the non-impairment
clause under Section 10, Article II is limited in
application to laws about to be enacted that would in
any way derogate from existing acts or contracts by
enlarging, abridging or in any manner changing the
intention of the parties thereto.

As aptly observed by the OSG, the enactment of R.A.

No. 8042 in 1995 preceded the execution of the
employment contract between petitioner and
respondents in 1998. Hence, it cannot be argued that
R.A. No. 8042, particularly the subject clause, impaired
the employment contract of the parties. Rather, when
the parties executed their 1998 employment contract,
they were deemed to have incorporated into it all the
provisions of R.A. No. 8042.

Article II and Section 3, Article XIII on labor

as a protected sector?

The answer is in the affirmative.

Section 1, Article III of the Constitution guarantees:

No person shall be deprived of life, liberty, or property

without due process of law nor shall any person be
denied the equal protection of the law.

Section 18,63 Article II and Section 3,64 Article XIII

accord all members of the labor sector, without
distinction as to place of deployment, full protection of
their rights and welfare.

To Filipino workers, the rights guaranteed under the

foregoing constitutional provisions translate to
economic security and parity: all monetary benefits
should be equally enjoyed by workers of similar
category, while all monetary obligations should be
borne by them in equal degree; none should be denied
the protection of the laws which is enjoyed by, or
spared the burden imposed on, others in like
circumstances.65

6 | Labor Standards Case Assignment | 27 June 2016

Such rights are not absolute but subject to the inherent

power of Congress to incorporate, when it sees fit, a
system of classification into its legislation; however, to
be valid, the classification must comply with these
requirements: 1) it is based on substantial distinctions;
2) it is germane to the purposes of the law; 3) it is not
limited to existing conditions only; and 4) it applies
equally to all members of the class.66

when they run afoul of the Constitution. The deference

stops where the classification violates a fundamental
right, or prejudices persons accorded special protection
by the Constitution. When these violations arise, this
Court must discharge its primary role as the vanguard
of constitutional guaranties, and require a stricter and
more exacting adherence to constitutional limitations.
Rational basis should not suffice.

There are three levels of scrutiny at which the Court

reviews the constitutionality of a classification
embodied in a law: a) the deferential or rational basis
scrutiny in which the challenged classification needs
only be shown to be rationally related to serving a
legitimate state interest;67 b) the middle-tier or
intermediate scrutiny in which the government must
show that the challenged classification serves an
important state interest and that the classification is at
least substantially related to serving that interest;68
and c) strict judicial scrutiny69 in which a legislative
classification which impermissibly interferes with the
exercise of a fundamental right70 or operates to the
peculiar disadvantage of a suspect class71 is
presumed unconstitutional, and the burden is upon the
government to prove that the classification is
necessary to achieve a compelling state interest and
that it is the least restrictive means to protect such
interest.72

Admittedly, the view that prejudice to persons

accorded special protection by the Constitution
requires a stricter judicial scrutiny finds no support in
American or English jurisprudence. Nevertheless, these
foreign decisions and authorities are not per se
controlling in this jurisdiction. At best, they are
persuasive and have been used to support many of our
decisions. We should not place undue and fawning
reliance upon them and regard them as indispensable
mental crutches without which we cannot come to our
own decisions through the employment of our own
endowments. We live in a different ambience and must
decide our own problems in the light of our own
interests and needs, and of our qualities and even
idiosyncrasies as a people, and always with our own
concept of law and justice. Our laws must be construed
in accordance with the intention of our own lawmakers
and such intent may be deduced from the language of
each law and the context of other local legislation
related thereto. More importantly, they must be
construed to serve our own public interest which is the
be-all and the end-all of all our laws. And it need not be
stressed that our public interest is distinct and different
from others.

Under American jurisprudence, strict judicial scrutiny is

triggered by suspect classifications73 based on race74
or gender75 but not when the classification is drawn
along income categories.76

xxxx
It is different in the Philippine setting. In Central Bank
(now Bangko Sentral ng Pilipinas) Employee
Association, Inc. v. Bangko Sentral ng Pilipinas,77 the
constitutionality of a provision in the charter of the
Bangko Sentral ng Pilipinas (BSP), a government
financial institution (GFI), was challenged for
maintaining its rank-and-file employees under the
Salary Standardization Law (SSL), even when the rankand-file employees of other GFIs had been exempted
from the SSL by their respective charters. Finding that
the disputed provision contained a suspect
classification based on salary grade, the Court
deliberately employed the standard of strict judicial
scrutiny in its review of the constitutionality of said
provision. More significantly, it was in this case that the
Court revealed the broad outlines of its judicial
philosophy, to wit:

Congress retains its wide discretion in providing for a

valid classification, and its policies should be accorded
recognition and respect by the courts of justice except

Further, the quest for a better and more "equal" world

calls for the use of equal protection as a tool of
effective judicial intervention.

Equality is one ideal which cries out for bold attention

and action in the Constitution. The Preamble proclaims
"equality" as an ideal precisely in protest against
crushing inequities in Philippine society. The command
to promote social justice in Article II, Section 10, in "all
phases of national development," further explicitated
in Article XIII, are clear commands to the State to take
affirmative action in the direction of greater equality. x
x x [T]here is thus in the Philippine Constitution no lack
of doctrinal support for a more vigorous state effort
towards achieving a reasonable measure of equality.

Our present Constitution has gone further in

guaranteeing vital social and economic rights to

7 | Labor Standards Case Assignment | 27 June 2016

marginalized groups of society, including labor. Under

the policy of social justice, the law bends over
backward to accommodate the interests of the working
class on the humane justification that those with less
privilege in life should have more in law. And the
obligation to afford protection to labor is incumbent not
only on the legislative and executive branches but also
on the judiciary to translate this pledge into a living
reality. Social justice calls for the humanization of laws
and the equalization of social and economic forces by
the State so that justice in its rational and objectively
secular conception may at least be approximated.

xxxx

Under most circumstances, the Court will exercise

judicial restraint in deciding questions of
constitutionality, recognizing the broad discretion given
to Congress in exercising its legislative power. Judicial
scrutiny would be based on the "rational basis" test,
and the legislative discretion would be given
deferential treatment.

But if the challenge to the statute is premised on the

denial of a fundamental right, or the perpetuation of
prejudice against persons favored by the Constitution
with special protection, judicial scrutiny ought to be
more strict. A weak and watered down view would call
for the abdication of this Courts solemn duty to strike
down any law repugnant to the Constitution and the
rights it enshrines. This is true whether the actor
committing the unconstitutional act is a private person
or the government itself or one of its instrumentalities.
Oppressive acts will be struck down regardless of the
character or nature of the actor.

xxxx

In the case at bar, the challenged proviso operates on

the basis of the salary grade or officer-employee
status. It is akin to a distinction based on economic
class and status, with the higher grades as recipients
of a benefit specifically withheld from the lower grades.
Officers of the BSP now receive higher compensation
packages that are competitive with the industry, while
the poorer, low-salaried employees are limited to the
rates prescribed by the SSL. The implications are quite
disturbing: BSP rank-and-file employees are paid the
strictly regimented rates of the SSL while employees
higher in rank - possessing higher and better education
and opportunities for career advancement - are given
higher compensation packages to entice them to stay.
Considering that majority, if not all, the rank-and-file
employees consist of people whose status and rank in

life are less and limited, especially in terms of job

marketability, it is they - and not the officers - who
have the real economic and financial need for the
adjustment . This is in accord with the policy of the
Constitution "to free the people from poverty, provide
adequate social services, extend to them a decent
standard of living, and improve the quality of life for
all." Any act of Congress that runs counter to this
constitutional desideratum deserves strict scrutiny by
this Court before it can pass muster. (Emphasis
supplied)

Imbued with the same sense of "obligation to afford

protection to labor," the Court in the present case also
employs the standard of strict judicial scrutiny, for it
perceives in the subject clause a suspect classification
prejudicial to OFWs.

Upon cursory reading, the subject clause appears

facially neutral, for it applies to all OFWs. However, a
closer examination reveals that the subject clause has
a discriminatory intent against, and an invidious impact
on, OFWs at two levels:

First, OFWs with employment contracts of less than one

year vis--vis OFWs with employment contracts of one
year or more;

Second, among OFWs with employment contracts of

more than one year; and

Third, OFWs vis--vis local workers with fixed-period

employment;

OFWs with employment contracts of less than one year

vis--vis OFWs with employment contracts of one year
or more

As pointed out by petitioner,78 it was in Marsaman

Manning Agency, Inc. v. National Labor Relations
Commission79 (Second Division, 1999) that the Court
laid down the following rules on the application of the
periods prescribed under Section 10(5) of R.A. No. 804,
to wit:

A plain reading of Sec. 10 clearly reveals that the

choice of which amount to award an illegally dismissed
overseas contract worker, i.e., whether his salaries for
the unexpired portion of his employment contract or
three (3) months salary for every year of the

8 | Labor Standards Case Assignment | 27 June 2016

unexpired term, whichever is less, comes into play only

when the employment contract concerned has a term
of at least one (1) year or more. This is evident from
the words "for every year of the unexpired term" which
follows the words "salaries x x x for three months." To
follow petitioners thinking that private respondent is
entitled to three (3) months salary only simply because
it is the lesser amount is to completely disregard and
overlook some words used in the statute while giving
effect to some. This is contrary to the well-established
rule in legal hermeneutics that in interpreting a
statute, care should be taken that every part or word
thereof be given effect since the law-making body is
presumed to know the meaning of the words employed
in the statue and to have used them advisedly. Ut res
magis valeat quam pereat.80 (Emphasis supplied)

In Marsaman, the OFW involved was illegally dismissed

two months into his 10-month contract, but was
awarded his salaries for the remaining 8 months and 6
days of his contract.

a 12-month contract, which was deemed renewed for

another 12 months. After serving for one year and
seven-and-a-half months, respondent Osdana was
illegally dismissed, and the Court awarded her salaries
for the entire unexpired portion of four and one-half
months of her contract.

The Marsaman interpretation of Section 10(5) has since

been adopted in the following cases:

Case Title
Contract Period Period of Service
Unexpired Period
Period Applied in the
Computation of the Monetary Award
Skippers v. Maguad84 6 months
4 months
4 months

2 months

Bahia Shipping v. Reynaldo Chua 85

8 months
4 months

9 months
4 months

Centennial Transmarine v. dela Cruz l869 months

4 months
5 months
5 months

Prior to Marsaman, however, there were two cases in

which the Court made conflicting rulings on Section
10(5). One was Asian Center for Career and
Employment System and Services v. National Labor
Relations Commission (Second Division, October
1998),81 which involved an OFW who was awarded a
two-year employment contract, but was dismissed
after working for one year and two months. The LA
declared his dismissal illegal and awarded him
SR13,600.00 as lump-sum salary covering eight
months, the unexpired portion of his contract. On
appeal, the Court reduced the award to SR3,600.00
equivalent to his three months salary, this being the
lesser value, to wit:

Talidano v. Falcon87
9 months

Under Section 10 of R.A. No. 8042, a worker dismissed

from overseas employment without just, valid or
authorized cause is entitled to his salary for the
unexpired portion of his employment contract or for
three (3) months for every year of the unexpired term,
whichever is less.

Pentagon v. Adelantar93
12 months
9
months and 7 days
2 months and 23 days 2
months and 23 days

In the case at bar, the unexpired portion of private

respondents employment contract is eight (8) months.
Private respondent should therefore be paid his basic
salary corresponding to three (3) months or a total of
SR3,600.82

Another was Triple-Eight Integrated Services, Inc. v.

National Labor Relations Commission (Third Division,
December 1998),83 which involved an OFW (therein
respondent Erlinda Osdana) who was originally granted

12 months
3 months

Univan v. CA 8812 months

months 3 months
Oriental v. CA 89
months 10 months

3 months

3 months

12 months
3 months

more than 2

PCL v. NLRC90 12 months

more than 2 months
more or less 9 months 3 months
Olarte v. Nayona91
months and 9 days

12 months
3 months

JSS v.Ferrer92 12 months

24 days3 months

21 days11

16 days11 months and

Phil. Employ v. Paramio, et al.94

10 months
2 months
portion

12 months
Unexpired

Flourish Maritime v. Almanzor 95

2 years 26 days
23 months and 4 days 6 months or 3 months
for each year of contract
Athenna Manpower v. Villanos 96
1 year, 10
months and 28 days
1 month
1 year, 9
months and 28 days
6 months or 3 months for each
year of contract
As the foregoing matrix readily shows, the subject
clause classifies OFWs into two categories. The first
category includes OFWs with fixed-period employment
contracts of less than one year; in case of illegal

9 | Labor Standards Case Assignment | 27 June 2016

dismissal, they are entitled to their salaries for the

entire unexpired portion of their contract. The second
category consists of OFWs with fixed-period
employment contracts of one year or more; in case of
illegal dismissal, they are entitled to monetary award
equivalent to only 3 months of the unexpired portion of
their contracts.

The disparity in the treatment of these two groups

cannot be discounted. In Skippers, the respondent OFW
worked for only 2 months out of his 6-month contract,
but was awarded his salaries for the remaining 4
months. In contrast, the respondent OFWs in Oriental
and PCL who had also worked for about 2 months out
of their 12-month contracts were awarded their
salaries for only 3 months of the unexpired portion of
their contracts. Even the OFWs involved in Talidano and
Univan who had worked for a longer period of 3 months
out of their 12-month contracts before being illegally
dismissed were awarded their salaries for only 3
months.

To illustrate the disparity even more vividly, the Court

assumes a hypothetical OFW-A with an employment
contract of 10 months at a monthly salary rate of
US$1,000.00 and a hypothetical OFW-B with an
employment contract of 15 months with the same
monthly salary rate of US$1,000.00. Both commenced
work on the same day and under the same employer,
and were illegally dismissed after one month of work.
Under the subject clause, OFW-A will be entitled to
US$9,000.00, equivalent to his salaries for the
remaining 9 months of his contract, whereas OFW-B
will be entitled to only US$3,000.00, equivalent to his
salaries for 3 months of the unexpired portion of his
contract, instead of US$14,000.00 for the unexpired
portion of 14 months of his contract, as the
US$3,000.00 is the lesser amount.

The disparity becomes more aggravating when the

Court takes into account jurisprudence that, prior to
the effectivity of R.A. No. 8042 on July 14, 1995,97
illegally dismissed OFWs, no matter how long the
period of their employment contracts, were entitled to
their salaries for the entire unexpired portions of their
contracts. The matrix below speaks for itself:

Case Title
Contract Period Period of Service
Unexpired Period
Period Applied in the
Computation of the Monetary Award
ATCI v. CA, et al.98
months 22 months

2 years 2 months

22

Phil. Integrated v. NLRC99

2 years 7 days 23
months and 23 days
23 months and 23 days

JGB v. NLC100 2 years 9 months

15 months

15 months

Agoy v. NLRC101
months 22 months

2 years 2 months

22

EDI v. NLRC, et al.102

months 19 months

2 years 5 months

19

Barros v. NLRC, et al.103

12 months
months 8 months
8 months

Philippine Transmarine v. Carilla104

12 months
6 months and 22 days 5 months and 18 days
5 months and 18 days
It is plain that prior to R.A. No. 8042, all OFWs,
regardless of contract periods or the unexpired
portions thereof, were treated alike in terms of the
computation of their monetary benefits in case of
illegal dismissal. Their claims were subjected to a
uniform rule of computation: their basic salaries
multiplied by the entire unexpired portion of their
employment contracts.

The enactment of the subject clause in R.A. No. 8042

introduced a differentiated rule of computation of the
money claims of illegally dismissed OFWs based on
their employment periods, in the process singling out
one category whose contracts have an unexpired
portion of one year or more and subjecting them to the
peculiar disadvantage of having their monetary awards
limited to their salaries for 3 months or for the
unexpired portion thereof, whichever is less, but all the
while sparing the other category from such prejudice,
simply because the latter's unexpired contracts fall
short of one year.

Among OFWs With Employment Contracts of More

Than One Year

Upon closer examination of the terminology employed

in the subject clause, the Court now has misgivings on
the accuracy of the Marsaman interpretation.

The Court notes that the subject clause "or for three (3)
months for every year of the unexpired term,
whichever is less" contains the qualifying phrases
"every year" and "unexpired term." By its ordinary
meaning, the word "term" means a limited or definite
extent of time.105 Corollarily, that "every year" is but
part of an "unexpired term" is significant in many ways:
first, the unexpired term must be at least one year, for
if it were any shorter, there would be no occasion for
such unexpired term to be measured by every year;
and second, the original term must be more than one
year, for otherwise, whatever would be the unexpired

10 | Labor Standards Case Assignment | 27 June 2016

term thereof will not reach even a year. Consequently,

the more decisive factor in the determination of when
the subject clause "for three (3) months for every year
of the unexpired term, whichever is less" shall apply is
not the length of the original contract period as held in
Marsaman,106 but the length of the unexpired portion
of the contract period -- the subject clause applies in
cases when the unexpired portion of the contract
period is at least one year, which arithmetically
requires that the original contract period be more than
one year.

Viewed in that light, the subject clause creates a sublayer of discrimination among OFWs whose contract
periods are for more than one year: those who are
illegally dismissed with less than one year left in their
contracts shall be entitled to their salaries for the
entire unexpired portion thereof, while those who are
illegally dismissed with one year or more remaining in
their contracts shall be covered by the subject clause,
and their monetary benefits limited to their salaries for
three months only.

To concretely illustrate the application of the foregoing

interpretation of the subject clause, the Court assumes
hypothetical OFW-C and OFW-D, who each have a 24month contract at a salary rate of US$1,000.00 per
month. OFW-C is illegally dismissed on the 12th month,
and OFW-D, on the 13th month. Considering that there
is at least 12 months remaining in the contract period
of OFW-C, the subject clause applies to the
computation of the latter's monetary benefits. Thus,
OFW-C will be entitled, not to US$12,000,00 or the
latter's total salaries for the 12 months unexpired
portion of the contract, but to the lesser amount of
US$3,000.00 or the latter's salaries for 3 months out of
the 12-month unexpired term of the contract. On the
other hand, OFW-D is spared from the effects of the
subject clause, for there are only 11 months left in the
latter's contract period. Thus, OFW-D will be entitled to
US$11,000.00, which is equivalent to his/her total
salaries for the entire 11-month unexpired portion.

OFWs vis--vis Local Workers

The earliest rule prescribing a uniform system of

computation was actually Article 299 of the Code of
Commerce (1888),108 to wit:

Article 299. If the contracts between the merchants

and their shop clerks and employees should have been
made of a fixed period, none of the contracting parties,
without the consent of the other, may withdraw from
the fulfillment of said contract until the termination of
the period agreed upon.

Persons violating this clause shall be subject to

indemnify the loss and damage suffered, with the
exception of the provisions contained in the following
articles.

In Reyes v. The Compaia Maritima,109 the Court

applied the foregoing provision to determine the
liability of a shipping company for the illegal discharge
of its managers prior to the expiration of their fixedterm employment. The Court therein held the shipping
company liable for the salaries of its managers for the
remainder of their fixed-term employment.

There is a more specific rule as far as seafarers are

concerned: Article 605 of the Code of Commerce which
provides:

Article 605. If the contracts of the captain and

members of the crew with the agent should be for a
definite period or voyage, they cannot be discharged
until the fulfillment of their contracts, except for
reasons of insubordination in serious matters, robbery,
theft, habitual drunkenness, and damage caused to the
vessel or to its cargo by malice or manifest or proven
negligence.

Article 605 was applied to Madrigal Shipping Company,

Inc. v. Ogilvie,110 in

With Fixed-Period Employment

As discussed earlier, prior to R.A. No. 8042, a uniform

system of computation of the monetary awards of
illegally dismissed OFWs was in place. This uniform
system was applicable even to local workers with fixedterm employment.107

which the Court held the shipping company liable for

the salaries and subsistence allowance of its illegally
dismissed employees for the entire unexpired portion
of their employment contracts.

While Article 605 has remained good law up to the

present,111 Article 299 of the Code of Commerce was
replaced by Art. 1586 of the Civil Code of 1889, to wit:

11 | Labor Standards Case Assignment | 27 June 2016

Article 1586. Field hands, mechanics, artisans, and

other laborers hired for a certain time and for a certain
work cannot leave or be dismissed without sufficient
cause, before the fulfillment of the contract. (Emphasis
supplied.)

Citing Manresa, the Court in Lemoine v. Alkan112 read

the disjunctive "or" in Article 1586 as a conjunctive
"and" so as to apply the provision to local workers who
are employed for a time certain although for no
particular skill. This interpretation of Article 1586 was
reiterated in Garcia Palomar v. Hotel de France
Company.113 And in both Lemoine and Palomar, the
Court adopted the general principle that in actions for
wrongful discharge founded on Article 1586, local
workers are entitled to recover damages to the extent
of the amount stipulated to be paid to them by the
terms of their contract. On the computation of the
amount of such damages, the Court in Aldaz v. Gay114
held:

The doctrine is well-established in American

jurisprudence, and nothing has been brought to our
attention to the contrary under Spanish jurisprudence,
that when an employee is wrongfully discharged it is
his duty to seek other employment of the same kind in
the same community, for the purpose of reducing the
damages resulting from such wrongful discharge.
However, while this is the general rule, the burden of
showing that he failed to make an effort to secure
other employment of a like nature, and that other
employment of a like nature was obtainable, is upon
the defendant. When an employee is wrongfully
discharged under a contract of employment his prima
facie damage is the amount which he would be entitled
to had he continued in such employment until the
termination of the period. (Howard vs. Daly, 61 N. Y.,
362; Allen vs. Whitlark, 99 Mich., 492; Farrell vs. School
District No. 2, 98 Mich., 43.)115 (Emphasis supplied)

On August 30, 1950, the New Civil Code took effect

with new provisions on fixed-term employment: Section
2 (Obligations with a Period), Chapter 3, Title I, and
Sections 2 (Contract of Labor) and 3 (Contract for a
Piece of Work), Chapter 3, Title VIII, Book IV.116 Much
like Article 1586 of the Civil Code of 1889, the new
provisions of the Civil Code do not expressly provide for
the remedies available to a fixed-term worker who is
illegally discharged. However, it is noted that in
Mackay Radio & Telegraph Co., Inc. v. Rich,117 the
Court carried over the principles on the payment of
damages underlying Article 1586 of the Civil Code of
1889 and applied the same to a case involving the
illegal discharge of a local worker whose fixed-period
employment contract was entered into in 1952, when
the new Civil Code was already in effect.118

More significantly, the same principles were applied to

cases involving overseas Filipino workers whose fixedterm employment contracts were illegally terminated,
such as in First Asian Trans & Shipping Agency, Inc. v.
Ople,119 involving seafarers who were illegally
discharged. In Teknika Skills and Trade Services, Inc. v.
National Labor Relations Commission,120 an OFW who
was illegally dismissed prior to the expiration of her
fixed-period employment contract as a baby sitter, was
awarded salaries corresponding to the unexpired
portion of her contract. The Court arrived at the same
ruling in Anderson v. National Labor Relations
Commission,121 which involved a foreman hired in
1988 in Saudi Arabia for a fixed term of two years, but
who was illegally dismissed after only nine months on
the job -- the Court awarded him salaries
corresponding to 15 months, the unexpired portion of
his contract. In Asia World Recruitment, Inc. v. National
Labor Relations Commission,122 a Filipino working as a
security officer in 1989 in Angola was awarded his
salaries for the remaining period of his 12-month
contract after he was wrongfully discharged. Finally, in
Vinta Maritime Co., Inc. v. National Labor Relations
Commission,123 an OFW whose 12-month contract
was illegally cut short in the second month was
declared entitled to his salaries for the remaining 10
months of his contract.

In sum, prior to R.A. No. 8042, OFWs and local workers

with fixed-term employment who were illegally
discharged were treated alike in terms of the
computation of their money claims: they were
uniformly entitled to their salaries for the entire
unexpired portions of their contracts. But with the
enactment of R.A. No. 8042, specifically the adoption of
the subject clause, illegally dismissed OFWs with an
unexpired portion of one year or more in their
employment contract have since been differently
treated in that their money claims are subject to a 3month cap, whereas no such limitation is imposed on
local workers with fixed-term employment.

The Court concludes that the subject clause contains a

suspect classification in that, in the computation of the
monetary benefits of fixed-term employees who are
illegally discharged, it imposes a 3-month cap on the
claim of OFWs with an unexpired portion of one year or
more in their contracts, but none on the claims of other
OFWs or local workers with fixed-term employment.
The subject clause singles out one classification of
OFWs and burdens it with a peculiar disadvantage.

There being a suspect classification involving a

vulnerable sector protected by the Constitution, the
Court now subjects the classification to a strict judicial

12 | Labor Standards Case Assignment | 27 June 2016

scrutiny, and determines whether it serves a

compelling state interest through the least restrictive
means.

What constitutes compelling state interest is measured

by the scale of rights and powers arrayed in the
Constitution and calibrated by history.124 It is akin to
the paramount interest of the state125 for which some
individual liberties must give way, such as the public
interest in safeguarding health or maintaining medical
standards,126 or in maintaining access to information
on matters of public concern.127

state interest sought to be served by the subject

clause.

The OSG locates the purpose of R.A. No. 8042 in the

speech of Rep. Bonifacio Gallego in sponsorship of
House Bill No. 14314 (HB 14314), from which the law
originated;130 but the speech makes no reference to
the underlying reason for the adoption of the subject
clause. That is only natural for none of the 29
provisions in HB 14314 resembles the subject clause.

On the other hand, Senate Bill No. 2077 (SB 2077)

contains a provision on money claims, to wit:
In the present case, the Court dug deep into the
records but found no compelling state interest that the
subject clause may possibly serve.

The OSG defends the subject clause as a police power

measure "designed to protect the employment of
Filipino seafarers overseas x x x. By limiting the liability
to three months [sic], Filipino seafarers have better
chance of getting hired by foreign employers." The
limitation also protects the interest of local placement
agencies, which otherwise may be made to shoulder
millions of pesos in "termination pay."128

Sec. 10. Money Claims. - Notwithstanding any provision

of law to the contrary, the Labor Arbiters of the
National Labor Relations Commission (NLRC) shall have
the original and exclusive jurisdiction to hear and
decide, within ninety (90) calendar days after the filing
of the complaint, the claims arising out of an employeremployee relationship or by virtue of the complaint,
the claim arising out of an employer-employee
relationship or by virtue of any law or contract
involving Filipino workers for overseas employment
including claims for actual, moral, exemplary and other
forms of damages.

The OSG explained further:

Often, placement agencies, their liability being

solidary, shoulder the payment of money claims in the
event that jurisdiction over the foreign employer is not
acquired by the court or if the foreign employer
reneges on its obligation. Hence, placement agencies
that are in good faith and which fulfill their obligations
are unnecessarily penalized for the acts of the foreign
employer. To protect them and to promote their
continued helpful contribution in deploying Filipino
migrant workers, liability for money are reduced under
Section 10 of RA 8042.

This measure redounds to the benefit of the migrant

workers whose welfare the government seeks to
promote. The survival of legitimate placement
agencies helps [assure] the government that migrant
workers are properly deployed and are employed under
decent and humane conditions.129 (Emphasis
supplied)

However, nowhere in the Comment or Memorandum

does the OSG cite the source of its perception of the

The liability of the principal and the

recruitment/placement agency or any and all claims
under this Section shall be joint and several.

Any compromise/amicable settlement or voluntary

agreement on any money claims exclusive of damages
under this Section shall not be less than fifty percent
(50%) of such money claims: Provided, That any
installment payments, if applicable, to satisfy any such
compromise or voluntary settlement shall not be more
than two (2) months. Any compromise/voluntary
agreement in violation of this paragraph shall be null
and void.

Non-compliance with the mandatory period for

resolutions of cases provided under this Section shall
subject the responsible officials to any or all of the
following penalties:

(1) The salary of any such official who fails to render

his decision or resolution within the prescribed period
shall be, or caused to be, withheld until the said official
complies therewith;

13 | Labor Standards Case Assignment | 27 June 2016

(2) Suspension for not more than ninety (90) days; or

(3) Dismissal from the service with disqualification to

hold any appointive public office for five (5) years.

Provided, however, That the penalties herein provided

shall be without prejudice to any liability which any
such official may have incurred under other existing
laws or rules and regulations as a consequence of
violating the provisions of this paragraph.

But significantly, Section 10 of SB 2077 does not

provide for any rule on the computation of money
claims.

A rule on the computation of money claims containing

the subject clause was inserted and eventually
adopted as the 5th paragraph of Section 10 of R.A. No.
8042. The Court examined the rationale of the subject
clause in the transcripts of the "Bicameral Conference
Committee (Conference Committee) Meetings on the
Magna Carta on OCWs (Disagreeing Provisions of
Senate Bill No. 2077 and House Bill No. 14314)."
However, the Court finds no discernible state interest,
let alone a compelling one, that is sought to be
protected or advanced by the adoption of the subject
clause.

In fine, the Government has failed to discharge its

burden of proving the existence of a compelling state
interest that would justify the perpetuation of the
discrimination against OFWs under the subject clause.

Assuming that, as advanced by the OSG, the purpose

of the subject clause is to protect the employment of
OFWs by mitigating the solidary liability of placement
agencies, such callous and cavalier rationale will have
to be rejected. There can never be a justification for
any form of government action that alleviates the
burden of one sector, but imposes the same burden on
another sector, especially when the favored sector is
composed of private businesses such as placement
agencies, while the disadvantaged sector is composed
of OFWs whose protection no less than the Constitution
commands. The idea that private business interest can
be elevated to the level of a compelling state interest
is odious.

Moreover, even if the purpose of the subject clause is

to lessen the solidary liability of placement agencies
vis-a-vis their foreign principals, there are mechanisms
already in place that can be employed to achieve that
purpose without infringing on the constitutional rights
of OFWs.

The POEA Rules and Regulations Governing the

Recruitment and Employment of Land-Based Overseas
Workers, dated February 4, 2002, imposes
administrative disciplinary measures on erring foreign
employers who default on their contractual obligations
to migrant workers and/or their Philippine agents.
These disciplinary measures range from temporary
disqualification to preventive suspension. The POEA
Rules and Regulations Governing the Recruitment and
Employment of Seafarers, dated May 23, 2003,
contains similar administrative disciplinary measures
against erring foreign employers.

Resort to these administrative measures is

undoubtedly the less restrictive means of aiding local
placement agencies in enforcing the solidary liability of
their foreign principals.

Thus, the subject clause in the 5th paragraph of

Section 10 of R.A. No. 8042 is violative of the right of
petitioner and other OFWs to equal
protection.1avvphi1

Further, there would be certain misgivings if one is to

approach the declaration of the unconstitutionality of
the subject clause from the lone perspective that the
clause directly violates state policy on labor under
Section 3,131 Article XIII of the Constitution.

While all the provisions of the 1987 Constitution are

presumed self-executing,132 there are some which this
Court has declared not judicially enforceable, Article
XIII being one,133 particularly Section 3 thereof, the
nature of which, this Court, in Agabon v. National Labor
Relations Commission,134 has described to be not selfactuating:

Thus, the constitutional mandates of protection to

labor and security of tenure may be deemed as selfexecuting in the sense that these are automatically
acknowledged and observed without need for any
enabling legislation. However, to declare that the
constitutional provisions are enough to guarantee the
full exercise of the rights embodied therein, and the
realization of ideals therein expressed, would be

14 | Labor Standards Case Assignment | 27 June 2016

impractical, if not unrealistic. The espousal of such

view presents the dangerous tendency of being
overbroad and exaggerated. The guarantees of "full
protection to labor" and "security of tenure", when
examined in isolation, are facially unqualified, and the
broadest interpretation possible suggests a blanket
shield in favor of labor against any form of removal
regardless of circumstance. This interpretation implies
an unimpeachable right to continued employment-a
utopian notion, doubtless-but still hardly within the
contemplation of the framers. Subsequent legislation is
still needed to define the parameters of these
guaranteed rights to ensure the protection and
promotion, not only the rights of the labor sector, but
of the employers' as well. Without specific and
pertinent legislation, judicial bodies will be at a loss,
formulating their own conclusion to approximate at
least the aims of the Constitution.

Ultimately, therefore, Section 3 of Article XIII cannot,

on its own, be a source of a positive enforceable right
to stave off the dismissal of an employee for just cause
owing to the failure to serve proper notice or hearing.
As manifested by several framers of the 1987
Constitution, the provisions on social justice require
legislative enactments for their enforceability.135
(Emphasis added)

Thus, Section 3, Article XIII cannot be treated as a

principal source of direct enforceable rights, for the
violation of which the questioned clause may be
declared unconstitutional. It may unwittingly risk
opening the floodgates of litigation to every worker or
union over every conceivable violation of so broad a
concept as social justice for labor.

It must be stressed that Section 3, Article XIII does not

directly bestow on the working class any actual
enforceable right, but merely clothes it with the status
of a sector for whom the Constitution urges protection
through executive or legislative action and judicial
recognition. Its utility is best limited to being an
impetus not just for the executive and legislative
departments, but for the judiciary as well, to protect
the welfare of the working class. And it was in fact
consistent with that constitutional agenda that the
Court in Central Bank (now Bangko Sentral ng Pilipinas)
Employee Association, Inc. v. Bangko Sentral ng
Pilipinas, penned by then Associate Justice now Chief
Justice Reynato S. Puno, formulated the judicial precept
that when the challenge to a statute is premised on the
perpetuation of prejudice against persons favored by
the Constitution with special protection -- such as the
working class or a section thereof -- the Court may
recognize the existence of a suspect classification and
subject the same to strict judicial scrutiny.

The view that the concepts of suspect classification

and strict judicial scrutiny formulated in Central Bank
Employee Association exaggerate the significance of
Section 3, Article XIII is a groundless apprehension.
Central Bank applied Article XIII in conjunction with the
equal protection clause. Article XIII, by itself, without
the application of the equal protection clause, has no
life or force of its own as elucidated in Agabon.

Along the same line of reasoning, the Court further

holds that the subject clause violates petitioner's right
to substantive due process, for it deprives him of
property, consisting of monetary benefits, without any
existing valid governmental purpose.136

The argument of the Solicitor General, that the actual

purpose of the subject clause of limiting the
entitlement of OFWs to their three-month salary in
case of illegal dismissal, is to give them a better
chance of getting hired by foreign employers. This is
plain speculation. As earlier discussed, there is nothing
in the text of the law or the records of the deliberations
leading to its enactment or the pleadings of respondent
that would indicate that there is an existing
governmental purpose for the subject clause, or even
just a pretext of one.

The subject clause does not state or imply any

definitive governmental purpose; and it is for that
precise reason that the clause violates not just
petitioner's right to equal protection, but also her right
to substantive due process under Section 1,137 Article
III of the Constitution.

The subject clause being unconstitutional, petitioner is

entitled to his salaries for the entire unexpired period
of nine months and 23 days of his employment
contract, pursuant to law and jurisprudence prior to the
enactment of R.A. No. 8042.

On the Third Issue

Petitioner contends that his overtime and leave pay

should form part of the salary basis in the computation
of his monetary award, because these are fixed
benefits that have been stipulated into his contract.

Petitioner is mistaken.

15 | Labor Standards Case Assignment | 27 June 2016

The word salaries in Section 10(5) does not include

overtime and leave pay. For seafarers like petitioner,
DOLE Department Order No. 33, series 1996, provides
a Standard Employment Contract of Seafarers, in which
salary is understood as the basic wage, exclusive of
overtime, leave pay and other bonuses; whereas
overtime pay is compensation for all work "performed"
in excess of the regular eight hours, and holiday pay is
compensation for any work "performed" on designated
rest days and holidays.

By the foregoing definition alone, there is no basis for

the automatic inclusion of overtime and holiday pay in
the computation of petitioner's monetary award, unless
there is evidence that he performed work during those
periods. As the Court held in Centennial Transmarine,
Inc. v. Dela Cruz,138

However, the payment of overtime pay and leave pay

should be disallowed in light of our ruling in Cagampan
v. National Labor Relations Commission, to wit:

The rendition of overtime work and the submission of

sufficient proof that said was actually performed are
conditions to be satisfied before a seaman could be
entitled to overtime pay which should be computed on

the basis of 30% of the basic monthly salary. In short,

the contract provision guarantees the right to overtime
pay but the entitlement to such benefit must first be
established.

In the same vein, the claim for the day's leave pay for
the unexpired portion of the contract is unwarranted
since the same is given during the actual service of the
seamen.

WHEREFORE, the Court GRANTS the Petition. The

subject clause "or for three months for every year of
the unexpired term, whichever is less" in the 5th
paragraph of Section 10 of Republic Act No. 8042 is
DECLARED UNCONSTITUTIONAL; and the December 8,
2004 Decision and April 1, 2005 Resolution of the Court
of Appeals are MODIFIED to the effect that petitioner is
AWARDED his salaries for the entire unexpired portion
of his employment contract consisting of nine months
and 23 days computed at the rate of US$1,400.00 per
month.

No costs.

SO ORDERED.

16 | Labor Standards Case Assignment | 27 June 2016