EN BANC Petitioner was hired by Gallant Maritime Services, Inc. and Marlow Navigation Co., Ltd.

(respondents) under a Philippine Overseas Employment Administration (POEA)-

[G.R. NO. 167614 : March 24, 2009] approved Contract of Employment with the following terms and conditions:

ANTONIO M. SERRANO, Petitioner, v. Gallant MARITIME SERVICES, INC. and Duration of contract 12 months
MARLOW NAVIGATION CO., INC., Respondents.
Position Chief Officer
DECISION
Basic monthly salary US$1,400.00

AUSTRIA-MARTINEZ, J.: Hours of work 48.0 hours per week

For decades, the toil of solitary migrants has helped lift entire families and communities Overtime US$700.00 per month
out of poverty. Their earnings have built houses, provided health care, equipped
Vacation leave with pay 7.00 days per month5
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 On March 19, 1998, the date of his departure, petitioner was constrained to accept a
have we begun to understand not only how much international migration impacts downgraded employment contract for the position of Second Officer with a monthly
development, but how smart public policies can magnify this effect. 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
United Nations Secretary-General Ban Ki-Moon
Global Forum on Migration and Development Respondents did not deliver on their promise to make petitioner Chief Officer. 7 Hence,
Brussels, July 10, 20071 petitioner refused to stay on as Second Officer and was repatriated to the Philippines
on May 26, 1998.8
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: 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
Sec. 10. Money Claims. - x x x In case of termination of overseas employment without only two (2) months and seven (7) days of his contract, leaving an unexpired portion of
just, valid or authorized cause as defined by law or contract, the workers shall be nine (9) months and twenty-three (23) days.
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 Petitioner filed with the Labor Arbiter (LA) a Complaint9 against respondents for
contract or for three (3) months for every year of the unexpired term, whichever constructive dismissal and for payment of his money claims in the total amount of
is less. US$26,442.73, broken down as follows:

x x x x (Emphasis and underscoring supplied)cralawlibrary

May 27/31, 1998 (5 days) incl. Leave pay US$ 413.90
does not magnify the contributions of overseas Filipino workers (OFWs) to national June 01/30, 1998 2,590.00
development, but exacerbates the hardships borne by them by unduly limiting their
entitlement in case of illegal dismissal to their lump-sum salary either for the unexpired July 01/31, 1998 2,590.00
portion of their employment contract "or for three months for every year of the unexpired
August 01/31, 1998 2,590.00
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 Sept. 01/30, 1998 2,590.00
them of equal protection and denies them due process.
Oct. 01/31, 1998 2,590.00
By way of Petition for Review under Rule 45 of the Rules of Court, petitioner assails Nov. 01/30, 1998 2,590.00
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 Dec. 01/31, 1998 2,590.00
clause unconstitutional.
Jan. 01/31, 1999 2,590.00
 Feb. 01/28, 1999 2,590.00 All other claims are hereby DISMISSED.

Mar. 1/19, 1999 (19 days) incl. leave pay 1,640.00 SO ORDERED.13 (Emphasis supplied)cralawlibrary
------------- ----
------------- ---- 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
25,382.23 overtime pay, + US$490.00/month, vacation leave pay = US$2,590.00/compensation
per month."14
Amount adjusted to chief mate's salary
(March 19/31, 1998 to April 1/30, 1998) + 1,060.5010 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

TOTAL CLAIM US$ 26,442.7311 In a Decision dated June 15, 2000, the NLRC modified the LA Decision, to wit:

as well as moral and exemplary damages and attorney's fees. WHEREFORE, the Decision dated 15 July 1999 is MODIFIED. Respondents are
hereby ordered to pay complainant, jointly and severally, in Philippine currency, at the
The LA rendered a Decision dated July 15, 1999, declaring the dismissal of petitioner prevailing rate of exchange at the time of payment the following:
illegal and awarding him monetary benefits, to wit:
1. Three (3) months salary
WHEREFORE, premises considered, judgment is hereby rendered declaring that the
dismissal of the complainant (petitioner) by the respondents in the above-entitled case $1,400 x 3 US$4,200.00
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 2. Salary differential 45.00
at the time of payment, the amount of EIGHT THOUSAND SEVEN HUNDRED
SEVENTY U.S. DOLLARS (US $8,770.00), representing the complainant's salary US$4,245.00
for three (3) months of the unexpired portion of the aforesaid contract of
employment.ςηαñrοblεš νιr†υαl lαω lιbrαrÿ 3. 10% Attorney's fees 424.50

TOTAL US$4,669.50
The respondents are likewise ordered to pay the complainant [petitioner], jointly and
severally, in Philippine Currency, based on the rate of exchange prevailing at the time
of payment, the amount of FORTY FIVE U.S. DOLLARS (US$ 45.00), 12 representing The other findings are affirmed.
the complainant's claim for a salary differential. In addition, the respondents are hereby
ordered to pay the complainant, jointly and severally, in Philippine Currency, at the SO ORDERED.19
exchange rate prevailing at the time of payment, the complainant's (petitioner's) claim
for attorney's fees equivalent to ten percent (10%) of the total amount awarded to the
aforesaid employee under this Decision. The NLRC corrected the LA's computation of the lump-sum 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
The claims of the complainant for moral and exemplary damages are hereby have been actually performed, and for vacation leave pay."20
DISMISSED for lack of merit.
Petitioner filed a Motion for Partial Reconsideration, but this time he questioned the Considering that the parties have filed their respective memoranda, the Court now
constitutionality of the subject clause.21 The NLRC denied the motion.22 takes up the full merit of the petition mindful of the extreme importance of the
constitutional question raised therein.
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 On the first and second issues
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 The unanimous finding of the LA, NLRC and CA that the dismissal of petitioner was
G.R. No. 151833, filed by petitioner. 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
In a Decision dated December 8, 2004, the CA affirmed the NLRC ruling on the of the lump-sum salary to be awarded to petitioner by reason of his illegal dismissal.
reduction of the applicable salary rate; however, the CA skirted the constitutional issue
raised by petitioner.25 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
His Motion for Reconsideration26 having been denied by the CA,27 petitioner brings his of the unexpired portion of nine months and 23 days of his employment contract or a
cause to this Court on the following grounds: total of US$4,200.00.

I 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
The Court of Appeals and the labor tribunals have decided the case in a way not in US$21,182.23 more or a total of US$25,382.23, equivalent to his salaries for the entire
accord with applicable decision of the Supreme Court involving similar issue of granting nine months and 23 days left of his employment contract, computed at the monthly rate
unto the migrant worker back wages equal to the unexpired portion of his contract of of US$2,590.00.31
employment instead of limiting it to three (3) months
The Arguments of Petitioner
II
Petitioner contends that the subject clause is unconstitutional because it unduly impairs
In the alternative that the Court of Appeals and the Labor Tribunals were merely the freedom of OFWs to negotiate for and stipulate in their overseas employment
applying their interpretation of Section 10 of Republic Act No. 8042, it is submitted that contracts a determinate employment period and a fixed salary package. 32 It also
the Court of Appeals gravely erred in law when it failed to discharge its judicial duty to impinges on the equal protection clause, for it treats OFWs differently from local Filipino
decide questions of substance not theretofore determined by the Honorable Supreme workers (local workers) by putting a cap on the amount of lump-sum salary to which
Court, particularly, the constitutional issues raised by the petitioner on the OFWs are entitled in case of illegal dismissal, while setting no limit to the same
constitutionality of said law, which unreasonably, unfairly and arbitrarily limits payment monetary award for local workers when their dismissal is declared illegal; that the
of the award for back wages of overseas workers to three (3) months. 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
III deployed locally or overseas.35

Even without considering the constitutional limitations [of] Sec. 10 of Republic Act No. Moreover, petitioner argues that the decisions of the CA and the labor tribunals are not
8042, the Court of Appeals gravely erred in law in excluding from petitioner's award the in line with existing jurisprudence on the issue of money claims of illegally dismissed
overtime pay and vacation pay provided in his contract since under the contract they OFWs. Though there are conflicting rulings on this, petitioner urges the Court to sort
form part of his salary.28 them out for the guidance of affected OFWs.36

On February 26, 2008, petitioner wrote the Court to withdraw his petition as he is Petitioner further underscores that the insertion of the subject clause into R.A. No. 8042
already old and sickly, and he intends to make use of the monetary award for his serves no other purpose but to benefit local placement agencies. He marks the
medical treatment and medication.29 Required to comment, counsel for petitioner filed statement made by the Solicitor General in his Memorandum, viz.:
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
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 under the subject clause of the money claims of OFWs who are illegally dismissed.
contribution in deploying Filipino migrant workers, liability for money claims was Thus, the provision does not violate the equal protection clause nor Section 18, Article
reduced under Section 10 of R.A. No. 8042. 37 (Emphasis supplied)cralawlibrary II of the Constitution.45

Petitioner argues that in mitigating the solidary liability of placement agencies, the Lastly, the OSG defends the rationale behind the subject clause as a police power
subject clause sacrifices the well-being of OFWs. Not only that, the provision makes measure adopted to mitigate the solidary liability of placement agencies for this
foreign employers better off than local employers because in cases involving the illegal "redounds to the benefit of the migrant workers whose welfare the government seeks
dismissal of employees, foreign employers are liable for salaries covering a maximum to promote. The survival of legitimate placement agencies helps [assure] the
of only three months of the unexpired employment contract while local employers are government that migrant workers are properly deployed and are employed under
liable for the full lump-sum salaries of their employees. As petitioner puts it: decent and humane conditions."46

In terms of practical application, the local employers are not limited to the amount of The Court's Ruling
backwages they have to give their employees they have illegally dismissed, following
well-entrenched and unequivocal jurisprudence on the matter. On the other hand, The Court sustains petitioner on the first and second issues.
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 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
Lastly, petitioner claims that the subject clause violates the due process clause, for it determination;47 (2) that the constitutional question is raised by a proper party48 and at
deprives him of the salaries and other emoluments he is entitled to under his fixed- the earliest opportunity;49 and (3) that the constitutional question is the very lis mota of
period employment contract.39 the case,50 otherwise the Court will dismiss the case or decide the same on some other
ground.51
The Arguments of Respondents
Without a doubt, there exists in this case an actual controversy directly involving
In their Comment and Memorandum, respondents contend that the constitutional issue petitioner who is personally aggrieved that the labor tribunals and the CA computed his
should not be entertained, for this was belatedly interposed by petitioner in his appeal monetary award based on the salary period of three months only as provided under the
before the CA, and not at the earliest opportunity, which was when he filed an appeal subject clause.
before the NLRC.40
The constitutional challenge is also timely. It should be borne in mind that the
The Arguments of the Solicitor General 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
The Solicitor General (OSG)41 points out that as R.A. No. 8042 took effect on July 15, issue is not raised in the pleadings before that competent court, it cannot be considered
1995, its provisions could not have impaired petitioner's 1998 employment contract. at the trial and, if not considered in the trial, it cannot be considered on
Rather, R.A. No. 8042 having preceded petitioner's contract, the provisions thereof are appeal.52 Records disclose that the issue on the constitutionality of the subject clause
deemed part of the minimum terms of petitioner's employment, especially on the matter was first raised, not in petitioner's appeal with the NLRC, but in his Motion for Partial
of money claims, as this was not stipulated upon by the parties. 42 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
Moreover, the OSG emphasizes that OFWs and local workers differ in terms of the constitutional issue. The NLRC is a labor tribunal that merely performs a quasi-judicial
nature of their employment, such that their rights to monetary benefits must necessarily function - its function in the present case is limited to determining questions of fact to
be treated differently. The OSG enumerates the essential elements that distinguish which the legislative policy of R.A. No. 8042 is to be applied and to resolving such
OFWs from local workers: first, while local workers perform their jobs within Philippine questions in accordance with the standards laid down by the law itself; 55 thus, its
territory, OFWs perform their jobs for foreign employers, over whom it is difficult for our foremost function is to administer and enforce R.A. No. 8042, and not to inquire into
courts to acquire jurisdiction, or against whom it is almost impossible to enforce the validity of its provisions. The CA, on the other hand, is vested with the power of
judgment; and second, as held in Coyoca v. National Labor Relations judicial review or the power to declare unconstitutional a law or a provision thereof,
Commission43 and Millares v. National Labor Relations Commission, 44 OFWs are such as the subject clause.56 Petitioner's interposition of the constitutional issue before
contractual employees who can never acquire regular employment status, unlike local the CA was undoubtedly seasonable. The CA was therefore remiss in failing to take up
workers who are or can become regular employees. Hence, the OSG posits that there the issue in its decision.
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
The third condition that the constitutional issue be critical to the resolution of the case Does the subject clause violate Section 1,
likewise obtains because the monetary claim of petitioner to his lump-sum salary for Article III of the Constitution, and Section 18,
the entire unexpired portion of his 12-month employment contract, and not just for a Article II and Section 3, Article XIII on labor
period of three months, strikes at the very core of the subject clause. as a protected sector?

Thus, the stage is all set for the determination of the constitutionality of the subject The answer is in the affirmative.
clause.
Section 1, Article III of the Constitution guarantees:
Does the subject clause violate Section 10,
Article III of the Constitution on non-impairment No person shall be deprived of life, liberty, or property without due process of law nor
of contracts? shall any person be denied the equal protection of the law.

The answer is in the negative. 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
Petitioner's claim that the subject clause unduly interferes with the stipulations in his welfare.
contract on the term of his employment and the fixed salary package he will receive 57 is
not tenable. To Filipino workers, the rights guaranteed under the foregoing constitutional provisions
translate to economic security and parity: all monetary benefits should be equally
Section 10, Article III of the Constitution provides: 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
No law impairing the obligation of contracts shall be passed. enjoyed by, or spared the burden imposed on, others in like circumstances.65

The prohibition is aligned with the general principle that laws newly enacted have only Such rights are not absolute but subject to the inherent power of Congress to
a prospective operation,58 and cannot affect acts or contracts already incorporate, when it sees fit, a system of classification into its legislation; however, to
perfected;59 however, as to laws already in existence, their provisions are read into be valid, the classification must comply with these requirements: 1) it is based on
contracts and deemed a part thereof.60 Thus, the non-impairment clause under Section substantial distinctions; 2) it is germane to the purposes of the law; 3) it is not limited to
10, Article II is limited in application to laws about to be enacted that would in any way existing conditions only; and 4) it applies equally to all members of the class. 66
derogate from existing acts or contracts by enlarging, abridging or in any manner
changing the intention of the parties thereto. 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
As aptly observed by the OSG, the enactment of R.A. No. 8042 in 1995 preceded the the challenged classification needs only be shown to be rationally related to serving a
execution of the employment contract between petitioner and respondents in 1998. legitimate state interest;67 b) the middle-tier or intermediate scrutiny in which the
Hence, it cannot be argued that R.A. No. 8042, particularly the subject clause, impaired government must show that the challenged classification serves an important state
the employment contract of the parties. Rather, when the parties executed their 1998 interest and that the classification is at least substantially related to serving that
employment contract, they were deemed to have incorporated into it all the provisions interest;68 and c) strict judicial scrutiny69 in which a legislative classification which
of R.A. No. 8042. impermissibly interferes with the exercise of a fundamental right 70 or operates to the
peculiar disadvantage of a suspect class 71 is presumed unconstitutional, and the
burden is upon the government to prove that the classification is necessary to achieve
But even if the Court were to disregard the timeline, the subject clause may not be a compelling state interest and that it is the least restrictive means to protect such
declared unconstitutional on the ground that it impinges on the impairment clause, for interest.72
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 Under American jurisprudence, strict judicial scrutiny is triggered by suspect
wherever they may be employed.61 Police power legislations adopted by the State to classifications73 based on race74 or gender75 but not when the classification is drawn
promote the health, morals, peace, education, good order, safety, and general welfare along income categories.76
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 It is different in the Philippine setting. In Central Bank (now Bangko Sentral ng Pilipinas)
measures taken by the State to promote public welfare. 62 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 rank-and-file employees reality. Social justice calls for the humanization of laws and the equalization of social
of other GFIs had been exempted from the SSL by their respective charters. Finding and economic forces by the State so that justice in its rational and objectively secular
that the disputed provision contained a suspect classification based on salary grade, conception may at least be approximated.
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 xxx
Court revealed the broad outlines of its judicial philosophy, to wit:
Under most circumstances, the Court will exercise judicial restraint in deciding
Congress retains its wide discretion in providing for a valid classification, and its policies questions of constitutionality, recognizing the broad discretion given to Congress in
should be accorded recognition and respect by the courts of justice except when they exercising its legislative power. Judicial scrutiny would be based on the "rational basis"
run afoul of the Constitution. The deference stops where the classification violates a test, and the legislative discretion would be given deferential treatment.
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 But if the challenge to the statute is premised on the denial of a fundamental right,
adherence to constitutional limitations. Rational basis should not suffice. 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 Court's solemn duty to strike down any
Admittedly, the view that prejudice to persons accorded special protection by the law repugnant to the Constitution and the rights it enshrines. This is true whether the
Constitution requires a stricter judicial scrutiny finds no support in American or English actor committing the unconstitutional act is a private person or the government itself or
jurisprudence. Nevertheless, these foreign decisions and authorities are not per se one of its instrumentalities. Oppressive acts will be struck down regardless of the
controlling in this jurisdiction. At best, they are persuasive and have been used to character or nature of the actor.
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 xxx
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 In the case at bar, the challenged proviso operates on the basis of the salary grade or
our own concept of law and justice. Our laws must be construed in accordance with the officer-employee status. It is akin to a distinction based on economic class and status,
intention of our own lawmakers and such intent may be deduced from the language of with the higher grades as recipients of a benefit specifically withheld from the lower
each law and the context of other local legislation related thereto. More importantly, grades. Officers of the BSP now receive higher compensation packages that are
they must be construed to serve our own public interest which is the be-all and the end- competitive with the industry, while the poorer, low-salaried employees are limited to
all of all our laws. And it need not be stressed that our public interest is distinct and the rates prescribed by the SSL. The implications are quite disturbing: BSP rank-and-
different from others. 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
xxx 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
Further, the quest for a better and more "equal" world calls for the use of equal marketability, it is they - and not the officers - who have the real economic and financial
protection as a tool of effective judicial intervention. 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
Equality is one ideal which cries out for bold attention and action in the Constitution. standard of living, and improve the quality of life for all." Any act of Congress that runs
The Preamble proclaims "equality" as an ideal precisely in protest against crushing counter to this constitutional desideratum deserves strict scrutiny by this Court before
inequities in Philippine society. The command to promote social justice in Article II, it can pass muster. (Emphasis supplied)cralawlibrary
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 Imbued with the same sense of "obligation to afford protection to labor," the Court in
equality. x x x [T]here is thus in the Philippine Constitution no lack of doctrinal support the present case also employs the standard of strict judicial scrutiny, for it perceives in
for a more vigorous state effort towards achieving a reasonable measure of equality. the subject clause a suspect classification prejudicial to OFWs.

Our present Constitution has gone further in guaranteeing vital social and economic Upon cursory reading, the subject clause appears facially neutral, for it applies to all
rights to marginalized groups of society, including labor. Under the policy of social OFWs. However, a closer examination reveals that the subject clause has a
justice, the law bends over backward to accommodate the interests of the working class discriminatory intent against, and an invidious impact on, OFWs at two levels:
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
First, OFWs with employment contracts of less than one year vis - à-vis OFWs with In the case at bar, the unexpired portion of private respondent's employment contract
employment contracts of one year or more; 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
Second, among OFWs with employment contracts of more than one year; and
Another was Triple-Eight Integrated Services, Inc. v. National Labor Relations
Third, OFWs vis - à-vis local workers with fixed-period employment; Commission (Third Division, December 1998),83 which involved an OFW (therein
respondent Erlinda Osdana) who was originally granted a 12-month contract, which
was deemed renewed for another 12 months. After serving for one year and seven-
OFWs with employment contracts of less than one year vis - à-vis OFWs with and-a-half months, respondent Osdana was illegally dismissed, and the Court awarded
employment contracts of one year or more her salaries for the entire unexpired portion of four and one-half months of her contract.

As pointed out by petitioner,78 it was in Marsaman Manning Agency, Inc. v. National The Marsaman interpretation of Section 10(5) has since been adopted in the following
Labor Relations Commission79 (Second Division, 1999) that the Court laid down the cases:
following rules on the application of the periods prescribed under Section 10(5) of R.A.
No. 804, to wit:
Case Title Contract Period of Unexpired Period Period Applied in
A plain reading of Sec. 10 clearly reveals that the choice of which amount to Period Service the Computation of
award an illegally dismissed overseas contract worker, i.e., whether his salaries the Monetary
for the unexpired portion of his employment contract or three (3) months' salary Award
for every year of the unexpired term, whichever is less, comes into play only
when the employment contract concerned has a term of at least one (1) year or Skippers v. 6 months 2 months 4 months 4 months
more. This is evident from the words "for every year of the unexpired term" which Maguad84
follows the words "salaries x x x for three months."
Bahia 9 months 8 months 4 months 4 months
Shipping v.
To follow petitioners' thinking that private respondent is entitled to three (3) months Reynaldo
salary only simply because it is the lesser amount is to completely disregard and Chua 85
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 Centennial 9 months 4 months 5 months 5 months
be taken that every part or word thereof be given effect since the law-making body is Transmarine
presumed to know the meaning of the words employed in the statue and to have used v. dela Cruz
them advisedly. Ut res magis valeat quam pereat.80 (Emphasis supplied)cralawlibrary l86

In Marsaman, the OFW involved was illegally dismissed two months into his 10-month Talidano v. 12 months 3 months 9 months 3 months
contract, but was awarded his salaries for the remaining 8 months and 6 days of his Falcon87
contract.
Univan v. 12 months 3 months 9 months 3 months
CA 88
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 Oriental v. 12 months more than 2 10 months 3 months
and Services v. National Labor Relations Commission (Second Division, October CA 89 months
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 PCL v. 12 months more than 2 more or less 9 3 months
declared his dismissal illegal and awarded him SR13,600.00 as lump-sum salary NLRC90 months months
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 Olarte v. 12 months 21 days 11 months and 9 3 months
lesser value, to wit: Nayona91 days

JSS v. 12 months 16 days 11 months and 24 3 months

Under Section 10 of R.A. No. 8042, a worker dismissed from overseas employment .Ferrer92 days
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. 12 months 9 months and 2 months and 23 2 months and 23 Case Title Contract Period of Unexpired Period Applied in the
Adelantar93 7 days days days Period Service Period Computation of the
Monetary Award
Phil. Employ 12 months 10 months 2 months Unexpired portion
v. Paramio, ATCI v. CA, 2 years 2 months 22 months 22 months
et al.94 et al.98

Flourish 2 years 26 days 23 months and 4 6 months or 3 Phil. 2 years 7 days 23 months 23 months and 23 days
Maritime v. days months for each year Integrated v. and 23 days
Almanzor 95 of contract NLRC99

Athenna 1 year, 10 1 month 1 year, 9 months 6 months or 3 JGB v. 2 years 9 months 15 months 15 months
Manpower months and and 28 days months for each year NLC100
v. Villanos 96 28 days of contract
Agoy v. 2 years 2 months 22 months 22 months
NLRC101
As the foregoing matrix readily shows, the subject clause classifies OFWs into two
categories. The first category includes OFWs with fixed-period employment contracts EDI v. 2 years 5 months 19 months 19 months
of less than one year; in case of illegal dismissal, they are entitled to their salaries for NLRC, et
the entire unexpired portion of their contract. The second category consists of OFWs al.102
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 Barros v. 12 months 4 months 8 months 8 months
of their contracts. NLRC, et
al.103
The disparity in the treatment of these two groups cannot be discounted. In Skippers, Philippine 12 months 6 months 5 months and 5 months and 18 days
the respondent OFW worked for only 2 months out of his 6-month contract, but was Transmarine and 22 days 18 days
awarded his salaries for the remaining 4 months. In contrast, the respondent OFWs v. Carilla104
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 It is plain that prior to R.A. No. 8042, all OFWs, regardless of contract periods or the
longer period of 3 months out of their 12-month contracts before being illegally unexpired portions thereof, were treated alike in terms of the computation of their
dismissed were awarded their salaries for only 3 months. 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
To illustrate the disparity even more vividly, the Court assumes a hypothetical OFW-A their employment contracts.
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 The enactment of the subject clause in R.A. No. 8042 introduced a differentiated rule
monthly salary rate of US$1,000.00. Both commenced work on the same day and under of computation of the money claims of illegally dismissed OFWs based on their
the same employer, and were illegally dismissed after one month of work. Under the employment periods, in the process singling out one category whose contracts have
subject clause, OFW-A will be entitled to US$9,000.00, equivalent to his salaries for an unexpired portion of one year or more and subjecting them to the peculiar
the remaining 9 months of his contract, whereas OFW-B will be entitled to only disadvantage of having their monetary awards limited to their salaries for 3 months or
US$3,000.00, equivalent to his salaries for 3 months of the unexpired portion of his for the unexpired portion thereof, whichever is less, but all the while sparing the other
contract, instead of US$14,000.00 for the unexpired portion of 14 months of his category from such prejudice, simply because the latter's unexpired contracts fall short
contract, as the US$3,000.00 is the lesser amount. of one year.

The disparity becomes more aggravating when the Court takes into account Among OFWs With Employment Contracts of More Than One Year
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
Upon closer examination of the terminology employed in the subject clause, the Court
contracts, were entitled to their salaries for the entire unexpired portions of their
now has misgivings on the accuracy of the Marsaman interpretation.
contracts. The matrix below speaks for itself:
The Court notes that the subject clause "or for three (3) months for every year of the Persons violating this clause shall be subject to indemnify the loss and damage
unexpired term, whichever is less" contains the qualifying phrases "every year" and suffered, with the exception of the provisions contained in the following articles.
"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 In Reyes v. The Compañia Maritima,109 the Court applied the foregoing provision to
significant in many ways: first, the unexpired term must be at least one year, for if it determine the liability of a shipping company for the illegal discharge of its managers
were any shorter, there would be no occasion for such unexpired term to be measured prior to the expiration of their fixed-term employment. The Court therein held the
by every year; and second, the original term must be more than one year, for otherwise, shipping company liable for the salaries of its managers for the remainder of their fixed-
whatever would be the unexpired term thereof will not reach even a year. Consequently, term employment.
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 There is a more specific rule as far as seafarers are concerned: Article 605 of the Code
unexpired portion of the contract period - - the subject clause applies in cases when of Commerce which provides:
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. 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
Viewed in that light, the subject clause creates a sub-layer of discrimination among of their contracts, except for reasons of insubordination in serious matters, robbery,
OFWs whose contract periods are for more than one year: those who are illegally theft, habitual drunkenness, and damage caused to the vessel or to its cargo by malice
dismissed with less than one year left in their contracts shall be entitled to their salaries or manifest or proven negligence.
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 Article 605 was applied to Madrigal Shipping Company, Inc. v. Ogilvie, 110 in
their monetary benefits limited to their salaries for three months only.
which the Court held the shipping company liable for the salaries and subsistence
To concretely illustrate the application of the foregoing interpretation of the subject allowance of its illegally dismissed employees for the entire unexpired portion of their
clause, the Court assumes hypothetical OFW-C and OFW-D, who each have a 24- employment contracts.
month 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 While Article 605 has remained good law up to the present, 111 Article 299 of the Code
12 months remaining in the contract period of OFW-C, the subject clause applies to the of Commerce was replaced by Art. 1586 of the Civil Code of 1889, to wit:
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 Article 1586. Field hands, mechanics, artisans, and other laborers hired for a certain
out of the 12-month unexpired term of the contract. On the other hand, OFW-D is time and for a certain work cannot leave or be dismissed without sufficient cause,
spared from the effects of the subject clause, for there are only 11 months left in the before the fulfillment of the contract. (Emphasis supplied.)
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. 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
OFWs vis - à-vis Local Workers employed for a time certain although for no particular skill. This interpretation of Article
With Fixed-Period Employment 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
As discussed earlier, prior to R.A. No. 8042, a uniform system of computation of the damages to the extent of the amount stipulated to be paid to them by the terms of their
monetary awards of illegally dismissed OFWs was in place. This uniform system was contract. On the computation of the amount of such damages, the Court in Aldaz v.
applicable even to local workers with fixed-term employment.107 Gay114 held:

The earliest rule prescribing a uniform system of computation was actually Article 299 The doctrine is well-established in American jurisprudence, and nothing has been
of the Code of Commerce (1888),108 to wit: 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
Article 299. If the contracts between the merchants and their shop clerks and kind in the same community, for the purpose of reducing the damages resulting from
employees should have been made of a fixed period, none of the contracting parties, such wrongful discharge. However, while this is the general rule, the burden of showing
without the consent of the other, may withdraw from the fulfillment of said contract until that he failed to make an effort to secure other employment of a like nature, and that
the termination of the period agreed upon. 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 There being a suspect classification involving a vulnerable sector protected by the
employment until the termination of the period. (Howard v. Daly, 61 N. Y., 362; Allen v. Constitution, the Court now subjects the classification to a strict judicial scrutiny, and
Whitlark, 99 Mich., 492; Farrell v. School District No. 2, 98 Mich., 43.) 115 (Emphasis determines whether it serves a compelling state interest through the least restrictive
supplied)cralawlibrary means.

On August 30, 1950, the New Civil Code took effect with new provisions on fixed-term What constitutes compelling state interest is measured by the scale of rights and
employment: Section 2 (Obligations with a Period), Chapter 3, Title I, and Sections 2 powers arrayed in the Constitution and calibrated by history.124 It is akin to the
(Contract of Labor) and 3 (Contract for a Piece of Work), Chapter 3, Title VIII, Book paramount interest of the state125 for which some individual liberties must give way,
IV.116Much like Article 1586 of the Civil Code of 1889, the new provisions of the Civil such as the public interest in safeguarding health or maintaining medical
Code do not expressly provide for the remedies available to a fixed-term worker who is standards,126 or in maintaining access to information on matters of public concern. 127
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 In the present case, the Court dug deep into the records but found no compelling state
Article 1586 of the Civil Code of 1889 and applied the same to a case involving the interest that the subject clause may possibly serve.
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
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
More significantly, the same principles were applied to cases involving overseas Filipino months [sic], Filipino seafarers have better chance of getting hired by foreign
workers whose fixed-term employment contracts were illegally terminated, such as in employers." The limitation also protects the interest of local placement agencies, which
First Asian Trans & Shipping Agency, Inc. v. Ople,119 involving seafarers who were otherwise may be made to shoulder millions of pesos in "termination pay."128
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 The OSG explained further:
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 Often, placement agencies, their liability being solidary, shoulder the payment of money
foreman hired in 1988 in Saudi Arabia for a fixed term of two years, but who was illegally claims in the event that jurisdiction over the foreign employer is not acquired by the
dismissed after only nine months on the job - - the Court awarded him salaries court or if the foreign employer reneges on its obligation. Hence, placement agencies
corresponding to 15 months, the unexpired portion of his contract. In Asia World that are in good faith and which fulfill their obligations are unnecessarily penalized for
Recruitment, Inc. v. National Labor Relations Commission, 122 a Filipino working as a the acts of the foreign employer. To protect them and to promote their continued helpful
security officer in 1989 in Angola was awarded his salaries for the remaining period of contribution in deploying Filipino migrant workers, liability for money are reduced under
his 12-month contract after he was wrongfully discharged. Finally, in Vinta Maritime Section 10 of RA 8042.
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 This measure redounds to the benefit of the migrant workers whose welfare the
remaining 10 months of his contract. government seeks to promote. The survival of legitimate placement agencies helps
[assure] the government that migrant workers are properly deployed and are employed
In sum, prior to R.A. No. 8042, OFWs and local workers with fixed-term employment under decent and humane conditions.129 (Emphasis supplied)cralawlibrary
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 However, nowhere in the Comment or Memorandum does the OSG cite the source of
portions of their contracts. But with the enactment of R.A. No. 8042, specifically the its perception of the state interest sought to be served by the subject clause.
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 3-month cap, whereas no such limitation is The OSG locates the purpose of R.A. No. 8042 in the speech of Rep. Bonifacio Gallego
imposed on local workers with fixed-term employment. 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
The Court concludes that the subject clause contains a suspect classification in 14314 resembles the subject clause.
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 On the other hand, Senate Bill No. 2077 (SB 2077) contains a provision on money
of other OFWs or local workers with fixed-term employment. The subject clause claims, to wit:
singles out one classification of OFWs and burdens it with a peculiar
disadvantage.
Sec. 10. Money Claims. - Notwithstanding any provision of law to the contrary, the Assuming that, as advanced by the OSG, the purpose of the subject clause is to protect
Labor Arbiters of the National Labor Relations Commission (NLRC) shall have the the employment of OFWs by mitigating the solidary liability of placement agencies, such
original and exclusive jurisdiction to hear and decide, within ninety (90) calendar days callous and cavalier rationale will have to be rejected. There can never be a justification
after the filing of the complaint, the claims arising out of an employer-employee for any form of government action that alleviates the burden of one sector, but imposes
relationship or by virtue of the complaint, the claim arising out of an employer-employee the same burden on another sector, especially when the favored sector is composed
relationship or by virtue of any law or contract involving Filipino workers for overseas of private businesses such as placement agencies, while the disadvantaged sector is
employment including claims for actual, moral, exemplary and other forms of damages. 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
The liability of the principal and the recruitment/placement agency or any and all claims interest is odious.
under this Section shall be joint and several.
Moreover, even if the purpose of the subject clause is to lessen the solidary liability of
Any compromise/amicable settlement or voluntary agreement on any money claims placement agencies vis-a-vis their foreign principals, there are mechanisms already in
exclusive of damages under this Section shall not be less than fifty percent (50%) of place that can be employed to achieve that purpose without infringing on the
such money claims: Provided, That any installment payments, if applicable, to satisfy constitutional rights of OFWs.
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 The POEA Rules and Regulations Governing the Recruitment and Employment of
void. Land-Based Overseas Workers, dated February 4, 2002, imposes administrative
disciplinary measures on erring foreign employers who default on their contractual
Non-compliance with the mandatory period for resolutions of cases provided under this obligations to migrant workers and/or their Philippine agents. These disciplinary
Section shall subject the responsible officials to any or all of the following penalties: 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
(1) The salary of any such official who fails to render his decision or resolution within erring foreign employers.
the prescribed period shall be, or caused to be, withheld until the said official complies
therewith;
Resort to these administrative measures is undoubtedly the less restrictive means of
aiding local placement agencies in enforcing the solidary liability of their foreign
(2) Suspension for not more than ninety (90) days; or principals.

(3) Dismissal from the service with disqualification to hold any appointive public office Thus, the subject clause in the 5th paragraph of Section 10 of R.A. No. 8042 is violative
for five (5) years. of the right of petitioner and other OFWs to equal
protection.ςηαñrοblεš νιr†υαl lαω lιbrαrÿ
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 Further, there would be certain misgivings if one is to approach the declaration of the
regulations as a consequence of violating the provisions of this paragraph. 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.
But significantly, Section 10 of SB 2077 does not provide for any rule on the
computation of money claims. 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
A rule on the computation of money claims containing the subject clause was inserted one,133particularly Section 3 thereof, the nature of which, this Court, in Agabon v.
and eventually adopted as the 5th paragraph of Section 10 of R.A. No. 8042. The Court National Labor Relations Commission,134 has described to be not self-actuating:
examined the rationale of the subject clause in the transcripts of the "Bicameral
Conference Committee (Conference Committee) Meetings on the Magna Carta on Thus, the constitutional mandates of protection to labor and security of tenure may be
OCWs (Disagreeing Provisions of Senate Bill No. 2077 and House Bill No. 14314)." deemed as self-executing in the sense that these are automatically acknowledged and
However, the Court finds no discernible state interest, let alone a compelling one, that observed without need for any enabling legislation. However, to declare that the
is sought to be protected or advanced by the adoption of the subject clause. constitutional provisions are enough to guarantee the full exercise of the rights
embodied therein, and the realization of ideals therein expressed, would be impractical,
In fine, the Government has failed to discharge its burden of proving the existence of a if not unrealistic. The espousal of such view presents the dangerous tendency of being
compelling state interest that would justify the perpetuation of the discrimination against overbroad and exaggerated. The guarantees of "full protection to labor" and "security
OFWs under the subject clause. 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 indicate that there is an existing governmental purpose for the subject clause, or even
removal regardless of circumstance. This interpretation implies an unimpeachable right just a pretext of one.
to continued employment-a utopian notion, doubtless-but still hardly within the
contemplation of the framers. Subsequent legislation is still needed to define the The subject clause does not state or imply any definitive governmental purpose; and it
parameters of these guaranteed rights to ensure the protection and promotion, not only is for that precise reason that the clause violates not just petitioner's right to equal
the rights of the labor sector, but of the employers' as well. Without specific and protection, but also her right to substantive due process under Section 1, 137 Article III
pertinent legislation, judicial bodies will be at a loss, formulating their own conclusion of the Constitution.
to approximate at least the aims of the Constitution.
The subject clause being unconstitutional, petitioner is entitled to his salaries for the
Ultimately, therefore, Section 3 of Article XIII cannot, on its own, be a source of a entire unexpired period of nine months and 23 days of his employment contract,
positive enforceable right to stave off the dismissal of an employee for just cause pursuant to law and jurisprudence prior to the enactment of R.A. No. 8042.
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) On the Third Issue

Thus, Section 3, Article XIII cannot be treated as a principal source of direct enforceable Petitioner contends that his overtime and leave pay should form part of the salary basis
rights, for the violation of which the questioned clause may be declared in the computation of his monetary award, because these are fixed benefits that have
unconstitutional. It may unwittingly risk opening the floodgates of litigation to every been stipulated into his contract.
worker or union over every conceivable violation of so broad a concept as social justice
for labor. Petitioner is mistaken.

It must be stressed that Section 3, Article XIII does not directly bestow on the working The word salaries in Section 10(5) does not include overtime and leave pay. For
class any actual enforceable right, but merely clothes it with the status of a sector for seafarers like petitioner, DOLE Department Order No. 33, series 1996, provides a
whom the Constitution urges protection through executive or legislative action Standard Employment Contract of Seafarers, in which salary is understood as the basic
and judicial recognition. Its utility is best limited to being an impetus not just for the wage, exclusive of overtime, leave pay and other bonuses; whereas overtime pay is
executive and legislative departments, but for the judiciary as well, to protect the welfare compensation for all work "performed" in excess of the regular eight hours, and holiday
of the working class.And it was in fact consistent with that constitutional agenda that pay is compensation for any work "performed" on designated rest days and holidays.
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 By the foregoing definition alone, there is no basis for the automatic inclusion of
Reynato S. Puno, formulated the judicial precept that when the challenge to a statute overtime and holiday pay in the computation of petitioner's monetary award, unless
is premised on the perpetuation of prejudice against persons favored by the there is evidence that he performed work during those periods. As the Court held
Constitution with special protection - - such as the working class or a section thereof - in Centennial Transmarine, Inc. v. Dela Cruz,138
- the Court may recognize the existence of a suspect classification and subject the
same to strict judicial scrutiny.
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 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 The rendition of overtime work and the submission of sufficient proof that said was
conjunction with the equal protection clause. Article XIII, by itself, without the application actually performed are conditions to be satisfied before a seaman could be entitled to
of the equal protection clause, has no life or force of its own as elucidated in Agabon. 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.
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 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.
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 WHEREFORE, the Court GRANTS the Petition. The subject clause "or for three
speculation. As earlier discussed, there is nothing in the text of the law or the records months for every year of the unexpired term, whichever is less" in the 5th paragraph of
of the deliberations leading to its enactment or the pleadings of respondent that would 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.