SERRANO v. GALLANT MARITIME SERVICES INC. & MARLOWE NAVIGATION CO., INC. G.R. No. 167614.

March 24, 2009 Facts: Petitioner was hired by Gallant Maritime Services, Inc. and Marlow Navigation Co., Ltd. (respondents) under a POEA-approved Contract of Employment. 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. However, respondents did not deliver on their promise to make petitioner Chief Officer. Hence, petitioner refused to stay on as Second Officer and was repatriated to the Philippines on May. 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. Petitioner filed with the Labor Arbiter (LA) a Complaint against respondents for constructive dismissal and for payment of his money claims. LA rendered the dismissal of petitioner illegal and awarding him monetary benefits. Respondents appealed to the NLRC to question the finding of the LA. Likewise, petitioner also appealed 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 Commission that in case of illegal dismissal, OFWs are entitled to their salaries for the unexpired portion of their contracts. Petitioner also appealed 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 Commission that in case of illegal dismissal, OFWs are entitled to their salaries for the unexpired portion of their contracts. Petitioner filed a Motion for Partial Reconsideration; he questioned the constitutionality of the subject clause. Petitioner filed a Petition for Certiorari with the CA, reiterating the constitutional challenge against the subject clause. CA affirmed the NLRC ruling on the reduction of the applicable salary rate; however, the CA skirted the constitutional issue raised by petitioner. The last clause in the 5th paragraph of Section 10, Republic Act (R.A.) No. 8042, to wit: 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. 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 Issue:

1.) Is petitioner entitled to his monetary claim which is the lump-sum salary for the entire unexpired portion of
his 12-month employment contract, and not just for a period of three months?

2.) Should petitioners overtime and leave pay 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? Held: 1.) Yes. 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. 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. 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 3-month 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. 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. 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. 2.) No. 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. CLAUDIO S. YAP, Petitioner, vs.THENAMARIS SHIP'S MANAGEMENT and INTERMARE MARITIME AGENCIES, INC., Respondents. G.R. No. 179532, May 30, 2011 Facts: Claudio S. Yap was employed as electrician of the vessel, M/T SEASCOUT on 14 August 2001 by Intermare Maritime Agencies, Inc. in behalf of its principal, Vulture Shipping Limited. for a duration of 12 months. On 23 August 2001, Yap boarded M/T SEASCOUT and commenced his job as electrician. However, on or about 08 November 2001, the vessel was sold. Yap, along with the other crewmembers, was informed by the Master of their vessel that the same was sold and will be scrapped. Yap received his seniority bonus, vacation bonus, extra bonus along with the scrapping bonus. However, with respect to the payment of his wage, he refused to accept the payment of one-month basic wage. He insisted that he was entitled to the payment of the unexpired portion of his contract since he was illegally dismissed from employment. He alleged that he opted for immediate transfer but none was made. The Labor Arbiter Thus, Claudio S. Yap (petitioner) filed a complaint for Illegal Dismissal with Damages and Attorneys Fees before the Labor Arbiter (LA). On July 26, 2004, the LA rendered a decision in favor of petitioner, finding the latter to have been constructively and illegally dismissed by respondents. LA opined that since the unexpired portion of petitioners contract was less than one year, petitioner was entitled to his salaries for the unexpired portion of his contract for a period of nine months. The NLRC Aggrieved, respondents sought recourse from the NLRC. The NLRC affirmed the LAs findings that petitioner was indeed constructively and illegally dismissed. However, the NLRC held that instead of an award of salaries corresponding to nine months, petitioner was only entitled to salaries for three months as provided under Section 10 of Republic Act (R.A.) No. 8042, as enunciated in our ruling in Marsaman Manning Agency, Inc. v. National Labor Relations Commission. Respondents filed a Motion for Partial Reconsideration. Finding merit in petitioners arguments, the NLRC

reversed its earlier Decision, holding that "there can be no choice to grant only three (3) months salary for every year of the unexpired term because there is no full year of unexpired term which this can be applied." The Court of Appeals The CA affirmed the findings and ruling of the LA and the NLRC that petitioner was constructively and illegally dismissed. However, the CA ruled that the NLRC erred in sustaining the LAs interpretation of Section 10 of R.A. No. 8042. In this regard, the CA relied on the clause "or for three months for every year of the unexpired term, whichever is less" provided in the 5th paragraph of Section 10 of R.A. No. 8042. Issue: Whether or not Section 10 of R.A. [No.] 8042, to the extent that it affords an illegally dismissed migrant worker the lesser benefit of "salaries for [the] unexpired portion of his employment contract or for three (3) months for every year of the unexpired term, whichever is less" is constitutional.YES Whether or not the Court of Appeals gravely erred in granting petitioner only three (3) months backwages when his unexpired term of 9 months is far short of the "every year of the unexpired term" threshold.-YES The Supreme Court In the meantime, while this case was pending before this Court, we declared as unconstitutional the clause "or for three months for every year of the unexpired term, whichever is less" provided in the 5th paragraph of Section 10 of R.A. No. 8042 in the case of Serrano v. Gallant Maritime Services, Inc. on March 24, 2009. This case should not be different from Serrano. The said provision of law has long been a source of abuse by callous employers against migrant workers; and that said provision violates the equal protection clause under the Constitution because, while illegally dismissed local workers are guaranteed under the Labor Code of reinstatement with full backwages computed from the time compensation was withheld from them up to their actual reinstatement. 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. Respondents, aware of our ruling in Serrano, aver that our pronouncement of unconstitutionality should not apply in this case because Section 10 of R.A. No. 8042 is a substantive law that deals with the rights and obligations of the parties in case of Illegal Dismissal of a migrant worker and is not merely procedural in character. Thus, pursuant to the Civil Code, there should be no retroactive application of the law in this case. As a general rule, an unconstitutional act is not a law; it confers no rights; it imposes no duties; it affords no protection; it creates no office; it is inoperative as if it has not been passed at all. The doctrine of operative fact serves as an exception to the aforementioned general rule. The doctrine of operative fact, as an exception to the general rule, only applies as a matter of equity and fair play. It nullifies the effects of an unconstitutional law by recognizing that the existence of a statute prior to a determination of unconstitutionality is an operative fact and may have consequences which cannot always be ignored. The past cannot always be erased by a new judicial declaration. The doctrine is applicable when a declaration of unconstitutionality will impose an undue burden on those who have relied on the invalid law. Following Serrano, we hold that this case should not be included in the aforementioned exception. To rule otherwise would be iniquitous to petitioner and other OFWs, and would, in effect, send a wrong signal that principals/employers and recruitment/manning agencies may violate an OFWs security

of tenure which an employment contract embodies and actually profit from such violation based on an unconstitutional provision of law. Invoking Serrano, respondents claim that the tanker allowance should be excluded from the definition of the term "salary." Fair play, justice, and due process dictate that this Court cannot now, for the first time on appeal, pass upon this question. Matters not taken up below cannot be raised for the first time on appeal. A close perusal of the contract reveals that the tanker allowance of US$130.00 was not categorized as a bonus but was rather encapsulated in the basic salary clause, hence, forming part of the basic salary of petitioner. A final note. We ought to be reminded of the plight and sacrifices of our OFWs. In Olarte v. Nayona, this Court held that: Our overseas workers belong to a disadvantaged class. Most of them come from the poorest sector of our society. Their profile shows they live in suffocating slums, trapped in an environment of crimes. Hardly literate and in ill health, their only hope lies in jobs they find with difficulty in our country. Their unfortunate circumstance makes them easy prey to avaricious employers. They will climb mountains, cross the seas, endure slave treatment in foreign lands just to survive. Out of despondence, they will work under sub-human conditions and accept salaries below the minimum. The least we can do is to protect them with our laws. WHEREFORE, the Petition is GRANTED. Marsaman Manning Agency vs. NLRC G.R. No. 127195, August 25, 1999 R.A. 8042 (Migrant Workers Act) Facts: Private respondent Wilfredo T. Cajeras was hired by petitioner MARSAMAN, the local manning agent of petitioner DIAMANTIDES, as Chief Cook Steward on the MV Prigipos, owned and operated by DIAMANTIDES, for a contract period of ten (10) months. Cajeras started work on 8 August 1995, but less than two (2) months later, he was repatriated to the Philippines allegedly by "mutual consent." Private respondent Cajeras filed a complaint for illegal dismissal against petitioners with the NLRC alleging that he was dismissed illegally, denying that his repatriation was by mutual consent, and asking for his unpaid wages, overtime pay, damages, and attorney's fees. On 29 January 1996 Labor Arbiter resolved the dispute in favor of private respondent Cajeras ruling that the latter's discharge from the MV Prigipos allegedly by "mutual consent" was not proved by convincing evidence. Petitioners appealed to the NLRC. On 16 September 1996 the NLRC affirmed the appealed findings and conclusions of the Labor Arbiter. Petitioners' motion for reconsideration was denied by the NLRC in its Resolution dated 12 November 1996. Hence, the petition contending that, among other things, the NLRC committed grave abuse of discretion in ordering a monetary award beyond the maximum of three (3) months' salary for every year of service set by RA 8042. Issue:

Whether or not the NLRC committed grave abuse of discretion Ruling: On the amount of salaries due private respondent, the rule has always been that an illegally dismissed worker whose employment is for a fixed period is entitled to payment of his salaries corresponding to the unexpired portion of his employment. On 15 July 1995, RA 8042 otherwise known as the "Migrant Workers and Overseas Filipinos Act of 1995" took effect, Sec. 10 of which provides: Sec. 10. In case of termination of overseas employment without just, valid or authorized cause as defined by law or contract, the worker shall be entitled to the full reimbursement of his placement fee with interest at twelve percent (12%) per annum, plus his salaries for the unexpired portion of the employment contract or for three (3) months for every year of the unexpired term whichever is less. 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 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. 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. The questioned Decision and Resolution of public respondent National Labor Relations Commission are AFFIRMED.