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Serrano v.

Gallant (The Constitution and Statutory Law; Constitution) GR NO 167614,


March 24, 2009

Parties
Petitioner Antonio Serrano is a Filipino seafarer, who was hired by Respondents Gallant
Maritime Services, Inc. and Marlow Navigation Co.,Ltd.

Context
Serrano was hired 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
Hours of work 48 hours per week
Overtime US$700.00 per month
Vacation leave with pay 7.00 days per month

March 1998, Serrano was constrained to accept a downgraded employment contract, with
the position of Second Officer and a monthly salary of only US$1,000 upon the assurance
that he would be made Chief Officer by the end of April 1998. Respondents did not deliver
on their promise.

Procedural
The contract was for 12 months or until March 1999, but upon his repatriation Serrano only
served 2 months and 7 days, leaving an unexpired portion of 9 months and 23 days. Thus,
petitioner filed with the Labor Arbiter a complaint for constructive dismissal and money
claims in the total of US$26,442.73 (which included “leave pay” and additional amounts
being what he’d receive if he was “Chief Officer”), as well as moral and exemplary damages.
The LA ordered respondents to pay based on the rate of exchange at the time of payment
US$ 8,770 ONLY, for 3 months of the unexpired portion of the contract of employment, as
well another US$ for the salary differential, plus 10% of total amount for attorney’s fees.

Serrano also appealed to the NLRC, on the issue that LA erred in not applying the rule that in
case of illegal dismissal, OFWs are entitled to salaries for the entire unexpired portion of the
contract. The NLRC modified LA’s decision by reducing the applicable salary rate from
US$2,590 to only US$1,400 since RA No. 8042 does not provide for overtime pay as it must
actually be performed, as well as vacation leave pay.

Serrano filed as well with the CA, which affirmed the NLRC’s ruling on the reduction of
salary rate. Thus, Serrano filed with the SC claiming the grave error of the CA in using the
basis of (RA No. 8042 Sec. 10) used for granting of damages, and claimed it limited their
(OFWs) entitlements in case of illegal dismissal by their employers. It provides:

Sec. 10 Money Claims.— ...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.

Petitioner likewise claims the subject clause as unconstitutional on the ground that it
defeats Art. II Sec. 18 of the Constitution which guarantees the protection of the rights and
welfare of ALL PH workers. On the other hand, respondents claim the constitutional issue
should not be entertained for it should have been brought up on the appeal to the NLRC
and not at the latest possible moment.

The OSG emphasized that OFWs and local workers have different natures of employment
and thus must be treated differently in terms of right to monetary benefits. It also defended
the rational of the subject clause as a police power.

(Main) Issue
WoN RA 8042 Sec. 10 (par 5) is unconstitutional

Ruling
YES. Records show the issue on 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, and reiterated in his Petition for Certiorari before the CA. It is the CA which
has the competence to resolve said issue.

The subject clause is violative of Section 1, Article III of the Constitution (due process, and
equal protection of the law), and Section 18, Article II and Section 3, Article XIII (both
according all members of the labor sector full protection of their rights and welfare). The
subject clause is discriminative of OFWs as that the choice of which amount to award an
illegally dismissed an overseas worker comes into play only when the contract concerned is
one year or more.

In other cases of similar nature cited, OFWs with fixed period employment contracts of less
than a year were entitled to their salaries for the entire unexpired portion of their contract,
while those with more than a year were entitled to only 3 months of the unexpired
portion of their contracts. The disparity becomes more aggravating when it was showed
that prior to the effectivity of RA No. 8042, ALL illegally dismissed OFWs were entitled to
their salaries for the entire unexpired portions of their contracts.

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.

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