G.R. No. 234365 - Philippine Transmarine Carriers, Inc. vs. Tena-e

Claudio S. Yap was employed as an electrician on the vessel M/T SEASCOUT on August 14, 2001, by Intermare Maritime Agencies, Inc. on behalf of Vulture Shipping Limited.
Yap's contract, entered into with Capt. Francisco B. Adviento (General Manager of Intermare), was for a 12-month duration.
Yap boarded the M/T SEASCOUT on August 23, 2001, and began his employment.

The vessel was sold around November 8, 2001, with the POEA informed on December 6, 2001.
Yap and other crew were informed by the vessel's Master about the sale and intended scrapping of the vessel.
An advisory from Capt. Constatinou indicated the possibility of transfer to other vessels and asked the crew for their preference regarding re-embarkation.
Yap received seniority, vacation, extra, and scrapping bonuses but refused the payment of one-month basic wage, insisting on payment for the unexpired portion of his contract, claiming illegal dismissal.
Respondents contended employment was validly terminated by the vessel's sale, and Yap was paid up to November 10, 2001, with no transfer arrangements made.

Yap filed a complaint for Illegal Dismissal with Damages and Attorney's Fees. Later, an amended complaint included other parties such as Capt. Adviento and Vulture Shipping Limited.
Labor Arbiter’s (LA) Decision (July 26, 2004): Found Yap was constructively and illegally dismissed and that respondents acted in bad faith for failing to transfer him to another vessel despite assurances and requirements for re-embarkation; awarded nine months’ back wages ($12,870), moral damages (P100,000), exemplary damages (P50,000), and attorney’s fees (10% total award).
NLRC Decision (January 14, 2005): Affirmed illegal dismissal and bad faith, but reduced back wages award to three months per Section 10 of R.A. No. 8042; other damages and fees affirmed.
Petitioner’s Motion for Partial Reconsideration granted (April 20, 2005): Modified back wage award back to entire unexpired contract period (nine months), reasoning no full year unexpired term to apply the three months per year formula. Other rulings unchanged.
Respondents’ Motion for Reconsideration denied; subsequently, they filed a Rule 65 petition with the Court of Appeals (CA).

CA Decision (February 28, 2007): Affirmed illegal dismissal and bad faith findings, including moral and exemplary damages and attorney’s fees.
CA modified the back wages award limiting it to three months’ salary based on the statute’s phrase “or for three months for every year of the unexpired term, whichever is less,” interpreting the 12-month contract and termination date.
Both parties’ motions for reconsideration denied.
Petitioner filed the instant petition raising constitutional issues against the “three months for every year of the unexpired term, whichever is less” provision of Section 10, R.A. No. 8042.

Petitioner: The three-months cap for OFWs is unconstitutional, violates equal protection clause, and is a source of abuse. He claims entitlement to nine months back wages.
Respondents: Argue Serrano ruling that declared the same provision unconstitutional should not apply retroactively; contend the tanker allowance should be excluded from salary computation; claim overpayment and seek reimbursement.

Whether the clause in Section 10, 5th paragraph of R.A. No. 8042, providing that illegally dismissed migrant workers may be paid “salaries for the unexpired portion of the employment contract or for three (3) months for every year of the unexpired term, whichever is less,” is constitutional.

Assuming the provision is constitutional, whether the CA erred in awarding petitioner only three months’ back wages despite the unexpired term of nine months, which is less than a full year.

Whether the US$130 tanker allowance should be included in the computation of petitioner’s basic salary for back wages.

Whether the findings of illegal dismissal, bad faith, and the award of damages and attorney’s fees were proper.