Case Summary (G.R. No. L-64204)
Petitioner
Antonio M. Serrano, hired as a Chief Officer but downgraded to Second Officer upon departure, refused to continue service when promised promotion did not materialize and was repatriated after two months, leaving nine months and 23 days unserved on his 12-month contract.
Respondents
Gallant Maritime Services, Inc. and Marlow Navigation Co., Inc., employers under a POEA-approved contract, contended that Section 10(5) of RA 8042 capped Serrano’s monetary award to three months’ salary, as applied by the Labor Arbiter, NLRC, and Court of Appeals.
Key Dates
• Departure and contract commencement: March 19, 1998
• Repatriation and constructive dismissal: May 26, 1998
• Labor Arbiter Decision: July 15, 1999
• NLRC Decision: June 15, 2000
• CA Decision: December 8, 2004 (Resolution: April 1, 2005)
• Supreme Court Decision: March 24, 2009
Applicable Law
• Republic Act No. 8042, Section 10(5) (1987 Constitution applies)
• 1987 Constitution, Article III, Section 1 (due process and equal protection)
• 1987 Constitution, Article II, Section 18; Article XIII, Section 3 (labor as protected sector)
Employment Contract Terms
Twelve-month POEA-approved contract: Chief Officer at US$1,400/month, 48-hour workweek, US$700 fixed overtime, 7 days’ paid vacation per month. Downgraded salary as Second Officer was US$1,000/month.
Circumstances of Dismissal and Claim
Promised promotion did not occur; Serrano refused Second Officer placement and was repatriated. He filed for constructive dismissal, claiming US$26,442.73 for salary differential, unexpired contract salary, placement fee reimbursement, damages, and attorney’s fees.
Labor Arbiter Ruling and Award
Declared dismissal illegal; awarded three months’ unexpired salary at a composite rate of US$2,590/month (US$8,770), salary differential (US$45), and 10% attorney’s fees; denied moral/exemplary damages.
NLRC Decision and Modification
Upheld illegality of dismissal; reduced the monthly salary basis to US$1,400 (basic salary only), awarding US$4,200 for three months, US$45 differential, and US$424.50 attorney’s fees; denied overtime and leave pay under RA 8042.
Court of Appeals Proceedings
Initially dismissed on technicality but later accepted certiorari petition; affirmed NLRC on salary basis reduction; refused to address the constitutional challenge to Section 10(5).
Issues Before the Supreme Court
- Whether Section 10(5)’s cap on money claims impairs contracts, denies equal protection, and violates due process.
- Whether omission of overtime and leave pay in three-month cap calculation is erroneous.
Arguments of Petitioner
• Section 10(5) impermissibly limits OFWs’ contract terms, violates equal protection by treating OFWs less favorably than local workers, and denies due process.
• Jurisprudence prior to RA 8042 uniformly awarded salaries for the entire unexpired contract; post-RA 8042 rulings conflict and should favor full unexpired salaries.
• Clause benefits placement agencies and foreign employers at OFWs’ expense.
Arguments of Respondents
Raised timeliness objection to the constitutional challenge, noting omission before the NLRC precluded review.
Arguments of Solicitor General
• RA 8042 is part of the employment contract executed in 1998 and does not impair obligations under Section 10, Article III.
• OFWs and local workers differ: OFWs are contractual, non-regular employees subject to foreign jurisdictional difficulties; classification of money claims is rational and furthers legitimate state interest in protecting placement agencies and promoting deployment.
Supreme Court’s Jurisdiction and Issue Framing
The Court confirmed jurisdiction, finding the constitutional question timely raised before the Court of Appeals, which has power of judicial review to declare laws unconstitutional; merits of Section 10(5)’s validity stand for review.
Analysis: Non-Impairment of Contracts
RA 8042 preceded Serrano’s 1998 contract; its provisions, including Section 10(5), were read into the contract and did not impair existing obligations. Even if prospective, as a police-power measure to regulate overseas recruitment, RA 8042 validly applies to pre-existing contracts.
Analysis: Equal Protection and Suspect Classification
The Court recognized Section 10(5) treats OFWs with contracts over one year less favorably than those under one year and local workers by capping awards at three months. This disparity lacks substantial distinctions germane to the law’s protective labor purpose
...continue readingCase Syllabus (G.R. No. L-64204)
Facts of the Case
- Antonio M. Serrano, a Filipino seafarer, contracted under a POEA-approved 12-month agreement as Chief Officer at US$1,400/basic, US$700/OT, US$490/vacation leave = US$2,590 per month
- On departure, respondents downgraded him to Second Officer at US$1,000/month, promising promotion by end-April 1998, which never materialized
- Petitioner refused continued service, repatriated on May 26 1998 after 2 months 7 days, leaving 9 months 23 days unexpired
- He filed for constructive dismissal and money claims of US$26,442.73, including unexpired salaries, leave pay, salary differential, moral/exemplary damages, and attorney’s fees
Procedural Background
- Labor Arbiter (July 15 1999) declared dismissal illegal, awarded US$8,770 (3 months at US$2,590) + US$45 differential + 10% attorney’s fees; denied moral/exemplary damages
- NLRC (June 15 2000) affirmed illegality, reduced salary basis to US$1,400, awarded US$4,200 (3 months) + US$45 + 10% fees; denied overtime and leave pay
- Court of Appeals (Dec 8 2004) affirmed NLRC computations, declined to decide constitutional challenge; resolution to deny reconsideration issued April 1 2005
- Serrano filed a Rule 45 petition before the Supreme Court, challenging the constitutionality of the “3 months or unexpired term, whichever is less” clause in Section 10, RA 8042
Issues Presented
- Does the last clause of Section 10, RA 8042 (“salaries for unexpired portion … or for three months for every year of the unexpired term, whichever is less”)
• Impair petitioner’s contract (contract-impairment clause)?
• Violate equal protection (discriminate against OFWs)?
• Deny due process (deprive property without valid purpose)? - Should overtime and vacation leave pay be included in the lump-sum computation?
Petitioner’s Arguments
- The clause reduces OFW entitlement to either full unexpired salary or a capped 3 months × years, whichever is less
- Contracts-impairment: law interferes with freely negotiated terms and fixed salary package
- Equal protection: treats OFWs differently from local workers by capping back wages, without substantial distinction
- Due process: deprives property (contractual back wages) without valid governmental objective
- Jurisprudence conflict: urges this Court to follow decisions awarding full unexpired salaries