Antonio M. Serrano vs. Gallant Maritime Svcs.

G.R. No. 167614

3/24/2009

Facts:
 Serrano was a seafarer. He was hired by Gallant Maritime Svcs and Marlow Navigation Co. under POEA-approved
contract with the following terms:
o 12 months;
o Chief Officer;
o $1,400;
o 48 hours/week
o $700/month OT; and
o Vacation with pay 7 days/month.
 However, on March 19, 1998, his departure date, Serrano was constrained to accept a downgrade employment
contract position as a Second Officer with a $1,000 salary upon the assurance that he would be promoted to his
original position by the end of April 1998.
 Gallant did not deliver on such. Serrano refused to stay as Second Officer and was repatriated on May 26, 1998.
 Serrano’s contract was for 12 months (March 1998-1999) but when he left on May 26, 1998, he only served 2
months and 7 days, leaving an unexpired portion of 9 months and 23 days.
 Serrano filed before the LA for constructive dismissal and payment of money claims worth $26,442.73, as well as
damages, broken down as follows
May 27/31, 1998 (5 days) incl. Leave pay US$ 413.90
June 01/30, 1998 2,590.00
July 01/31, 1998 2,590.00
August 01/31, 1998 2,590.00
Sept. 01/30, 1998 2,590.00
Oct. 01/31, 1998 2,590.00
Nov. 01/30, 1998 2,590.00
Dec. 01/31, 1998 2,590.00
Jan. 01/31, 1999 2,590.00
Feb. 01/28, 1999 2,590.00
Mar. 1/19, 1999 (19 days) incl. leave pay 1,640.00
 The LA declared that Serrano’s dismissal as illegal and was entitled to his monetary claims. It awarded $8,770 which
represented Serrano’s salary of 3 months of the unexpired of the contract. Gallant was also ordered to pay an
additional $45 for Serrano’s salary differential and other fees but denied the damages for lack of merit.
 The LA based his computation for only the 3 months the unexpired contract rather than the whole 9 months. The LA
applied the salary rate of $2,590 which consists of his basic salary, OT and vacation leave pay.
 Gallant appealed to the NLRC regarding Serrano’s illegal dismissal while Serrano appealed to the same for not giving
him his full compensation of the unexpired contract. The NLRC corrected the LA’s computation by reducing the
initial $2,590 award to $1,400 because R.A. No. 8042 does not provide the awarding of OT pay and vacation leave
pay, which should have been actually performed or availed of.
 Serrano filed for a partial MR and questioned the constitutionality R.A. No’s 8042 specific provision which was
denied by the NLRC. Serrano went to the CA to challenge the same. CA initially dismissed it but was given due as
directed by the SC.
 CA affirmed the NLRC ruling on said reduction but was silent on the constitutionality of said statute provision.
 Serrano wanted to withdraw his case as he is old and sickly and wanted to use the money for his treatment.
Serrano’s counsel moved to allow partial execution of the monetary award and the constitutionality be resolved.

Issue:
 Whether the CA and LA/NLRC decided a case in accordance with SC decisions which granted backwages on the
unexpired portion of contracts instead of 3 months
 Whether the same erred in failing to discharge its duty to rule on constitutional issues
 Whether the same erred in excluding his OT and vacation pay as it was under said contract as they form part of his
salary

Serrano’s Contentions:
 Said clause is unconstitutional as it duly impairs the freedom of OFWs to negotiate and stipulate in their contracts to
determine employment periods and salary packages.
 It impinges the equal protection clause as it treats OFWs differently from PH local workers by putting a cap on the
amount of lump-sum salary to w/c OFWs are entitled if they are illegally dismissed while setting limits to the same
monetary award for local workers when their dismissal is declared illegal. There is no substantial distinction between
the two groups.
 It defeats Art. II, Sec. 18 w/c guarantees protection of rights of Filipino workers, here and abroad.
 The CA and LA/NLRC decisions are not in line with SC decisions regarding money claims of illegally dismissed OFWs.
 Said clause is only beneficial to local placement agencies.
 In mitigating the solidary liability of placement agencies, the subject clause sacrifices the well-being of OFWs.
 Violated due process as it deprives him of salaries he is entitled under said contract.

Gallant’s Contentions:
 The constitutionality issue should not be entertained as it was belatedly interposed by Serrano and not the earliest
time.

OSG:
 When said law took effect, it did not impair Serrano’s contract. Having preceded it, the provisions therein are
deemed part of the minimum terms of Serrano’s employment, especially on the money claims.
 OFWs and local workers in terms of nature of employment.
o Local Workers – PH territory; OFWs – foreign territory;
o OFWs are contractual; Local workers can be regularized in PH;
o Local worker have certain rights that OFWs do not have;
o Said clause is a police power measure to mitigate solidary liability of placement agencies as it redounds to the
benefit of migrant workers.

Ruling:
 1st and 2nd issue:
o Judicial review: 1) actual case; 2) locus standi; 3) earliest time; and 4) lis mota.
o There is an actual case as Serrano is aggrieved that the computation is wrong. It is timely as the constitutionality
was raised in his partial MR but to the NLRC not to the CA. Only competent courts can have such jurisdiction. The
monetary claim is subject to the said clause.
 Does the clause in R.A. No. 8042 violate Art. III, Sec. 10 of the Constitution - NO
o Laws newly enacted have only prospective operation and cannot affect perfected contracts. Said provision is
limited to laws about to be enacted. The statute precedes Serrano’s contract hence it cannot be said the said
statute impaired said contract.
o Regardless of the timeline, said law is an exercise of police power to regulate business/profession/calling.
 Does the clause of the same violate Art. III, Sec. 1/Art. II, Sec. 3/Art. XII, Sec. 3 – YES
o The rights guaranteed under said provisions translate to economic security that all monetary benefits be equally
enjoyed by all workers of the same category.
o Such rights are not absolute as it subject to Congress power to incorporate.
  1) Based on substantial distinctions; 2) German to the purposes of law; 3) not limited to existing conditions
only; and 4) equally applied to all members of the class.
o 3 levels of constitutionality of classification embodied in law:
 a) the deferential or rational basis scrutiny in which the challenged classification needs only be shown to be
rationally related to serving a legitimate state interest;
 b) the middle-tier or intermediate scrutiny in which the government must show that the challenged
classification serves an important state interest and that the classification is at least substantially related to
serving that interest; and
 c) strict judicial scrutiny in which a legislative classification which impermissibly interferes with the exercise of a
fundamental right or operates to the peculiar disadvantage of a suspect class is presumed unconstitutional,
and the burden is upon the government to prove that the classification is necessary to achieve a compelling
state interest and that it is the least restrictive means to protect such interest.
o In this case, the said clause reveals is discriminatory against OFWs: 1) OFWs with contracts less than a year vs.
more than a year; 2) OFW vis-a-vi local workers with fixed period.
 Under Section 10 of R.A. No. 8042, a worker dismissed from overseas employment 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.
 In the case at bar, the unexpired portion of private respondent’s employment contract is eight (8) months. Private
respondent should therefore be paid his basic salary corresponding to three (3) months.
 SC concluded 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 State has failed to discharge its burden of proving the existence of a compelling state interest that would justify
the perpetuation of the discrimination against OFWs under the subject clause.
 Assuming that, the purpose of the subject clause is to protect the employment of OFWs by mitigating the solidary
liability of placement agencies, such callous and cavalier rationale will have to be rejected. There can never be a
justification for any form of government action that alleviates the burden of one sector, but imposes the same
burden on another sector, especially when the favored sector is composed of private businesses such as placement
agencies, while the disadvantaged sector is composed of OFWs whose protection no less than the Constitution
commands.
 Ultimately, therefore, Section 3 of Article XIII cannot, on its own, be a source of a positive enforceable right to
stave off the dismissal of an employee for just cause owing to the failure to serve proper notice or hearing.
 Said clause deprives Serrano right to due process as it deprives him of property (monetary benefits) w/o existing
valid governmental purpose.
 Said clause does not guarantee he will be hired in the future. There is no governmental purpose hence violates the
equal protection clause.
 3rd Issue:
o OT and vacation pay is not stipulated in the contract. Salaries do not include such. Salary is understood as basic
wage, exclusive of OT, leave and other pay bonuses.
 WHEREFORE, the Court GRANTS the Petition. 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; 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.
Elements:
Aspects of “Due Process”:
1. Procedural due process – refers to the mode of procedure which government agencies must follow in the
enforcement and application of laws.
2. Substantive due process – prohibition against arbitrary laws.

Note: PROCEDURAL DUE PROCESS:

1. A law which hears before it condemns.
2. Due process of law contemplates notice and opportunity to be heard before judgment is rendered affecting one’s
person or property (Lopez v. Dir. of Lands)
3. Due process depends on circumstances; it varies with the subject matter and the necessities of the situation.

Requisites of PROCEDURAL due process:

For JUDICIAL proceedings: CODE: C J N O H
1. A court or tribunal clothed with judicial power to hear and determine the matter before it.
2. Jurisdiction must be lawfully acquired over the person of the defendant or over the property which is the subject
of the proceedings.
3. The defendant must be given notice and an opportunity to be heard.
4. Judgment must be rendered upon a lawful hearing.

For ADMINISTRATIVE proceedings: CODE: H E D S H I P

1. The right to a hearing, which includes the right to present one’s case and submit evidence in support thereof.
2. The tribunal must consider the evidence presented.
3. The decision must have something to support itself.
4. Evidence supporting the conclusion must be substantial.
5. The decision must be based on the evidence presented at the hearing or at least contained in the record and
disclosed to the parties affected.
6. The tribunal or body or any of its judges must act on its or his own independent consideration of the law and facts
of the controversy, and not simply accept the views of a subordinate in arriving at a decision.
7. The board or body should, in all controversial questions, render its decision in such a manner that the parties to
the proceeding can know the various issues involved and the reasons for the decision rendered.
Note:
1. What is required is not actual hearing, but a real opportunity to be heard.
2. The requirement of due process can be satisfied by subsequent due hearing.
3. Violation of due process: when same person reviews his own decision on appeal.
4. Notice and hearing are required in judicial and quasi-judicial proceedings, but not in the promulgation of general
rule.
For SCHOOL DISCIPLINARY proceedings: CODE: W A In A D P
1. The student must be informed in writing of the nature and cause of any accusation against them.
2. The student shall have the right to answer the charges against him, with the assistance of counsel if desired.
3. The student has the right to be informed of the evidence against him.
4. The student has the right to adduce evidence in his own behalf.
5. The evidence must be duly considered by the investigating committee or official designated by the school
authorities to hear and decide the case.
6. The penalty imposed must be proportionate to the offense.
Note:
1. The school has a contractual obligation to afford its students a fair opportunity to complete the course a student
has enrolled for.
 2. Exceptions:
3. Serious breach of discipline; or
4. Failure to maintain the required academic standard.
5. Proceedings in student disciplinary cases may be summary; cross-examination is not essential

Instances when hearings are NOT necessary:

1. When administrative agencies are exercising their quasi-legislative functions.
2. Abatement of nuisance per se.
3. Granting by courts of provisional remedies.
4. Cases of preventive suspension.
5. Removal of temporary employees in the government service.
6. Issuance of warrants of distraint and/or levy by the BIR Commissioner.
7. Cancellation of the passport of a person charged with a crime.
8. Issuance of sequestration orders (considered a provisional remedy).
9. Judicial order which prevents an accused from travelling abroad in order to maintain the effectivity of the court’s
jurisdiction.
10. Suspension of a bank’s operations by the Monetary Board upon a prima facie finding of liquidity problems in such
bank.
Note:
1. The right to counsel is a very basic requirement of substantive due process and has to be observed even in
administrative and quasi-judicial bodies.
2. The right to appeal is a statutory privilege that may be exercised only in the manner in accordance with law.

Requisites of SUBSTANTIVE due process: CODE: I M

1. The INTERESTS of the public generally, as distinguished from those of a particular class, requires the interference
by the government and
2. The MEANS employed are necessary for the accomplishment of the purpose and not unduly oppressive upon
individuals.

Requirements of a valid ordinance:

1. Must not contravene the Constitution or any statute
2. Must not be unfair or oppressive
3. Must not be partial or discriminatory
4. Must not prohibit, but may regulate trade
5. Must be general and consistent with public policy
6. Must not be unreasonable
When is a law VAGUE?
1. When it lacks COMPREHENSIBLE STANDARDS
2. That men of ordinary intelligence must necessarily GUESS as to its meaning
3. And differ as to its application