ANTONIO M.

SERRANO, Petitioner, 
vs.
GALLANT MARITIME SERVICE, INC. AND MARLOW NAVIGATION CO.,
INC., Respondents.

FACTS:
Antonio Serrano (Serrano for brevity) was a Filipino sea fairer employed as Chief Officer by
Gallant Maritime Services Inc. and Marlow Navigation Co., Inc. (respondents for brevity)
under a 12- month contract with Basic Monthly Salary of US$1400. However, when he
departed on March 19. 1998, Serrano was constrained to accept a downgraded employment
of Second Officer with monthly salary of US$1,000 with the assurance that he would be
made Chief Officer by the end of April 1998. However, respondents failed to keep their
promise so Serrano refused to stay as Second Officer and was repatriated to the Philippines,
having served only 2 months and 7 days for the 12-month contract.

Serrano filed a complaint before the Labor arbiter for constructive dismissal and payment of
money claims (total US$26442.73), moral and exemplary damages, and attorney’s fees.

Further, Antonio Serrano, claims that the 5th paragraph of Section 10, Republic Act (R.A.)
No. 8042 violates the OFWs' constitutional rights in that it impairs the terms of their contract,
deprives them of equal protection and denies them due process.
Section 10, Republic Act (R.A.) No. 8042 provides: Section 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. x x x x

ISSUES:
1) Whether or not the 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. 8402 is
unconstitutional; and

2) Whether or not Serrano is entitled to salaries equivalent of three months of the unexpired
portion or salaries equivalent of the entire nine months and 23 days left of his employment
contract including overtime pay and holiday pay

RULING:
1) The subject clause VIOLATES the Equal Protection Clause and Right of an individual to
due Process (Section 1, Article III), and recognizing their rights as a protected Sector (Section
18, Article II; and Section 3 of Article XIII)

Prior to R.A. 8042, all OFWs who were illegally terminated were subjected to a uniform rule
of monetary benefits computation: basic salary times the entire unexpired portion of their
employment. However, upon the enactment of R.A. 8042, illegally dismissed employees with
unexpired portion of 1 year or more are singled out and subjected to the disadvantageous
monetary award of 3 months of their unexpired portion; as opposed to those illegally
terminated OFWs with unexpired contracts of less than one year who are entitled to their

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salaries for the unexpired period; and illegally dismissed local workers with fixed-term
employment who are not subjected to the 3-cap limitation.

Filipino workers are protected and afforded certain rights under the Constitution subject to
the inherent power of Congress to incorporate a system of classification into its legislation. 

There is a valid classification if the classification is

1.) based on substantial distinction,
2.) germane to the purpose of law,
3) it is not limited to existing conditions; and
4) it applies equally to all members of the class.

There are three levels of scrutiny at which the Court reviews the constitutionality of a
classification embodied in a law:

1.) 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
2.) 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
3.)) 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

Imbued with the same sense of "obligation to afford protection to labor," the Court in the
present case also employs the standard of strict judicial scrutiny, for it perceives in the subject
clause a suspect classification prejudicial to OFWs.

In the present case, the Court, based on the records, found no compelling state interest that
the subject clause may possibly serve.

The Court ruled that the Government 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.

The Court declared the provision unconstitutional clause VIOLATES the Equal Protection

Clause and Right of an individual to due Process (Sec 1, Art III), recognizing their rights as a
protected Sector (Sec 18, Art II; and Section 3 of Article XIII).

Note how the Court approaches the issue applying Section 1, Art III and not solely on the
provisions re the Constitution’s state policy on labor.

This is so because Section 3 of Article XIII is not a self-executing provision and it cannot on
its own, be a source of enforceable right. What it does is recognize labor as a protected
sector; otherwise, it will lead to a broad interpretation would suggest a blanket shield in favor
of labor.

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In declaring the subject clause unconstitutional, the Court reasoned that since the same
deprived Serrano of property and money benefits without an existing valid and definitive
governmental purpose, it violated not only Serrano’s right to equal protection but as well as
his right to substantive due process under (Section1, Article III of the Constitution). Hence,
Serrano is entitled to his salaries for the entire unexpired period.

2) Yes, Serrano is entitled to his salaries, but not the overtime and holiday pay, for the entire
unexpired portion of his employment contract consisting of nine months and 23 days
computed at the rate of US$1,400 per month. The Supreme Court expound that the word
salaries in Section 10 (5) does not include overtime and leave pay. For seafarers like
petitioner, DOLE Department Order No. 33, series of 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. Hence, 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.