CLAUDIO YAP vs.

THENAMARIS SHIPS MANAGEMENT and INTERMARE MARITIME

AGENCIES INC
G.R. No. 179532
May 30, 2011

FACTS

Petitioner Claudio Yap was employed as electrician of the vessel, M/T SEASCOUT on
August 14, 2001 by Intermare Maritime Agencies. The employment contract he
entered into was for a duration of 12 months.

On August 23, 2001, Yap boarded the vessel and commenced his job as an electrician.

However, on November 8, 2001, the vessel where he was working was sold. POEA
was informed about the sale on December 6, 2001. Yap, along with other crewmembers,
were informed by the Master of their vessel that the same was sold and will be
scrapped.

Yap received his seniority bonus, vacation bonus, extra bonus along with the scrapping
bonus however he refused to accept the payment of his one-month basic wage:
according to him, he was entitled to the payment of the unexpired portion of his
contract since he was illegally dismissed from the employment. He alleged that he
opted for immediate transfer but none was made.

On the other hand, the Ship management contended that Yap was not illegally dismissed
since following the sale of the vessel, Yap signed off from the vessel on November 10, 2002
and was paid his wages corresponding to the months he worked or until November 10,
2001 plus his bonuses.

Thus, Yap filed a complaint for Illegal Dismissal with damages before the Labor
Arbiter.

Decision of Labor Arbiter:

Labor Arbiter rendered in favor of Yap, finding that he was constructively and
illegally dismissed by respondents. LA found that respondents acted in bad faith when
they assured Yap of re-embarkation and required him to produce an electrician certificate
during the period of his contract, but actually he was not able to board one despite
respondents numerous vessels.
According to the LA, since the unexpired portion of Yaps contract was LESS THAN
ONE YEAR Yap was entitled to his salaries for the UNEXPIRED PORTION OF HIS
CONTRACT for a PERIOD OF 9 MONTHS.

Decision of NLRC:
Affirmed the findings of LA that Yap was indeed constructively and illegally dismissed.
However, NLRC ruled that Yap was only entitled to salaries for 3 MONTHS as provided
under Sec. 10 of RA 8042
A motion for Partial Reconsideration was filed both by Yap and respondents
Affirming the findings of illegal dismissal, NLRC reversed its earlier decision and held
that Yap was entitled to his salary for the UNEXPIRED PORTION OF HIS
EMPLOYMENT CONTRACT for a period of 9 MONTHS.

Decision of Court of Appeals:

CA affirmed the ruling of LA and NLRC that Yap was illegally dismissed.
 However, it revered the NLRC ruling the option of 3 months for every year of the
unexpired term, whichever is less is applicable in this case pursuant to Sec. 10 of
RA 8042.

Note: When this case was pending before the Supreme Court, the Court declared the
UNCONSTITUTIONALITY of the clause or for 3 months for every year of the unexpired
term, whichever is less in Sec. 10 of RA 8042 in the case of Serrano vs Gallant on
March 24, 2009.

Unaware of the Serrano vs Gallant ruling, Yap filed this petition raising the unconstitutionality
of the phrase for 3 months for every year of the unexpired term, whichever is less under Sec.
10, RA 8042:
It violates Art. XIII of the Constitution to the extent that it gives an erring
employer the option to pay an illegally dismissed migrant only 3 months
for every year of the unexpired term of his contract thereby giving lesser
benefit to the migrant worker and has been a source of abuse by callous
employers
It violate the equal protection clause: while illegally dismissed local workers
under the Labor Code are guaranteed reinstatement with full backwages computed
from the time compensation was withheld from them up to their actual
reinstatement, migrant workers, by virtue of Sec. 10, RA 8042, have to waive
9 months of their collectible backwages every time they have a year of
unexpired term of contract to reckon with.

Respondents Arguments:
Aware of the Serrano vs Gallant ruling, PRONOUNCEMENT OF
UNCONSTITUTIONALITY (or for 3 months for every year of the unexpired term,
whichever is less) SHOULD NOT APPLY since Sec. 10 RA 8042 is a substantive law,
not procedural in character, Thus pursuant to the Civil Code, there should be NO
RETROACTIVE APPLICATION of the law in this case.
Petitioners tanker allowance of US$130 should not be included in the computation
of his basic salary invoking the Serrano ruling that TANKER ALLOWANCE SHOULD
BE EXCLUDED FROM THE DEFINITION OF THE TERM Salary. (The CA ruling
included the tanker allowance in computing the lump-sum salary of Yap)

ISSUES

1. WON the clause or for 3 months for every year of the unexpired term, whichever is less under
Sec. 10 (RA 8042) is unconstitutional?
1.1. Is the doctrine of operative fact applicable in this case?
2. WON the tanker allowance should be included in the computation of the basic salary to be
awarded to Yap?
3. What is the proper computation of the lump-sum salary to be awarded to Yap by reason of his
illegal dismissal?
RULING

1. WON the clause or for 3 months for every year of the unexpired term, whichever is less under
Sec. 10 (RA 8042) is unconstitutional?

YES. As already declared in the Serrano ruling, the clause or for 3 months for every year of
the unexpired term, whichever is less under Sec. 10 (RA 8042) is UNCONSTITUTIONAL for
being violative of the OFWs right to equal protection of laws

As held in the Serrano ruling:

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.

Moreover, the subject clause does not state or imply any definitive governmental purpose
hence it violates petitioners right to equal protection and right to substantive due
process.

1.1 Is the doctrine of operative fact applicable in this case?

NO, the doctrine of operative fact is not applicable in this case. As a general
rule, an unconstitutional act is not a law, it confers no rights; imposes no duties; it affords
no protection, it creates no office; it is inoperative as if it has not been passed at all.

However, the doctrine of operative fact is an exception to this general rule:

nullifies the effects of an unconstitutional law by recognizing the existence of a statute
prior to a determination of unconstitutionality is an operative fact and may have
consequences which cannot always be ignored. This doctrine only applies as a matter
of equity and fair play.

In this case, it was NOT THE FAULT OF PETITIONER THAT HE LOST HIS JOB
DUE TO AN ACT OF ILLEGAL DISMISSAL COMMITTED BY RESPONDENTS. To rule
otherwise would be iniquitous to petitioner and other OFWs, and would in effect sent a
wrong signal that principals/employers and recruitment agencies may violate an OFWs
security of tenure which an employment contract embodies and actually profit from such
violation based on an unconstitutional provision of law.

2. WON the tanker allowance should be included in the computation of the basic salary to be
awarded to Yap?

YES. The tanker allowance of US$130 should be included in computing the lump-sum
salary to be awarded to Yap.

2.1 What are included in salary, overtime pay and holiday pay?
SALARIES in Sec. 10(5), RA 8042 does not include overtime and leave pay. For
seafarers like petitioner, DOLE Department Order No. 33, series 1996, provides a Standard
Employment Contract for Seafarers in which salary is understood as BASIC WAGE exclusive
of overtime, leave pay and other bonuses.

OVERTIME PAY compensation for all work performed in excess of the regular 8 hours
HOLIDAY PAY compensation for any work performed on designated rest days and
holidays

In this case, the employment contract reveals that the tanker allowance of US$130
WAS NOT CATEGORIZED AS A BONUS but rather encapsulated in the basic salary
clause, hence forming part of the basic salary of petitioner. Respondents themselves in
their petition for certiorari before the CA averred that petitioners basic salary, pursuant to the
contract, was US$1,300.00 + US$130.00 tanker allowance. If respondents intended it differently,
the contract per se should have indicated that said allowance does not form part of the basic
salary or, simply, the contract should have separated it from the basic salary clause.

3. What is the proper computation of the lump-sum salary to be awarded to Yap by reason of his
illegal dismissal?

Yap is entitled to his salaries for the ENTIRE UNEXPIRED PORTION OF HIS EMPLOYMENT
CONTRACT consisting of 9 months computed at the rate of US$1,430 per month.