G.R. No.

47800, December 2, 1940 FIRST DIVISION

MAXIMO CALALANG, Petitioner, -versus- A. D. WILLIAMS, ET AL., Respondents.

x--------------------------------------------------x
DECISION
LAUREL, J.:

Maximo Calalang, in his capacity as a private citizen and as a taxpayer of Manila, brought before this court this petition for a
writ of prohibition against the respondents, A. D. Williams, as Chairman of the National Traffic Commission; Vicente Fragante,
as Director of Public Works; Sergio Bayan, as Acting Secretary of Public Works and Communications; Eulogio Rodriguez, as
Mayor of the City of Manila; and Juan Dominguez, as Acting Chief of Police of Manila.

It is alleged in the petition that the National Traffic Commission, in its resolution of July 17, 1940, resolved to recommend to
the Director of Public Works and to the Secretary of Public Works and Communications that animal-drawn vehicles be
prohibited from passing along Rosario Street extending from Plaza Calderon de la

Barca to Dasmarias Street, from 7:30 a.m. to 12:30 p.m. and from 1:30 p.m. to 5:30 p.m.; and along Rizal Avenue extending
from the railroad crossing at Antipolo Street to Echague Street, from 7 a.m. to 11 p.m., from a period of one year from the
date of the opening of the Colgante Bridge to traffic; that the Chairman of the National Traffic Commission, on July 18, 1940
recommended to the Director of Public Works the adoption of the measure proposed in the resolution aforementioned, in
pursuance of the provisions of Commonwealth Act No. 548 which authorizes said Director of Public Works, with the approval
of the Secretary of Public Works and Communications, to promulgate rules and regulations to regulate and control the use of
and traffic on national roads; that on August 2, 1940, the Director of Public Works, in his first indorsement to the Secretary of
Public Works and Communications, recommended to the latter the approval of the recommendation made by the Chairman of
the National Traffic Commission as aforesaid, with the modification that the closing of Rizal Avenue to traffic to animal-drawn
vehicles be limited to the portion thereof extending from the railroad crossing at Antipolo Street to Azcarraga Street; that on
August 10, 1940, the Secretary of Public Works and Communications, in his second indorsement addressed to the Director of
Public Works, approved the recommendation of the latter that Rosario Street and Rizal Avenue be closed to traffic of animal-
drawn vehicles, between the points and during the hours as above indicated, for a period of one year from the date of the
opening of the Colgante Bridge to traffic; that the Mayor of Manila and the Acting Chief of Police of Manila have enforced and
caused to be enforced the rules and regulations thus adopted; that as a consequence of such enforcement, all animal-drawn
vehicles are not allowed to pass and pick up passengers in the places above-mentioned to the detriment not only of their
owners but of the riding public as well.

It is contended by the petitioner that Commonwealth Act No. 548 by which the Director of Public Works, with the approval of
the Secretary of Public Works and Communications, is authorized to promulgate rules and regulations for the regulation and
control of the use of and traffic on national roads and streets is unconstitutional because it constitutes an undue delegation
of legislative power. This contention is untenable. As was observed by this court in Rubi vs. Provincial Board of Mindoro (39
Phil, 660, 700), The rule has

nowhere been better stated than in the early Ohio case decided by Judge Ranney, and since followed in a multitude of cases,
namely: The true distinction therefore is between the delegation of power to make the law, which necessarily involves a
discretion as to what it shall be, and conferring an authority or discretion as to its execution, to be exercised under and in
pursuance of the law. The first cannot be done; to the latter no valid objection can be made. (Cincinnati, W. & Z. R. Co. vs.
Commrs. Clinton County, 1 Ohio St., 88.) Discretion, as held by Chief Justice Marshall in Wayman vs. Southard (10 Wheat.,
1) may be committed by the Legislature to an executive department or official. The Legislature may make decisions of
executive departments or subordinate officials thereof, to whom it has committed the execution of certain acts, final on
questions of fact. (U.S. vs. Kinkead, 248 Fed., 141.) The growing tendency in the decisions is to give prominence to the
necessity of the case.

Section 1 of Commonwealth Act No. 548 reads as follows:

SECTION 1. To promote safe transit upon, and avoid obstructions on, roads and streets designated as national roads by acts
of the National Assembly or by executive orders of the President of the Philippines, the Director of Public Works, with the
approval of the Secretary of Public Works and Communications, shall promulgate the necessary rules and regulations to
regulate and control the use of and traffic on such roads and streets. Such rules and regulations, with the approval of the
President, may contain provisions controlling or regulating the construction of buildings or other structures within a reasonable
distance from along the national roads. Such roads may be temporarily closed to any or all classes of traffic by the Director of
Public Works and his duly authorized representatives whenever the condition of the road or the traffic thereon makes such
action necessary or advisable in the public convenience and interest, or for a specified period, with the approval of the
Secretary of Public Works and Communications.
The above provisions of law do not confer legislative power upon the Director of Public Works and the Secretary of Public
Works and Communications. The authority therein conferred upon them and

under which they promulgated the rules and regulations now complained of is not to determine what public policy demands
but merely to carry out the legislative policy laid down by the National Assembly in said Act, to wit, to promote safe transit
upon and avoid obstructions on, roads and streets designated as national roads by acts of the National Assembly or by
executive orders of the President of the Philippines and to close them temporarily to any or all classes of traffic whenever
the condition of the road or the traffic makes such action necessary or advisable in the public convenience and interest. The
delegated power, if at all, therefore, is not the determination of what the law shall be, but merely the ascertainment of the
facts and circumstances upon which the application of said law is to be predicated. To promulgate rules and regulations on
the use of national roads and to determine when and how long a national road should be closed to traffic, in view of the
condition of the road or the traffic thereon and the requirements of public convenience and interest, is an administrative
function which cannot be directly discharged by the National Assembly. It must depend on the discretion of some other
government official to whom is confided the duty of determining whether the proper occasion exists for executing the law.
But it cannot be said that the exercise of such discretion is the making of the law. As was said in Lockes Appeal (72 Pa. 491):
To assert that a law is less than a law, because it is made to depend on a future event or act, is to rob the Legislature of the
power to act wisely for the public welfare whenever a law is passed relating to a state of affairs not yet developed, or to things
future and impossible to fully know. The proper distinction the court said was this: The Legislature cannot delegate its power
to make the law; but it can make a law to delegate a power to determine some fact or state of things upon which the law
makes, or intends to make, its own action depend. To deny this would be to stop the wheels of government. There are many
things upon which wise and useful legislation must depend which cannot be known to the law-making power, and, must,
therefore, be a subject of inquiry and determination outside of the halls of legislation. (Field vs. Clark, 143 U. S. 649, 694;
36 L. Ed. 294.)

In the case of People vs. Rosenthal and Osmea, G.R. Nos. 46076 and 46077, promulgated June 12, 1939, and in Pangasinan
Transportation vs. The Public Service Commission, G.R. No. 47065, promulgated

June 26, 1940, this Court had occasion to observe that the principle of separation of powers has been made to adapt itself to
the complexities of modern governments, giving rise to the adoption, within certain limits, of the principle of subordinate
legislation, not only in the United States and England but in practically all modern governments. Accordingly, with the growing
complexity of modern life, the multiplication of the subjects of governmental regulations, and the increased difficulty of
administering the laws, the rigidity of the theory of separation of governmental powers has, to a large extent, been relaxed
by permitting the delegation of greater powers by the legislative and vesting a larger amount of discretion in administrative
and executive officials, not only in the execution of the laws, but also in the promulgation of certain rules and regulations
calculated to promote public interest.

The petitioner further contends that the rules and regulations promulgated by the respondents pursuant to the provisions of
Commonwealth Act No. 548 constitute an unlawful interference with legitimate business or trade and abridge the right to
personal liberty and freedom of locomotion. Commonwealth Act No. 548 was passed by the National Assembly in the exercise
of the paramount police power of the state.

Said Act, by virtue of which the rules and regulations complained of were promulgated, aims to promote safe transit upon and
avoid obstructions on national roads, in the interest and convenience of the public. In enacting said law, therefore, the National
Assembly was prompted by considerations of public convenience and welfare. It was inspired by a desire to relieve congestion
of traffic. which is, to say the least, a menace to public safety. Public welfare, then, lies at the bottom of the enactment of
said law, and the state in order to promote the general welfare may interfere with personal liberty, with property, and with
business and occupations. Persons and property may be subjected to all kinds of restraints and burdens, in order to secure
the general comfort, health, and prosperity of the state (U.S. vs. Gomez Jesus, 31 Phil., 218). To this fundamental aim of our
Government the rights of the individual are subordinated. Liberty is a blessing without which life is a misery, but liberty should
not be made to prevail over authority because then society will fall into anarchy. Neither should authority be made to prevail
over liberty because then

the individual will fall into slavery. The citizen should achieve the required balance of liberty and authority in his mind through
education and personal discipline, so that there may be established the resultant equilibrium, which means peace and order
and happiness for all. The moment greater authority is conferred upon the government, logically so much is withdrawn from
the residuum of liberty which resides in the people. The paradox lies in the fact that the apparent curtailment of liberty is
precisely the very means of insuring its preservation.

The scope of police power keeps expanding as civilization advances. As was said in the case of Dobbins vs. Los Angeles (195
U.S. 223, 238; 49 L. ed. 169), the right to exercise the police power is a continuing one, and a business lawful today may in
the future, because of the changed situation, the growth of population or other causes, become a menace to the public health
and welfare, and be required to yield to the public good. And in People vs. Pomar (46 Phil., 440), it was observed that
advancing civilization is bringing within the police power of the state today things which were not thought of as being within
such power yesterday. The development of civilization, the rapidly increasing population, the growth of public opinion, with
an increasing desire on the part of the masses and of the government to look after and care for the interests of the individuals
of the state, have brought within the police power many questions for regulation which formerly were not so considered.

The petitioner finally avers that the rules and regulations complained of infringe upon the constitutional precept regarding the
promotion of social justice to insure the well-being and economic security of all the people. The promotion of social justice,
however, is to be achieved not through a mistaken sympathy towards any given group. Social justice is neither communism,
nor despotism, nor atomism, nor anarchy, but the humanization of laws and the equalization of social and economic forces
by the State so that justice in its rational and objectively secular conception may at least be approximated. Social justice
means the promotion of the welfare of all the people, the adoption by the Government of measures calculated to insure
economic stability of all the competent elements of society, through the maintenance of a proper economic and social
equilibrium in the interrelations of the members of the community, constitutionally,

through the adoption of measures legally justifiable, or extra-constitutionally, through the exercise of powers underlying the
existence of all governments on the time-honored principle of salus populi est suprema lex.

Social justice, therefore, must be founded on the recognition of the necessity of interdependence among divers and diverse
units of a society and of the protection that should be equally and evenly extended to all groups as a combined force in our
social and economic life, consistent with the fundamental and paramount objective of the state of promoting the health,
comfort, and quiet of all persons, and of bringing about the greatest good to the greatest number.

IN VIEW OF THE FOREGOING, the Writ of Prohibition Prayed for is hereby denied, with costs against the petitioner. So
ordered.

Avancea, C.J., Imperial, Diaz and Horrilleno, JJ., concur.

G.R. No. 78909 June 30, 1989
MATERNITY CHILDREN'S HOSPITAL, represented by ANTERA L. DORADO, President, petitioner,
vs.
THE HONORABLE SECRETARY OF LABOR AND THE REGIONAL DlRECTOR OF LABOR, REGION X, respondents.

MEDIALDEA, J.:
This is a petition for certiorari seeking the annulment of the Decision of the respondent Secretary of Labor dated September
24, 1986, affirming with modification the Order of respondent Regional Director of Labor, Region X, dated August 4, 1986,
awarding salary differentials and emergency cost of living allowances (ECOLAS) to employees of petitioner, and the Order
denying petitioner's motion for reconsideration dated May 13, 1987, on the ground of grave abuse of discretion.
Petitioner is a semi-government hospital, managed by the Board of Directors of the Cagayan de Oro Women's Club and
Puericulture Center, headed by Mrs. Antera Dorado, as holdover President. The hospital derives its finances from the club
itself as well as from paying patients, averaging 130 per month. It is also partly subsidized by the Philippine Charity
Sweepstakes Office and the Cagayan De Oro City government.
Petitioner has forty-one (41) employees. Aside from salary and living allowances, the employees are given food, but the
amount spent therefor is deducted from their respective salaries (pp. 77-78, Rollo).
On May 23, 1986, ten (10) employees of the petitioner employed in different capacities/positions filed a complaint with the
Office of the Regional Director of Labor and Employment, Region X, for underpayment of their salaries and ECOLAS, which
was docketed as ROX Case No. CW-71-86.
On June 16, 1986, the Regional Director directed two of his Labor Standard and Welfare Officers to inspect the records of
the petitioner to ascertain the truth of the allegations in the complaints (p. 98, Rollo). Payrolls covering the periods of May,
1974, January, 1985, November, 1985 and May, 1986, were duly submitted for inspection.
On July 17, 1986, the Labor Standard and Welfare Officers submitted their report confirming that there was underpayment
of wages and ECOLAs of all the employees by the petitioner, the dispositive portion of which reads:
IN VIEW OF THE FOREGOING, deficiency on wage and ecola as verified and confirmed per review of the
respondent payrolls and interviews with the complainant workers and all other information gathered by the
team, it is respectfully recommended to the Honorable Regional Director, this office, that Antera Dorado,
President be ORDERED to pay the amount of SIX HUNDRED FIFTY FOUR THOUSAND SEVEN HUNDRED
FIFTY SIX & 01/100 (P654,756.01), representing underpayment of wages and ecola to the THIRTY SIX (36)
employees of the said hospital as appearing in the attached Annex "F" worksheets and/or whatever action
equitable under the premises. (p. 99, Rollo)
Based on this inspection report and recommendation, the Regional Director issued an Order dated August 4, 1986, directing
the payment of P723,888.58, representing underpayment of wages and ECOLAs to all the petitioner's employees, the
dispositive portion of which reads:
WHEREFORE, premises considered, respondent Maternity and Children Hospital is hereby ordered to pay the
above-listed complainants the total amount indicated opposite each name, thru this Office within ten (10)
days from receipt thereof. Thenceforth, the respondent hospital is also ordered to pay its
employees/workers the prevailing statutory minimum wage and allowance.
SO ORDERED. (p. 34, Rollo)
Petitioner appealed from this Order to the Minister of Labor and Employment, Hon. Augusto S. Sanchez, who rendered a
Decision on September 24, 1986, modifying the said Order in that deficiency wages and ECOLAs should be computed only
from May 23, 1983 to May 23, 1986, the dispositive portion of which reads:
WHEREFORE, the August 29, 1986 order is hereby MODIFIED in that the deficiency wages and ECOLAs
should only be computed from May 23, 1983 to May 23, 1986. The case is remanded to the Regional
Director, Region X, for recomputation specifying the amounts due each the complainants under each of the
applicable Presidential Decrees. (p. 40, Rollo)
On October 24, 1986, the petitioner filed a motion for reconsideration which was denied by the Secretary of Labor in his
Order dated May 13, 1987, for lack of merit (p. 43 Rollo).
The instant petition questions the all-embracing applicability of the award involving salary differentials and ECOLAS, in that it
covers not only the hospital employees who signed the complaints, but also those (a) who are not signatories to the
complaint, and (b) those who were no longer in the service of the hospital at the time the complaints were filed.
Petitioner likewise maintains that the Order of the respondent Regional Director of Labor, as affirmed with modifications by
respondent Secretary of Labor, does not clearly and distinctly state the facts and the law on which the award was based. In
its "Rejoinder to Comment", petitioner further questions the authority of the Regional Director to award salary differentials
and ECOLAs to private respondents, (relying on the case of Encarnacion vs. Baltazar, G.R. No. L-16883, March 27, 1961, 1
SCRA 860, as authority for raising the additional issue of lack of jurisdiction at any stage of the proceedings, p. 52, Rollo),
alleging that the original and exclusive jurisdiction over money claims is properly lodged in the Labor Arbiter, based on
Article 217, paragraph 3 of the Labor Code.
The primary issue here is whether or not the Regional Director had jurisdiction over the case and if so, the extent of
coverage of any award that should be forthcoming, arising from his visitorial and enforcement powers under Article 128 of
the Labor Code. The matter of whether or not the decision states clearly and distinctly statement of facts as well as the law
upon which it is based, becomes relevant after the issue on jurisdiction has been resolved.
This is a labor standards case, and is governed by Art. 128-b of the Labor Code, as amended by E.O. No. 111. Labor
standards refer to the minimum requirements prescribed by existing laws, rules, and regulations relating to wages, hours of
work, cost of living allowance and other monetary and welfare benefits, including occupational, safety, and health standards
(Section 7, Rule I, Rules on the Disposition of Labor Standards Cases in the Regional Office, dated September 16,
1987). 1 Under the present rules, a Regional Director exercises both visitorial and enforcement power over labor standards
cases, and is therefore empowered to adjudicate money claims, provided there still exists an employer-employee
relationship, and the findings of the regional office is not contested by the employer concerned.
Prior to the promulgation of E.O. No. 111 on December 24, 1986, the Regional Director's authority over money claims was
unclear. The complaint in the present case was filed on May 23, 1986 when E.O. No. 111 was not yet in effect, and the
prevailing view was that stated in the case of Antonio Ong, Sr. vs. Henry M. Parel, et al., G.R. No. 76710, dated December
21, 1987, thus:
. . . the Regional Director, in the exercise of his visitorial and enforcement powers under Article 128 of the
Labor Code, has no authority to award money claims, properly falling within the jurisdiction of the labor
arbiter. . . .
. . . If the inspection results in a finding that the employer has violated certain labor standard laws, then the
regional director must order the necessary rectifications. However, this does not include adjudication of
money claims, clearly within the ambit of the labor arbiter's authority under Article 217 of the Code.
The Ong case relied on the ruling laid down in Zambales Base Metals Inc. vs. The Minister of Labor, et al., (G.R. Nos. 73184-
88, November 26, 1986, 146 SCRA 50) that the "Regional Director was not empowered to share in the original and exclusive
jurisdiction conferred on Labor Arbiters by Article 217."
We believe, however, that even in the absence of E. O. No. 111, Regional Directors already had enforcement powers over
money claims, effective under P.D. No. 850, issued on December 16, 1975, which transferred labor standards cases from
the arbitration system to the enforcement system.
To clarify matters, it is necessary to enumerate a series of rules and provisions of law on the disposition of labor standards
cases.
Prior to the promulgation of PD 850, labor standards cases were an exclusive function of labor arbiters, under Article 216 of
the then Labor Code (PD No. 442, as amended by PD 570-a), which read in part:
Art. 216. Jurisdiction of the Commission. The Commission shall have exclusive appellate jurisdiction over
all cases decided by the Labor Arbiters and compulsory arbitrators.
The Labor Arbiters shall have exclusive jurisdiction to hear and decide the following cases involving all
workers whether agricultural or non-agricultural.
xxx xxx xxx
(c) All money claims of workers, involving non-payment or underpayment of wages,
overtime compensation, separation pay, maternity leave and other money claims arising
from employee-employer relations, except claims for workmen's compensation, social
security and medicare benefits;
(d) Violations of labor standard laws;
xxx xxx xxx
(Emphasis supplied)
The Regional Director exercised visitorial rights only under then Article 127 of the Code as follows:
ART. 127. Visitorial Powers. The Secretary of Labor or his duly authorized representatives, including, but
not restricted, to the labor inspectorate, shall have access to employers' records and premises at any time
of the day or night whenever work is being undertaken therein, and the right to copy therefrom, to question
any employee and investigate any fact, condition or matter which may be necessary to determine violations
or in aid in the enforcement of this Title and of any Wage Order or regulation issued pursuant to this Code.
With the promulgation of PD 850, Regional Directors were given enforcement powers, in addition to visitorial powers. Article
127, as amended, provided in part:
SEC. 10. Article 127 of the Code is hereby amended to read as follows:
Art. 127. Visitorial and enforcement powers.
xxx xxx xxx
(b) The Secretary of Labor or his duly authorized representatives shall have
the power to order and administer, after due notice and
hearing, compliance with the labor standards provisions of this Code based
on the findings of labor regulation officers or industrial safety engineers
made in the course of inspection, and to issue writs of execution to the
appropriate authority for the enforcement of their order.
xxx xxx xxx
Labor Arbiters, on the other hand, lost jurisdiction over labor standards cases. Article 216, as then amended by PD 850,
provided in part:
SEC. 22. Article 216 of the Code is hereby amended to read as follows:
Art. 216. Jurisdiction of Labor Arbiters and the Commission. (a) The Labor Arbiters shall
have exclusive jurisdiction to hear and decide the following cases involving all workers,
whether agricultural or non-agricultural:
xxx xxx xxx
 (3) All money claims of workers involving non-payment or underpayment of
wages, overtime or premium compensation, maternity or service incentive
leave, separation pay and other money claims arising from employer-
employee relations, except claims for employee's compensation, social
security and medicare benefits and as otherwise provided in Article 127 of
this Code.
xxx xxx xxx
(Emphasis supplied)
Under the then Labor Code therefore (PD 442 as amended by PD 570-a, as further amended by PD 850), there were three
adjudicatory units: The Regional Director, the Bureau of Labor Relations and the Labor Arbiter. It became necessary to
clarify and consolidate all governing provisions on jurisdiction into one document. 2 On April 23, 1976, MOLE Policy
Instructions No. 6 was issued, and provides in part (on labor standards cases) as follows:
POLICY INSTRUCTIONS NO. 6
TO: All Concerned
SUBJECT: DISTRIBUTION OF JURISDICTION OVER LABOR CASES
xxx xxx xxx
1. The following cases are under the exclusive original jurisdiction of the Regional Director.
a) Labor standards cases arising from violations of labor standard
laws discovered in the course of inspection or complaints where employer-
employee relations still exist;
xxx xxx xxx
2. The following cases are under the exclusive original jurisdiction of the Conciliation
Section of the Regional Office:
a) Labor standards cases where employer-employee relations no longer
exist;
xxx xxx xxx
6. The following cases are certifiable to the Labor Arbiters:
a) Cases not settled by the Conciliation Section of the Regional Office,
namely:
1) labor standard cases where employer-employee relations no longer
exist;
xxx xxx xxx
(Emphasis supplied)
MOLE Policy Instructions No. 7 (undated) was likewise subsequently issued, enunciating the rationale for, and the scope of,
the enforcement power of the Regional Director, the first and second paragraphs of which provide as follows:
POLICY INSTRUCTIONS NO. 7
TO: All Regional Directors
SUBJECT: LABOR STANDARDS CASES
Under PD 850, labor standards cases have been taken from the arbitration system and placed under the
enforcement system, except where a) questions of law are involved as determined by the Regional Director,
b) the amount involved exceeds P100,000.00 or over 40% of the equity of the employer, whichever is
lower, c) the case requires evidentiary matters not disclosed or verified in the normal course of inspection,
or d) there is no more employer-employee relationship.
The purpose is clear: to assure the worker the rights and benefits due to him under labor standards
laws without having to go through arbitration. The worker need not litigate to get what legally belongs to
him. The whole enforcement machinery of the Department of Labor exists to insure its expeditious delivery
to him free of charge. (Emphasis supplied)
Under the foregoing, a complaining employee who was denied his rights and benefits due him under labor standards law
need not litigate. The Regional Director, by virtue of his enforcement power, assured "expeditious delivery to him of his
rights and benefits free of charge", provided of course, he was still in the employ of the firm.
After PD 850, Article 216 underwent a series of amendments (aside from being re-numbered as Article 217) and with it a
corresponding change in the jurisdiction of, and supervision over, the Labor Arbiters:
1. PD 1367 (5-1-78) gave Labor Arbiters exclusive jurisdiction over unresolved issues in
collective bargaining, etc., and those cases arising from employer-employee relations duly
indorsed by the Regional Directors. (It also removed his jurisdiction over moral or other
damages) In other words, the Labor Arbiter entertained cases certified to him. (Article 228,
1978 Labor Code.)
2. PD 1391 (5-29-78) all regional units of the National Labor Relations Commission
(NLRC) were integrated into the Regional Offices Proper of the Ministry of Labor; effectively
transferring direct administrative control and supervision over the Arbitration Branch to the
Director of the Regional Office of the Ministry of Labor. "Conciliable cases" which were thus
previously under the jurisdiction of the defunct Conciliation Section of the Regional Office
for purposes of conciliation or amicable settlement, became immediately assignable to the
Arbitration Branch for joint conciliation and compulsory arbitration. In addition, the Labor
 Arbiter had jurisdiction even over termination and labor-standards cases that may be
assigned to them for compulsory arbitration by the Director of the Regional Office. PD 1391
merged conciliation and compulsory arbitration functions in the person of the Labor Arbiter.
The procedure governing the disposition of cases at the Arbitration Branch paralleled those
in the Special Task Force and Field Services Division, with one major exception: the Labor
Arbiter exercised full and untrammelled authority in the disposition of the case, particularly
in the substantive aspect, his decisions and orders subject to review only on appeal to the
NLRC. 3
3. MOLE Policy Instructions No. 37 Because of the seemingly overlapping functions as a
result of PD 1391, MOLE Policy Instructions No. 37 was issued on October 7, 1978, and
provided in part:
POLICY INSTRUCTIONS NO. 37
TO: All Concerned
SUBJECT: ASSIGNMENT OF CASES TO LABOR ARBITERS
Pursuant to the provisions of Presidential Decree No. 1391 and to insure speedy disposition
of labor cases, the following guidelines are hereby established for the information and
guidance of all concerned.
1. Conciliable Cases.
Cases which are conciliable per se i.e., (a) labor standards cases where employer-employee
relationship no longer exists; (b) cases involving deadlock in collective bargaining, except
those falling under P.D. 823, as amended; (c) unfair labor practice cases; and (d) overseas
employment cases, except those involving overseas seamen, shall be assigned by the
Regional Director to the Labor Arbiter for conciliation and arbitration without coursing them
through the conciliation section of the Regional Office.
2. Labor Standards Cases.
Cases involving violation of labor standards laws where employer- employee
relationship still exists shall be assigned to the Labor Arbiters where:
a) intricate questions of law are involved; or
b) evidentiary matters not disclosed or verified in the normal course of
inspection by labor regulations officers are required for their proper
disposition.
3. Disposition of Cases.
When a case is assigned to a Labor Arbiter, all issues raised therein shall be resolved by
him including those which are originally cognizable by the Regional Director to avoid
multiplicity of proceedings. In other words, the whole case, and not merely issues involved
therein, shall be assigned to and resolved by him.
xxx xxx xxx
(Emphasis supplied)
4. PD 1691(5-1-80) original and exclusive jurisdiction over unresolved issues in collective
bargaining and money claims, which includes moral or other damages.
Despite the original and exclusive jurisdiction of labor arbiters over money claims, however, the Regional
Director nonetheless retained his enforcement power, and remained empowered to
adjudicate uncontested money claims.
5. BP 130 (8-21-8l) strengthened voluntary arbitration. The decree also returned the
Labor Arbiters as part of the NLRC, operating as Arbitration Branch thereof.
6. BP 227(6-1- 82) original and exclusive jurisdiction over questions involving legality of
strikes and lock-outs.
The present petition questions the authority of the Regional Director to issue the Order, dated August 4, 1986, on the basis
of his visitorial and enforcement powers under Article 128 (formerly Article 127) of the present Labor Code. It is contended
that based on the rulings in the Ong vs. Parel (supra) and the Zambales Base Metals, Inc. vs. TheMinister of Labor
(supra) cases, a Regional Director is precluded from adjudicating money claims on the ground that this is an exclusive
function of the Labor Arbiter under Article 217 of the present Code.
On August 4, 1986, when the order was issued, Article 128(b) 4 read as follows:
(b) The Minister of Labor or his duly authorized representatives shall have the power to
order and administer, after due notice and hearing, compliance with the labor standards
provisions of this Code based on the findings of labor regulation officers or industrial safety
engineers made in the course of inspection, and to issue writs of execution to the
appropriate authority for the enforcement of their order, except in cases where the
employer contests the findings of the labor regulations officer and raises issues which
cannot be resolved without considering evidentiary matters that are not verifiable in the
normal course of inspection. (Emphasis supplied)
On the other hand, Article 217 of the Labor Code as amended by P.D. 1691, effective May 1, 1980; Batas Pambansa Blg.
130, effective August 21, 1981; and Batas Pambansa Blg. 227, effective June 1, 1982, inter alia, provides:
 ART. 217. Jurisdiction of Labor Arbiters and the Commission. (a) The Labor Arbiters shall have
the original and exclusive jurisdiction to hear and decide within thirty (30) working days after submission of
the case by the parties for decision, the following cases involving all workers, whether agricultural or non-
agricultural:
1. Unfair labor practice cases;
2. Those that workers may file involving wages, hours of work and other terms and
conditions of employment;
3. All money claims of workers, including those based on non-payment or underpayment of
wages, overtime compensation, separation pay and other benefits provided by law or
appropriate agreement, except claims for employees' compensation, social security,
medicare and maternity benefits;
4. Cases involving household services; and
5. Cases arising from any violation of Article 265 of this Code, including questions involving
the legality of strikes and lock-outs. (Emphasis supplied)
The Ong and Zambales cases involved workers who were still connected with the company. However, in the Ong case, the
employer disputed the adequacy of the evidentiary foundation (employees' affidavits) of the findings of the labor standards
inspectors while in the Zambales case, the money claims which arose from alleged violations of labor standards provisions
were not discovered in the course of normal inspection. Thus, the provisions of MOLE Policy Instructions Nos. 6,
(Distribution of Jurisdiction Over Labor Cases) and 37 (Assignment of Cases to Labor Arbiters) giving Regional Directors
adjudicatory powers over uncontested money claims discovered in the course of normal inspection, provided an employer-
employee relationship still exists, are inapplicable.
In the present case, petitioner admitted the charge of underpayment of wages to workers still in its employ; in fact, it
pleaded for time to raise funds to satisfy its obligation. There was thus no contest against the findings of the labor
inspectors.
Barely less than a month after the promulgation on November 26, 1986 of the Zambales Base Metals case, Executive Order
No. 111 was issued on December 24, 1986, 5 amending Article 128(b) of the Labor Code, to read as follows:
(b) THE PROVISIONS OF ARTICLE 217 OF THIS CODE TO THE CONTRARY
NOTWITHSTANDING AND IN CASES WHERE THE RELATIONSHIP OF EMPLOYER-
EMPLOYEE STILL EXISTS, the Minister of Labor and Employment or his duly authorized
representatives shall have the power to order and administer, after due notice and hearing,
compliance with the labor standards provisions of this Code AND OTHER LABOR
LEGISLATION based on the findings of labor regulation officers or industrial safety
engineers made in the course of inspection, and to issue writs of execution to the
appropriate authority for the enforcement of their orders, except in cases where the
employer contests the findings of the labor regulation officer and raises issues which cannot
be resolved without considering evidentiary matters that are not verifiable in the normal
course of inspection. (Emphasis supplied)
As seen from the foregoing, EO 111 authorizes a Regional Director to order compliance by an employer with labor standards
provisions of the Labor Code and other legislation. It is Our considered opinion however, that the inclusion of the phrase, "
The provisions of Article 217 of this Code to the contrary notwithstanding and in cases where the relationship of employer-
employee still exists" ... in Article 128(b), as amended, above-cited, merely confirms/reiterates the enforcement adjudication
authority of the Regional Director over uncontested money claims in cases where an employer-employee relationship still
exists. 6
Viewed in the light of PD 850 and read in coordination with MOLE Policy Instructions Nos. 6, 7 and 37, it is clear that it has
always been the intention of our labor authorities to provide our workers immediate access (when still feasible, as where an
employer-employee relationship still exists) to their rights and benefits, without being inconvenienced by
arbitration/litigation processes that prove to be not only nerve-wracking, but financially burdensome in the long run.
Note further the second paragraph of Policy Instructions No. 7 indicating that the transfer of labor standards cases from the
arbitration system to the enforcement system is
. . to assure the workers the rights and benefits due to him under labor standard laws, without having to go
through arbitration. . .
so that
. . the workers would not litigate to get what legally belongs to him. .. ensuring delivery . . free of charge.
Social justice legislation, to be truly meaningful and rewarding to our workers, must not be hampered in its application by
long-winded arbitration and litigation. Rights must be asserted and benefits received with the least inconvenience. Labor
laws are meant to promote, not defeat, social justice.
This view is in consonance with the present "Rules on the Disposition of Labor Standard Cases in the Regional Offices
" 7 issued by the Secretary of Labor, Franklin M. Drilon on September 16, 1987.
Thus, Sections 2 and 3 of Rule II on "Money Claims Arising from Complaint Routine Inspection", provide as follows:
Section 2. Complaint inspection. All such complaints shall immediately be forwarded to the Regional
Director who shall refer the case to the appropriate unit in the Regional Office for assignment to a Labor
Standards and Welfare Officer (LSWO) for field inspection. When the field inspection does not produce the
desired results, the Regional Director shall summon the parties for summary investigation to expedite the
disposition of the case. . . .
 Section 3. Complaints where no employer-employee relationship actually exists. Where employer-
employee relationship no longer exists by reason of the fact that it has already been severed, claims for
payment of monetary benefits fall within the exclusive and original jurisdiction of the labor arbiters . . . .
(Emphasis supplied)
Likewise, it is also clear that the limitation embodied in MOLE Policy Instructions No. 7 to amounts not exceeding
P100,000.00 has been dispensed with, in view of the following provisions of pars. (b) and (c), Section 7 on "Restitution", the
same Rules, thus:
xxx xxx xxx
(b) Plant-level restitutions may be effected for money claims not exceeding Fifty Thousand
(P50,000.00). . . .
(c) Restitutions in excess of the aforementioned amount shall be effected at the Regional
Office or at the worksite subject to the prior approval of the Regional Director.
which indicate the intention to empower the Regional Director to award money claims in excess of P100,000.00; provided of
course the employer does not contest the findings made, based on the provisions of Section 8 thereof:
Section 8. Compromise agreement. Should the parties arrive at an agreement as to the whole or part of
the dispute, said agreement shall be reduced in writing and signed by the parties in the presence of the
Regional Director or his duly authorized representative.
E.O. No. 111 was issued on December 24, 1986 or three (3) months after the promulgation of the Secretary of Labor's
decision upholding private respondents' salary differentials and ECOLAs on September 24, 1986. The amendment of the
visitorial and enforcement powers of the Regional Director (Article 128-b) by said E.O. 111 reflects the intention enunciated
in Policy Instructions Nos. 6 and 37 to empower the Regional Directors to resolve uncontested money claims in cases where
an employer-employee relationship still exists. This intention must be given weight and entitled to great respect. As held
in Progressive Workers' Union, et. al. vs. F.P. Aguas, et. al. G.R. No. 59711-12, May 29, 1985, 150 SCRA 429:
. . The interpretation by officers of laws which are entrusted to their administration is entitled to great
respect. We see no reason to detract from this rudimentary rule in administrative law, particularly when
later events have proved said interpretation to be in accord with the legislative intent. ..
The proceedings before the Regional Director must, perforce, be upheld on the basis of Article 128(b) as amended by E.O.
No. 111, dated December 24, 1986, this executive order "to be considered in the nature of a curative statute with
retrospective application." (Progressive Workers' Union, et al. vs. Hon. F.P. Aguas, et al. ( Supra); M. Garcia vs. Judge A.
Martinez, et al., G.R. No. L- 47629, May 28, 1979, 90 SCRA 331).
We now come to the question of whether or not the Regional Director erred in extending the award to all hospital
employees. We answer in the affirmative.
The Regional Director correctly applied the award with respect to those employees who signed the complaint, as well as
those who did not sign the complaint, but were still connected with the hospital at the time the complaint was filed (See
Order, p. 33 dated August 4, 1986 of the Regional Director, Pedrito de Susi, p. 33, Rollo).
The justification for the award to this group of employees who were not signatories to the complaint is that the visitorial and
enforcement powers given to the Secretary of Labor is relevant to, and exercisable over establishments, not over the
individual members/employees, because what is sought to be achieved by its exercise is the observance of, and/or
compliance by, such firm/establishment with the labor standards regulations. Necessarily, in case of an award resulting from
a violation of labor legislation by such establishment, the entire members/employees should benefit therefrom. As aptly
stated by then Minister of Labor Augusto S. Sanchez:
. . It would be highly derogatory to the rights of the workers, if after categorically finding the respondent
hospital guilty of underpayment of wages and ECOLAs, we limit the award to only those who signed the
complaint to the exclusion of the majority of the workers who are similarly situated. Indeed, this would be
not only render the enforcement power of the Minister of Labor and Employment nugatory, but would be
the pinnacle of injustice considering that it would not only discriminate but also deprive them of legislated
benefits.
. . . (pp. 38-39, Rollo).
This view is further bolstered by the provisions of Sec. 6, Rule II of the "Rules on the Disposition of Labor Standards cases in
the Regional Offices" (supra) presently enforced, viz:
SECTION 6. Coverage of complaint inspection. A complaint inspection shall not be limited to the specific
allegations or violations raised by the complainants/workers but shall be a thorough inquiry into and
verification of the compliance by employer with existing labor standards and shall cover all workers similarly
situated. (Emphasis supplied)
However, there is no legal justification for the award in favor of those employees who were no longer connected with the
hospital at the time the complaint was filed, having resigned therefrom in 1984, viz:
1. Jean (Joan) Venzon (See Order, p. 33, Rollo)
2. Rosario Paclijan
3. Adela Peralta
4. Mauricio Nagales
5. Consesa Bautista
6. Teresita Agcopra
7. Felix Monleon
8. Teresita Salvador
 9. Edgar Cataluna; and
10. Raymond Manija ( p.7, Rollo)
The enforcement power of the Regional Director cannot legally be upheld in cases of separated employees. Article 129 of
the Labor Code, cited by petitioner (p. 54, Rollo) is not applicable as said article is in aid of the enforcement power of the
Regional Director; hence, not applicable where the employee seeking to be paid underpayment of wages is already
separated from the service. His claim is purely a money claim that has to be the subject of arbitration proceedings and
therefore within the original and exclusive jurisdiction of the Labor Arbiter.
Petitioner has likewise questioned the order dated August 4, 1986 of the Regional Director in that it does not clearly and
distinctly state the facts and the law on which the award is based.
We invite attention to the Minister of Labor's ruling thereon, as follows:
Finally, the respondent hospital assails the order under appeal as null and void because it does not clearly
and distinctly state the facts and the law on which the awards were based. Contrary to the pretensions of
the respondent hospital, we have carefully reviewed the order on appeal and we found that the same
contains a brief statement of the (a) facts of the case; (b) issues involved; (c) applicable laws; (d)
conclusions and the reasons therefor; (e) specific remedy granted (amount awarded). (p. 40, Rollo)
ACCORDINGLY, this petition should be dismissed, as it is hereby DISMISSED, as regards all persons still employed in the
Hospital at the time of the filing of the complaint, but GRANTED as regards those employees no longer employed at that
time.
SO ORDERED.
Fernan, C.J., Narvasa, Gutierrez, Jr., Cruz, Paras, Feliciano, Gancayco, Padilla, Bidin, Cortes, Grio-Aquino and Regalado, JJ.,
concur.

Separate Opinions
SARMIENTO, J., concurring:
Subject to my opinion in G.R. Nos. 82805 and 83205.
MELENCIO-HERRERA, J., concurring:
I concur, with the observation that even as reconciled, it would seem inevitable to state that the conclusion in the Zambales and Ong
cases that, prior to Executive Order No. 111, Regional Directors were not empowered to share the original and exclusive jurisdiction
conferred on Labor Arbiters over money claims, is now deemed modified, if not superseded.
It may not be amiss to state either that under Section 2, Republic Act No. 6715, which amends further the Labor Code of the Philippines
(PD No. 442), Regional Directors have also been granted adjudicative powers, albeit limited, over monetary claims and benefits of
workers, thereby settling any ambiguity on the matter. Thus:
SEC. 2. Article 129 of the Labor Code of the Philippines, as amended, is hereby further amended to read as follows:
Art. 129. Recovery of wages, simple money claims and other benefits. Upon complaint of any
interested party, the Regional Director of the Department of Labor and Employment or any of the duly
authorized hearing officers of the Department is empowered, through summary proceeding and after
due notice, to hear and decide any matter involving the recovery of wages and other monetary claims
and benefits, including legal interest, owing to an employee or person employed in domestic or
household service or househelper under this Code, arising from employer-employee relations:
Provided, That such complaint does not include a claim for reinstatement: Provided, further, That the
aggregate money claims of each employee or househelper do not exceed five thousand pesos
(P5,000.00). The Regional Director or hearing officer shall decide or resolve the complaint within thirty
(30) calendar days from the date of the filing of the same. ...

Separate Opinions
SARMIENTO, J., concurring:
Subject to my opinion in G.R. Nos. 82805 and 83205.
MELENCIO-HERRERA, J., concurring:
I concur, with the observation that even as reconciled, it would seem inevitable to state that the conclusion in the Zambales and Ong
cases that, prior to Executive Order No. 111, Regional Directors were not empowered to share the original and exclusive jurisdiction
conferred on Labor Arbiters over money claims, is now deemed modified, if not superseded.
It may not be amiss to state either that under Section 2, Republic Act No. 6715, which amends further the Labor Code of the Philippines
(PD No. 442), Regional Directors have also been granted adjudicative powers, albeit limited, over monetary claims and benefits of
workers, thereby settling any ambiguity on the matter. Thus:
SEC. 2. Article 129 of the Labor Code of the Philippines, as amended, is hereby further amended to read as follows:
Art. 129. Recovery of wages, simple money claims and other benefits. Upon complaint of any
interested party, the Regional Director of the Department of Labor and Employment or any of the duly
authorized hearing officers of the Department is empowered, through summary proceeding and after
due notice, to hear and decide any matter involving the recovery of wages and other monetary claims
and benefits, including legal interest, owing to an employee or person employed in domestic or
household service or househelper under this Code, arising from employer-employee relations:
Provided, That such complaint does not include a claim for reinstatement: Provided, further, That the
aggregate money claims of each employee or househelper do not exceed five thousand pesos
(P5,000.00). The Regional Director or hearing officer shall decide or resolve the complaint within thirty
(30) calendar days from the date of the filing of the same. ...
G.R. No. 174585
FEDERICO M. LEDESMA, JR., Petitioner, - versus - NATIONAL LABOR RELATIONS COMMISSION (NLRC-SECOND DIVISION)
HONS. RAUL T. AQUINO, VICTORIANO R. CALAYCAY and ANGELITA A. GACUTAN ARE THE COMMISSIONERS, PHILIPPINE
NAUTICAL TRAINING INC., ATTY. HERNANI FABIA, RICKY TY, PABLO MANOLO, C. DE LEON and TREENA CUEVA,
Respondents

October 19, 2007

x- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -x

DECISION

CHICO-NAZARIO, J.:

This a Petition for Review on Certiorari under Rule 45 of the Revised Rules of Court, filed by petitioner Federico Ledesma, Jr.,
seeking to reverse and set aside the Decision,[1]dated 28 May 2005, and the Resolution,[2] dated 7 September 2006, of the
Court of Appeals in CA-G.R. SP No. 79724. The appellate court, in its assailed Decision and Resolution, affirmed the Decision
dated 15 April 2003, and Resolution dated 9 June 2003, of the National Labor Relations Commission (NLRC), dismissing
petitioners complaint for illegal dismissal and ordering the private respondent Philippine National Training Institute (PNTI) to
reinstate petitioner to his former position without loss of seniority rights.

The factual and procedural antecedents of the instant petition are as follows:

On 4 December 1998, petitioner was employed as a bus/service driver by the private respondent on probationary
basis, as evidenced by his appointment.[3] As such, he was required to report at private respondents training site
in Dasmarias, Cavite, under the direct supervision of its site administrator, Pablo Manolo de Leon (de Leon).[4]

On 11 November 2000, petitioner filed a complaint against de Leon for allegedly abusing his authority as site
administrator by using the private respondents vehicles and other facilities for personal ends. In the same complaint, petitioner
also accused de Leon of immoral conduct allegedly carried out within the private respondents premises. A copy of the complaint
was duly received by private respondents Chief Accountant, Nita Azarcon (Azarcon).[5]

On 27 November 2000, de Leon filed a written report against the petitioner addressed to private respondents Vice-
President for Administration, Ricky Ty (Ty), citing his suspected drug use.

In view of de Leons report, private respondents Human Resource Manager, Trina Cueva (HR Manager Cueva), on 29
November 2000, served a copy of a Notice to petitioner requiring him to explain within 24 hours why no disciplinary action
should be imposed on him for allegedly violating Section 14, Article IV of the private respondents Code of Conduct. [6]

On 3 December 2000, petitioner filed a complaint for illegal dismissal against private respondent before the Labor
Arbiter.

In his Position Paper,[7] petitioner averred that in view of the complaint he filed against de Leon for his abusive conduct
as site administrator, the latter retaliated by falsely accusing petitioner as a drug user. VP for Administration Ty, however,
instead of verifying the veracity of de Leons report, readily believed his allegations and together with HR Manager Cueva,
verbally dismissed petitioner from service on 29 November 2000.

Petitioner alleged that he was asked to report at private respondents main office in Espaa, Manila, on 29 November
2000. There, petitioner was served by HR Manager Cuevaa copy of the Notice to Explain together with the copy of de Leons
report citing his suspected drug use. After he was made to receive the copies of the said notice and report, HR
Manager Cueva went inside the office of VP for Administration Ty. After a while, HR Manager Cueva came out of the office
with VP for Administration Ty. To petitioners surprise, HR Manager Cueva took back the earlier Notice to Explain given to him
and flatly declared that there was no more need for the petitioner to explain since his drug test result revealed that he was
positive for drugs. When petitioner, however, asked for a copy of the said drug test result, HR Manager Cueva told him that
it was with the companys president, but she would also later claim that the drug test result was already with the proper
authorities at Camp Crame.[8]

Petitioner was then asked by HR Manager Cueva to sign a resignation letter and also remarked that whether or not
petitioner would resign willingly, he was no longer considered an employee of private respondent. All these events transpired
in the presence of VP for Administration Ty, who even convinced petitioner to just voluntarily resign with the assurance that
he would still be given separation pay. Petitioner did not yet sign the resignation letter replying that he needed time to think
over the offers. When petitioner went back to private respondents training site in Dasmarias, Cavite, to get his bicycle, he was
no longer allowed by the guard to enter the premises. [9]

On the following day, petitioner immediately went to St. Dominic Medical Center for a drug test and he was found
negative for any drug substance. With his drug result on hand, petitioner went back to private respondents main office
in Manila to talk to VP for Administration Ty and HR Manager Cueva and to show to them his drug test result.Petitioner then
told VP for Administration Ty and HR Manager Cueva that since his drug test proved that he was not guilty of the drug use
charge against him, he decided to continue to work for the private respondent.[10]

On 2 December 2000, petitioner reported for work but he was no longer allowed to enter the training site for he was
allegedly banned therefrom according to the guard on duty. This incident prompted the petitioner to file the complaint for
illegal dismissal against the private respondent before the Labor Arbiter.

For its part, private respondent countered that petitioner was never dismissed from employment but merely served a
Notice to Explain why no disciplinary action should be filed against him in view of his superiors report that he was suspected
of using illegal drugs. Instead of filing an answer to the said notice, however, petitioner prematurely lodged a complaint for
illegal dismissal against private respondent before the Labor Arbiter. [11]

Private respondent likewise denied petitioners allegations that it banned the latter from entering private respondents
premises. Rather, it was petitioner who failed or refused to report to work after he was made to explain his alleged drug
use. Indeed, on 3 December 2000, petitioner was able to claim at the training site his salary for the period of 16-30 November
2000, as evidenced by a copy of the pay voucher bearing petitioners signature. Petitioners accusation that he was no longer
allowed to enter the training site was further belied by the fact that he was able to claim his 13 th month pay thereat on 9
December 2000, supported by a copy of the pay voucher signed by petitioner. [12]

On 26 July 2002, the Labor Arbiter rendered a Decision, [13] in favor of the petitioner declaring illegal his separation
from employment. The Labor Arbiter, however, did not order petitioners reinstatement for the same was no longer practical,
and only directed private respondent to pay petitioner backwages. The dispositive portion of the Labor Arbiters Decision reads:

WHEREFORE, premises considered, the dismissal of the [petitioner] is herein declared to be

illegal. [Private respondent] is directed to pay the complainant backwages and separation pay in the total
amount of One Hundred Eighty Four Thousand Eight Hundred Sixty One Pesos and Fifty Three Centavos
(P184, 861.53).[14]

Both parties questioned the Labor Arbiters Decision before the NLRC. Petitioner assailed the portion of the Labor
Arbiters Decision denying his prayer for reinstatement, and arguing that the doctrine of strained relations is applied only to
confidential employees and his position as a driver was not covered by such prohibition. [15] On the other hand, private
respondent controverted the Labor Arbiters finding that petitioner was illegally dismissed from employment, and insisted that
petitioner was never dismissed from his job but failed to report to work after he was asked to explain regarding his suspected
drug use.[16]

On 15 April 2003, the NLRC granted the appeal raised by both parties and reversed the Labor Arbiters Decision. [17] The
NLRC declared that petitioner failed to establish the fact of dismissal for his claim that he was banned from entering the
training site was rendered impossible by the fact that he was able to subsequently claim his salary and 13 thmonth
pay. Petitioners claim for reinstatement was, however, granted by the NLRC. The decretal part of the NLRC Decision reads:

WHEREFORE, premises considered, the decision under review is, hereby REVERSED and SET ASIDE,
and another entered, DISMISSING the complaint for lack of merit.

[Petitioner] is however, ordered REINSTATED to his former position without loss of seniority rights,
but WITHOUT BACKWAGES.[18]

The Motion for Reconsideration filed by petitioner was likewise denied by the NLRC in its Resolution dated 29 August
2003.[19]

The Court of Appeals dismissed petitioners Petition for Certiorari under Rule 65 of the Revised Rules of Court, and
affirmed the NLRC Decision giving more credence to private respondents stance that petitioner was not dismissed from
employment, as it is more in accord with the evidence on record and the attendant circumstances of the instant
case.[20] Similarly ill-fated was petitioners Motion for Reconsideration, which was denied by the Court of Appeals in its
Resolution issued on 7 September 2006. [21]

Hence, this instant Petition for Review on Certiorari[22] under Rule 45 of the Revised Rules of Court, filed by petitioner
assailing the foregoing Court of Appeals Decision and Resolution on the following grounds:

I.

WHETHER, THE HON. COURT OF APPEALS COMMITTED A MISAPPREHENSION OF FACTS, AND THE
ASSAILED DECISION IS NOT SUPPORTED BY THE EVIDENCE ON RECORD. PETITIONERS DISMISSAL WAS
ESTABLISHED BY THE UNCONTRADICTED EVIDENCES ON RECORD, WHICH WERE MISAPPRECIATED BY
 PUBLIC RESPONDENT NLRC, AND HAD THESE BEEN CONSIDERED THE INEVITABLE CONCLUSION WOULD
BE THE AFFIRMATION OF THE LABOR ARBITERS DECISION FINDING ILLEGAL DISMISSAL

II.

WHETHER, THE HON. COURT OF APPEALS SUBVERTED DUE PROCESS OF LAW WHEN IT DID NOT CONSIDER
THE EVIDENCE ON RECORD SHOWING THAT THERE WAS NO JUST CAUSE FOR DISMISSAL AS PETITIONER
IS NOT A DRUG USER AND THERE IS NO EVIDENCE TO SUPPORT THIS GROUND FOR DISMISSAL.

III.

WHETHER, THE HON. COURT OF APPEALS COMMITTED REVERSIBLE ERROR OF LAW IN NOT FINDING THAT
RESPONDENTS SUBVERTED PETITIONERS RIGHT TO DUE PROCESS OF THE LAW. [23]

Before we delve into the merits of this case, it is best to stress that the issues raised by petitioner in this instant
petition are factual in nature which is not within the office of a Petition for Review .[24] The raison detre for this rule is that,
this Court is not a trier of facts and does not routinely undertake the re-examination of the evidence presented by the
contending parties for the factual findings of the labor officials who have acquired expertise in their own fields are accorded
not only respect but even finality, and are binding upon this Court.[25]

However, when the findings of the Labor Arbiter contradict those of the NLRC, departure from the general rule is
warranted, and this Court must of necessity make an infinitesimal scrunity and examine the records all over again including
the evidence presented by the opposing parties to determine which findings should be preferred as more conformable with
evidentiary facts.[26]

The primordial issue in the petition at bar is whether the petitioner was illegally dismissed from employment.

The Labor Arbiter found that the petitioner was illegally dismissed from employment warranting the payment of his
backwages. The NLRC and the Court of Appeals found otherwise.

In reversing the Labor Arbiters Decision, the NLRC underscored the settled evidentiary rule that before the burden of proof
shifts to the employer to prove the validity of the employees dismissal, the employee must first sufficiently establish that he
was indeed dismissed from employment. The petitioner, in the present case, failed to establish the fact of his dismissal. The
NLRC did not give credence to petitioners allegation that he was banned by the private respondent from entering the
workplace, opining that had it been true that petitioner was no longer allowed to enter the training site when he reported for
work thereat on 2 December 2000, it is quite a wonder he was able to do so the very next day, on 3 December 2000, to claim
his salary.[27]

The Court of Appeals validated the above conclusion reached by the NLRC and further rationated that petitioners
positive allegations that he was dismissed from service was negated by substantial evidence to the contrary. Petitioners
averments of what transpired inside private respondents main office on 29 November 2000, when he was allegedly already
dismissed from service, and his claim that he was effectively banned from private respondents premises are belied by the fact
that he was able to claim his salary for the period of 16-30 November 2000 at private respondents training site.

Petitioner, therefore, is now before this Court assailing the Decisions handed down by the NLRC and the Court of
Appeals, and insisting that he was illegally dismissed from his employment. Petitioner argues that his receipt of his earned
salary for the period of 16-30 November 2000, and his 13th month pay, is neither inconsistent with nor a negation of his
allegation of illegal dismissal. Petitioner maintains that he received his salary and benefit only from the guardhouse, for he
was already banned from the work premises.

We are not persuaded.

Well-entrenched is the principle that in order to establish a case before judicial and quasi-administrative bodies, it is
necessary that allegations must be supported by substantial evidence. [28] Substantial evidence is more than a mere scintilla. It
means such relevant evidence as a reasonable mind might accept as adequate to support a conclusion. [29]

In the present case, there is hardly any evidence on record so as to meet the quantum of evidence required, i.e.,
substantial evidence. Petitioners claim of illegal dismissal is supported by no other than his own bare, uncorroborated and,
thus, self-serving allegations, which are also incoherent, inconsistent and contradictory.

Petitioner himself narrated that when his presence was requested on 29 November 2000 at the private respondents
main office where he was served with the Notice to Explain his superiors report on his suspected drug use, VP for
Administration Ty offered him separation pay if he will just voluntarily resign from employment. While we do not condone
such an offer, neither can we construe that petitioner was dismissed at that instance. Petitioner was only being given the
option to either resign and receive his separation pay or not to resign but face the possible disciplinary charges against
him. The final decision, therefore, whether to voluntarily resign or to continue working still, ultimately rests with the
petitioner. In fact, by petitoners own admission, he requested from VP for Administration Ty more time to think over the offer.

Moreover, the petitioner alleged that he was not allowed to enter the training site by the guard on duty who told him
that he was already banned from the premises.Subsequently, however, petitioner admitted in his Supplemental Affidavit that
he was able to return to the said site on 3 December 2000, to claim his 16-30 November 2000 salary, and again on 9 December
2000, to receive his 13th month pay. The fact alone that he was able to return to the training site to claim his salary and
benefits raises doubt as to his purported ban from the premises.

Finally, petitioners stance that he was dismissed by private respondent was further weakened with the presentation
of private respondents payroll bearing petitioners name proving that petitioner remained as private respondents employee up
to December 2000. Again, petitioners assertion that the payroll was merely fabricated for the purpose of supporting private
respondents case before the NLRC cannot be given credence. Entries in the payroll, being entries in the course of business,
enjoy the presumption of regularity under Rule 130, Section 43 of the Rules of Court. It is therefore incumbent upon the
petitioner to adduce clear and convincing evidence in support of his claim of fabrication and to overcome such presumption
of regularity.[30] Unfortunately, petitioner again failed in such endeavor.

On these scores, there is a dearth of evidence to establish the fact of petitioners dismissal. We have scrupulously
examined the records and we found no evidence presented by petitioner, other than his own contentions that he was indeed
dismissed by private respondent.

While this Court is not unmindful of the rule that in cases of illegal dismissal, the employer bears the burden of proof
to prove that the termination was for a valid or authorized cause in the case at bar, however, the facts and the evidence did
not establish a prima facie case that the petitioner was dismissed from employment. [31] Before the private respondent must
bear the burden of proving that the dismissal was legal, petitioner must first establish by substantial evidence the fact of his
dismissal from service.Logically, if there is no dismissal, then there can be no question as to the legality or illegality thereof.

In Machica v. Roosevelt Services Center, Inc.,[32] we had underscored that the burden of proving the allegations rest
upon the party alleging, to wit:

The rule is that one who alleges a fact has the burden of proving it; thus, petitioners were
burdened to prove their allegation that respondents dismissed them from their employment. It must be
stressed that the evidence to prove this fact must be clear, positive and convincing. The rule that
the employer bears the burden of proof in illegal dismissal cases finds no application here because the
respondents deny having dismissed the petitioners.[33]

In Rufina Patis Factory v. Alusitain,[34] this Court took the occasion to emphasize:

It is a basic rule in evidence, however, that the burden of proof is on the part of the party who makes
the allegations ei incumbit probatio, qui dicit, non qui negat. If he claims a right granted by law, he
must prove his claim by competent evidence, relying on the strength of his own evidence and
not upon the weakness of that of his opponent.[35]

It is true that the Constitution affords full protection to labor, and that in light of this Constitutional mandate, we must
be vigilant in striking down any attempt of the management to exploit or oppress the working class. However, it does not
mean that we are bound to uphold the working class in every labor dispute brought before this Court for our resolution.

The law in protecting the rights of the employees, authorizes neither oppression nor self-destruction of the
employer. It should be made clear that when the law tilts the scales of justice in favor of labor, it is in recognition of the
inherent economic inequality between labor and management. The intent is to balance the scales of justice; to put the two
parties on relatively equal positions. There may be cases where the circumstances warrant favoring labor over the interests
of management but never should the scale be so tilted if the result is an injustice to the employer. Justitia nemini neganda est -
- justice is to be denied to none.[36]

WHEREFORE, premises considered, the instant Petition is DENIED. The Court of Appeals Decision dated 28 May 2005 and
its Resolution dated 7 September 2006 in CA-G.R. SP No. 79724 are hereby AFFIRMED. Costs against the petitioner.
G.R. No. 81958 June 30, 1988
PHILIPPINE ASSOCIATION OF SERVICE EXPORTERS, INC., petitioner,
vs.
HON. FRANKLIN M. DRILON as Secretary of Labor and Employment, and TOMAS D. ACHACOSO, as
Administrator of the Philippine Overseas Employment Administration, respondents. Gutierrez & Alo Law Offices for
petitioner.
SARMIENTO, J.:
The petitioner, Philippine Association of Service Exporters, Inc. (PASEI, for short), a firm "engaged principally in the
recruitment of Filipino workers, male and female, for overseas placement," 1 challenges the Constitutional validity of
Department Order No. 1, Series of 1988, of the Department of Labor and Employment, in the character of "GUIDELINES
GOVERNING THE TEMPORARY SUSPENSION OF DEPLOYMENT OF FILIPINO DOMESTIC AND HOUSEHOLD WORKERS," in
this petition for certiorari and prohibition. Specifically, the measure is assailed for "discrimination against males or
females;" 2 that it "does not apply to all Filipino workers but only to domestic helpers and females with similar skills;" 3 and
that it is violative of the right to travel. It is held likewise to be an invalid exercise of the lawmaking power, police power
being legislative, and not executive, in character.
In its supplement to the petition, PASEI invokes Section 3, of Article XIII, of the Constitution, providing for worker
participation "in policy and decision-making processes affecting their rights and benefits as may be provided by
law." 4 Department Order No. 1, it is contended, was passed in the absence of prior consultations. It is claimed, finally, to be
in violation of the Charter's non-impairment clause, in addition to the "great and irreparable injury" that PASEI members
face should the Order be further enforced.
On May 25, 1988, the Solicitor General, on behalf of the respondents Secretary of Labor and Administrator of the Philippine
Overseas Employment Administration, filed a Comment informing the Court that on March 8, 1988, the respondent Labor
Secretary lifted the deployment ban in the states of Iraq, Jordan, Qatar, Canada, Hongkong, United States, Italy, Norway,
Austria, and Switzerland. * In submitting the validity of the challenged "guidelines," the Solicitor General invokes the police
power of the Philippine State.
It is admitted that Department Order No. 1 is in the nature of a police power measure. The only question is whether or not
it is valid under the Constitution.
The concept of police power is well-established in this jurisdiction. It has been defined as the "state authority to enact
legislation that may interfere with personal liberty or property in order to promote the general welfare." 5 As defined, it
consists of (1) an imposition of restraint upon liberty or property, (2) in order to foster the common good. It is not capable
of an exact definition but has been, purposely, veiled in general terms to underscore its all-comprehensive embrace.
"Its scope, ever-expanding to meet the exigencies of the times, even to anticipate the future where it could be done,
provides enough room for an efficient and flexible response to conditions and circumstances thus assuring the greatest
benefits." 6
It finds no specific Constitutional grant for the plain reason that it does not owe its origin to the Charter. Along with the
taxing power and eminent domain, it is inborn in the very fact of statehood and sovereignty. It is a fundamental attribute of
government that has enabled it to perform the most vital functions of governance. Marshall, to whom the expression has
been credited, 7 refers to it succinctly as the plenary power of the State "to govern its citizens." 8
"The police power of the State ... is a power coextensive with self- protection, and it is not inaptly termed the "law of
overwhelming necessity." It may be said to be that inherent and plenary power in the State which enables it to prohibit all
things hurtful to the comfort, safety, and welfare of society." 9
It constitutes an implied limitation on the Bill of Rights. According to Fernando, it is "rooted in the conception that men in
organizing the state and imposing upon its government limitations to safeguard constitutional rights did not intend thereby
to enable an individual citizen or a group of citizens to obstruct unreasonably the enactment of such salutary measures
calculated to ensure communal peace, safety, good order, and welfare." 10 Significantly, the Bill of Rights itself does not
purport to be an absolute guaranty of individual rights and liberties "Even liberty itself, the greatest of all rights, is not
unrestricted license to act according to one's will." 11 It is subject to the far more overriding demands and requirements of
the greater number.
Notwithstanding its extensive sweep, police power is not without its own limitations. For all its awesome consequences, it
may not be exercised arbitrarily or unreasonably. Otherwise, and in that event, it defeats the purpose for which it is
exercised, that is, to advance the public good. Thus, when the power is used to further private interests at the expense of
the citizenry, there is a clear misuse of the power. 12
In the light of the foregoing, the petition must be dismissed.
As a general rule, official acts enjoy a presumed vahdity. 13 In the absence of clear and convincing evidence to the contrary,
the presumption logically stands.
The petitioner has shown no satisfactory reason why the contested measure should be nullified. There is no question that
Department Order No. 1 applies only to "female contract workers," 14 but it does not thereby make an undue discrimination
between the sexes. It is well-settled that "equality before the law" under the Constitution 15 does not import a perfect
Identity of rights among all men and women. It admits of classifications, provided that (1) such classifications rest on
substantial distinctions; (2) they are germane to the purposes of the law; (3) they are not confined to existing conditions;
and (4) they apply equally to all members of the same class. 16
The Court is satisfied that the classification made-the preference for female workers rests on substantial distinctions.
As a matter of judicial notice, the Court is well aware of the unhappy plight that has befallen our female labor force abroad,
especially domestic servants, amid exploitative working conditions marked by, in not a few cases, physical and personal
abuse. The sordid tales of maltreatment suffered by migrant Filipina workers, even rape and various forms of torture,
confirmed by testimonies of returning workers, are compelling motives for urgent Government action. As precisely the
caretaker of Constitutional rights, the Court is called upon to protect victims of exploitation. In fulfilling that duty, the Court
sustains the Government's efforts.
The same, however, cannot be said of our male workers. In the first place, there is no evidence that, except perhaps for
isolated instances, our men abroad have been afflicted with an Identical predicament. The petitioner has proffered no
argument that the Government should act similarly with respect to male workers. The Court, of course, is not impressing
some male chauvinistic notion that men are superior to women. What the Court is saying is that it was largely a matter of
evidence (that women domestic workers are being ill-treated abroad in massive instances) and not upon some fanciful or
arbitrary yardstick that the Government acted in this case. It is evidence capable indeed of unquestionable demonstration
and evidence this Court accepts. The Court cannot, however, say the same thing as far as men are concerned. There is
simply no evidence to justify such an inference. Suffice it to state, then, that insofar as classifications are concerned, this
Court is content that distinctions are borne by the evidence. Discrimination in this case is justified.
As we have furthermore indicated, executive determinations are generally final on the Court. Under a republican regime, it is
the executive branch that enforces policy. For their part, the courts decide, in the proper cases, whether that policy, or the
manner by which it is implemented, agrees with the Constitution or the laws, but it is not for them to question its wisdom.
As a co-equal body, the judiciary has great respect for determinations of the Chief Executive or his subalterns, especially
when the legislature itself has specifically given them enough room on how the law should be effectively enforced. In the
case at bar, there is no gainsaying the fact, and the Court will deal with this at greater length shortly, that Department
Order No. 1 implements the rule-making powers granted by the Labor Code. But what should be noted is the fact that in
spite of such a fiction of finality, the Court is on its own persuaded that prevailing conditions indeed call for a deployment
ban.
There is likewise no doubt that such a classification is germane to the purpose behind the measure. Unquestionably, it is the
avowed objective of Department Order No. 1 to "enhance the protection for Filipino female overseas workers" 17 this Court
has no quarrel that in the midst of the terrible mistreatment Filipina workers have suffered abroad, a ban on deployment will
be for their own good and welfare.
The Order does not narrowly apply to existing conditions. Rather, it is intended to apply indefinitely so long as those
conditions exist. This is clear from the Order itself ("Pending review of the administrative and legal measures, in the
Philippines and in the host countries . . ." 18), meaning to say that should the authorities arrive at a means impressed with a
greater degree of permanency, the ban shall be lifted. As a stop-gap measure, it is possessed of a necessary malleability,
depending on the circumstances of each case. Accordingly, it provides:
9. LIFTING OF SUSPENSION. The Secretary of Labor and Employment (DOLE) may, upon
recommendation of the Philippine Overseas Employment Administration (POEA), lift the suspension in
countries where there are:
1. Bilateral agreements or understanding with the Philippines, and/or,
2. Existing mechanisms providing for sufficient safeguards to ensure the welfare and protection of Filipino
workers. 19
The Court finds, finally, the impugned guidelines to be applicable to all female domestic overseas workers. That it does not
apply to "all Filipina workers" 20 is not an argument for unconstitutionality. Had the ban been given universal applicability,
then it would have been unreasonable and arbitrary. For obvious reasons, not all of them are similarly circumstanced. What
the Constitution prohibits is the singling out of a select person or group of persons within an existing class, to the prejudice
of such a person or group or resulting in an unfair advantage to another person or group of persons. To apply the ban, say
exclusively to workers deployed by A, but not to those recruited by B, would obviously clash with the equal protection clause
of the Charter. It would be a classic case of what Chase refers to as a law that "takes property from A and gives it to
B." 21 It would be an unlawful invasion of property rights and freedom of contract and needless to state, an invalid
act. 22 (Fernando says: "Where the classification is based on such distinctions that make a real difference as infancy, sex,
and stage of civilization of minority groups, the better rule, it would seem, is to recognize its validity only if the young, the
women, and the cultural minorities are singled out for favorable treatment. There would be an element of unreasonableness
if on the contrary their status that calls for the law ministering to their needs is made the basis of discriminatory legislation
against them. If such be the case, it would be difficult to refute the assertion of denial of equal protection." 23 In the case at
bar, the assailed Order clearly accords protection to certain women workers, and not the contrary.)
It is incorrect to say that Department Order No. 1 prescribes a total ban on overseas deployment. From scattered provisions
of the Order, it is evident that such a total ban has hot been contemplated. We quote:
5. AUTHORIZED DEPLOYMENT-The deployment of domestic helpers and workers of similar skills defined
herein to the following [sic] are authorized under these guidelines and are exempted from the suspension.
5.1 Hirings by immediate members of the family of Heads of State and Government;
5.2 Hirings by Minister, Deputy Minister and the other senior government officials; and
5.3 Hirings by senior officials of the diplomatic corps and duly accredited international
organizations.
5.4 Hirings by employers in countries with whom the Philippines have [sic] bilateral labor
agreements or understanding.
xxx xxx xxx
7. VACATIONING DOMESTIC HELPERS AND WORKERS OF SIMILAR SKILLS--Vacationing domestic helpers
and/or workers of similar skills shall be allowed to process with the POEA and leave for worksite only if they
 are returning to the same employer to finish an existing or partially served employment contract. Those
workers returning to worksite to serve a new employer shall be covered by the suspension and the provision
of these guidelines.
xxx xxx xxx
9. LIFTING OF SUSPENSION-The Secretary of Labor and Employment (DOLE) may, upon recommendation
of the Philippine Overseas Employment Administration (POEA), lift the suspension in countries where there
are:
1. Bilateral agreements or understanding with the Philippines, and/or,
2. Existing mechanisms providing for sufficient safeguards to ensure the welfare and
protection of Filipino workers. 24
xxx xxx xxx
The consequence the deployment ban has on the right to travel does not impair the right. The right to travel is subject,
among other things, to the requirements of "public safety," "as may be provided by law." 25 Department Order No. 1 is a
valid implementation of the Labor Code, in particular, its basic policy to "afford protection to labor," 26 pursuant to the
respondent Department of Labor's rule-making authority vested in it by the Labor Code. 27 The petitioner assumes that it is
unreasonable simply because of its impact on the right to travel, but as we have stated, the right itself is not absolute. The
disputed Order is a valid qualification thereto.
Neither is there merit in the contention that Department Order No. 1 constitutes an invalid exercise of legislative power. It is
true that police power is the domain of the legislature, but it does not mean that such an authority may not be lawfully
delegated. As we have mentioned, the Labor Code itself vests the Department of Labor and Employment with rulemaking
powers in the enforcement whereof. 28
The petitioners's reliance on the Constitutional guaranty of worker participation "in policy and decision-making processes
affecting their rights and benefits" 29 is not well-taken. The right granted by this provision, again, must submit to the
demands and necessities of the State's power of regulation.
The Constitution declares that:
Sec. 3. The State shall afford full protection to labor, local and overseas, organized and unorganized, and
promote full employment and equality of employment opportunities for all. 30
"Protection to labor" does not signify the promotion of employment alone. What concerns the Constitution more
paramountly is that such an employment be above all, decent, just, and humane. It is bad enough that the country has to
send its sons and daughters to strange lands because it cannot satisfy their employment needs at home. Under these
circumstances, the Government is duty-bound to insure that our toiling expatriates have adequate protection, personally and
economically, while away from home. In this case, the Government has evidence, an evidence the petitioner cannot
seriously dispute, of the lack or inadequacy of such protection, and as part of its duty, it has precisely ordered an indefinite
ban on deployment.
The Court finds furthermore that the Government has not indiscriminately made use of its authority. It is not contested that
it has in fact removed the prohibition with respect to certain countries as manifested by the Solicitor General.
The non-impairment clause of the Constitution, invoked by the petitioner, must yield to the loftier purposes targetted by the
Government. 31 Freedom of contract and enterprise, like all other freedoms, is not free from restrictions, more so in this
jurisdiction, where laissez faire has never been fully accepted as a controlling economic way of life.
This Court understands the grave implications the questioned Order has on the business of recruitment. The concern of the
Government, however, is not necessarily to maintain profits of business firms. In the ordinary sequence of events, it is
profits that suffer as a result of Government regulation. The interest of the State is to provide a decent living to its citizens.
The Government has convinced the Court in this case that this is its intent. We do not find the impugned Order to be tainted
with a grave abuse of discretion to warrant the extraordinary relief prayed for.
WHEREFORE, the petition is DISMISSED. No costs.
SO ORDERED.
G.R. No. 167614 March 24, 2009
ANTONIO M. SERRANO, Petitioner,
vs.
Gallant MARITIME SERVICES, INC. and MARLOW NAVIGATION CO., INC., Respondents.
DECISION
AUSTRIA-MARTINEZ, J.:
For decades, the toil of solitary migrants has helped lift entire families and communities out of poverty. Their earnings have
built houses, provided health care, equipped schools and planted the seeds of businesses. They have woven together the
world by transmitting ideas and knowledge from country to country. They have provided the dynamic human link between
cultures, societies and economies. Yet, only recently have we begun to understand not only how much international
migration impacts development, but how smart public policies can magnify this effect.
United Nations Secretary-General Ban Ki-Moon
Global Forum on Migration and Development
Brussels, July 10, 20071
For Antonio Serrano (petitioner), a Filipino seafarer, the last clause in the 5th paragraph of Section 10, Republic Act (R.A.)
No. 8042,2 to wit:
Sec. 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 (Emphasis and underscoring supplied)
does not magnify the contributions of overseas Filipino workers (OFWs) to national development, but exacerbates the
hardships borne by them by unduly limiting their entitlement in case of illegal dismissal to their lump-sum salary either for
the unexpired portion of their employment contract "or for three months for every year of the unexpired term, whichever is
less" (subject clause). Petitioner claims that the last clause violates the OFWs' constitutional rights in that it impairs the
terms of their contract, deprives them of equal protection and denies them due process.
By way of Petition for Review under Rule 45 of the Rules of Court, petitioner assails the December 8, 2004 Decision 3 and
April 1, 2005 Resolution4 of the Court of Appeals (CA), which applied the subject clause, entreating this Court to declare the
subject clause unconstitutional.
Petitioner was hired by Gallant Maritime Services, Inc. and Marlow Navigation Co., Ltd. (respondents) under a Philippine
Overseas Employment Administration (POEA)-approved Contract of Employment with the following terms and conditions:
Duration of contract 12 months

Position Chief Officer

Basic monthly salary US$1,400.00

Hours of work 48.0 hours per week

Overtime US$700.00 per month

Vacation leave with pay 7.00 days per month5

On March 19, 1998, the date of his departure, petitioner was constrained to accept a downgraded employment contract for
the position of Second Officer with a monthly salary of US$1,000.00, upon the assurance and representation of respondents
that he would be made Chief Officer by the end of April 1998. 6
Respondents did not deliver on their promise to make petitioner Chief Officer. 7 Hence, petitioner refused to stay on as
Second Officer and was repatriated to the Philippines on May 26, 1998.8
Petitioner's employment contract was for a period of 12 months or from March 19, 1998 up to March 19, 1999, but at the
time of his repatriation on May 26, 1998, he had served only two (2) months and seven (7) days of his contract, leaving an
unexpired portion of nine (9) months and twenty-three (23) days.
Petitioner filed with the Labor Arbiter (LA) a Complaint 9 against respondents for constructive dismissal and for payment of
his money claims in the total amount of US$26,442.73, broken down as follows:
May 27/31, 1998 (5 days) incl. Leave pay US$ 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

----------------------------------
----------------------------------
------------

25,382.23

Amount adjusted to chief mate's salary

(March 19/31, 1998 to April 1/30, 1998) + 1,060.5010

----------------------------------
----------------------------------
--------------------------

TOTAL CLAIM US$ 26,442.7311

as well as moral and exemplary damages and attorney's fees.
The LA rendered a Decision dated July 15, 1999, declaring the dismissal of petitioner illegal and awarding him
monetary benefits, to wit:
WHEREFORE, premises considered, judgment is hereby rendered declaring that the dismissal of the complainant
(petitioner) by the respondents in the above-entitled case was illegal and the respondents are hereby ordered to
pay the complainant [petitioner], jointly and severally, in Philippine Currency, based on the rate of exchange
prevailing at the time of payment, the amount of EIGHT THOUSAND SEVEN HUNDRED SEVENTY U.S.
DOLLARS (US $8,770.00), representing the complainants salary for three (3) months of the unexpired
portion of the aforesaid contract of employment.1avvphi1
The respondents are likewise ordered to pay the complainant [petitioner], jointly and severally, in Philippine
Currency, based on the rate of exchange prevailing at the time of payment, the amount of FORTY FIVE U.S.
DOLLARS (US$ 45.00),12 representing the complainants claim for a salary differential. In addition, the respondents
are hereby ordered to pay the complainant, jointly and severally, in Philippine Currency, at the exchange rate
prevailing at the time of payment, the complainants (petitioner's) claim for attorneys fees equivalent to ten percent
(10%) of the total amount awarded to the aforesaid employee under this Decision.
The claims of the complainant for moral and exemplary damages are hereby DISMISSED for lack of merit.
All other claims are hereby DISMISSED.
SO ORDERED.13 (Emphasis supplied)
In awarding petitioner a lump-sum salary of US$8,770.00, the LA based his computation on the salary period of
three months only -- rather than the entire unexpired portion of nine months and 23 days of petitioner's
employment contract - applying the subject clause. However, the LA applied the salary rate of US$2,590.00,
consisting of petitioner's "[b]asic salary, US$1,400.00/month + US$700.00/month, fixed overtime pay, +
US$490.00/month, vacation leave pay = US$2,590.00/compensation per month." 14
Respondents appealed15 to the National Labor Relations Commission (NLRC) to question the finding of the LA that
petitioner was illegally dismissed.
Petitioner also appealed16 to the NLRC on the sole issue that the LA erred in not applying the ruling of the Court
in Triple Integrated Services, Inc. v. National Labor Relations Commission 17 that in case of illegal dismissal, OFWs
are entitled to their salaries for the unexpired portion of their contracts. 18
In a Decision dated June 15, 2000, the NLRC modified the LA Decision, to wit:
WHEREFORE, the Decision dated 15 July 1999 is MODIFIED. Respondents are hereby ordered to pay complainant,
jointly and severally, in Philippine currency, at the prevailing rate of exchange at the time of payment the following:
1. Three (3) months salary

$1,400 x 3 US$4,200.00

2. Salary differential 45.00

US$4,245.00

3. 10% Attorneys fees 424.50

 TOTAL US$4,669.50
The other findings are affirmed.
SO ORDERED.19
The NLRC corrected the LA's computation of the lump-sum salary awarded to petitioner by reducing the applicable salary
rate from US$2,590.00 to US$1,400.00 because R.A. No. 8042 "does not provide for the award of overtime pay, which
should be proven to have been actually performed, and for vacation leave pay." 20
Petitioner filed a Motion for Partial Reconsideration, but this time he questioned the constitutionality of the subject
clause.21 The NLRC denied the motion.22
Petitioner filed a Petition for Certiorari23 with the CA, reiterating the constitutional challenge against the subject
clause.24 After initially dismissing the petition on a technicality, the CA eventually gave due course to it, as directed by this
Court in its Resolution dated August 7, 2003 which granted the petition for certiorari, docketed as G.R. No. 151833, filed by
petitioner.
In a Decision dated December 8, 2004, the CA affirmed the NLRC ruling on the reduction of the applicable salary rate;
however, the CA skirted the constitutional issue raised by petitioner. 25
His Motion for Reconsideration26 having been denied by the CA,27 petitioner brings his cause to this Court on the following
grounds:
I
The Court of Appeals and the labor tribunals have decided the case in a way not in accord with applicable decision of the
Supreme Court involving similar issue of granting unto the migrant worker back wages equal to the unexpired portion of his
contract of employment instead of limiting it to three (3) months
II
In the alternative that the Court of Appeals and the Labor Tribunals were merely applying their interpretation of Section 10
of Republic Act No. 8042, it is submitted that the Court of Appeals gravely erred in law when it failed to discharge its judicial
duty to decide questions of substance not theretofore determined by the Honorable Supreme Court, particularly, the
constitutional issues raised by the petitioner on the constitutionality of said law, which unreasonably, unfairly and arbitrarily
limits payment of the award for back wages of overseas workers to three (3) months.
III
Even without considering the constitutional limitations [of] Sec. 10 of Republic Act No. 8042, the Court of Appeals gravely
erred in law in excluding from petitioners award the overtime pay and vacation pay provided in his contract since under the
contract they form part of his salary.28
On February 26, 2008, petitioner wrote the Court to withdraw his petition as he is already old and sickly, and he intends to
make use of the monetary award for his medical treatment and medication. 29 Required to comment, counsel for petitioner
filed a motion, urging the court to allow partial execution of the undisputed monetary award and, at the same time, praying
that the constitutional question be resolved.30
Considering that the parties have filed their respective memoranda, the Court now takes up the full merit of the petition
mindful of the extreme importance of the constitutional question raised therein.
On the first and second issues
The unanimous finding of the LA, NLRC and CA that the dismissal of petitioner was illegal is not disputed. Likewise not
disputed is the salary differential of US$45.00 awarded to petitioner in all three fora. What remains disputed is only the
computation of the lump-sum salary to be awarded to petitioner by reason of his illegal dismissal.
Applying the subject clause, the NLRC and the CA computed the lump-sum salary of petitioner at the monthly rate of
US$1,400.00 covering the period of three months out of the unexpired portion of nine months and 23 days of his
employment contract or a total of US$4,200.00.
Impugning the constitutionality of the subject clause, petitioner contends that, in addition to the US$4,200.00 awarded by
the NLRC and the CA, he is entitled to US$21,182.23 more or a total of US$25,382.23, equivalent to his salaries for the
entire nine months and 23 days left of his employment contract, computed at the monthly rate of US$2,590.00.31
The Arguments of Petitioner
Petitioner contends that the subject clause is unconstitutional because it unduly impairs the freedom of OFWs to negotiate
for and stipulate in their overseas employment contracts a determinate employment period and a fixed salary package. 32 It
also impinges on the equal protection clause, for it treats OFWs differently from local Filipino workers (local workers) by
putting a cap on the amount of lump-sum salary to which OFWs are entitled in case of illegal dismissal, while setting no limit
to the same monetary award for local workers when their dismissal is declared illegal; that the disparate treatment is not
reasonable as there is no substantial distinction between the two groups; 33and that it defeats Section 18,34 Article II of the
Constitution which guarantees the protection of the rights and welfare of all Filipino workers, whether deployed locally or
overseas.35
Moreover, petitioner argues that the decisions of the CA and the labor tribunals are not in line with existing jurisprudence on
the issue of money claims of illegally dismissed OFWs. Though there are conflicting rulings on this, petitioner urges the
Court to sort them out for the guidance of affected OFWs.36
Petitioner further underscores that the insertion of the subject clause into R.A. No. 8042 serves no other purpose but to
benefit local placement agencies. He marks the statement made by the Solicitor General in his Memorandum, viz.:
Often, placement agencies, their liability being solidary, shoulder the payment of money claims in the event that jurisdiction
over the foreign employer is not acquired by the court or if the foreign employer reneges on its obligation. Hence,
placement agencies that are in good faith and which fulfill their obligations are unnecessarily penalized for the acts of the
foreign employer. To protect them and to promote their continued helpful contribution in deploying Filipino migrant workers,
liability for money claims was reduced under Section 10 of R.A. No. 8042. 37 (Emphasis supplied)
Petitioner argues that in mitigating the solidary liability of placement agencies, the subject clause sacrifices the well-being of
OFWs. Not only that, the provision makes foreign employers better off than local employers because in cases involving the
illegal dismissal of employees, foreign employers are liable for salaries covering a maximum of only three months of the
unexpired employment contract while local employers are liable for the full lump-sum salaries of their employees. As
petitioner puts it:
In terms of practical application, the local employers are not limited to the amount of backwages they have to give their
employees they have illegally dismissed, following well-entrenched and unequivocal jurisprudence on the matter. On the
other hand, foreign employers will only be limited to giving the illegally dismissed migrant workers the maximum of three (3)
months unpaid salaries notwithstanding the unexpired term of the contract that can be more than three (3) months. 38
Lastly, petitioner claims that the subject clause violates the due process clause, for it deprives him of the salaries and other
emoluments he is entitled to under his fixed-period employment contract.39
The Arguments of Respondents
In their Comment and Memorandum, respondents contend that the constitutional issue should not be entertained, for this
was belatedly interposed by petitioner in his appeal before the CA, and not at the earliest opportunity, which was when he
filed an appeal before the NLRC.40
The Arguments of the Solicitor General
The Solicitor General (OSG)41 points out that as R.A. No. 8042 took effect on July 15, 1995, its provisions could not have
impaired petitioner's 1998 employment contract. Rather, R.A. No. 8042 having preceded petitioner's contract, the provisions
thereof are deemed part of the minimum terms of petitioner's employment, especially on the matter of money claims, as
this was not stipulated upon by the parties.42
Moreover, the OSG emphasizes that OFWs and local workers differ in terms of the nature of their employment, such that
their rights to monetary benefits must necessarily be treated differently. The OSG enumerates the essential elements that
distinguish OFWs from local workers: first, while local workers perform their jobs within Philippine territory, OFWs perform
their jobs for foreign employers, over whom it is difficult for our courts to acquire jurisdiction, or against whom it is almost
impossible to enforce judgment; and second, as held in Coyoca v. National Labor Relations Commission 43 and Millares v.
National Labor Relations Commission,44 OFWs are contractual employees who can never acquire regular employment status,
unlike local workers who are or can become regular employees. Hence, the OSG posits that there are rights and privileges
exclusive to local workers, but not available to OFWs; that these peculiarities make for a reasonable and valid basis for the
differentiated treatment under the subject clause of the money claims of OFWs who are illegally dismissed. Thus, the
provision does not violate the equal protection clause nor Section 18, Article II of the Constitution. 45
Lastly, the OSG defends the rationale behind the subject clause as a police power measure adopted to mitigate the solidary
liability of placement agencies for this "redounds to the benefit of the migrant workers whose welfare the government seeks
to promote. The survival of legitimate placement agencies helps [assure] the government that migrant workers are properly
deployed and are employed under decent and humane conditions." 46
The Court's Ruling
The Court sustains petitioner on the first and second issues.
When the Court is called upon to exercise its power of judicial review of the acts of its co-equals, such as the Congress, it
does so only when these conditions obtain: (1) that there is an actual case or controversy involving a conflict of rights
susceptible of judicial determination;47 (2) that the constitutional question is raised by a proper party 48 and at the earliest
opportunity;49 and (3) that the constitutional question is the very lis mota of the case, 50otherwise the Court will dismiss the
case or decide the same on some other ground.51
Without a doubt, there exists in this case an actual controversy directly involving petitioner who is personally aggrieved that
the labor tribunals and the CA computed his monetary award based on the salary period of three months only as provided
under the subject clause.
The constitutional challenge is also timely. It should be borne in mind that the requirement that a constitutional issue be
raised at the earliest opportunity entails the interposition of the issue in the pleadings before a competent court, such
that, if the issue is not raised in the pleadings before that competent court, it cannot be considered at the trial and, if not
considered in the trial, it cannot be considered on appeal.52 Records disclose that the issue on the constitutionality of the
subject clause was first raised, not in petitioner's appeal with the NLRC, but in his Motion for Partial Reconsideration with
said labor tribunal,53 and reiterated in his Petition for Certiorari before the CA.54Nonetheless, the issue is deemed seasonably
raised because it is not the NLRC but the CA which has the competence to resolve the constitutional issue. The NLRC is a
labor tribunal that merely performs a quasi-judicial function its function in the present case is limited to determining
questions of fact to which the legislative policy of R.A. No. 8042 is to be applied and to resolving such questions in
accordance with the standards laid down by the law itself;55 thus, its foremost function is to administer and enforce R.A. No.
8042, and not to inquire into the validity of its provisions. The CA, on the other hand, is vested with the power of judicial
review or the power to declare unconstitutional a law or a provision thereof, such as the subject clause. 56 Petitioner's
interposition of the constitutional issue before the CA was undoubtedly seasonable. The CA was therefore remiss in failing to
take up the issue in its decision.
The third condition that the constitutional issue be critical to the resolution of the case likewise obtains because the
monetary claim of petitioner to his lump-sum salary for the entire unexpired portion of his 12-month employment contract,
and not just for a period of three months, strikes at the very core of the subject clause.
Thus, the stage is all set for the determination of the constitutionality of the subject clause.
Does the subject clause violate Section 10,
Article III of the Constitution on non-impairment
of contracts?
The answer is in the negative.
Petitioner's claim that the subject clause unduly interferes with the stipulations in his contract on the term of his
employment and the fixed salary package he will receive 57 is not tenable.
Section 10, Article III of the Constitution provides:
No law impairing the obligation of contracts shall be passed.
The prohibition is aligned with the general principle that laws newly enacted have only a prospective operation,58and cannot
affect acts or contracts already perfected; 59 however, as to laws already in existence, their provisions are read into contracts
and deemed a part thereof.60 Thus, the non-impairment clause under Section 10, Article II is limited in application to laws
about to be enacted that would in any way derogate from existing acts or contracts by enlarging, abridging or in any
manner changing the intention of the parties thereto.
As aptly observed by the OSG, the enactment of R.A. No. 8042 in 1995 preceded the execution of the employment contract
between petitioner and respondents in 1998. Hence, it cannot be argued that R.A. No. 8042, particularly the subject clause,
impaired the employment contract of the parties. Rather, when the parties executed their 1998 employment contract, they
were deemed to have incorporated into it all the provisions of R.A. No. 8042.
But even if the Court were to disregard the timeline, the subject clause may not be declared unconstitutional on the ground
that it impinges on the impairment clause, for the law was enacted in the exercise of the police power of the State to
regulate a business, profession or calling, particularly the recruitment and deployment of OFWs, with the noble end in view
of ensuring respect for the dignity and well-being of OFWs wherever they may be employed. 61Police power legislations
adopted by the State to promote the health, morals, peace, education, good order, safety, and general welfare of the people
are generally applicable not only to future contracts but even to those already in existence, for all private contracts must
yield to the superior and legitimate measures taken by the State to promote public welfare. 62
Does the subject clause violate Section 1,
Article III of the Constitution, and Section 18,
Article II and Section 3, Article XIII on labor
as a protected sector?
The answer is in the affirmative.
Section 1, Article III of the Constitution guarantees:
No person shall be deprived of life, liberty, or property without due process of law nor shall any person be denied the equal
protection of the law.
Section 18,63 Article II and Section 3,64 Article XIII accord all members of the labor sector, without distinction as to place of
deployment, full protection of their rights and welfare.
To Filipino workers, the rights guaranteed under the foregoing constitutional provisions translate to economic security and
parity: all monetary benefits should be equally enjoyed by workers of similar category, while all monetary obligations should
be borne by them in equal degree; none should be denied the protection of the laws which is enjoyed by, or spared the
burden imposed on, others in like circumstances.65
Such rights are not absolute but subject to the inherent power of Congress to incorporate, when it sees fit, a system of
classification into its legislation; however, to be valid, the classification must comply with these requirements: 1) it is based
on substantial distinctions; 2) it is germane to the purposes of the law; 3) it is not limited to existing conditions only; and 4)
it applies equally to all members of the class.66
There are three levels of scrutiny at which the Court reviews the constitutionality of a classification embodied in a 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;67 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;68 and c) strict judicial scrutiny69 in which a legislative classification which impermissibly interferes with
the exercise of a fundamental right70 or operates to the peculiar disadvantage of a suspect class71 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.72
Under American jurisprudence, strict judicial scrutiny is triggered by suspect classifications73 based on race74 or gender75 but
not when the classification is drawn along income categories.76
It is different in the Philippine setting. In Central Bank (now Bangko Sentral ng Pilipinas) Employee Association, Inc. v.
Bangko Sentral ng Pilipinas,77 the constitutionality of a provision in the charter of the Bangko Sentral ng Pilipinas(BSP), a
government financial institution (GFI), was challenged for maintaining its rank-and-file employees under the Salary
Standardization Law (SSL), even when the rank-and-file employees of other GFIs had been exempted from the SSL by their
respective charters. Finding that the disputed provision contained a suspect classification based on salary grade, the Court
deliberately employed the standard of strict judicial scrutiny in its review of the constitutionality of said provision. More
significantly, it was in this case that the Court revealed the broad outlines of its judicial philosophy, to wit:
Congress retains its wide discretion in providing for a valid classification, and its policies should be accorded recognition and
respect by the courts of justice except when they run afoul of the Constitution. The deference stops where the classification
violates a fundamental right, or prejudices persons accorded special protection by the Constitution. When these
violations arise, this Court must discharge its primary role as the vanguard of constitutional guaranties, and require a stricter
and more exacting adherence to constitutional limitations. Rational basis should not suffice.
Admittedly, the view that prejudice to persons accorded special protection by the Constitution requires a stricter judicial
scrutiny finds no support in American or English jurisprudence. Nevertheless, these foreign decisions and authorities are not
per se controlling in this jurisdiction. At best, they are persuasive and have been used to support many of our decisions. We
should not place undue and fawning reliance upon them and regard them as indispensable mental crutches without which
we cannot come to our own decisions through the employment of our own endowments. We live in a different ambience
and must decide our own problems in the light of our own interests and needs, and of our qualities and even idiosyncrasies
as a people, and always with our own concept of law and justice. Our laws must be construed in accordance with the
intention of our own lawmakers and such intent may be deduced from the language of each law and the context of other
local legislation related thereto. More importantly, they must be construed to serve our own public interest which is the be-
all and the end-all of all our laws. And it need not be stressed that our public interest is distinct and different from others.
xxxx
Further, the quest for a better and more "equal" world calls for the use of equal protection as a tool of effective judicial
intervention.
Equality is one ideal which cries out for bold attention and action in the Constitution. The Preamble proclaims "equality" as
an ideal precisely in protest against crushing inequities in Philippine society. The command to promote social justice in
Article II, Section 10, in "all phases of national development," further explicitated in Article XIII, are clear commands to the
State to take affirmative action in the direction of greater equality. x x x [T]here is thus in the Philippine Constitution no lack
of doctrinal support for a more vigorous state effort towards achieving a reasonable measure of equality.
Our present Constitution has gone further in guaranteeing vital social and economic rights to marginalized groups of society,
including labor. Under the policy of social justice, the law bends over backward to accommodate the interests of the working
class on the humane justification that those with less privilege in life should have more in law. And the obligation to afford
protection to labor is incumbent not only on the legislative and executive branches but also on the judiciary to translate this
pledge into a living reality. Social justice calls for the humanization of laws and the equalization of social and economic
forces by the State so that justice in its rational and objectively secular conception may at least be approximated.
xxxx
Under most circumstances, the Court will exercise judicial restraint in deciding questions of constitutionality, recognizing the
broad discretion given to Congress in exercising its legislative power. Judicial scrutiny would be based on the "rational basis"
test, and the legislative discretion would be given deferential treatment.
But if the challenge to the statute is premised on the denial of a fundamental right, or the perpetuation of prejudice
against persons favored by the Constitution with special protection, judicial scrutiny ought to be more
strict. A weak and watered down view would call for the abdication of this Courts solemn duty to strike down any law
repugnant to the Constitution and the rights it enshrines. This is true whether the actor committing the unconstitutional act
is a private person or the government itself or one of its instrumentalities. Oppressive acts will be struck down regardless of
the character or nature of the actor.
xxxx
In the case at bar, the challenged proviso operates on the basis of the salary grade or officer-employee status. It is akin to a
distinction based on economic class and status, with the higher grades as recipients of a benefit specifically withheld from
the lower grades. Officers of the BSP now receive higher compensation packages that are competitive with the industry,
while the poorer, low-salaried employees are limited to the rates prescribed by the SSL. The implications are quite
disturbing: BSP rank-and-file employees are paid the strictly regimented rates of the SSL while employees higher in rank -
possessing higher and better education and opportunities for career advancement - are given higher compensation
packages to entice them to stay. Considering that majority, if not all, the rank-and-file employees consist of people whose
status and rank in life are less and limited, especially in terms of job marketability, it is they - and not the officers - who
have the real economic and financial need for the adjustment . This is in accord with the policy of the Constitution "to free
the people from poverty, provide adequate social services, extend to them a decent standard of living, and improve the
quality of life for all." Any act of Congress that runs counter to this constitutional desideratum deserves strict scrutiny by this
Court before it can pass muster. (Emphasis supplied)
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.
Upon cursory reading, the subject clause appears facially neutral, for it applies to all OFWs. However, a closer examination
reveals that the subject clause has a discriminatory intent against, and an invidious impact on, OFWs at two levels:
First, OFWs with employment contracts of less than one year vis--vis OFWs with employment contracts of one year
or more;
Second, among OFWs with employment contracts of more than one year; and
Third, OFWs vis--vis local workers with fixed-period employment;
OFWs with employment contracts of less than one year vis--vis OFWs with employment contracts of one
year or more
As pointed out by petitioner,78 it was in Marsaman Manning Agency, Inc. v. National Labor Relations Commission79(Second
Division, 1999) that the Court laid down the following rules on the application of the periods prescribed under Section 10(5)
of R.A. No. 804, to wit:
A plain reading of Sec. 10 clearly reveals that the choice of which amount to award an illegally dismissed
overseas contract worker, i.e., whether his salaries for the unexpired portion of his employment contract or
three (3) months salary for every year of the unexpired term, whichever is less, comes into play only when
the employment contract concerned has a term of at least one (1) year or more. This is evident from the
words "for every year of the unexpired term" which follows the words "salaries x x x for three months." To
follow petitioners thinking that private respondent is entitled to three (3) months salary only simply because it is the lesser
amount is to completely disregard and overlook some words used in the statute while giving effect to some. This is contrary
to the well-established rule in legal hermeneutics that in interpreting a statute, care should be taken that every part or word
thereof be given effect since the law-making body is presumed to know the meaning of the words employed in the statue
and to have used them advisedly. Ut res magis valeat quam pereat. 80 (Emphasis supplied)
In Marsaman, the OFW involved was illegally dismissed two months into his 10-month contract, but was awarded his
salaries for the remaining 8 months and 6 days of his contract.
Prior to Marsaman, however, there were two cases in which the Court made conflicting rulings on Section 10(5). One
was Asian Center for Career and Employment System and Services v. National Labor Relations Commission (Second Division,
October 1998),81 which involved an OFW who was awarded a two-year employment contract, but was dismissed after
working for one year and two months. The LA declared his dismissal illegal and awarded him SR13,600.00 as lump-sum
salary covering eight months, the unexpired portion of his contract. On appeal, the Court reduced the award to SR3,600.00
equivalent to his three months salary, this being the lesser value, to wit:
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 respondents employment contract is eight (8) months. Private
respondent should therefore be paid his basic salary corresponding to three (3) months or a total of SR3,600. 82
Another was Triple-Eight Integrated Services, Inc. v. National Labor Relations Commission (Third Division, December
1998),83 which involved an OFW (therein respondent Erlinda Osdana) who was originally granted a 12-month contract,
which was deemed renewed for another 12 months. After serving for one year and seven-and-a-half months, respondent
Osdana was illegally dismissed, and the Court awarded her salaries for the entire unexpired portion of four and one-half
months of her contract.
The Marsaman interpretation of Section 10(5) has since been adopted in the following cases:
Case Title Contract Period Period of Service Unexpired Period Period Applied in the
Computation of the
Monetary Award

Skippers v. Maguad84 6 months 2 months 4 months 4 months

Bahia Shipping v. 9 months 8 months 4 months 4 months

Reynaldo Chua 85

Centennial Transmarine 9 months 4 months 5 months 5 months

v. dela Cruz l86

Talidano v. Falcon87 12 months 3 months 9 months 3 months

Univan v. CA 88 12 months 3 months 9 months 3 months

Oriental v. CA 89 12 months more than 2 months 10 months 3 months

PCL v. NLRC90 12 months more than 2 months more or less 9 months 3 months

Olarte v. Nayona91 12 months 21 days 11 months and 9 days 3 months

JSS v.Ferrer92 12 months 16 days 11 months and 24 days 3 months

Pentagon v. Adelantar93 12 months 9 months and 7 days 2 months and 23 days 2 months and 23 days

Phil. Employ v. Paramio, 12 months 10 months 2 months Unexpired portion

et al.94

Flourish Maritime v. 2 years 26 days 23 months and 4 days 6 months or 3 months for
Almanzor 95 each year of contract

Athenna Manpower v. 1 year, 10 months 1 month 1 year, 9 months and 28 6 months or 3 months for
Villanos 96 and 28 days days each year of contract

As the foregoing matrix readily shows, the subject clause classifies OFWs into two categories. The first category includes
OFWs with fixed-period employment contracts of less than one year; in case of illegal dismissal, they are entitled to their
salaries for the entire unexpired portion of their contract. The second category consists of OFWs with fixed-period
employment contracts of one year or more; in case of illegal dismissal, they are entitled to monetary award equivalent to
only 3 months of the unexpired portion of their contracts.
The disparity in the treatment of these two groups cannot be discounted. In Skippers, the respondent OFW worked for only
2 months out of his 6-month contract, but was awarded his salaries for the remaining 4 months. In contrast, the respondent
OFWs in Oriental and PCL who had also worked for about 2 months out of their 12-month contracts were awarded their
salaries for only 3 months of the unexpired portion of their contracts. Even the OFWs involved in Talidano and Univan who
had worked for a longer period of 3 months out of their 12-month contracts before being illegally dismissed were awarded
their salaries for only 3 months.
To illustrate the disparity even more vividly, the Court assumes a hypothetical OFW-A with an employment contract of 10
months at a monthly salary rate of US$1,000.00 and a hypothetical OFW-B with an employment contract of 15 months with
the same monthly salary rate of US$1,000.00. Both commenced work on the same day and under the same employer, and
were illegally dismissed after one month of work. Under the subject clause, OFW-A will be entitled to US$9,000.00,
equivalent to his salaries for the remaining 9 months of his contract, whereas OFW-B will be entitled to only US$3,000.00,
equivalent to his salaries for 3 months of the unexpired portion of his contract, instead of US$14,000.00 for the unexpired
portion of 14 months of his contract, as the US$3,000.00 is the lesser amount.
The disparity becomes more aggravating when the Court takes into account jurisprudence that, prior to the effectivity of
R.A. No. 8042 on July 14, 1995,97 illegally dismissed OFWs, no matter how long the period of their employment
contracts, were entitled to their salaries for the entire unexpired portions of their contracts. The matrix below speaks for
itself:
Case Title Contract Period Period of Service Unexpired Period Period Applied in the
Computation of the Monetary
Award

ATCI v. CA, et al.98 2 years 2 months 22 months 22 months

Phil. Integrated v. 2 years 7 days 23 months and 23 23 months and 23 days

NLRC99 days

JGB v. NLC100 2 years 9 months 15 months 15 months

Agoy v. NLRC101 2 years 2 months 22 months 22 months

EDI v. NLRC, et al.102 2 years 5 months 19 months 19 months

Barros v. NLRC, et al.103 12 months 4 months 8 months 8 months

Philippine Transmarine 12 months 6 months and 22 5 months and 18 5 months and 18 days
v. Carilla104 days days

It is plain that prior to R.A. No. 8042, all OFWs, regardless of contract periods or the unexpired portions thereof, were
treated alike in terms of the computation of their monetary benefits in case of illegal dismissal. Their claims were subjected
to a uniform rule of computation: their basic salaries multiplied by the entire unexpired portion of their employment
contracts.
The enactment of the subject clause in R.A. No. 8042 introduced a differentiated rule of computation of the money claims of
illegally dismissed OFWs based on their employment periods, in the process singling out one category whose contracts
have an unexpired portion of one year or more and subjecting them to the peculiar disadvantage of having their monetary
awards limited to their salaries for 3 months or for the unexpired portion thereof, whichever is less, but all the while sparing
the other category from such prejudice, simply because the latter's unexpired contracts fall short of one year.
Among OFWs With Employment Contracts of More Than One Year
Upon closer examination of the terminology employed in the subject clause, the Court now has misgivings on the accuracy
of the Marsaman interpretation.
The Court notes that the subject clause "or for three (3) months for every year of the unexpired term, whichever is less"
contains the qualifying phrases "every year" and "unexpired term." By its ordinary meaning, the word "term" means a
limited or definite extent of time.105 Corollarily, that "every year" is but part of an "unexpired term" is significant in many
ways: first, the unexpired term must be at least one year, for if it were any shorter, there would be no occasion for such
unexpired term to be measured by every year ; and second, the original term must be more than one year, for otherwise,
whatever would be the unexpired term thereof will not reach even a year. Consequently, the more decisive factor in the
determination of when the subject clause "for three (3) months for every year of the unexpired term, whichever is less" shall
apply is not the length of the original contract period as held in Marsaman,106 but the length of the unexpired portion of the
contract period -- the subject clause applies in cases when the unexpired portion of the contract period is at least one year,
which arithmetically requires that the original contract period be more than one year.
Viewed in that light, the subject clause creates a sub-layer of discrimination among OFWs whose contract periods are for
more than one year: those who are illegally dismissed with less than one year left in their contracts shall be entitled to their
salaries for the entire unexpired portion thereof, while those who are illegally dismissed with one year or more remaining in
their contracts shall be covered by the subject clause, and their monetary benefits limited to their salaries for three months
only.
To concretely illustrate the application of the foregoing interpretation of the subject clause, the Court assumes hypothetical
OFW-C and OFW-D, who each have a 24-month contract at a salary rate of US$1,000.00 per month. OFW-C is illegally
dismissed on the 12th month, and OFW-D, on the 13th month. Considering that there is at least 12 months remaining in the
contract period of OFW-C, the subject clause applies to the computation of the latter's monetary benefits. Thus, OFW-C will
be entitled, not to US$12,000,00 or the latter's total salaries for the 12 months unexpired portion of the contract, but to the
lesser amount of US$3,000.00 or the latter's salaries for 3 months out of the 12-month unexpired term of the contract. On
the other hand, OFW-D is spared from the effects of the subject clause, for there are only 11 months left in the latter's
contract period. Thus, OFW-D will be entitled to US$11,000.00, which is equivalent to his/her total salaries for the entire 11-
month unexpired portion.
OFWs vis--vis Local Workers
With Fixed-Period Employment
As discussed earlier, prior to R.A. No. 8042, a uniform system of computation of the monetary awards of illegally dismissed
OFWs was in place. This uniform system was applicable even to local workers with fixed-term employment.107
The earliest rule prescribing a uniform system of computation was actually Article 299 of the Code of Commerce
(1888),108 to wit:
Article 299. If the contracts between the merchants and their shop clerks and employees should have been made of a fixed
period, none of the contracting parties, without the consent of the other, may withdraw from the fulfillment of said contract
until the termination of the period agreed upon.
Persons violating this clause shall be subject to indemnify the loss and damage suffered, with the exception of the provisions
contained in the following articles.
In Reyes v. The Compaia Maritima,109 the Court applied the foregoing provision to determine the liability of a shipping
company for the illegal discharge of its managers prior to the expiration of their fixed-term employment. The Court therein
held the shipping company liable for the salaries of its managers for the remainder of their fixed-term employment.
There is a more specific rule as far as seafarers are concerned: Article 605 of the Code of Commerce which provides:
Article 605. If the contracts of the captain and members of the crew with the agent should be for a definite period or
voyage, they cannot be discharged until the fulfillment of their contracts, except for reasons of insubordination in serious
matters, robbery, theft, habitual drunkenness, and damage caused to the vessel or to its cargo by malice or manifest or
proven negligence.
Article 605 was applied to Madrigal Shipping Company, Inc. v. Ogilvie, 110 in
which the Court held the shipping company liable for the salaries and subsistence allowance of its illegally dismissed
employees for the entire unexpired portion of their employment contracts.
While Article 605 has remained good law up to the present,111 Article 299 of the Code of Commerce was replaced by Art.
1586 of the Civil Code of 1889, to wit:
Article 1586. Field hands, mechanics, artisans, and other laborers hired for a certain time and for a certain work cannot
leave or be dismissed without sufficient cause, before the fulfillment of the contract. (Emphasis supplied.)
Citing Manresa, the Court in Lemoine v. Alkan112 read the disjunctive "or" in Article 1586 as a conjunctive "and" so as to
apply the provision to local workers who are employed for a time certain although for no particular skill. This interpretation
of Article 1586 was reiterated in Garcia Palomar v. Hotel de France Company. 113 And in both Lemoine and Palomar, the
Court adopted the general principle that in actions for wrongful discharge founded on Article 1586, local workers are entitled
to recover damages to the extent of the amount stipulated to be paid to them by the terms of their contract. On the
computation of the amount of such damages, the Court in Aldaz v. Gay 114 held:
The doctrine is well-established in American jurisprudence, and nothing has been brought to our attention to the contrary
under Spanish jurisprudence, that when an employee is wrongfully discharged it is his duty to seek other employment of the
same kind in the same community, for the purpose of reducing the damages resulting from such wrongful discharge.
However, while this is the general rule, the burden of showing that he failed to make an effort to secure other employment
of a like nature, and that other employment of a like nature was obtainable, is upon the defendant. When an employee is
wrongfully discharged under a contract of employment his prima facie damage is the amount which he would be entitled to
had he continued in such employment until the termination of the period . (Howard vs. Daly, 61 N. Y., 362; Allen vs.
Whitlark, 99 Mich., 492; Farrell vs. School District No. 2, 98 Mich., 43.)115(Emphasis supplied)
On August 30, 1950, the New Civil Code took effect with new provisions on fixed-term employment: Section 2 (Obligations
with a Period), Chapter 3, Title I, and Sections 2 (Contract of Labor) and 3 (Contract for a Piece of Work), Chapter 3, Title
VIII, Book IV.116 Much like Article 1586 of the Civil Code of 1889, the new provisions of the Civil Code do not expressly
provide for the remedies available to a fixed-term worker who is illegally discharged. However, it is noted that in Mackay
Radio & Telegraph Co., Inc. v. Rich,117 the Court carried over the principles on the payment of damages underlying Article
1586 of the Civil Code of 1889 and applied the same to a case involving the illegal discharge of a local worker whose fixed-
period employment contract was entered into in 1952, when the new Civil Code was already in effect. 118
More significantly, the same principles were applied to cases involving overseas Filipino workers whose fixed-term
employment contracts were illegally terminated, such as in First Asian Trans & Shipping Agency, Inc. v. Ople,119involving
seafarers who were illegally discharged. In Teknika Skills and Trade Services, Inc. v. National Labor Relations
Commission,120 an OFW who was illegally dismissed prior to the expiration of her fixed-period employment contract as a
baby sitter, was awarded salaries corresponding to the unexpired portion of her contract. The Court arrived at the same
ruling in Anderson v. National Labor Relations Commission, 121 which involved a foreman hired in 1988 in Saudi Arabia for a
fixed term of two years, but who was illegally dismissed after only nine months on the job -- the Court awarded him salaries
corresponding to 15 months, the unexpired portion of his contract. In Asia World Recruitment, Inc. v. National Labor
Relations Commission,122 a Filipino working as a security officer in 1989 in Angola was awarded his salaries for the remaining
period of his 12-month contract after he was wrongfully discharged. Finally, in Vinta Maritime Co., Inc. v. National Labor
Relations Commission,123 an OFW whose 12-month contract was illegally cut short in the second month was declared
entitled to his salaries for the remaining 10 months of his contract.
In sum, prior to R.A. No. 8042, OFWs and local workers with fixed-term employment who were illegally discharged were
treated alike in terms of the computation of their money claims: they were uniformly entitled to their salaries for the entire
unexpired portions of their contracts. But with the enactment of R.A. No. 8042, specifically the adoption of the subject
clause, illegally dismissed OFWs with an unexpired portion of one year or more in their employment contract have since
been differently treated in that their money claims are subject to a 3-month cap, whereas no such limitation is imposed on
local workers with fixed-term employment.
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.
There being a suspect classification involving a vulnerable sector protected by the Constitution, the Court now subjects the
classification to a strict judicial scrutiny, and determines whether it serves a compelling state interest through the least
restrictive means.
What constitutes compelling state interest is measured by the scale of rights and powers arrayed in the Constitution and
calibrated by history.124 It is akin to the paramount interest of the state125 for which some individual liberties must give way,
such as the public interest in safeguarding health or maintaining medical standards,126 or in maintaining access to
information on matters of public concern.127
In the present case, the Court dug deep into the records but found no compelling state interest that the subject clause may
possibly serve.
The OSG defends the subject clause as a police power measure "designed to protect the employment of Filipino seafarers
overseas x x x. By limiting the liability to three months [sic], Filipino seafarers have better chance of getting hired by foreign
employers." The limitation also protects the interest of local placement agencies, which otherwise may be made to shoulder
millions of pesos in "termination pay."128
The OSG explained further:
Often, placement agencies, their liability being solidary, shoulder the payment of money claims in the event that jurisdiction
over the foreign employer is not acquired by the court or if the foreign employer reneges on its obligation. Hence,
placement agencies that are in good faith and which fulfill their obligations are unnecessarily penalized for the acts of the
foreign employer. To protect them and to promote their continued helpful contribution in deploying Filipino migrant workers,
liability for money are reduced under Section 10 of RA 8042.
This measure redounds to the benefit of the migrant workers whose welfare the government seeks to promote. The survival
of legitimate placement agencies helps [assure] the government that migrant workers are properly deployed and are
employed under decent and humane conditions.129 (Emphasis supplied)
However, nowhere in the Comment or Memorandum does the OSG cite the source of its perception of the state interest
sought to be served by the subject clause.
The OSG locates the purpose of R.A. No. 8042 in the speech of Rep. Bonifacio Gallego in sponsorship of House Bill No.
14314 (HB 14314), from which the law originated; 130 but the speech makes no reference to the underlying reason for the
adoption of the subject clause. That is only natural for none of the 29 provisions in HB 14314 resembles the subject clause.
On the other hand, Senate Bill No. 2077 (SB 2077) contains a provision on money claims, to wit:
Sec. 10. Money Claims. - Notwithstanding any provision of law to the contrary, the Labor Arbiters of the National Labor
Relations Commission (NLRC) shall have the original and exclusive jurisdiction to hear and decide, within ninety (90)
calendar days after the filing of the complaint, the claims arising out of an employer-employee relationship or by virtue of
the complaint, the claim arising out of an employer-employee relationship or by virtue of any law or contract involving
Filipino workers for overseas employment including claims for actual, moral, exemplary and other forms of damages.
The liability of the principal and the recruitment/placement agency or any and all claims under this Section shall be joint and
several.
Any compromise/amicable settlement or voluntary agreement on any money claims exclusive of damages under this Section
shall not be less than fifty percent (50%) of such money claims: Provided, That any installment payments, if applicable, to
satisfy any such compromise or voluntary settlement shall not be more than two (2) months. Any compromise/voluntary
agreement in violation of this paragraph shall be null and void.
Non-compliance with the mandatory period for resolutions of cases provided under this Section shall subject the responsible
officials to any or all of the following penalties:
(1) The salary of any such official who fails to render his decision or resolution within the prescribed period shall be,
or caused to be, withheld until the said official complies therewith;
(2) Suspension for not more than ninety (90) days; or
(3) Dismissal from the service with disqualification to hold any appointive public office for five (5) years.
Provided, however, That the penalties herein provided shall be without prejudice to any liability which any such official may
have incurred under other existing laws or rules and regulations as a consequence of violating the provisions of this
paragraph.
But significantly, Section 10 of SB 2077 does not provide for any rule on the computation of money claims.
A rule on the computation of money claims containing the subject clause was inserted and eventually adopted as the 5th
paragraph of Section 10 of R.A. No. 8042. The Court examined the rationale of the subject clause in the transcripts of the
"Bicameral Conference Committee (Conference Committee) Meetings on the Magna Carta on OCWs (Disagreeing Provisions
of Senate Bill No. 2077 and House Bill No. 14314)." However, the Court finds no discernible state interest, let alone a
compelling one, that is sought to be protected or advanced by the adoption of the subject clause.
In fine, 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.
Assuming that, as advanced by the OSG, 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.
The idea that private business interest can be elevated to the level of a compelling state interest is odious.
Moreover, even if the purpose of the subject clause is to lessen the solidary liability of placement agencies vis-a-vistheir
foreign principals, there are mechanisms already in place that can be employed to achieve that purpose without infringing
on the constitutional rights of OFWs.
The POEA Rules and Regulations Governing the Recruitment and Employment of Land-Based Overseas Workers, dated
February 4, 2002, imposes administrative disciplinary measures on erring foreign employers who default on their contractual
obligations to migrant workers and/or their Philippine agents. These disciplinary measures range from temporary
disqualification to preventive suspension. The POEA Rules and Regulations Governing the Recruitment and Employment of
Seafarers, dated May 23, 2003, contains similar administrative disciplinary measures against erring foreign employers.
Resort to these administrative measures is undoubtedly the less restrictive means of aiding local placement agencies in
enforcing the solidary liability of their foreign principals.
Thus, the subject clause in the 5th paragraph of Section 10 of R.A. No. 8042 is violative of the right of petitioner and other
OFWs to equal protection.1avvphi1
Further, there would be certain misgivings if one is to approach the declaration of the unconstitutionality of the subject
clause from the lone perspective that the clause directly violates state policy on labor under Section 3, 131Article XIII of the
Constitution.
While all the provisions of the 1987 Constitution are presumed self-executing,132 there are some which this Court has
declared not judicially enforceable, Article XIII being one,133 particularly Section 3 thereof, the nature of which, this
Court, in Agabon v. National Labor Relations Commission,134 has described to be not self-actuating:
Thus, the constitutional mandates of protection to labor and security of tenure may be deemed as self-executing in the
sense that these are automatically acknowledged and observed without need for any enabling legislation. However, to
declare that the constitutional provisions are enough to guarantee the full exercise of the rights embodied therein, and the
realization of ideals therein expressed, would be impractical, if not unrealistic. The espousal of such view presents the
dangerous tendency of being overbroad and exaggerated. The guarantees of "full protection to labor" and "security of
tenure", when examined in isolation, are facially unqualified, and the broadest interpretation possible suggests a blanket
shield in favor of labor against any form of removal regardless of circumstance. This interpretation implies an unimpeachable
right to continued employment-a utopian notion, doubtless-but still hardly within the contemplation of the framers.
Subsequent legislation is still needed to define the parameters of these guaranteed rights to ensure the protection and
promotion, not only the rights of the labor sector, but of the employers' as well. Without specific and pertinent legislation,
judicial bodies will be at a loss, formulating their own conclusion to approximate at least the aims of the Constitution.
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. As
manifested by several framers of the 1987 Constitution, the provisions on social justice require legislative enactments for
their enforceability.135 (Emphasis added)
Thus, Section 3, Article XIII cannot be treated as a principal source of direct enforceable rights, for the violation of which
the questioned clause may be declared unconstitutional. It may unwittingly risk opening the floodgates of litigation to every
worker or union over every conceivable violation of so broad a concept as social justice for labor.
It must be stressed that Section 3, Article XIII does not directly bestow on the working class any actual enforceable right,
but merely clothes it with the status of a sector for whom the Constitution urges protection through executive or legislative
action and judicial recognition. Its utility is best limited to being an impetus not just for the executive and legislative
departments, but for the judiciary as well, to protect the welfare of the working class. And it was in fact consistent with that
constitutional agenda that the Court in Central Bank (now Bangko Sentral ng Pilipinas) Employee Association, Inc. v. Bangko
Sentral ng Pilipinas, penned by then Associate Justice now Chief Justice Reynato S. Puno, formulated the judicial precept
that when the challenge to a statute is premised on the perpetuation of prejudice against persons favored by the
Constitution with special protection -- such as the working class or a section thereof -- the Court may recognize the
existence of a suspect classification and subject the same to strict judicial scrutiny.
The view that the concepts of suspect classification and strict judicial scrutiny formulated in Central Bank Employee
Association exaggerate the significance of Section 3, Article XIII is a groundless apprehension. Central Bank applied Article
XIII in conjunction with the equal protection clause. Article XIII, by itself, without the application of the equal protection
clause, has no life or force of its own as elucidated in Agabon.
Along the same line of reasoning, the Court further holds that the subject clause violates petitioner's right to substantive due
process, for it deprives him of property, consisting of monetary benefits, without any existing valid governmental purpose. 136
The argument of the Solicitor General, that the actual purpose of the subject clause of limiting the entitlement of OFWs to
their three-month salary in case of illegal dismissal, is to give them a better chance of getting hired by foreign employers.
This is plain speculation. As earlier discussed, there is nothing in the text of the law or the records of the deliberations
leading to its enactment or the pleadings of respondent that would indicate that there is an existing governmental purpose
for the subject clause, or even just a pretext of one.
The subject clause does not state or imply any definitive governmental purpose; and it is for that precise reason that the
clause violates not just petitioner's right to equal protection, but also her right to substantive due process under Section
1,137 Article III of the Constitution.
The subject clause being unconstitutional, petitioner is entitled to his salaries for the entire unexpired period of nine months
and 23 days of his employment contract, pursuant to law and jurisprudence prior to the enactment of R.A. No. 8042.
On the Third Issue
Petitioner contends that his overtime and leave pay should form part of the salary basis in the computation of his monetary
award, because these are fixed benefits that have been stipulated into his contract.
Petitioner is mistaken.
The word salaries in Section 10(5) does not include overtime and leave pay. For seafarers like petitioner, DOLE Department
Order No. 33, series 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.
By the foregoing definition alone, 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. As the
Court held in Centennial Transmarine, Inc. v. Dela Cruz,138
However, the payment of overtime pay and leave pay should be disallowed in light of our ruling in Cagampan v. National
Labor Relations Commission, to wit:
The rendition of overtime work and the submission of sufficient proof that said was actually performed are conditions to be
satisfied before a seaman could be entitled to overtime pay which should be computed on the basis of 30% of the basic
monthly salary. In short, the contract provision guarantees the right to overtime pay but the entitlement to such benefit
must first be established.
In the same vein, the claim for the day's leave pay for the unexpired portion of the contract is unwarranted since the same
is given during the actual service of the seamen.
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 DECLAREDUNCONSTITUTIONAL;
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.
No costs.
SO ORDERED.