Illegal Dismissal Benefits

In case of illegal dismissal, how much is a seafarer entitled to receive from his employers? His salaries for the unexpired portion of his employment contract or his salaries for three (3) months for every year of the unexpired term, whichever is less?

The r ruling of the Supreme Court in the case of Antonio M. Serrano vs. Gallant Maritime Services, Inc. and Marlow Navigation Co., Inc. (G.R. No. 167614, March 24, 2009) has brought clarity and definitiveness to the issue of entitlement to benefits of a seafarer in case he is illegallydismissed. It made certain that the seafarer should receive his salaries for the entire unexpired portion of his contract, and not just for three months.

In the said Serrano case, the petitioner-seafarer was hired as Chief Officer for a period of 12 months. On the date of his departure however, he accepted the downgraded post of Second Officer upon the assurance of his employers that he would be made Chief Officer in less than two months. His employers however, reneged on their commitment, resulting to petitioner-seafarer’s refusal to stay on as Second Officer. He was then repatriated to the Philippines after less than three months of work. Formally complaining to the Labor Arbiter, the latter, among others, declared his dismissal as illegal but only awarded petitioner-seafarer a lump sum amount based on his salary for three months of the unexpired portion of his contract.

On appeal, the petitioner-seafarer eventually questioned the constitutionality of the 5th paragraph of Section 10, Republic Act No. 8042 (otherwise known as the “Migrant Workers and Overseas Filipinos Act of 1995”) which took effect on July 15, 1995. It reads: “Sec.10. Money Claims.-xxx 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” (underscoring supplied)The National Labor Relations Commission (NLRC) sustained in principle the Labor Arbiter’s decision although it modified the computation of the award.

The Court of Appeals likewise affirmed the NLRC decision. The Supreme Court took the side of the petitioner-seafarer by affirming the illegality of his dismissal and awarded him his salaries for the entire unexpired portion of his employment contract covering nine months and 23 days.

Moreover, in an unparalleled initiative, exercising its power of judicial review of the acts of Congress, the Supreme Court declared the 5th paragraph of Section 10 of RA 8042 as violative of Section 1, Article III (right to due process and equal protection), Section 18, Article II and Section 3, Article XIII (protection of rights of all Filipino workers, whether deployed locally or overseas) of the Constitution. The High Court observed that the questioned clause has a discriminatory intent against overseas Filipino workers (OFWs) at two levels, i.e., OFWs with employment contracts of LESS THAN 1 YEAR vis-à-vis OFWs with contracts of ONE YEAR OR MORE, and OFWs vis-a-vis local workers with fixed-period employment. The clause only limits the monetary awards of OFWs, whose contracts have an unexpired portion of one year or more, to their salaries for three months or for the unexpired portion thereof, whichever is less, but does not bother OFWs with unexpired contracts short of one year.

The Court concluded “….the subject clause contains a suspect classification in that, in the computation of the monetary benefits of fixed-term employees who are illegally dismissed, it imposes a three-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” (underscoring supplied). The Court likewise added that the clause violates the petitioner-seafarer’s right to substantive due process for it deprives him of property, consisting of monetary benefits without any existing valid governmental purpose. With the above ruling, the Supreme Court has reverted to the old, simple, and logical manner by which claims of illegally dismissed OFWs are computed, i.e., their basic salaries multiplied by the entire unexpired portions of their contracts, and accordingly disregarded any distinction relating to the OFWs’ contract periods or the unexpired portions thereof.

Article of Atty. Augusto R. Bundang originally published in the May-June 2009 issue of Tinig ng Marino