SERRANO vs GALLANT MARITIME SERVICES, INC.

G.R. No. 167614; March 24, 2009

FACTS: Serrano the petitioner, a Filipino seafarer, claiming 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. Petitioner
was hired by Gallant Maritime Services, Inc. and Marlow Navigation Co., Ltd. , the respondents under a POEA
approved Contract of Employment.

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. Respondents did not deliver on their
promise to make petitioner Chief Officer. Hence, petitioner refused to stay on as Second Officer and was repatriated to
the Philippines on May 1998. 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 a complaint with the Labor Arbiter (LA) against respondents for constructive dismissal and for
payment of his money claims in the total amount of US$26,442.73 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. Respondents appealed to the NLRC to question the decison of the LA that petitioner was illegally
dismissed. Then , petitioner also appealed to the NLRC, OFWs are entitled to their salaries for the unexpired portion of
their contracts. The NLRC modified the LA Decision that respondent ordered to pay complainant.

Petitioner filed a Motion for Partial Reconsideration, but this time he questioned the constitutionality of the
subject clause and NLRC denied the motion. Petitioner filed a Petition for Certiorari with the CA, reiterating the
constitutional challenge against the subject clause, CA granted the petition for certiorari. CA affirmed the NLRC ruling
on the reduction of the applicable salary rate, however, the CA skirted the constitutional issue raised by petitioner.

ISSUE: 1. Whether or not the subject clause violates Section 10, Article III of the Constitution on non-
impairment of contracts;
2. Whether or not 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;
3. Whether or not RA Section 10 (par 5) of RA 8042 is unconstitutional.

RULING: First issue, the Court held that 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 is not tenable. 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. 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. Police 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.

Second issue, the Court 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, Article II and Section 3, 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.

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.

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; b) the middle-tier or intermediate scrutiny in which the government
must show that the challenged classification serves an important state interest and that the classification is at least
substantially related to serving that interest; and c) strict judicial scrutiny in which a legislative classification which
impermissibly interferes with the exercise of a fundamental right or operates to the peculiar disadvantage of a suspect
class is presumed unconstitutional, and the burden is upon the government to prove that the classification is necessary to
achieve a compelling state interest and that it is the least restrictive means to protect such interest.

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-à-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-à-vis local workers with fixed-period employment;

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. It is akin to the paramount interest of the state for which some
individual liberties must give way, such as the public interest in safeguarding health or maintaining medical
standards, or in maintaining access to information on matters of public concern.
 Last issue, In the present case, the Court dug deep into the records but found no compelling state interest that
the subject clause may possibly serve. 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.

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. The subject clause “or for three months for every year of the unexpired term,
whichever is less” in the 5th paragraph of Section 10 of Republic Act No. 8042 is Declared Unconstitutional.
EMIRATE SECURITY AND MAINTENANCE SYSTEMS, INC. vs MENESE
G.R. No. 182848, October 5, 2011

FACTS: Respondent Glenda M. Menese filed a complaint for constructive dismissal; illegal reduction of
salaries and allowances; separation pay; refund of contribution to cash bond; overtime, holiday, rest day
and premium pay; damages; and attorneys fees against the petitioners, Emirate Security and Maintenance
Systems, Inc. and its General Manager Yan.
Menese alleged in the compulsory arbitration proceedings, the agency engaged her services as
payroll and billing clerk. She was assigned to the agency’s security detachment at the PGH. She claimed
that she was never given overtime, holiday, rest day and premium pay. Menese also alleged she started
getting pressures from the agency for her to resign from her position because it had been committed to a
certain Amy Claro, a protge of Mrs. Dapula the new chief of the Security Division of the UP Manila and
PGH. Menese raised the matter with Yan who told her that the agency was in the process of establishing
goodwill with Dapula, so it had to sacrifice her position to accommodate Dapulas request to hire Claro.
The petitioners, denied liability. They alleged that Dapula informed the agency in writing, through
Yan, that she had been receiving numerous complaints from security guards and other agency employees
about Meneses unprofessional conduct. Dapulas letter, Yan sent Menese a memorandum instructing her to
report to the agency’s head office and, there and then, discussed with her Dapulas letter. Yan informed
Menese that upon Dapulas request, she would be transferred to another assignment which would not involve
any demotion in rank or diminution in her salary and other benefits. Although Menese said that she would
think about the matter, the petitioners were surprised to receive summons from the labor arbiter regarding
the complaint.
Labor Arbiter declared Menese to have been constructively dismissed. The petitioners appealed to the
NLRC, then NLRC Second Division issued a resolution granting the appeal and reversing the labor arbiters
decision. Menese filed a partial motion for reconsideration, the NLRC rendered a resolution setting aside
the entry of judgment and denying Meneses partial motion for reconsideration. The CA granted the petition

ISSUE: 1. Whether or not Respondent was constructively dismissed.

2. Whether or not Respondent is entitled to overtime pay, among others.

RULING: First Issue: The Court denied the petition due to lack of merit. The evidence of Meneses
unwarranted, unjustified and, in her own language, unceremonious dismissal is so glaring that to ignore it
is to commit, as the NLRC did, grave abuse of discretion.
The Court point that at the time material to the case, Menese ceased to be the agencys payroll and
billing clerk at its PGH detachment. The position was taken away from her as she had been transferred to
the agencys main office on Ortigas Avenue, Mandaluyong City, upon the request of Dapula, the new chief
of the UP-PGH Security Division. They also submit that Menese refused to comply with the valid transfer
orders they issued, making her liable for abandonment and insubordination. They argue that nothing on
record shows that she was illegally dismissed as no dismissal had been imposed on her.
As Menese noted, the petitioners did not submit as annex to the petition Yans letter to Dapula, and
the reason appears to be obvious they were trying to avoid calling attention to the absence of proof of
Meneses alleged unprofessionalism and her involvement in nepotism. Evidently, the basis for Dapulas
request did not exist. Thus, the Court found out that credible Meneses contention that her transfer was a
ploy to remove her from the PGH detachment to accommodate the entry of Dapulas protge. In short, the
agency wanted to create a vacancy for Claro, the protge. Confronted with this clear intent of the petitioners,
the court cannot see how Meneses transfer could be considered a valid exercise of management prerogative.
As Menese rightly put it, her transfer was arbitrarily done, motivated no less by ill will and bad faith.
The Court cannot blame Menese for refusing Yans offer to be transferred. Not only was the transfer
arbitrary and done in bad faith, it would also result, as Menese feared, in a demotion in rank and a diminution
in pay. Although Yan informed Menese that based on the request of the client, she will be transferred to
another assignment which however will not involve any demotion in rank nor diminution in her salaries
and other benefits, the offer was such as to invite reluctance and suspicion as it was couched in a very
general manner. We find credible Meneses submission on this point, i.e., that under the offered transfer: (1)
she would hold the position of lady guard and (2) she would be paid in accordance with the statutory
minimum wage, or from P11,720.00 to P7,500.00.
In these lights, Meneses transfer constituted a constructive dismissal as it had no justifiable basis
and entailed a demotion in rank and a diminution in pay for her. For a transfer not to be considered a
constructive dismissal, the employer must be able to show that the transfer is for a valid reason, entails no
diminution in the terms and conditions of employment, and must be unreasonably inconvenient or
prejudicial to the employee. If the employer fails to meet these standards, the employees transfer shall
amount, at the very least, to constructive dismissal. The petitioners, unfortunately for them, failed to come
up to these standards.
Second issue: While the labor arbiter declared that Meneses claim for overtime pay is unrebutted
and, indeed, nowhere in the petitioners position paper did they controvert Meneses claim, we hold that the
claim must still be substantiated. In Global Incorporated v. Commissioner Atienza, a claim for overtime
pay will not be granted for want of factual and legal basis. In this respect, the records indicate that the labor
arbiter granted Meneses claim for holiday pay, rest day and premium pay on the basis of payrolls. There is
no such proof in support of Meneses claim for overtime pay other than her contention that she worked from
8:00 a.m. up to 5:00 p.m. She presented no evidence to show that she was working during the entire one
hour meal break. We thus find the NLRCs deletion of the overtime pay award in order.
Also, the NLRC noted that the award of P2,600.00 for the refund of the cash bond deposit is
overstated and should be adjusted to P600.00 only, as indicated by the payrolls. The Court find the
adjustment in order. All told, except for the above clarifications on the overtime pay award and the refund
of the cash bond deposit, we reiterate and so declare the petition to be devoid of merit.
G & M Phils. Inc., vs. EPIFANIO CRUZ
G.R. No. 140495. April 15, 2005

FACTS: Petitioner G & M Phils., Inc. recruited respondent Cruz as trailer driver for its foreign principal,
Salim Al Yami Est., for a period of two years, and with a stipulated monthly salary of US$625, starting
June 6, 1990. Respondent alleged that when he arrived in the Kingdom of Saudi Arabia, he was made to
sign an employment contract in blank and his salary was reduced to SR604.00. Seven months into
employment, his employer deported him on December 28, 1990. According to respondent, the cause for his
dismissal was his complaint for sub-human working conditions, non-payment of wages and overtime pay,
salary deduction and change of employer. Hence, he filed with the Labor Arbiter an Affidavit/Complaint
against petitioner for illegal dismissal, underpayment and non-payment of wages, and refund of
transportation expenses. Respondent claims that he was only paid in an amount equivalent to five months
salary and he did not receive his salary for the last two months. Respondent submitted a copy of his pay
slip showing the amount of SR604.00 as his basic salary.

Petitioner contends that respondent abandoned his job when he joined an illegal strike and refused
to report for work, constituting a breach of his employment contract and a valid cause for termination of
employment. Petitioner also claims that the pay slip submitted by respondent is inadmissible because the
original copy was not presented and that its existence, due execution, genuineness and authenticity were
not established.

The Labor Arbiter found merit in petitioners claim that respondent abandoned his job, but
nevertheless granted respondents claim for underpayment of wages and two months unpaid salary. On
partial appeal to the NLRC, the same was dismissed for lack of merit. Respondent G & M Phils. Inc., and
Salim Al Yami Est., are hereby ordered jointly and severally liable to pay complainant. Petitioner filed a
special civil action for certiorari in the Court of Appeals, but it was dismissed for lack of merit.

ISSUE: Whether or not in complaints involving underpayment of salaries, the employee has the burden of
proving such underpayment?

RULING: The Court led that the rule is that the burden of proving payment of monetary claims rests on
the employer, in this case, petitioner, it being the employment agency or recruitment entity, and agent of
the foreign principal, Salim Al Yami Est., which recruited respondent. In Jimenez vs. NLRC, which
involves a claim for unpaid wages/commissions, separation pay and damages against an employer, the
Court ruled that where a person is sued for a debt admits that the debt was originally owed, and pleads
payment in whole or in part, it is incumbent upon him to prove such payment. This is based on the principle
of evidence that each party must prove his affirmative allegations. Since petitioner asserts that respondent
has already been fully paid of his stipulated salary, the burden is upon petitioner to prove such fact of full
payment.

As a general rule, one who pleads payment has the burden of proving it. Even where the plaintiff
must allege non-payment, the general rule is that the burden rests on the defendant to prove payment, rather
than on the plaintiff to prove non-payment. The debtor has the burden of showing with legal certainty that
the obligation has been discharged by payment. Petitioner merely denied respondents claim of
underpayment. It did not present any controverting evidence to prove full payment. Hence, the findings of
the Labor Arbiter, the NLRC and the Court of Appeals that respondent was not fully paid of his wages
stand.
 With regard to the admissibility of the pay slips, both the Labor Arbiter and the NLRC found that
it was admissible as evidence. As a general rule, the Court is not duty-bound to delve into the accuracy of
the NLRCs factual findings in the absence of a clear showing that these were arbitrary and bereft of any
rational basis. Petitioner failed to demonstrate any arbitrariness or lack of rational basis on the part of the
NLRC.

Article 221 of the Labor Code provides that proceedings before the NLRC are not covered by the
technical rules of evidence and procedure. The probative value of the copy of the pay slips is aptly justified
by the NLRC, that the payslips are original duplicates of computerized payslips issued by the employer,
Salim Al Yami Est., to its workers which contain entries such as pay date, employees I.D. number,
employee name, category, basic rate, overtime hours and other relevant information, including an
itemization of earnings (basic pay, overtime pay, meal allowance for the period covered) and deductions.
The fact that the payslips are not authenticated will not militate against complainants claim, considering
that in presenting the payslips, complainant has established the fact of underpayment, and the burden has
shifted to the respondent to prove that complainant was totally compensated for actual services rendered.