SECOND DIVISION

[G.R. No. 179532. May 30, 2011.]

CLAUDIO S. YAP, petitioner , vs. THENAMARIS SHIP'S MANAGEMENT

and INTERMARE MARITIME AGENCIES, INC., respondents.

DECISION

NACHURA, J : p

Before this Court is a Petition for Review on Certiorari 1 under Rule 45 of the
Rules of Civil Procedure, seeking the reversal of the Court of Appeals (CA) Decision 2
dated February 28, 2007, which affirmed with modification the National Labor Relations
Commission (NLRC) resolution 3 dated April 20, 2005.
The undisputed facts, as found by the CA, are as follows:

[Petitioner] Claudio S. Yap was employed as electrician of the vessel, M/T

SEASCOUT on 14 August 2001 by Intermare Maritime Agencies, Inc. in behalf of
its principal, Vulture Shipping Limited. The contract of employment entered into
by Yap and Capt. Francisco B. Adviento, the General Manager of Intermare, was
for a duration of 12 months. On 23 August 2001, Yap boarded M/T SEASCOUT
and commenced his job as electrician. However, on or about 08 November 2001,
the vessel was sold. The Philippine Overseas Employment Administration
(POEA) was informed about the sale on 06 December 2001 in a letter signed by
Capt. Adviento. Yap, along with the other crewmembers, was informed by the
Master of their vessel that the same was sold and will be scrapped. They were
also informed about the Advisory sent by Capt. Constatinou, which states, among
others:

". . . PLEASE ASK YR OFFICERS AND RATINGS IF THEY WISH TO BE

TRANSFERRED TO OTHER VESSELS AFTER VESSEL S DELIVERY
(GREEK VIA ATHENS-PHILIPINOS VIA MANILA. . .

. . . FOR CREW NOT WISH TRANSFER TO DECLARE THEIR

PROSPECTED TIME FOR REEMBARKATION IN ORDER TO SCHEDULE
THEM ACCLY. . ."

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

[Respondents], for their part, contended that Yap was not illegally
 dismissed. They alleged that following the sale of the M/T SEASCOUT, Yap
signed off from the vessel on 10 November 2001 and was paid his wages
corresponding to the months he worked or until 10 November 2001 plus his
seniority bonus, vacation bonus and extra bonus. They further alleged that Yap's
employment contract was validly terminated due to the sale of the vessel and no
arrangement was made for Yap's transfer to Thenamaris' other vessels. 4

Thus, Claudio S. Yap (petitioner) filed a complaint for Illegal Dismissal with
Damages and Attorney's Fees before the Labor Arbiter (LA). Petitioner claimed that he
was entitled to the salaries corresponding to the unexpired portion of his contract.
Subsequently, he filed an amended complaint, impleading Captain Francisco Adviento of
respondents Intermare Maritime Agencies, Inc. (Intermare) and Thenamaris Ship's
Management (respondents), together with C.J. Martionos, Interseas Trading and
Financing Corporation, and Vulture Shipping Limited/Stejo Shipping Limited.
On July 26, 2004, the LA rendered a decision 5 in favor of petitioner, finding the
latter to have been constructively and illegally dismissed by respondents. Moreover, the
LA found that respondents acted in bad faith when they assured petitioner of re-
embarkation and required him to produce an electrician certificate during the period of
his contract, but actually he was not able to board one despite of respondents'
numerous vessels. Petitioner made several follow-ups for his re-embarkation but
respondents failed to heed his plea; thus, petitioner was forced to litigate in order to
vindicate his rights. Lastly, the LA opined that since the unexpired portion of petitioner's
contract was less than one year, petitioner was entitled to his salaries for the unexpired
portion of his contract for a period of nine months. The LA disposed, as follows:

WHEREFORE, in view of the foregoing, a decision is hereby rendered

declaring complainant to have been constructively dismissed. Accordingly,
respondents Intermare Maritime Agency Incorporated, Thenamaris Ship's Mgt.,
and Vulture Shipping Limited are ordered to pay jointly and severally complainant
Claudio S. Yap the sum of $12,870.00 or its peso equivalent at the time of
payment. In addition, moral damages of ONE HUNDRED THOUSAND PESOS
(P100,000.00) and exemplary damages of FIFTY THOUSAND PESOS
(P50,000.00) are awarded plus ten percent (10%) of the total award as attorney's
fees.

Other money claims are DISMISSED for lack of merit.

SO ORDERED. 6

Aggrieved, respondents sought recourse from the NLRC.

In its decision 7 dated January 14, 2005, the NLRC affirmed the LA's findings that
petitioner was indeed constructively and illegally dismissed; that respondents' bad faith
was evident on their wilful failure to transfer petitioner to another vessel; and that the
award of attorney's fees was warranted. However, the NLRC held that instead of an
award of salaries corresponding to nine months, petitioner was only entitled to salaries
for three months as provided under Section 10 8 of Republic Act (R.A.) No. 8042, 9 as
enunciated in our ruling in Marsaman Manning Agency, Inc. v. National Labor Relations
Commission. 10 Hence, the NLRC ruled in this wise: c AHDES
 WHEREFORE, premises considered, the decision of the Labor Arbiter
finding the termination of complainant illegal is hereby AFFIRMED with a
MODIFICATION. Complainant['s] salary for the unexpired portion of his contract
should only be limited to three (3) months basic salary.

Respondents Intermare Maritime Agency, Inc.[,] Vulture Shipping Limited

and Thenamaris Ship Management are hereby ordered to jointly and severally
pay complainant, the following:

1. Three (3) months basic salary — US$4,290.00 or its peso

equivalent at the time of actual payment.

2. Moral damages — P100,000.00

3. Exemplary damages — P50,000.00

4. Attorney's fees equivalent to 10% of the total monetary award.

SO ORDERED. 11

Respondents filed a Motion for Partial Reconsideration, 12 praying for the reversal
and setting aside of the NLRC decision, and that a new one be rendered dismissing the
complaint. Petitioner, on the other hand, filed his own Motion for Partial Reconsideration,
13 praying that he be paid the nine (9)-month basic salary, as awarded by the LA.

On April 20, 2005, a resolution 14 was rendered by the NLRC, affirming the
findings of Illegal Dismissal and respondents' failure to transfer petitioner to another
vessel. However, finding merit in petitioner's arguments, the NLRC reversed its earlier
Decision, holding that "there can be no choice to grant only three (3) months salary
for every year of the unexpired term because there is no full year of unexpired term
which this can be applied." Hence —

WHEREFORE, premises considered, complainant's Motion for Partial

Reconsideration is hereby granted. The award of three (3) months basic salary in
the sum of US$4,290.00 is hereby modified in that complainant is entitled to his
salary for the unexpired portion of employment contract in the sum of
US$12,870.00 or its peso equivalent at the time of actual payment.

All aspect of our January 14, 2005 Decision STANDS.

SO ORDERED. 15

Respondents filed a Motion for Reconsideration, which the NLRC denied. SAEHaC

Undaunted, respondents filed a petition for certiorari 16 under Rule 65 of the

Rules of Civil Procedure before the CA. On February 28, 2007, the CA affirmed the
findings and ruling of the LA and the NLRC that petitioner was constructively and
illegally dismissed. The CA held that respondents failed to show that the NLRC acted
without statutory authority and that its findings were not supported by law,
jurisprudence, and evidence on record. Likewise, the CA affirmed the lower agencies'
findings that the advisory of Captain Constantinou, taken together with the other
documents and additional requirements imposed on petitioner, only meant that the latter
should have been re-embarked. In the same token, the CA upheld the lower agencies'
unanimous finding of bad faith, warranting the imposition of moral and exemplary
damages and attorney's fees. However, the CA ruled that the NLRC erred in sustaining
the LA's interpretation of Section 10 of R.A. No. 8042. In this regard, the CA relied on
the clause "or for three months for every year of the unexpired term, whichever is
less" provided in the 5th paragraph of Section 10 of R.A. No. 8042 and held:

In the present case, the employment contract concerned has a term of one
year or 12 months which commenced on August 14, 2001. However, it was
preterminated without a valid cause. [Petitioner] was paid his wages for the
corresponding months he worked until the 10th of November. Pursuant to the
provisions of Sec. 10, [R.A. No.] 8042, therefore, the option of "three months for
every year of the unexpired term" is applicable. 17

Thus, the CA provided, to wit:

WHEREFORE, premises considered, this Petition for C ertiorari is

DENIED. The Decision dated January 14, 2005, and Resolutions, dated April
20, 2005 and July 29, 2005, respectively, of public respondent National Labor
Relations Commission-Fourth Division, Cebu City, in NLRC No. V-000038-04
(RAB VIII (OFW)-04-01-0006) are hereby AFFIRMED with the MODIFICATION
that private respondent is entitled to three (3) months of basic salary computed at
US$4,290.00 or its peso equivalent at the time of actual payment.

Costs against Petitioners. 18

Both parties filed their respective motions for reconsideration, which the CA,
however, denied in its Resolution 19 dated August 30, 2007.
Unyielding, petitioner filed this petition, raising the following issues:

1) Whether or not Section 10 of R.A. [No.] 8042, to the extent that it affords an
illegally dismissed migrant worker the lesser benefit of — "salaries for [the]
unexpired portion of his employment contract or for three (3) months for
every year of the unexpired term, whichever is less" — is constitutional;
and

2) Assuming that it is, whether or not the Court of Appeals gravely erred in
granting petitioner only three (3) months backwages when his unexpired
term of 9 months is far short of the "every year of the unexpired term"
threshold. 20AHaDSI

In the meantime, while this case was pending before this Court, we declared as
unconstitutional the clause "or for three months for every year of the unexpired term,
whichever is less" provided in the 5th paragraph of Section 10 of R.A. No. 8042 in the
case of Serrano v. Gallant Maritime Services, Inc. 21 on March 24, 2009.
Apparently, unaware of our ruling in Serrano, petitioner claims that the 5th
paragraph of Section 10, R.A. No. 8042, is violative of Section 1, 22 Article III and
Section 3, 23 Article XIII of the Constitution to the extent that it gives an erring employer
the option to pay an illegally dismissed migrant worker only three months for every year
of the unexpired term of his contract; that said provision of law has long been a source
of abuse by callous employers against migrant workers; and that said provision violates
the equal protection clause under the Constitution because, while illegally dismissed
local workers are guaranteed under the Labor Code of reinstatement with full backwages
computed from the time compensation was withheld from them up to their actual
reinstatement, migrant workers, by virtue of Section 10 of R.A. No. 8042, have to waive
nine months of their collectible backwages every time they have a year of unexpired
term of contract to reckon with. Finally, petitioner posits that, assuming said provision of
law is constitutional, the CA gravely abused its discretion when it reduced petitioner's
backwages from nine months to three months as his nine-month unexpired term cannot
accommodate the lesser relief of three months for every year of the unexpired term. 24
On the other hand, respondents, aware of our ruling in Serrano, aver that our
pronouncement of unconstitutionality of the clause "or for three months for every year
of the unexpired term, whichever is less" provided in the 5th paragraph of Section 10
of R.A. No. 8042 in Serrano should not apply in this case because Section 10 of R.A.
No. 8042 is a substantive law that deals with the rights and obligations of the parties in
case of Illegal Dismissal of a migrant worker and is not merely procedural in character.
Thus, pursuant to the Civil Code, there should be no retroactive application of the law in
this case. Moreover, respondents asseverate that petitioner's tanker allowance of
US$130.00 should not be included in the computation of the award as petitioner's basic
salary, as provided under his contract, was only US$1,300.00. Respondents submit that
the CA erred in its computation since it included the said tanker allowance.
Respondents opine that petitioner should be entitled only to US$3,900.00 and not to
US$4,290.00, as granted by the CA. Invoking Serrano, respondents claim that the
tanker allowance should be excluded from the definition of the term "salary." Also,
respondents manifest that the full sum of P878,914.47 in Intermare's bank account was
garnished and subsequently withdrawn and deposited with the NLRC Cashier of
Tacloban City on February 14, 2007. On February 16, 2007, while this case was pending
before the CA, the LA issued an Order releasing the amount of P781,870.03 to petitioner
as his award, together with the sum of P86,744.44 to petitioner's former lawyer as
attorney's fees, and the amount of P3,570.00 as execution and deposit fees. Thus,
respondents pray that the instant petition be denied and that petitioner be directed to
return to Intermare the sum of US$8,970.00 or its peso equivalent. 25 Sc TaEA

On this note, petitioner counters that this new issue as to the inclusion of the
tanker allowance in the computation of the award was not raised by respondents before
the LA, the NLRC and the CA, nor was it raised in respondents' pleadings other than in
their Memorandum before this Court, which should not be allowed under the
circumstances. 26
The petition is impressed with merit.
Prefatorily, it bears emphasis that the unanimous finding of the LA, the NLRC and
the CA that the dismissal of petitioner was illegal is not disputed. Likewise not disputed
is the tribunals' unanimous finding of bad faith on the part of respondents, thus,
warranting the award of moral and exemplary damages and attorney's fees. What
remains in issue, therefore, is the constitutionality of the 5th paragraph of Section 10 of
R.A. No. 8042 and, necessarily, the proper computation of the lump-sum salary to be
awarded to petitioner by reason of his illegal dismissal.
Verily, we have already declared in Serrano that the clause "or for three months
for every year of the unexpired term, whichever is less" provided in the 5th paragraph
of Section 10 of R.A. No. 8042 is unconstitutional for being violative of the rights of
Overseas Filipino Workers (OFWs) to equal protection of the laws. In an exhaustive
discussion of the intricacies and ramifications of the said clause, this Court, in Serrano,
pertinently held:

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. 27

Moreover, this Court held therein that the subject clause does not state or imply
any definitive governmental purpose; hence, the same violates not just therein
petitioner's right to equal protection, but also his right to substantive due process under
Section 1, Article III of the Constitution. 28 Consequently, petitioner therein was
accorded 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.
We have already spoken. Thus, this case should not be different from Serrano.
As a general rule, an unconstitutional act is not a law; it confers no rights; it
imposes no duties; it affords no protection; it creates no office; it is inoperative as if it
has not been passed at all. The general rule is supported by Article 7 of the Civil Code,
which provides: HADTEC

Art. 7. Laws are repealed only by subsequent ones, and their violation
or non-observance shall not be excused by disuse or custom or practice to the
contrary.

The doctrine of operative fact serves as an exception to the aforementioned

general rule. In Planters Products, Inc. v. Fertiphil Corporation , 29 we held:

The doctrine of operative fact, as an exception to the general rule, only

applies as a matter of equity and fair play. It nullifies the effects of an
unconstitutional law by recognizing that the existence of a statute prior to a
determination of unconstitutionality is an operative fact and may have
consequences which cannot always be ignored. The past cannot always be
erased by a new judicial declaration.

The doctrine is applicable when a declaration of unconstitutionality will

impose an undue burden on those who have relied on the invalid law. Thus, it
was applied to a criminal case when a declaration of unconstitutionality would put
the accused in double jeopardy or would put in limbo the acts done by a
municipality in reliance upon a law creating it. 30

Following Serrano, we hold that this case should not be included in the
aforementioned exception. After all, it was not the fault of petitioner that he lost his job
due to an act of illegal dismissal committed by respondents. To rule otherwise would be
iniquitous to petitioner and other OFWs, and would, in effect, send a wrong signal that
principals/employers and recruitment/manning agencies may violate an OFW's security
of tenure which an employment contract embodies and actually profit from such
violation based on an unconstitutional provision of law.
In the same vein, we cannot subscribe to respondents' postulation that the tanker
allowance of US$130.00 should not be included in the computation of the lump-sum
salary to be awarded to petitioner.
First. It is only at this late stage, more particularly in their Memorandum, that
respondents are raising this issue. It was not raised before the LA, the NLRC, and the
CA. They did not even assail the award accorded by the CA, which computed the lump-
sum salary of petitioner at the basic salary of US$1,430.00, and which clearly included
the US$130.00 tanker allowance. Hence, fair play, justice, and due process dictate that
this Court cannot now, for the first time on appeal, pass upon this question. Matters not
taken up below cannot be raised for the first time on appeal. They must be raised
seasonably in the proceedings before the lower tribunals. Questions raised on appeal
must be within the issues framed by the parties; consequently, issues not raised before
the lower tribunals cannot be raised for the first time on appeal. 31
Second. Respondents' invocation of Serrano is unavailing. Indeed, we made the
following pronouncements in Serrano, to wit:

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. 32 ECDaAc

A close perusal of the contract reveals that the tanker allowance of US$130.00
was not categorized as a bonus but was rather encapsulated in the basic salary clause,
hence, forming part of the basic salary of petitioner. Respondents themselves in their
petition for certiorari before the CA averred that petitioner's basic salary, pursuant to
the contract, was "US$1,300.00 + US$130.00 tanker allowance." 33 If respondents
intended it differently, the contract per se should have indicated that said allowance
does not form part of the basic salary or, simply, the contract should have separated it
from the basic salary clause.
A final note.
We ought to be reminded of the plight and sacrifices of our OFWs. In Olarte v.
Nayona, 34 this Court held that:

Our overseas workers belong to a disadvantaged class. Most of them

come from the poorest sector of our society. Their profile shows they live in
suffocating slums, trapped in an environment of crimes. Hardly literate and in ill
health, their only hope lies in jobs they find with difficulty in our country. Their
unfortunate circumstance makes them easy prey to avaricious employers. They
will climb mountains, cross the seas, endure slave treatment in foreign lands just
to survive. Out of despondence, they will work under sub-human conditions and
accept salaries below the minimum. The least we can do is to protect them with
our laws.
 our laws.

WHEREFORE, the Petition is GRANTED. The Court of Appeals Decision dated

February 28, 2007 and Resolution dated August 30, 2007 are hereby MODIFIED to the
effect that petitioner is AWARDED his salaries for the entire unexpired portion of his
employment contract consisting of nine months computed at the rate of US$1,430.00
per month. All other awards are hereby AFFIRMED. No costs.

SO ORDERED.

Carpio, Peralta, Abad and Mendoza, JJ., concur.

Footnotes

1.Rollo, pp. 33-56.

2.Penned by Associate Justice Antonio L. Villamor, with Associate Justices Pampio A.

Abarintos and Stephen C. Cruz, concurring; id. at 60-73.

3.Id. at 166-170.

4.Supra note 2, at 63-65.

5.Rollo, pp. 121-129.

6.Id. at 129.

7.Id. at 130-149.

8.The last clause in the 5th paragraph of Section 10, R.A. No. 8042, provides to wit:

Sec. 10. MONEY CLAIMS. — . . . .

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. (Emphasis and underscoring supplied.)

9.The Migrant Workers and Overseas Filipinos Act of 1995, effective July 15, 1995.

10.371 Phil. 827 (1999).

11.Supra note 7, at 148-149.

12.Rollo, pp. 157-163.

13.Id. at 150-156.

14.Id. at 166-170.

15.Id. at 170.

16.Id. at 171-196.
17.Supra note 2, at 70.

18.Id. at 72-73.

19.Rollo, pp. 96-99.

20.Supra note 1, at 44-45.

21.G.R. No. 167614, March 24, 2009, 582 SCRA 254.

22.Section 1, Article III of the Constitution provides:

Section 1. 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 laws.

23.Section 3, Article XIII of the Constitution pertinently provides:

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.

24.Rollo, pp. 312-331.

25.Id. at 290-303.

26.Supra note 24.

27.Supra note 21, at 295.

28.Id. at 303.

29.G.R. No. 166006, March 14, 2008, 548 SCRA 485.

30.Id. at 516-517. (Citations omitted.)

31.Ayson v. Vda. De Carpio, 476 Phil. 525, 535 (2004).

32.Supra note 21, at 303. (Emphasis supplied.)

33.Supra note 16, at 173.

34.461 Phil. 429, 431 (2003).