Serrano vs.

Gallant Maritime Services

G.R. No. 167614 March 24, 2009
Non-impairment of Contract Clause, OFW Employment Contract

Ponente: Austria-Martinez
Topic: Section 10, paragraph 5 of R.A. No. 8042

FACTS:

For Antonio Serrano, a Filipino seafarer, the last clause in the 5thparagraph of Section 10,
Republic Act (R.A.) No. 8042, does not magnify the contributions of 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.

ISSUE:

Does the 5th paragraph of Section 10, RA 8042 violate the non-impairment of contract clause of
the Constitution?

RULING:

NO. The prohibition is aligned with the general principle that laws newly enacted have only a
prospective operation, and cannot affect acts or contracts already perfected; however, as to laws
already in existence, their provisions are read into contracts and deemed a part thereof. 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.

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 SAMEER OVERSEAS PLACEMENT AGENCY, INC., Petitioner,

vs.

JOY C. CABILES, Respondent.

G.R. No. 170139 August 5, 2014

PONENTE: Leonen

TOPIC: Section 10 of RA 8042 vis-a-vis Section 7 of RA 10022

FACTS:

Petitioner, Sameer Overseas Placement Agency, Inc., is a recruitment and placement

agency.

Respondent Joy Cabiles was hired thus signed a one-year employment contract for a
monthly salary of NT$15,360.00. Joy was deployed to work for Taiwan Wacoal, Co. Ltd.
(Wacoal) on June 26, 1997. She alleged that in her employment contract, she agreed to work as
quality control for one year. In Taiwan, she was asked to work as a cutter.

Sameer claims that on July 14, 1997, a certain Mr. Huwang from Wacoal informed
Joy, without prior notice, that she was terminated and that “she should immediately report to
their office to get her salary and passport.” She was asked to “prepare for immediate
repatriation.” Joy claims that she was told that from June 26 to July 14, 1997, she only earned a
total of NT$9,000.15 According to her, Wacoal deducted NT$3,000 to cover her plane ticket to
Manila.

On October 15, 1997, Joy filed a complaint for illegal dismissal with the NLRC against
petitioner and Wacoal. LA dismissed the complaint. NLRC reversed LA’s decision. CA affirmed
the ruling of the National Labor Relations Commission finding respondent illegally dismissed
and awarding her three months’ worth of salary, the reimbursement of the cost of her
repatriation, and attorney’s fees

ISSUE:

Whether or not Cabiles was entitled to the unexpired portion of her salary due to illegal
dismissal.

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HELD:

YES. The Court held that the award of the three-month equivalent of respondent’s
salary should be increased to the amount equivalent to the unexpired term of the employment
contract.

In Serrano v. Gallant Maritime Services, Inc. and Marlow Navigation Co., Inc., this
court ruled that the clause “or for three (3) months for every year of the unexpired term,
whichever is less” is unconstitutional for violating the equal protection clause and substantive
due process.

A statute or provision which was declared unconstitutional 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 Court said that they are aware that the clause “or for three (3) months for every
year of the unexpired term, whichever is less” was reinstated in Republic Act No. 8042 upon
promulgation of Republic Act No. 10022 in 2010.

Ruling on the constitutional issue

In the hierarchy of laws, the Constitution is supreme. No branch or office of the

government may exercise its powers in any manner inconsistent with the Constitution, regardless
of the existence of any law that supports such exercise. The Constitution cannot be trumped by
any other law. All laws must be read in light of the Constitution. Any law that is inconsistent
with it is a nullity.

Thus, when a law or a provision of law is null because it is inconsistent with the
Constitution, the nullity cannot be cured by reincorporation or reenactment of the same or a
similar law or provision. A law or provision of law that was already declared unconstitutional
remains as such unless circumstances have so changed as to warrant a reverse conclusion.

The Court observed that the reinstated clause, this time as provided in Republic Act.
No. 10022, violates the constitutional rights to equal protection and due process.96 Petitioner as
well as the Solicitor General have failed to show any compelling change in the circumstances
that would warrant us to revisit the precedent.

The Court declared, once again, the clause, “or for three (3) months for every year of
the unexpired term, whichever is less” in Section 7 of Republic Act No. 10022 amending Section
10 of Republic Act No. 8042 is declared unconstitutional and, therefore, null and void.

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 JESUS VERGARA VS. HAMMONIA MARITIME SERVICES INC.
& ATLANTIC MARINE LTD.
G.R. NO. 172933 OCTOBER 6, 2008

PONENTE: BRION
TOPIC: 240-DAY PRINCIPLE

FACTS:

The seafarer was repratriated due to eye problem. After undergoing the required treatment, the
company doctor declared the seafarer fit to resume further sea duty. The seafarer’s private
doctors disagreed and gave the opinion that seafarer was not fit to work as a pump man because
the job could precipitate the resurgence of his former condition.

ISSUE:

Whether or not the petitioner’s claim for permanent total disability benefits has a legal basis.

HELD:

The Supreme Court held that a temporary total disability only becomes permanent when so
declared by the company physician within the periods he is allowed to do so, or upon the
expiration of the maximum-240 Day medical treatment period without a declaration of either
fitness to work or the existence of a permanent disability. In the instant case, the company –
designated doctor duly made a declaration well within the extended 240-day period that the
seafarer was fit to work.