Serrano v Gallant Maritime Services Inc.,

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


Serrano was hired by Gallant Maritime under a POEA approved Contract of Employment. In 1998, on the date of his departure, petitioner was constrained to accept a downgraded employment contract for the position of Second Officer, 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. 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.

  • The LA declared the dismissal of petitioner illegal and awarded him monetary benefits based 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. Both petitioner and respondents appealed from the decision of LA.
  • 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.  
  • The CA affirmed the NLRC ruling on the reduction of the applicable salary rate

Petitioner claims that the Sec.10 of RA 8042 violates the  OFWs’ constitutional rights because it

(a)impairs the terms of their contract, it unduly interferes with the stipulations in his contract on the term of his employment and the fixed salary package he will receive.

(b) deprives them of equal protection and denies them due process.

He contends that he is entitled of the entire nine months and 23 days left of his employment contract, computed at the monthly rate of US$2,590.00


(1) WON the subject clause violate Section 10, Article III of the Constitution on non-impairment of contract.

(2) WON 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?


(1) Section 10, Article III of the Constitution provides:

No law impairing the obligation of contracts shall be passed.

NO.  The subject clause may not be declared unconstitutional on the ground that it impinges (affects) 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.

Note: 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.

(2) YES. 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 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

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.

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