Constitutional Law, Labor Law

Serrano vs. Gallant Maritime Services G.R. No. 167614 March 24, 2009 Non-impairment of Contract Clause, OFW Employment Contract

FACTS:

For Antonio Serrano, a Filipino seafarer, the last clause in the 5th paragraph 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. 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 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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