Serrano v.

Gallant Maritime Service Inc

G.R. No. 167614, 24 Mar 2009
FACTS:
Petitioner Antonio Serrano was hired by respondents Gallant Maritime Services, Inc. and
Marlow Navigation Co., Inc., under a POEA-approved contract of employment for 12 months, as
Chief Officer, with the basic monthly salary of US$1,400, plus $700/month overtime pay, and 7
days paid vacation leave per month. On the date of his departure, Serrano was constrained to
accept a downgraded employment contract upon the assurance and representation of
respondents that he would be Chief Officer by the end of April 1998. Respondents did not
deliver on their promise to make Serrano Chief Officer. Hence, Serrano refused to stay on as
second Officer and was repatriated to the Philippines, serving only two months and 7 days,
leaving an unexpired portion of nine months and twenty-three days. Upon complaint filed by
Serrano before the Labor Arbiter (LA), the dismissal was declared illegal. On appeal, the NLRC
modified the LA decision based on the provision of RA 8042. Serrano filed a Motion for Partial
Reconsideration, but this time he questioned the constitutionality of the last clause in the 5th
paragraph of Section 10 of RA 8042.
ISSUES / RULING:
Whether or not the subject clause violates Section 10, Article III of the Constitution on nonimpairment of contracts
The answer is in the negative. Petitioners 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 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.
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
The answer is in the affirmative. To Filipino workers, the rights guaranteed under the foregoing
constitutional provisions translate to economic security and parity. 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--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--vis local workers with
fixed-period employment. The subject clause singles out one classification of OFWs and burdens
it with a peculiar disadvantage. 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.
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Sameer Overseas Placement Agency Inc v. Cabiles

G.R. No. 170139, 5 Aug 2004
FACTS:
Petitioner Sameer Overseas Placement Agency, a recruitment and placement agency posted an
ad for a quality control job Taiwan. Respondent Joy C. Cabiles responded to that job offer and
was accepted. She later signed a one-year employment contract for a monthly salary of NT$15,
360.00. She alleged that she was required by petitioner to pay a placement fee of 70,000 when
she signed the employment contract.
June 26, 1997 - Joy was deployed to work for Taiwan Wacoal but to her surprise, she was as
asked to work as a cutter rather than as a quality control.
July 14, 1997 - Petitioner claims that 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 contends that from June 26 to July 14, she only earned a total of NT$9,000. According to
her Wacoal deducted 3,000 to cover her plane ticket to Manila.
October 15, 1997 - Pursuant to these events, Joy filed a complaint for illegal dismissal with the
NLRC against petitioner and Wacoal. She prayed that her placement fee be returned together
with the withheld amount for repartriation costs, payment of her salary for 23 months as well
as moral and exemplary damages. Sameer alleged that respondents termination was due to her
inefficiency, negligence in her duties and her failure to comply with the work requirements of
her foreign employer. It claimed that it did not ask for a placement fee of 70,000 as evidenced by
an Official Receipt dated June 10, 1997 bearing the amount of 20, 360. It further added that it
had already been substituted by Pacific Manpower and Management Services, Inc. as of August
6, 1997.
Pacific moved for the dismissal of petitioners claims against it alleging that there was no
employer-employee relationship between them. The Labor Arbiter dismissed Joys complaint
ruling that it was based on mere allegations. Joy appealed to the NLRC. NLRC declared that
Joy was illegally dismissed. It reiterated that the burden of proof to show that the dismissal was
based on a just or valid cause belongs to the employer. Sameer failed to prove that there were
just causes for termination and procedural due process was not observed in terminating
respondent. It awarded respondent 3 months worth of salary and the reimbursement of 3,000
and 300 attorneys fees. Sameers MR was denied by the Commission. Thus it filed a petition for
certiorari with the CA.
CA affirmed the decision of the NLRC but ordered the remand of the case to the NLRC for the
purpose of addressing the validity and propriety of the third-party complaint against Pacific.
Thus, this petition before the SC. Petitioner reiterates that there was just cause for termination
because Wacoal found respondent inefficient in her work. It further alleged that Pacific should
be the one to assume responsibility for Wacoals contractual obligations since Wacoals
accreditation was already transferred to Pacific.

ISSUES / RULING:
Whether or not Respondent Joy was illegally dismissed
Sameer failed to show that there was just cause for Joys dismissal. The employer, Wacoal, also
failed to accord her due process of law. Although the law recognizes management prerogative in
the imposition of rules to ensure the compliance of employees of its standards, it should not
however, be abused. It is tempered with the employees right to security of tenure. Workers are
entitled to substantive and procedural due process before termination. They may not be
removed from employment without a valid or just cause as determined by law and without
going through the proper procedure. This guarantee is not stripped off of them when they work
in a different jurisdiction. With respect to the rights of overseas Filipino workers, we follow the
principle of lex loci contractus. Thus, by our laws, OFWs may only be terminated for a just or
authorized cause and after compliance with procedural due process requirements as
enumerated in Article 282 of the LC. The allegations of petitioner that respondent was
inefficient in her work and negligent in her duties may constitute a just cause for termination
under Article 282 (b) but only if petitioner was able to prove it.
To show that dismissal resulting from inefficiency in work is valid, it must be shown that:
(1) Employer has set standards of conduct and workmanship against which the employee
will be judged
(2) The standards of conduct and workmanship must have been communicated to the
employee
(3) The communication was made at a reasonable time prior to the employees performance
assessment
The employer on a regular basis, determined if an employee is still qualified and efficient, based
on work standards. Based on that determination, and after complying with the due process
requirements of notice and hearing, the employer may exercise its management prerogative of
terminating the employee found unqualified.
In this case, no evidence was shown to support the allegations of petitioners. Petitioner did not
even bother to specify what requirements were not met, what efficiency standards were violated
or what particular acts of respondents constituted inefficiency. Furthermore, there was also no
showing that the respondent was sufficiently informed of the standards against which here
work efficiency and performance were judged. The parties conflict as to the position held by
respondent showed that even the matter as basic as the job title was not clear.
Respondents dismissal less than one year from hiring and her repatriation on the same day
also show that the employers did not comply with the due process requirement. Petitioner failed
to comply with the twin notices and hearing requirements.
Respondent Joy having been illegally dismissed is entitled to her salary for the unexpired
portion of the employment contract that was violated together with attorneys fees and
reimbursement of amount withheld from her salary.

Whether or not the clause 3 months for every year of the unexpired term whichever is less is
unconstitutional
Sec. 10 of RA 8042 states that overseas workers who were terminated without just, valid or
authorized cause shall be entitled to full reimbursement of his placement fee with interest of
12% per annum, plus his salaries for the unexpired portion of his employment contract or for 3
months for every year of the unexpired term, whichever is less. Sec. 15 of the same act states
that repatriation of the worker and the transport of his personal belongings shall be the
primary responsibility of the agency which recruited or deployed the worker overseas. The LC
also entitled the employee to 10% of the amount of withheld wages as attorneys fees when
withholding is unlawful.
This court upholds the award of the NLRC which was affirmed by the CA however, the threemonth equivalent of respondents salary should be increased to the amount equivalent to the
unexpired term of the employment contract.
In Serrano vs. Gallant Maritime Services, Inc., this court ruled that the clause or for three
months for every year of the unexpired term, whichever is less is unconstitutional for violating
the equal protection clause and substantive due process.
A statue or provision which was declared unconstitutional is not a law. However, such clause
was reinstated in R.A. 8042 upon promulgation of R.A. 10022 in 2010.
R.A. 10022 was promulgated on March 8, 2010. This means that the reinstatement clause was
not yet in effect at the time of respondents termination from work in 1997. R.A. 8042 therefore
governs this case.
We are thus confronted with a unique situation. The law passed incorporates the exact clause
already declared unconstitutional, without any perceived substantial change in the
circumstances.
In the hierarchy of laws, the Constitution is supreme. Any law that is inconsistent with it is a
nullity. This 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 changes as to warrant a reverse conclusion.
We are not convinced by the pleadings submitted by the parties that the situation has so
changed so as to cause us to reverse binding precedent.
The new law puts our overseas workers in the same vulnerable position as they were prior to
Serrano.
We observe that the reinstated clause, this time as provided in R.A. 10022 violates the
constitutional rights to equal protection and due process. We reiterate our finding in Serrano vs.
Gallant Maritime that limiting wages that should be recovered by an illegally dismissed
overseas worker to three months is both a violation of due process and the equal protection
clauses of the Constitution.

Whether or not judgment earns interest

On the interest rate, the Bangko Sentral ng Pilipinas Circular No. 799 of June 21, 2013 which
revised the interest rate for loan or forbearance form 12% to 6% in the absence of stipulation
applies in this case.
We add that Circular No. 799 is not applicable when there is a law that states otherwise. For
instance, Sec. 10 of RA 8042 provides that terminated overseas workers are entitled to the
reimbursement of his or her placement fee with an interest of 12% per annum. There is,
therefore, an implied stipulation in contracts between the placement agency and the overseas
worker that in case the overseas worker is adjudged as entitled to reimbursement of his or her
placement fees, the amount shall be subject to 12% interest per annum. The same cannot be
said for awards for salary for the unexpired portion of the employment contract under RA 8042.
These awards are covered by Circular NO. 799. In sum, if judgment did not become final and
executor before July 1, 2013, and there was no stipulation in the contract providing for a
different interest rate, other money claims under Sec 10 of RA 8042 shall be subject to the 6%
interest per annum in accordance with Circular No. 799.
Thus, petitioner is entitled to an interest rate of 6% per annum on her money claims from the
finality of this judgment.
Whether or not both the agency and the foreign employer have to be impleaded in the case
Finally, we clarify the liabilities of Wacoal as principal and petitioner as the employment
agency that facilitated respondents overseas employment.
Sec. 10 of RA 8042 provides that the foreign employer and local employment agency are jointly
and severally liable for money claims including claims arising out of an employer-employee
relationship and/or damages. The fundamental effect of joint and several liability is that each of
the debtors is liable for the entire obligation. A final determination may, therefore, be achieved
even if only one of the joint and several debtors are impleaded in an action. This way, the
overseas workers are assured that someone may be made to answer for violations that the
foreign employer may have committed. The petition is DENIED.