SERRANO VS. GALLANT MARITIME SERVICES, INC.

FACTS: Serrano signed a contract of employment with Gallant but on the date of
his departure, was informed that his salary was downgraded. He was
nonetheless promised promotion after a month. When such promotion did not
happen, he refused to stay and was repatriated. Serrano filed a complaint
against Gallant before the LA for constructive dismissal, reimbursement of
placement fee, and for payment of his money claims. LA awarded Serrano with
pro-rated monetary benefits corresponding his 3-month stay, citing that RA 8042
or the Migrant Workers and Overseas Filipinos Act of 1995 does not provide for
the award of overtime pay, which should be proven to have been actually
performed and for vacation leave pay. Serrano questioned the constitutionality of
the clause, claiming that unreasonably, unfairly, and arbitrarily limits payment of
award for back wages of overseas workers to three month and is violative of
Section 10, Article III of the Constitution on non-impairment of contracts.

ISSUE: Whether the clause is unconstitutional and infringes the constitutional

guaranty on non-impairment of contracts.

RULING: The SC ruled in NEGATIVE. The SC noted that 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. Police power
legislations adopted by the State promote health, morals, general welfare,
among others, and are designed to protect not only the employment of OFWs but
also the interest of local placement agencies, which otherwise may be made to
shoulder millions of pesos in termination pay.