SC voids disadvantageous contract of seafarer

The Supreme Court (SC) has voided an agreement between a seafarer and a consultancy firm for being ''grossly disadvantageous'' to the worker.

In a decision promulgated in November 2023, the SC Second Division denied the petition filed by the consultancy firm seeking to overturn the rulings of the Court of Appeals (CA), which reversed the ruling of a trial court to award damages in favor of the firm.

According to the court, repatriated seafarer Floserfino Ross sought the assistance of the firm in filing a claim against his local manning agency, foreign shipowner, and insurance company.

Ross executed a special power of attorney and authorized the firm to represent him in his claims.

He also executed an affidavit of undertaking that states that he is obligated, without any need for demand, to turn over a portion of the proceeds to the firm.

The SC said the terms and conditions were incorporated into the Irrevocable Memorandum of Agreement executed by Ross and his wife.

The firm claimed that it asked for two checks in the amounts of P300,000 and P940,800.

Ross, however, said that the firm asked for two blank checks.

Due to this, the firm sent several demand letters to the couple, which went unheeded. This led them to file a case before a regional trial court.

Though the court ruled in the firm’s favor, the CA reversed this, ruling that the contract was void from the start as the firm rendered legal service despite not having lawyers.

In ruling in favor of Ross, the high court said the agreement was similar to a “champertous contract” and was “grossly disadvantageous” as there was no specific agreement as to the amount that would be given to the firm.

“This arrangement is prone to abuse and authorizes [the firm] to demand any amount from Floserfino,” it said.

Meanwhile, the SC ordered the firm to explain its litigation financing agreements with its clients.

“There is a legitimate concern [about] the allegation that [the firm] is engaged in unauthorized practice of law. If proven to be true, such conduct tarnishes the integrity of the legal profession and undermines the authority of this Court to regulate the practice of law,” it said. — VBL, GMA Integrated News