069 Abosta Ship MGT V Hilario

3&epublic of tbe ilbilippines
~upreme
QCourt
~anila
FIRST DIVISION
ABOSTA SHIP MANAGEMENT
and/or ARTEMIO CORBILLA,
Petitioners,
G.R. No. 195792

Present:
SERENO, CJ, Chairperson,
LEONARDO-DE CASTRO,
BERSAMIN,
*VILLARAMA, JR., and
PEREZ, JJ.
- versus -
WILHILM M. HILARIO,
Respondent.
Promulgated:
.NOV Lt 2014
:x - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - ~...
DECISION
SERENO, CJ:
Abosta Ship Management Corporation (petitioner) filed a Petition for
Review on Certiorari 1 under Rule 45 of the 1997 Rules of Civil Procedure
assailing the Court of Appeals (CA) Decision2 dated 3 December 2010 and
Resolution3 dated 11February2011 in CA-G.R. SP No. 110745.
The antecedents of this case are as follows:
On 24 October 2002, an employment contract was executed by
petitioner, on behalf of its foreign principal Panstar Shipping Co., Ltd., and
respondent. In this contract, the latter was hired as a bosun (boatswain) of
the foreign vessel Grand Mark for a period of nine months, with a monthly
Designated additional member in lieu of Associate Justice Estela M. Perlas-Bernabe per S.O. No. 1885
dated 24 November 2014.
I
Rollo, pp. 10-31.
2
Id. at 36-48; penned by Associate Justice Antonio L. Villamor and concurred in by Associate Justices Jose
C. Reyes, Jr. and Samuel H. Gaerlan.
3
Id. at 34-35.
Decision
G.R. No. 195792
salary of USD566.4 The contract was duly approved by the Philippine

Overseas Employment Agency (POEA) on 25 October 2002.5
On 27 November 2002, upon reporting to the office of petitioner,
respondent was informed that the latters deployment had been postponed
due to shifting demands of the foreign principal. It appears, though, that the
foreign principal decided to promote an able seaman on board the vessel
instead of hiring respondent. Petitioner thus requested respondent to wait for
another two to three months for a vacancy to occur.6 In the meantime,
respondent was allowed to make cash advances7 as financial assistance.
Eventually, on 28 January 2003, respondent filed a Complaint with
the POEA against petitioner for violation of Section 2(r), Rule I, Part VI of
the 2002 POEA Rules by failing to deploy respondent within the prescribed
period without any valid reason. Respondent likewise filed a Complaint with
the Labor Arbiter on 6 February 2003 based on the same ground and sought
actual, moral and exemplary damages and attorneys fees.
Petitioner moved for the dismissal of the Complaint, alleging that the
Labor Arbiter had no jurisdiction over the matter, as jurisdiction was
supposedly lodged with the POEA. However, the Labor Arbiter denied the
motion, stating that the action for damages arising from employment
relations was clearly within its jurisdiction.
On 13 February 2004, the National Labor Relations Commission
(NLRC) granted petitioners appeal and reversed the Labor Arbiters Order.
The NLRC held that considering no employer-employee relationship existed
between the parties, the POEA had jurisdiction over the case. The claim for
non-deployment was administrative in character, and sanctions may be
imposed by the POEA.8
Respondent consequently filed a Petition for Certiorari with the CA
questioning the ruling of the NLRC.
On 17 March 2006, the CA granted the Petition. It pointed out that
Section 10 of the Labor Code provides that the jurisdiction of the Labor
Arbiter includes claims arising by virtue of any law or contract involving
Filipino workers for overseas deployment, including claims for actual,
moral, exemplary and other forms of damages. Meanwhile, the POEA has
jurisdiction over pre-employment cases that are administrative in character.
Thus, respondents Complaint was reinstated.9
4
CA rollo, pp. 32-35.

Id.
6
CA Decision, rollo, p. 37.
7
CA rollo, pp. 68-70.
8
Rollo, pp. 81-84.
9
Id. at 85-98.
5
Decision
G.R. No. 195792
After the parties submitted their respective Position Papers, the Labor
Arbiter ordered petitioner to pay respondent his salary for nine months in the
amount of USD 10,071. The Labor Arbiter found that the contract executed
between the parties and the non-fulfillment thereof entitled respondent to his
salary for the whole duration of the contract. However, the arbiter did not
find bad faith, which would have merited the award of moral damages.10
This Decision prompted petitioner to appeal to the NLRC. On 11
March 2009, it held that respondents non-deployment was due to a valid
exercise of the foreign principals management prerogative, which should be
given due respect. Thus, the NLRC dismissed the Complaint, but ordered
petitioner to comply with our directive to deploy respondent as soon as
possible or face the inevitable consequences.11
Dissatisfied with the NLRCs ruling, respondent filed a Petition for
Certiorari with the CA. On 3 December 2010, it granted the Petition and
held that the NLRC committed grave abuse of discretion by holding that the
able seamans promotion was a valid management prerogative. The CA
further ruled that since respondent had already been hired for the same
position, then there was no longer any vacant position to which to promote
the able seaman. Moreover, under the POEA Rules, petitioner assumed joint
and solidary liability with its foreign principal, and was thus liable to
respondent. It thus found the NLRCs Decision to be contrary to law and
prevailing jurisprudence. Finally, the CA ruled that NLRCs Order for
petitioner to deploy respondent as soon as possible or face inevitable
consequences was nonsensical considering that the controversy arose
from way back in 2002, and that the assailed Order was issued in 2009.12
The CA likewise denied the Motion for Reconsideration filed by
petitioner. Hence, this Petition.
ASSIGNMENT OF ERRORS
Petitioner raises the following errors allegedly committed by the CA:
The Honorable Court of Appeals committed grave reversible error when it
ruled that complainant is entitled to actual damages in the light of Paul v.
Santiago case, the doctrine of stare decis [sic] being inapplicable in the
instant case as to the issue of award of actual damages.
The Honorable NLRC did not commit grave abuse of discretion when it
ruled differently from Santiago case [on] the issue of actual damages
contrary to erroneous decision of the Court of Appeals that NLRC
committed grave abuse of discretion in disregarding Santiago case on the
10
Id. at 100-106.
Id. at 141-150.
12
CA Decision, rollo, pp. 45-47.
11
Decision
G.R. No. 195792
issue of actual damages.

The Honorable Court of Appeals committed reversible error when it
disregarded the factual findings of the NLRC, that, if properly considered,
would justify petitioners use of management prerogative.
The Honorable Court of Appeals committed reversible error in reinstating
the award of actual damages despite the want of any factual and legal
basis and again in missapplying [sic] Datuman case in the instant case.13
THE COURTS RULING

The issue boils down to whether the CA committed serious errors of
law.
We rule in the negative.
There is no dispute that the parties entered into a contract of
employment on 24 October 2002, and that petitioner failed to deploy
respondent. The controversy arose from the act of the foreign principal in
promoting another person, an act that effectively disregarded the contract
dated 24 October 2002 entered into between petitioner, on behalf of its
foreign principal, and respondent. There was a clear breach of contract when
petitioner failed to deploy respondent in accordance with the POEAapproved contract.
The Court is left with the issue of whether such breach would entitle
respondent to the payment of actual damages for the failure of petitioner to
comply with the latters obligations in accordance with the employment
contract.
It is the contention of petitioner that respondents non-deployment
was due to the foreign principals management prerogative to promote an
able seaman. Supposedly, this exercise of management prerogative is a
valid and justifiable reason that would negate any liability for damages.
We do not agree.
Based on a communication sent by a certain M.K. Jin dated 10
October 2002,14 the foreign principal had already chosen respondent from
among the other candidates as BSN (bosun or boatswain). Pursuant to this
communication, petitioner entered into an employment contract and hired
respondent on 24 October 2002. Subsequent communications, though, show
13
14
Petition for Review on Certiorari, rollo, pp. 16-17.

Id at 59.
Decision
G.R. No. 195792
that the foreign principal approved a different candidate for the position of
BSN.15 Thus, petitioner did not deploy respondent.
There was an apparent violation of the contract at the time that the
foreign principal decided to promote another person as expressed in its
communications dated 10 November 2002 and 14 November 2002. The
vacancy for the position of boatswain ceased to exist upon the execution of
the contract between petitioner and respondent on 24 October 2002, a
contract subsequently approved by the POEA on 25 October 2002. Clearly,
there was no vacancy when the foreign principal changed its mind, since the
position of boatswain had already been filled up by respondent.
The contract was already perfected on the date of its execution, which
occurred when petitioner and respondent agreed on the object and the cause,
as well as on the rest of the terms and conditions therein. Naturally,
contemporaneous with the perfection of the employment contract was the
birth of certain rights and obligations, a breach of which may give rise to a
cause of action against the erring party.16 Also, the POEA Standard Contract
must be recognized and respected. Thus, neither the manning agent nor the
employer can simply prevent a seafarer from being deployed without a valid
reason.17
True, the promotion and choice of personnel is an exercise of
management prerogative. In fact, this Court has upheld management
prerogatives, so long as they are exercised in good faith for the advancement
of the employers interest, and not for the purpose of defeating or
circumventing the rights of the employees under special laws or under valid
agreements.18 However, there are limitations on the exercise of management
prerogatives, such as existing laws and the principle of equity and
substantial justice.19
Under the principle of equity and substantial justice, change of mind
was not a valid reason for the non-deployment of respondent. He lost the
opportunity to apply for other positions in other agencies when he signed the
contract of employment with petitioner. Simply put, that contract was
binding on the parties and may not later be disowned simply because of a
change of mind of either one of them.
The unilateral and unreasonable failure to deploy respondent
constitutes breach of contract, which gives rise to a liability to pay actual
damages. The sanctions provided for non-deployment do not end with the
suspension or cancellation of license or the imposition of a fine and the
15
Id. at 60-61.
Santiago v. CF Sharp Crew Management, Inc., 554 Phil. 63 (2007).
17
Id.
18
San Miguel Corporation v. Ubaldo, G.R. No. 92859, 1 Feburary 1993, 218 SCRA 293, 301.
19
Peckson v. Robinsons Supermarket Corporation, G.R. No. 198534, 3 July 2013, 700 SCRA 668.
16
Decision
G.R. No. 195792
return of all documents at no cost to the worker. They do not forfend a

seafarer from instituting an action for damages against the employer or
20
agency that has failed to deploy him.
Considering that it was petitioner who entered into the contract of
employment with respondent for and on behalf of the foreign principal, it
has the primary obligation to ensure the implementation of that contract.
Furthermore, in line with the policy of the state to protect and alleviate the
plight of the working class, Section 1, paragraph f (3) of Rule II of the
POEA Rules and Regulations, 21 clearly provides that the private
employment agency shall assume joint and solidary liability with the
employer. Indeed, this Court has consistently held that private employment
agencies are held jointly and severally liable with the foreign-based
employer for any violation of the recruitment agreement or contract of
employment. 22 This joint and solidary liability imposed by law on
recruitment agencies and foreign employers is meant to assure the aggrieved
worker of immediate and sufficient payment of what is due him. 23
In sum, the failure to deploy respondent was an exercise of a
management prerogative that went beyond its limits and resulted in a breach
of contract. In tum, petitioner's breach gave rise to respondent's cause of
action to claim actual damages for the pecuniary loss suffered by the latter in
the form of the loss of nine months' worth of salary as provided in the
POEA-approved contract of employment.
WHEREFORE,
DENIED.
premises
considered,
the
instant Petition
is
SO ORDERED.
MARIA LOURDES P.A. SERENO

Chief Justice, Chairperson
20
Supra note 16.

Section 1. Requirements for Issuance of License. - Every applicant for license to operate a private
employment agency or manning agency shall submit a written application together with the following
requirements:
21
xx xx
f. A verified undertaking stating that the applicant:
xx xx
(3) Shall assume joint and solidary liability with the employer for all claims and
liabilities which may arise in connection with the implementation of the contract; including
but not limited to payment of wages, death and disability compensation and repatriation.
22
Datuman v. First Cosmopolitan Power, 591 Phil. 662 (2008) citing Hellenic Philippine Shipping, Inc. v.
Siete, G.R. No. 84082, 13March 1991, 195 SCRA 179, 186; Empire Insurance Company v. NLRC, 355 Phil.
694 (1998).
23
Id. citing P.I. Manpower Placements, Inc. v. NLRC (Second Division), 342 Phil. 414 (1997).
Decision
G.R. No. 195792
WE CONCUR:
JlAAA:JA1
~ ~~
MES'IT'AJ. LEONARDO-DE CASTRO

Associate Justice
CERTIFICATION
Pursuant to Section 13, Article VIII of the Constitution, I certify that

the conclusions in the above Decision had been reached in consultation
before the case was assigned to the writer of the opinion of the Court's
Division.
MARIA LOURDES P.A. SERENO

Chief Justice

069 Abosta Ship MGT V Hilario

Uploaded by

Document Information

Original Description:

Original Title

Copyright

Available Formats

Share this document

Share or Embed Document

Sharing Options

Did you find this document useful?

Is this content inappropriate?

Copyright:

Available Formats

069 Abosta Ship MGT V Hilario

Uploaded by

Copyright:

Available Formats

3&epublic of tbe ilbilippines

G.R. No. 195792

G.R. No. 195792

salary of USD566.4 The contract was duly approved by the Philippine

CA rollo, pp. 32-35.

G.R. No. 195792

G.R. No. 195792

issue of actual damages.

THE COURTS RULING

Petition for Review on Certiorari, rollo, pp. 16-17.

G.R. No. 195792

G.R. No. 195792

return of all documents at no cost to the worker. They do not forfend a

MARIA LOURDES P.A. SERENO

Supra note 16.

G.R. No. 195792

MES'IT'AJ. LEONARDO-DE CASTRO

Pursuant to Section 13, Article VIII of the Constitution, I certify that

MARIA LOURDES P.A. SERENO

You might also like