Professional Documents
Culture Documents
GR No. 177498
GR No. 177498
CARPIO, J.,
Chairperson,
PEREZ,
SERENO,
-versus-
REYES, and
PERLAS-BERNABE, JJ.*
SULPECIO MEDEQUILLO,
JR., Promulgated:
Respondent.
x------------------------------------------------x
DECISION
PEREZ, J.:
Before the Court is a Petition for Review on Certiorari1 of the Decision2 of the First
Division of the Court of Appeals in CA-G.R. SP No. 91632 dated 31 January 2007, denying
the petition for certiorari filed by Stolt-Nielsen Transportation Group, Inc. and Chung Gai
Ship Management (petitioners) and affirming the Resolution of the National Labor Relations
Commission (NLRC). The dispositive portion of the assailed decision reads:
WHEREFORE, the petition is hereby DENIED. Accordingly, the
assailed Decision promulgated on February 28, 2003 and the Resolution dated
July 27, 2005 are AFFIRMED.3
2. He would be paid with a monthly basic salary of $808.00 and a fixed overtime
pay of $404.00 or a total of $1,212.00 per month during the employment
period commencing on 6 November 1991;
4. On February 1992 or for nearly three (3) months of rendering service and
while the vessel was at Batangas, he was ordered by the ship’s master to
disembark the vessel and repatriated back to Manila for no reason or
explanation;
6. On 23 April 1992, the Second Contract was noted and approved by the POEA;
7. The POEA, without knowledge that he was not deployed with the vessel,
certified the Second Employment Contract on 18 September 1992.
10. On 22 December 1994, he demanded for his passport, seaman’s book and
other employment documents. However, he was only allowed to claim the
said documents in exchange of his signing a document;
11. He was constrained to sign the document involuntarily because without these
documents, he could not seek employment from other agencies.
He prayed for actual, moral and exemplary damages as well as attorney’s fees for his
illegal dismissal and in view of the Petitioners’ bad faith in not complying with the Second
Contract.
The case was transferred to the Labor Arbiter of the DOLE upon the effectivity of the
Migrant Workers and Overseas Filipinos Act of 1995.
The parties were required to submit their respective position papers before the Labor
Arbiter. However, petitioners failed to submit their respective pleadings despite the
opportunity given to them.5
The Labor Arbiter found the first contract entered into by and between the complainant and
the respondents to have been novated by the execution of the second contract. In other
words, respondents cannot be held liable for the first contract but are clearly and definitely
liable for the breach of the second contract.8 However, he ruled that there was no
substantial evidence to grant the prayer for moral and exemplary damages.9
The petitioners appealed the adverse decision before the National Labor Relations
Commission assailing that they were denied due process, that the respondent cannot be
considered as dismissed from employment because he was not even deployed yet and the
monetary award in favor of the respondent was exorbitant and not in accordance with law.10
On 28 February 2003, the NLRC affirmed with modification the Decision of the Labor
Arbiter. The dispositive portion reads:
The NLRC ruled that records showed that attempts to serve the various notices of hearing
were made on petitioners’ counsel on record but these failed on account of their failure to
furnish the Office of the Labor Arbiter a copy of any notice of change of address. There was
also no evidence that a service of notice of change of address was served on the POEA.13
The NLRC upheld the finding of unjustified termination of contract for failure on the part of
the petitioners to present evidence that would justify their non-deployment of the
respondent.14 It denied the claim of the petitioners that the monetary award should be
limited only to three (3) months for every year of the unexpired term of the contract. It
ruled that the factual incidents material to the case transpired within 1991-1992 or before
the effectivity of Republic Act No. 8042 or the Migrant Workers and Overseas Filipinos Act of
1995 which provides for such limitation.15
However, the NLRC upheld the reduction of the monetary award with respect to the deletion
of the overtime pay due to the non-deployment of the respondent.16
The Partial Motion for Reconsideration filed by the petitioners was denied by the
NLRC in its Resolution dated 27 July 2005.17
Finding no grave abuse of discretion, the Court of Appeals AFFIRMED the Decision of
the labor tribunal.
The following are the assignment of errors presented before this Court:
I.
III.
The petitioners contend that the first employment contract between them and the
private respondent is different from and independent of the second contract subsequently
executed upon repatriation of respondent to Manila.
We do not agree.
In its ruling, the Labor Arbiter clarified that novation had set in between the first and second
contract. To quote:
xxx [T]his office would like to make it clear that the first contract entered into
by and between the complainant and the respondents is deemed to have
been novated by the execution of the second contract. In other words,
respondents cannot be held liable for the first contract but are clearly and
definitely liable for the breach of the second contract.20
This ruling was later affirmed by the Court of Appeals in its decision ruling that:
We concur with the finding that there was a novation of the first employment
contract.
We reiterate once more and emphasize the ruling in Reyes v. National Labor
Relations Commission,22 to wit:
xxxx
With the finding that respondent “was still employed under the first contract when he
negotiated with petitioners on the second contract”,24 novation became an unavoidable
conclusion.
Equally settled is the rule that factual findings of labor officials, who are deemed to
have acquired expertise in matters within their jurisdiction, are generally accorded not only
respect but even finality by the courts when supported by substantial evidence, i.e., the
amount of relevant evidence which a reasonable mind might accept as adequate to justify a
conclusion.25 But these findings are not infallible. When there is a showing that they were
arrived at arbitrarily or in disregard of the evidence on record, they may be examined by
the courts.26 In this case, there was no showing of any arbitrariness on the part of the lower
courts in their findings of facts. Hence, we follow the settled rule.
We need not dwell on the issue of prescription. It was settled by the Court of Appeals
with its ruling that recovery of damages under the first contract was already time-barred.
Thus:
The issue that proceeds from the fact of novation is the consequence of the non-
deployment of respondent.
The petitioners argue that under the POEA Contract, actual deployment of the
seafarer is a suspensive condition for the commencement of the employment.28 We agree
with petitioners on such point. However, even without actual deployment, the perfected
contract gives rise to obligations on the part of petitioners.
A contract is a meeting of minds between two persons whereby one binds himself,
with respect to the other, to give something or to render some service.29 The contracting
parties may establish such stipulations, clauses, terms and conditions as they may deem
convenient, provided they are not contrary to law, morals, good customs, public order, or
public policy.30
The POEA Standard Employment Contract provides that employment shall commence
“upon the actual departure of the seafarer from the airport or seaport in the port of
hire.”31We adhere to the terms and conditions of the contract so as to credit the valid prior
stipulations of the parties before the controversy started. Else, the obligatory force of every
contract will be useless. Parties are bound not only to the fulfillment of what has been
expressly stipulated but also to all the consequences which, according to their nature, may
be in keeping with good faith, usage and law.32
Thus, even if by the standard contract employment commences only “upon actual
departure of the seafarer”, this does not mean that the seafarer has no remedy in case of
non-deployment without any valid reason. Parenthetically, the contention of the petitioners
of the alleged poor performance of respondent while on board the first ship MV “Stolt
Aspiration” cannot be sustained to justify the non-deployment, for no evidence to prove the
same was presented.33
We rule that distinction must be made between the perfection of the employment
contract and the commencement of the employer-employee relationship. The perfection of
the contract, which in this case coincided with the date of execution thereof, occurred when
petitioner and respondent agreed on the object and the cause, as well as the rest of the
terms and conditions therein. The commencement of the employer-employee relationship,
as earlier discussed, would have taken place had petitioner been actually deployed from the
point of hire. Thus, even before the start of any employer-employee relationship,
contemporaneous with the perfection of the employment contract was the birth of certain
rights and obligations, the breach of which may give rise to a cause of action against the
erring party. Thus, if the reverse had happened, that is the seafarer failed or refused to be
deployed as agreed upon, he would be liable for damages.34
Further, we do not agree with the contention of the petitioners that the penalty is a
mere reprimand.
xxx
b. Thirty (30) calendar days from the date of processing by the administration
of the employment contracts of seafarers.
The appellate court correctly ruled that the penalty of reprimand 36 provided under
Rule IV, Part VI of the POEA Rules and Regulations Governing the Recruitment and
Employment of Land-based Overseas Workers is not applicable in this case. The breach of
contract happened on February 1992 and the law applicable at that time was the 1991
POEA Rules and Regulations Governing Overseas Employment. The penalty for non-
deployment as discussed is suspension or cancellation of license or fine.
Now, the question to be dealt with is how will the seafarer be compensated by
reason of the unreasonable non-deployment of the petitioners?
Following the law, the claim is still cognizable by the labor arbiters of the NLRC under
the second phrase of the provision.
Applying the rules on actual damages, Article 2199 of the New Civil Code provides
that one is entitled to an adequate compensation only for such pecuniary loss suffered by
him as he has duly proved. Respondent is thus liable to pay petitioner actual damages in
the form of the loss of nine (9) months’ worth of salary as provided in the contract.38 This is
but proper because of the non-deployment of respondent without just cause.
WHEREFORE, the appeal is DENIED. The 31 January 2007 Decision of the Court of
Appeals in CA-G.R. SP. No. 91632 is hereby AFFIRMED. The Petitioners are hereby ordered
to pay Sulpecio Medequillo, Jr., the award of actual damages equivalent to his salary for
nine (9) months as provided by the Second Employment Contract.
SO ORDERED.