PAUL
V. SANTIAGO, G.R.
No. 162419
Petitioner,
Present:
QUISUMBING,* J.,
- versus - Chairperson,
CARPIO,**
CARPIO
MORALES,
TINGA,
and
CF
SHARP CREW MANAGEMENT, VELASCO, JR., JJ.
INC.,
Respondent.
Promulgated:
x----------------------------------------------------------------------------x
Tinga,
J.:
At the
heart of this case involving a contract between a seafarer, on one hand,
and the manning agent and the foreign principal, on the other, is this erstwhile
unsettled legal quandary: whether the seafarer, who was prevented from leaving
the port of Manila and refused deployment without valid reason but whose POEA-approved
employment contract provides that the employer-employee relationship shall
commence only upon the seafarer’s actual departure from the port in the point
of hire, is entitled to relief?
This treats
of the petition for review filed by Paul V. Santiago (petitioner)
assailing the Decision and Resolution of the Court of
Appeals dated 16 October 2003 and 19 February 2004, respectively, in CA-G.R. SP
No. 68404.[1]
Petitioner had been
working as a seafarer for Smith Bell Management, Inc. (respondent) for
about five (5) years.[2] On
A week before the scheduled date of
departure, Capt. Pacifico Fernandez,
respondent’s Vice President, sent a facsimile message to the captain of “MSV
Seaspread,” which reads:
I received a phone call today from the wife
of Paul Santiago in
We do not want this to
happen again and have the vessel penalized like the C.S. Nexus in
Forewarned is forearmed like
his brother when his brother when he was applying he behaved like a Saint but in his heart he was a serpent. If you agree with me then we will send his
replacement.
Kindly
advise.[3]
To this message the captain of “MSV Seaspread” replied:
Many thanks for your advice concerning P. Santiago, A/B. Please cancel
plans for him to return to Seaspread.[4]
On
Petitioner filed a complaint for
illegal dismissal, damages, and attorney's fees against
respondent and its foreign principal, Cable and Wireless (Marine) Ltd.[5] The case
was raffled to Labor Arbiter Teresita Castillon-Lora, who ruled
that the employment contract remained valid but had not
commenced since petitioner was not deployed.
According to her, respondent violated the rules and
regulations governing overseas employment when it did not deploy
petitioner, causing petitioner to suffer actual damages representing
lost salary income for nine (9) months and fixed
overtime fee, all amounting to US$7, 209.00.
The labor arbiter held
respondent liable. The
dispositive portion of her Decision dated
WHEREFORE,
premises considered, respondent is hereby
Ordered to
pay complainant actual damages
in the amount of US$7,209.00
plus 10% attorney's fees, payable in Philippine peso at the rate of exchange
prevailing at the time of payment.
All the other claims are
hereby DISMISSED for lack of merit.
SO ORDERED.[6]
On appeal by respondent, the National Labor Relations
Commission (NLRC) ruled that there is no employer-employee relationship between
petitioner and respondent because under the Standard Terms
and Conditions Governing the Employment of Filipino Seafarers on Board Ocean
Going Vessels (POEA Standard Contract), the employment contract shall commence
upon actual departure of the seafarer from the airport or seaport at the point
of hire and with a POEA-approved contract. In the absence of an
employer-employee relationship between the parties, the claims for illegal
dismissal, actual damages, and attorney’s fees
should be dismissed.[7] On the other hand, the NLRC found respondent’s decision
not to deploy petitioner to be a valid exercise of its
management prerogative.[8] The NLRC disposed of the appeal in this
wise:
WHEREFORE,
in the light of the foregoing, the assailed Decision dated
SO ORDERED.[9]
Petitioner moved for the reconsideration of the NLRC’s
Decision but his motion was denied for
lack of merit.[10] He elevated the case to the Court of Appeals
through a petition for certiorari.
In
its Decision[11]
dated
According to the appellate court, petitioner is not entitled
to actual damages because damages are not recoverable by a worker who was not
deployed by his agency within the period
prescribed in
the POEA Rules.[13] It
agreed with the NLRC’s finding that petitioner’s non-deployment was a valid
exercise of respondent’s management
prerogative.[14]
It added that since petitioner had not departed from the
Petitioner’s subsequent motion for reconsideration was
denied on
The present petition is
anchored on two grounds, to wit:
A. The Honorable Court of Appeals committed a serious error of law when it ignored [S]ection 10 of Republic Act [R.A.] No. 8042 otherwise known as the Migrant Worker’s Act of 1995 as well as Section 29 of the Standard Terms and Conditions Governing the Employment of Filipino Seafarers On-Board Ocean-Going Vessels (which is deemed incorporated under the petitioner’s POEA approved Employment Contract) that the claims or disputes of the Overseas Filipino Worker by virtue of a contract fall within the jurisdiction of the Labor Arbiter of the NLRC.
B.
The Honorable Court of Appeals committed a
serious error when it disregarded the required quantum of proof in labor cases,
which is substantial evidence, thus a total departure from established
jurisprudence on the matter.[17]
Petitioner
maintains that respondent violated the Migrant Workers Act and the POEA Rules
when it failed to deploy him within thirty (30) calendar days without a valid
reason. In doing so, it had unilaterally
and arbitrarily prevented the consummation of the POEA- approved contract. Since
it prevented his deployment without
valid basis, said deployment being a condition to the consummation of the POEA
contract, the contract is deemed consummated, and therefore he should be
awarded actual damages, consisting of the stipulated salary and fixed overtime
pay.[18] Petitioner adds that since the contract is
deemed consummated, he should be considered an employee for all intents and
purposes, and thus the labor arbiter and/or the NLRC has jurisdiction to take
cognizance of his claims.[19]
Petitioner
additionally claims that he should be considered a regular employee, having
worked for five (5) years on board the same vessel owned by the same principal
and manned by the same local agent. He
argues that respondent’s act of not deploying him was a scheme designed to
prevent him from attaining the status of a regular employee.[20]
Petitioner submits that respondent had no
valid and sufficient cause to abandon the employment contract, as it merely
relied upon alleged phone calls from his wife and other unnamed callers in
arriving at the conclusion that he would jump ship like his brother. He points out that his wife had executed an
affidavit[21] strongly denying having called respondent,
and that the other alleged callers did not even disclose their identities to
respondent.[22]
Thus, it was error for the Court of Appeals to adopt the
unfounded conclusion of the NLRC, as the same was not based on substantial
evidence.[23]
On
the other hand, respondent argues that the Labor Arbiter has no jurisdiction to
award petitioner’s monetary claims. His
employment with respondent did not commence because his deployment was withheld
for a valid reason. Consequently, the
labor arbiter and/or the NLRC cannot entertain adjudication of petitioner’s
case much less award damages to him. The controversy involves a breach of
contractual obligations and as such is cognizable by civil courts.[24] On another matter, respondent claims that the
second issue posed by petitioner involves a recalibration of facts which is
outside the jurisdiction of this Court.[25]
There
is some merit in the petition.
There
is no question that the parties entered into an employment contract on
However,
a 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.
Moreover,
while the POEA Standard Contract must be recognized and respected, neither the manning
agent nor the employer can simply prevent a seafarer from being deployed without a valid reason.
Respondent’s
act of preventing petitioner from departing
the
We
take exception to the Court of Appeals’ conclusion that damages are not
recoverable by a worker who was not deployed by his agency. The fact that the POEA Rules[27] are
silent as to the payment of damages to the affected seafarer does not mean that
the seafarer is precluded from claiming the same. The sanctions provided for non-deployment do not end with
the suspension or cancellation of license or fine and the 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 agency which has failed to deploy him.
The POEA Rules only
provide sanctions which the POEA can impose on erring agencies. It does not provide for damages and money
claims recoverable by aggrieved employees because it is not the POEA, but the
NLRC, which has jurisdiction over such matters.
Despite
the absence of an employer-employee relationship between petitioner and
respondent, the Court rules that the NLRC has jurisdiction over petitioner’s
complaint. The jurisdiction of labor arbiters is not limited to claims arising
from employer-employee relationships. Section
10 of R.A. No. 8042 (Migrant Workers Act), provides that:
Sec. 10. Money Claims. – Notwithstanding any provision of law to the
contrary, the Labor Arbiters of the National Labor Relations Commission (NLRC)
shall have the original and exclusive jurisdiction to hear and decide, within
ninety (90) calendar days after the filing of the complaint, the claims arising
out of an employer-employee relationship or
by virtue of any law or contract involving Filipino workers for overseas deployment
including claims for actual, moral, exemplary and other forms of damages. x
x x [Emphasis supplied]
Since
the present petition involves the employment contract entered into by
petitioner for overseas employment, his claims are cognizable by the labor
arbiters of the NLRC.
Article
2199 of the 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. He is not, however, entitled
to overtime pay. While the contract indicated a fixed overtime pay, it is not a
guarantee that he would receive said amount regardless of whether or not he
rendered overtime work. Even though petitioner was “prevented without valid
reason from rendering regular much less overtime service,”[28] the fact remains that there is no certainty
that petitioner will perform overtime work had he been allowed to board the
vessel. The amount of US$286.00
stipulated in the contract will be paid
only if and when the employee rendered overtime work. This has been the tenor of our rulings in the
case of Stolt-Nielsen Marine Services (Phils.),
Inc. v. National Labor Relations Commission[29] where
we discussed the matter in this light:
The contract provision means that the fixed overtime pay of 30% would
be the basis for computing the overtime pay if and when overtime work would be
rendered. Simply stated, the rendition of
overtime work and the submission of sufficient proof that said work was
actually performed are conditions to be satisfied before a seaman could be
entitled to overtime pay which should be computed on the basis of 30% of the
basic monthly salary. In short, the
contract provision guarantees the right to overtime pay but the entitlement to
such benefit must first be established.
Realistically speaking, a seaman, by the very nature of his job, stays
on board a ship or vessel beyond the regular eight-hour work schedule. For the employer to give him overtime pay for
the extra hours when he might be sleeping or attending to his personal chores
or even just lulling away his time would be extremely unfair and unreasonable.[30]
The
Court also holds that petitioner is entitled to attorney’s fees in the concept of damages and
expenses of litigation. Attorney's fees are recoverable when the defendant's
act or omission has compelled the plaintiff to incur expenses to protect his
interest.[31] We note that respondent’s basis for not
deploying petitioner is the belief that he will jump ship just like his
brother, a mere suspicion that is based on alleged phone calls of several
persons whose identities were not even confirmed. Time and again, this Court has upheld
management prerogatives so long as they are exercised in good faith for the
advancement of the employer’s interest and not for the purpose of defeating or
circumventing the rights of the employees under special laws or under valid
agreements.[32] Respondent’s failure to deploy petitioner is
unfounded and unreasonable, forcing petitioner to institute the suit
below. The award of attorney’s fees is
thus warranted.
However,
moral damages cannot be awarded in this case.
While respondent’s failure to deploy petitioner seems baseless and
unreasonable, we cannot qualify such action as being tainted with bad faith, or
done deliberately to defeat petitioner’s rights, as to justify the award of
moral damages. At most, respondent was being overzealous in protecting its
interest when it became too hasty in making its conclusion that petitioner will
jump ship like his brother.
We
likewise do not see respondent’s failure to deploy petitioner as an act
designed to prevent the latter from attaining the status of a regular employee.
Even if petitioner was able to depart the
v. National Labor Relations Commission,[33] the Court ruled that seafarers are considered
contractual employees and cannot be considered as regular employees under the
Labor Code. Their employment is governed
by the contracts they sign every time they are rehired and their employment is
terminated when the contract expires. The
exigencies of their work necessitates that they be employed on a contractual
basis.[34]
WHEREFORE, petition is GRANTED IN PART. The Decision dated
representing salary for nine
(9) months as stated in the contract, and attorney’s fees at the reasonable
rate of 10% of the recoverable amount.
SO
ORDERED.
DANTE O. TINGA
Associate Justice
WE CONCUR:
(On Official Leave)
LEONARDO A. QUISUMBING
Associate Justice
Chairperson
ANTONIO T. CARPIO CONCHITA CARPIO MORALES
Associate Justice Associate Justice
PRESBITERO J. VELASCO,
JR.
Associate Justice
ATTESTATION
I attest 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.
ANTONIO T. CARPIO
Associate
Justice
Acting
Chairperson, Second Division
CERTIFICATION
Pursuant to Section 13, Article VIII of
the Constitution, and the Acting Division Chairperson’s Attestation, it is
hereby certified 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.
REYNATO S. PUNO
Chief
Justice
[2]Smith Bell
Management, Inc. was substituted by present respondent, CF Sharp Crew
Management, Inc. which had assumed all the contractual obligations of Cable and
Wireless (Marine) Ltd. while the case was pending before the Court of Appeals.
See respondent’s Comment dated
[5]The caption
of the complaint docketed as NCR-OFW-(M) 98-07-0788, reads Paul V. Santiago v. Smith Bell Management, Inc. and/or Cable and
Wireless (Marine) Ltd./Mr. Jose Pueio/ Pacifico T. Fernandez. From the inception of the case before the
labor arbiter until it reached the Court of Appeals, Smith Bell Management, Inc., the foreign
principal Cable and Wireless (Marine) Ltd.
and the officers of
Smith Bell Management, Inc. were
named as respondents. When the case
reached this Court, petitioner deleted Smith Bell Management, Inc., Cable and
Wireless (Marine) Ltd. and the two officers from the caption of the case in all
its pleadings filed with the Court, retaining only C.F. Sharp Crew Management, Inc.
as respondent. For its part, CF
Sharp Crew Management, Inc. also
referred to itself as the only respondent in all his pleadings before the
Court.
[13]Interpreting
Sec. 4, par. (b), Rule II, Book II, POEA Rules and Regulations Governing
Overseas Employment; id. at 36.
[26]Sec. 2 of the POEA Standard Contract lays down the
rule as to when the employment contract commences, thus:
A.
The Employment contract between the employer
and the seafarer shall commence upon actual departure of the seafarer from
the airport or seaport in the point of hire and with a POEA approved
contract. It shall be effective until
the seafarer’s date of arrival at the point of hire upon termination of his
employment pursuant to Section 18 of this Contract. [Emphasis supplied]
[27]Sec. 4, par.
(b), Rule II, Book III of the POEA Rules and Regulations Governing Overseas
Employment dated
Section
4. Worker’s Deployment.— An agency shall
deploy its recruits within the
deployment period as indicated below:
a.
One hundred
twenty (120) calendar days from the date of signing of employment contract for
all landbased workers;
b.
Thirty (30)
calendar days from the date of processing by the administration of the
employment contracts of seafarers.
Failure of the agency to deploy a
worker within the prescribed period without valid reasons shall be a cause for
suspension or cancellation of license or fine.
In addition, the agency shall return all documents at no cost to the
worker.
[31]Remigio v. National Labor Relations
Commission, G.R. No. 159887,
[34]This ruling
was reiterated in Pentagon International
Shipping, Inc. v. Adelantar, G.R. No. 157373, 27 July 2004, 435 SCRA 342; Gu-Miro v. Adorable, G.R. No. 160952, 20
August 2004, 437 SCRA 162, 169; and Petroleum
Shipping Ltd. v. National Labor
Relations Commission, G.R. No. 148130, 16 June 2006, 491 SCRA 35, 42.