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EASTERN SHIPPING LINES, INC., Petitioner, - versus - FERRER D. ANTONIO, Respondent. |
G.R. No. 171587 Present: CARPIO, J., Chairperson, CHICO-NAZARIO, VELASCO, JR., NACHURA, and PERALTA, JJ. Promulgated: October 13, 2009 |
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PERALTA, J.:
Before this Court is a Petition for
Review on Certiorari, under Rule 45 of the Rules of Court, seeking to
set aside the Decision[1]
dated December 1, 2005, and the Resolution[2]
dated February 21, 2006 of the Court of Appeals (CA) in CA-G.R. SP. No. 75701
which affirmed with modification the Resolutions rendered by the National Labor
Relations Commission (NLRC), Second Division, dated September
19, 2002 and January 30, 2003, respectively, in NLRC NCR CA NO. 029121-01, ordering
petitioner to pay respondent his optional retirement benefit, plus moral
damages and attorney's fees.
Petitioner
Eastern Shipping Lines is a domestic corporation doing business in the
In its
defense, petitioner alleged that sometime in January 1996, respondent filed a
vacation leave to take the licensure examinations for 2nd Engineer
while his vessel was dry-docked for repairs. The following month, respondent,
while waiting for the results of his licensure examinations, filed another
vacation leave for an alleged medical check-up. Having passed the licensure
examinations for 2nd Engineer, he signified his intention to
petitioner that he be assigned to a vessel for the said position. In the
meantime, since there was still no vacancy in the desired position, respondent
was instructed to undergo medical examinations as a prerequisite for boarding a
vessel. He was found to be medically fit. Respondent, however, for unknown reasons,
failed to report to petitioner after undergoing the medical examinations. He
did not even bother to verify whether he had a voyage assignment for his new
position as 2nd Engineer. On January 16, 1997, respondent suddenly
went to the office and decided to avail himself of the company's retirement
gratuity plan by formally applying for payment of his optional retirement
benefits due to financial reasons. Petitioner denied his application
ratiocinating that his shipboard employment history and track record as a
seaman did not meet the standard required in granting the optional retirement
benefits.
The Labor Arbiter (LA), in his Decision[5]
dated April 18, 2001, rendered judgment in favor of the respondent. It found
that respondent was forced to file his optional retirement due to petitioner's
failure to give him any work assignment despite that he had already recovered
from his injury and was declared fit to work. The LA found that petitioner's
actuations amounted to constructive dismissal and, hence, ordered the payment
of respondent's optional retirement benefits, as well as moral and exemplary
damages, and attorney's fees. The dispositive portion of LA’s Decision reads:
WHEREFORE, premises all considered,
judgment is hereby rendered as follows:
Ordering respondent to pay
complainant his optional retirement benefit of US$4,014.84 (55% x 608.30 x 12
yrs = 4,104.84) or its peso equivalent computed at the rate of exchange at the
time of actual payment; Ordering respondents to pay complainant moral damages in
the amount of P150,000.00 and exemplary damages in the amount of P75,000.00;
and to pay complainant ten (10%) percent of the total monetary award by way of
attorney's fees.
SO ORDERED.[6]
Dissatisfied
with the LA's finding, petitioner appealed to the NLRC on grounds of serious errors which would cause
grave or irreparable damage or injury to petitioner and for grave abuse of
discretion. It alleged that the LA erred in ruling that respondent was entitled
to the optional retirement benefits, as well as to the payment of moral and
exemplary damages, and attorney's fees.
The
NLRC, Second Division, in its Resolution[7]
dated September 19, 2002, affirmed the findings of the LA and dismissed petitioner's
appeal. It held that petitioner’s denial
of respondent's application for optional retirement benefits was arbitrary and
illegal.
Petitioner
filed a motion for reconsideration,[8]
which the NLRC denied in a Resolution[9]
dated January 30, 2003.
Undaunted,
petitioner filed a petition for certiorari
with the CA alleging that the NLRC committed grave abuse of discretion
amounting to lack or excess of jurisdiction in awarding the retirement
gratuity/separation pay to the respondent in the amount of US$4,104.84, plus
moral and exemplary damages, and attorney's fees.
The CA,
in its Decision dated December 1, 2005, affirmed the resolutions of the NLRC,
but modified the award of moral damages in the reduced amount of PhP25,000.00
and deleted the award of exemplary damages. The CA ruled that the affirmance by
the NLRC of the LA's ruling was supported by substantial evidence. Judicial
prudence dictates that the NLRC's exercise of discretion in affirming the LA's
factual findings should be accorded great weight and respect. The CA ruled that
while it acknowledged that the company's optional retirement benefits were in
the form of a gratuity, which may or may not be awarded at the company's
discretion, such exercise of discretion must still comply with the basic and
common standard reason may require. Since respondent had complied with the
minimum requirement provided in the gratuity plan, i.e., actual rendition of 3,650 days on board petitioner's vessel,
thus, petitioner's denial of the optional retirement benefits of the respondent
was arbitrary and illegal.
Petitioner
filed a motion for reconsideration,[10]
which the CA denied in a Resolution[11]
dated February 21, 2006.
Hence, the instant petition raising this
sole assignment of error:
WHETHER OR NOT THE COURT OF APPEALS
ERRED IN AWARDING THE RESPONDENT THE OPTIONAL RETIREMENT BENEFIT BEING APPLIED
FOR IN US DOLLARS UNDER THE GRATUITY PLAN OF HEREIN PETITIONER.[12]
The
petition is meritorious.
Respondent is not entitled to optional retirement benefits. Under the Labor Code, it is
provided that:
ART. 287. Retirement. – Any employee may be
retired upon reaching the retirement age established in the
collective bargaining agreement or other applicable employment contract.
In case of retirement, the employee shall be entitled to receive such retirement benefits as he may have earned under existing laws
and any collective bargaining agreement and other agreements: Provided, however, That an employee’s retirement benefits under any collective bargaining and other
agreements shall not be less than those provided herein.
In the absence of a retirement
plan or agreement providing for retirement benefits of
employees in the establishment, an employee upon reaching the age of sixty (60)
years or more, but not beyond sixty-five (65) years which is hereby declared
the compulsory retirement age, who has served at least five
(5) years in the said establishment, may retire and shall be entitled to retirement pay equivalent to at least one-half (1/2) month
salary for every year of service, a fraction of at least six (6) months being
considered as one whole year.[13]
Clearly, the age of retirement
is primarily determined by the existing agreement or employment contract. In the absence of such agreement, the retirement age shall be fixed by law. Under the aforecited law, the mandated compulsory
retirement age is set at 65 years, while the minimum age for optional retirement is set at 60 years.
In the case at bar, there is a
retirement gratuity plan between the petitioner and the respondent, which
provides the following:
Retirement Gratuity
x x x x
B. Retirement under
the Labor Code:
Any employee whether land-based
office personnel or shipboard employee who shall reach the age of sixty (60)
while in active employment with this company may retire from the service upon
his written request in accordance with the provisions of Art. 277 of the Labor
Code and its Implementing Rules, Book 6, Rule 1, Sec. 13 and he shall be paid
termination pay equivalent to fifteen (15) days pay for every year of service
as stated in said Labor Code and its Implementing Rules. However, the
company may at its own volition grant him a higher benefit which shall not
exceed the benefits provided for in the Retirement Gratuity
table mentioned elsewhere in this policy.
It will be the exclusive prerogative
and sole option of this company to retire any covered employee who shall have
rendered at least fifteen (15) years of credited service for land-based
employees and 3,650 days actually on board vessel for shipboard personnel. x x x
Under Paragraph
B of the plan, a shipboard employee, upon his written request, may retire from
service if he has reached the eligibility age of 60 years. In this case, the
option to retire lies with the employee.
Records show that respondent was only 41 years old when he applied for optional
retirement, which was 19 years short of the required eligibility age.
Thus, he cannot claim optional retirement benefits as a matter of right.
In
Eastern Shipping Lines, Inc. v. Sedan,[14] respondent
Dioscoro Sedan, a 3rd Marine Engineer and Oiler in one of the
vessels of Eastern Shipping Lines, after several voyages, applied for optional
retirement. Eastern Shipping Lines deferred action since his services on board
ship were still needed. Despite several demands for his optional retirement,
the requests were not acted upon. Thus,
The aforecited Paragraph B is
different from Paragraph C on optional retirement. The difference lies on who
exercises the option to retire. Unlike in Paragraph B, the option to retire in Paragraph
C is exclusively lodged in the employer. Although respondent may have rendered
at least 3,650 days of service on board a vessel, which qualifies him for
optional retirement under Paragraph C, however, he cannot demand the same as a
matter of right.
If an employee upon rendering at least
3,650 days of service would automatically be entitled to the benefits of the
gratuity plan, then it would not have been termed as optional, as the foregoing
scenario would make the retirement mandatory and compulsory.
Due to the foregoing findings of facts
of the CA, although generally deemed conclusive, may admit review by this Court
if the CA failed to notice certain relevant facts which, if properly
considered, will justify a different conclusion and when the judgment of the CA
is premised on misapprehension of facts.[15]
The CA erred in affirming the rulings
of the LA and the NLRC, as the availment of the optional retirement benefits is
subject to the exclusive prerogative and sole option of the petitioner.
It is also worth to note that respondent, being a seaman, is not entitled to the payment of separation pay. In Millares v. National Labor Relations Commission,[16] we ruled that:
x x x [I]t is clear that seafarers are considered contractual
employees. They cannot be considered as regular employees under Article 280 of
the Labor Code. Their employment is governed by the contracts they sign
everytime they are rehired and their employment is terminated when the contract
expires. Their employment is contractually fixed for a certain period of time.
They fall under the exception of Article 280 whose
employment has been fixed for a specific project or
undertaking the completion or termination of which has been determined at the
time of engagement of the employee or where the work or services to be
performed is seasonal in nature and the employment is for the duration of the
season. We need not depart from the rulings
of the Court in the two aforementioned cases which indeed constitute stare decisis with respect to the
employment status of seafarers.
x x x x
From all the foregoing, we hereby state that
petitioners are not considered regular or permanent employees under Article 280
of the Labor Code. Petitioners’ employment have automatically ceased upon the
expiration of their contracts of enlistment (COE). Since there was no dismissal
to speak of, it follows that petitioners are not entitled to
reinstatement or payment of separation pay or backwages, as provided by
law.[17]
The CA affirmed the award of moral damages due to the refusal of the petitioner to reemploy respondent after he had recovered from his injury and was declared fit to work, forcing him to apply instead for optional retirement benefit.
We
rule that the award of moral damages is not proper. Moral damages are recoverable only if the defendant
has acted fraudulently or in bad faith, or is guilty of gross negligence
amounting to bad faith, or in wanton disregard of his contractual
obligations. The breach must be wanton, reckless, malicious, or in bad
faith, oppressive or abusive.[18]
Further, moral damages
are recoverable only where the dismissal was attended by bad faith or fraud, or
constituted an act oppressive to labor, or was done in a
manner contrary to morals, good customs or public policy.[19]
In the
present case, there was no contractual obligation on the part of the petitioner
to mandatorily reemploy respondent. The reason, as provided in the Millares
case, is that their employment is contractually fixed for a certain period of
time and automatically ceased upon the expiration of their contract. Records
will show that respondent's last employment with the petitioner ended on
In Gu-Miro v. Adorable,[21] this Court said that:
Thus, even with the continued re-hiring
by respondent company of petitioner to serve as Radio Officer on board
Bergesen’s different vessels, this should be interpreted not as a basis for
regularization but rather a series of contract renewals sanctioned under the
doctrine set down by the second Millares case.
If at all, petitioner was preferred because of practical considerations - namely,
his experience and qualifications. However, this does not alter the status of
his employment from being contractual.
With respect to the claim for backwages
and separation pay, it is now well settled that the award of backwages and
separation pay in lieu of reinstatement are reliefs that are awarded to an
employee who is unjustly dismissed. In the instant case, petitioner was
separated from his employment due to the termination of an impliedly renewed
contract with respondent company. Hence, there is no illegal or unjust
dismissal.[22]
Clearly, after the termination of the renewed contract with the petitioner, respondent cannot force the petitioner to reemploy him as a matter of right. The employment ends at the precise time the contract ends. Hence, there was no illegal or unjust dismissal, or even a constructive dismissal.
Nonetheless, although respondent's
entitlement to optional retirement pay is wanting and despite petitioner's non-obligation to mandatorily rehire him, the
grant of financial assistance is in order as an equitable concession under the
circumstances of the case.
In
the aforecited case of Eastern,[23]
this Court affirmed the CA's grant of financial assistance to the respondent
therein. In that case, we said that:
But we must stress that this Court
did allow, in several instances, the grant of financial assistance. In the
words of Justice Sabino de Leon, Jr., now deceased, financial assistance may be
allowed as a measure of social justice and exceptional circumstances, and as an
equitable concession. The instant case equally calls for balancing the interests
of the employer with those of the worker, if only to approximate what Justice
Laurel calls justice in its secular sense.
In this instance, our attention has
been called to the following circumstances: that private respondent joined the
company when he was a young man of 25 years and stayed on until he was 48 years
old; that he had given to the company the best years of his youth, working on
board ship for almost 24 years; that in those years there was not a single
report of him transgressing any of the company rules and regulations; that he
applied for optional retirement under the
company’s non-contributory plan when his daughter died and for his own health
reasons; and that it would appear that he had served the company well, since
even the company said that the reason it refused his application for optional retirement was that it still needed
his services; that he denies receiving the telegram asking him to report back
to work; but that considering his age and health, he preferred to stay home
rather than risk further working in a ship at sea.
In our view, with these special
circumstances, we can call upon the same “social and compassionate justice”
cited in several cases allowing financial assistance. These circumstances
indubitably merit equitable concessions, via the principle of “compassionate
justice” for the working class. x x x[24]
In the
present case, respondent had been employed with the petitioner for almost
twelve (12) years. On February 13, 1996, he suffered from a “fractured left
transverse process of fourth lumbar vertebra,” while their vessel was at the
port of Yokohama, Japan. After consulting a doctor, he was required to rest for
a month. When he was repatriated to
Considering
all of the foregoing and in line with Eastern, the ends of social
and compassionate justice would be served best if respondent will be given some
equitable relief. Thus, the award of P100,000.00 to respondent as
financial assistance is deemed equitable under the circumstances.
WHEREFORE, the petition is GRANTED.
The Decision and Resolution of the Court of Appeals, dated December 1, 2005 and
February 21, 2006, respectively, in CA-G.R. SP. No. 75701, are REVERSED
and SET ASIDE. Respondent is awarded
financial assistance in the amount of P100,000.00.
SO ORDERED.
DIOSDADO M. PERALTA
Associate Justice
WE CONCUR:
ANTONIO T. CARPIO
Associate Justice
Chairperson
MINITA V. CHICO-NAZARIO PRESBITERO J. VELASCO, JR.
Associate Justice Associate Justice
ANTONIO
EDUARDO B. NACHURA
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
Third Division, Chairperson
CERTIFICATION
Pursuant to Section 13, Article VIII of the Constitution and the Division Chairperson’s Attestation, I certify that the conclusions in the above Decision were reached in consultation before the case was assigned to the writer of the opinion of the Court’s Division.
LEONARDO A. QUISUMBING
Acting Chief Justice
[1] Penned by Associate Justice Monina Arevalo-Zenarosa, with Associate Justices Andres B. Reyes, Jr. and Rosmari D. Carandang, concurring; rollo, pp. 40-47.
[2]
[3] Records, p. 92.
[4]
[5] Rollo, pp. 142-149.
[6] Id. at 148-149.
[7] Penned by Commissioner Angelita A. Gacutan, with Presiding Commissioner Raul T. Aquino and Commissioner Victoriano R. Calaycay, concurring; rollo, pp. 109-118.
[8] Rollo, pp. 96-107.
[9]
[10] Rollo, pp. 29-38.
[11]
[12] Id. at 10.
[13] Emphasis ours.
[14] G.R. No. 159354,
[15] Fuentes v. Court of Appeals, 335 Phil. 1163, 1168 (1997).
[16] 434 Phil. 524 (2002).
[17] Id. at 538-540. (Emphasis ours.)
[18] McLeod v. National Labor
Relations Commission, G.R. No. 146667,
[19] Rutaquio v. National Labor Relations Commission, 375 Phil. 405, 416-417 (1999).
[20] Records, p. 94.
[21] 480 Phil. 597 (2004).
[22] Id. at 608. (Emphasis ours.)
[23] Supra note 14.
[24] Id. at 574-575.