SECOND DIVISION
|
C.F. SHARP & CO. INC. and JOHN J. ROCHA, Petitioners, -versus- PIONEER INSURANCE & SURETY CORPORATION, WILFREDO
C. AGUSTIN and HERNANDO G. MINIMO,
Respondents. |
G.R. No. 179469 Present:
CARPIO, J., Chairperson,
VILLARAMA, JR.,*
PEREZ,
SERENO, and
REYES, JJ. Promulgated: February 15, 2012 |
x ----------------------------------------------------------------------------------------x
D E C I S I O N
PEREZ, J.:
Whether a local private
employment agency may be held liable for breach of contract for failure to
deploy a seafarer, is the bone of contention in this case.
Assailed in this petition
for review are the Decision[1]
dated 30 October 2003 and the 29 August 2007 Resolution of the Court of Appeals
in CA-G.R. CV No. 53336 finding petitioners C.F. Sharp Co. Inc. (C.F. Sharp)
and John J. Rocha (Rocha) liable for damages.
Responding to a newspaper
advertisement of a job opening for sandblasters and painters in Libya, respondents
Wilfredo C. Agustin and Hernando G. Minimo applied with C.F. Sharp sometime in
August 1990. After passing the
interview, they were required to submit their passports, seamans book, National
Bureau of Investigation clearance, employment certificates, certificates of
seminars attended, and results of medical examination. Upon submission of the requirements, a
Contract of Employment was executed between respondents and C.F. Sharp. Thereafter, respondents were required to
attend various seminars, open a bank account with the corresponding allotment
slips, and attend a pre-departure orientation.
They were then advised to prepare for immediate deployment and to report
to C.F. Sharp to ascertain the schedule of their deployment.
After a month, respondents
were yet to be deployed prompting them to request for the release of the
documents they had submitted to C.F. Sharp.
C.F. Sharp allegedly refused to surrender the documents which led to the
filing of a complaint by respondents before the Philippine Overseas Employment
Administration (POEA) on 21 January 1991.
On 30 October 1991, POEA issued
an Order finding C.F. Sharp guilty of violation of Article 34(k) of the Labor
Code, which makes it unlawful for any entity to withhold or deny travel
documents from applicant workers before departure for monetary or financial
considerations other than those authorized under this Code and its implementing
rules and regulations. Consequently,
C.F. Sharps license was suspended until the return of the disputed documents
to respondents. POEA likewise declared
that it has no jurisdiction to adjudicate the monetary claims of respondents.
On 10 March 1995,
respondents filed a Complaint for breach of contract and damages against C.F.
Sharp and its surety, Pioneer Insurance and Surety Corporation (Pioneer
Insurance), before the Regional Trial Court (RTC) of Pasay City. Respondents claimed that C.F. Sharp falsely
assured them of deployment and that its refusal to release the disputed
documents on the ground that they were already bound by reason of the Contract
of Employment, denied respondents of employment opportunities abroad and a
guaranteed income. Respondents also
prayed for damages. Pioneer Insurance
filed a cross claim against C.F. Sharp and John J. Rocha, the executive
vice-president of C.F. Sharp, based on an Indemnity Agreement which
substantially provides that the duo shall jointly and severally indemnify
Pioneer Insurance for damages, losses, and costs which the latter may incur as
surety. The RTC rendered judgment on 27
June 1996 favoring respondents, to wit:
WHEREFORE, plaintiffs causes of action having been proved with a
preponderance of evidence, judgment is hereby ordered as follows:
a.
Declaring the non-deployment of plaintiffs and the
refusal to release documents as breach of contract;
b.
By way of compensatory damages, awarding $450 per
month and $439 overtime per month, which should have been received by
plaintiffs from other employers, making a joint and solidary obligation on the
part of the two defendants C.F. Sharp and Pioneer for the period covered by
the employment contracts;
c.
Ordering each defendant to pay each plaintiff P50,000.00
as moral damages and another P50,000.00 each as exemplary damages;
d.
Ordering defendants to share in the payment to
plaintiffs of P50,000.00 attorneys fees;
e.
Defendants to pay litigation expenses and costs of
suit.[2]
The trial court ruled that there was a violation of
the contract when C.F. Sharp failed to deploy and release the papers and
documents of respondents, hence, they are entitled to damages. The trial court likewise upheld the cause of
action of respondents against Pioneer Insurance, the former being the actual
beneficiaries of the surety bond.
On appeal, C.F. Sharp and Rocha raise a jurisdictional
issue that the RTC has no jurisdiction over the instant case pursuant to
Section 4(a) of Executive Order No. 797 which vests upon the POEA the
jurisdiction over all cases, including money claims, arising out of or by
virtue of any contract involving workers for overseas employment. C.F. Sharp and Rocha refuted the findings of
the trial court and maintained that the perfection and effectivity of the
Contract of Employment depend upon the actual deployment of respondents.
The Court of Appeals upheld the jurisdiction of the
trial court by ruling that petitioners are now estopped from raising such
question because they have actively participated in the proceedings before the
trial court. The Court of Appeals
further held that since there is no perfected employment contract between the
parties, it is the RTC and not the POEA, whose jurisdiction pertains only to
claims arising from contracts involving Filipino seamen, which has jurisdiction
over the instant case.
Despite the finding that no contract was perfected
between the parties, the Court of Appeals adjudged C.F. Sharp and Rocha liable
for damages, to wit:
WHEREFORE, the Appeal of C.F. Sharp Co Inc. and John J. Rocha is
PARTIALLY GRANTED only insofar as We declare that there is no breach of
contract because no contract of employment was perfected. However, We find appellants C.F. Sharp Co.
Inc. and John J. Rocha liable to plaintiff-appellees for damages pursuant to
Article 21 of the Civil Code and award each plaintiff-appellees temperate
damages amounting to P100,000.00, and moral damages in the increased
amount of P100,000.00. The award
of exemplary damages and attorneys fees amounting to P50,000.00, respectively,
is hereby affirmed.[3]
The Court of Appeals
limited the liability of Pioneer Insurance to the amount of P150,000.00
pursuant to the Contract of Suretyship between C.F. Sharp and Pioneer
Insurance.
Rocha filed the instant
petition on the submission that there is no basis to hold him liable for
damages under Article 21 of the Civil Code because C.F. Sharp has signified its
intention to return the documents and had in fact informed respondents that
they may, at any time of the business day, withdraw their documents. Further, respondents failed to establish the
basis for which they are entitled to moral damages. Rocha refuted the award of exemplary damages
because the act of requiring respondents to sign a quitclaim prior to the
release of their documents could not be considered bad faith. Rocha also questions the award of temperate
damages on the ground that the act of withholding respondents documents could
not be considered chronic and continuing.[4]
Right off, insofar as
Pioneer Insurance is concerned, the petition should be dismissed against it
because the ruling of the Court of Appeals limited its liability to P150,000.00
was not assailed by Rocha, hence the same has now attained finality.
Before us, respondents maintain that they are entitled
to damages under Article 21 of the Civil Code for C.F. Sharps unjustified
refusal to release the documents to them and for requiring them to sign a
quitclaim which would effectively bar them from seeking redress against
petitioners. Respondents justify the
award of other damages as they suffered pecuniary losses attributable to
petitioners malice and bad faith.
In his Reply, Rocha
introduced a new argument, i.e., that
he should not be held jointly liable with C.F. Sharp considering that the
company has a separate personality.
Rocha argues that there is no showing in the Complaint that he had
participated in the malicious act complained.
He adds that his liability only stems from the Indemnity Agreement with
Pioneer Insurance and does not extend to respondents.
Records disclose that
Rocha was first impleaded in the case by Pioneer Insurance. Pioneer Insurance, as surety, was sued by
respondents together with C.F. Sharp.
Pioneer Insurance in turn filed a third party complaint against Rocha on
the basis of an Indemnity Agreement whereby he bound himself to indemnify and
hold harmless Pioneer Insurance from and against any and all damages which the
latter may incur in consequence of having become a surety.[5]
The third party complaint partakes the
nature of a cross-claim.
C.F. Sharp, as defendant-appellant and Rocha, as
third-party defendant-appellant, filed only one brief before the Court of
Appeals essentially questioning the declaration of the trial court that
non-deployment is tantamount to breach of contract and the award of damages. The Court of Appeals found them both liable
for damages. Both C.F. Sharp and Rocha
sought recourse before this Court via a Motion for Extension of Time (To File a
Petition for Review) on 19 September 2007.[6] In the Petition for Review, however, C.F.
Sharp was noticeably dropped as petitioner.
Rocha maintains essentially the same argument that he and C.F. Sharp
were wrongfully adjudged liable for damages.
It was only in its Reply dated 25 March 2008 that
Rocha, through a new representation, suddenly forwarded the argument that he
should not be held liable as an officer of C.F. Sharp. It is too late in the day for Rocha to change
his theory. It is doctrinal that
defenses not pleaded in the answer may not be raised for the first time on
appeal. A party cannot, on appeal,
change fundamentally the nature of the issue in the case. When a party
deliberately adopts a certain theory and the case is decided upon that theory
in the court below, he will not be permitted to change the same on appeal,
because to permit him to do so would be unfair to the adverse party.[7] More so in this case, where Rocha introduced
a new theory at the Reply stage. Disingenuousness
may even be indicated by the sudden exclusion of the name of C.F. Sharp from
the main petition even as Rocha posited arguments not just for himself and also
in behalf of C.F. Sharp.
The core issue pertains to damages.
The bases of the lower courts award of damages
differ. In upholding the perfection of
contract between respondents and C.F. Sharp, the trial court stated that the
unjustified failure to deploy and subsequently release the documents of
respondents entitled them to compensatory damages, among others. Differently, the appellate court found that
no contract was perfected between the parties that will give rise to a breach
of contract. Thus, the appellate court
deleted the award of actual damages.
However, it adjudged other damages against C.F. Sharp for its unlawful
withholding of documents from respondents.
We sustain the trial
courts ruling.
On the issue of whether
respondents are entitled to relief for failure to deploy them, the RTC ruled in
this wise:
The contract of employment entered into
by the plaintiffs and the defendant C.F. Sharp is an actionable document, the
same contract having the essential requisites for its validity. It is worthy to note that there are three
stages of a contract: (1) preparation, conception, or generation which is the
period of negotiation and bargaining ending at the moment of agreement of the
parties. (2) Perfection or birth of the
contract, which is the moment when the parties come to agree on the terms of
the contract. (3) Consummation or death, which is the fulfillment or
performance of the terms agreed upon in the contract.
Hence, it is imperative to know the stage reached by the contract
entered into by the plaintiffs and C.F. sharp.
Based on the testimonies of the witnesses presented in this Court, there
was already a perfected contract between plaintiffs and defendant C.F.
Sharp. Under Article 1315 of the New
Civil Code of the Philippines, it states that:
x x x x
Thus, when plaintiffs signed the contract of employment with C.F. Sharp
(as agent of the principal WB Slough) consequently, the latter is under
obligation to deploy the plaintiffs, which is the natural effect and
consequence of the contract agreed by them.[8]
We agree.
As correctly ruled at the trial, contracts undergo
three distinct stages, to wit: negotiation; perfection or birth; and
consummation. Negotiation begins from the time the prospective contracting
parties manifest their interest in the contract and ends at the moment of
agreement of the parties. Perfection or birth of the contract takes place when
the parties agree upon the essential elements of the contract. Consummation
occurs when the parties fulfill or perform the terms agreed upon in the
contract, culminating in the extinguishment thereof.[9]
Under Article 1315 of the Civil Code, a contract is
perfected by mere consent and from that moment the 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.[10]
An employment contract, like any other contract, is
perfected at the moment (1) the parties come to agree upon its terms; and (2)
concur in the essential elements thereof: (a) consent of the contracting
parties, (b) object certain which is the subject matter of the contract and (c)
cause of the obligation.[11]
We have scoured through the Contract of Employment and
we hold that it is a perfected contract of employment. We reproduce below the terms of the Contract of Employment for easy reference:
WITNESSETH
That the Seafarer
shall be employed on board under the following terms and conditions:
1.1 Duration of Contract: 3 month/s
1.2 Position:
SANDBLASTER/PAINTER
1.3 Basic Monthly Salary: $450.00 per month
1.4 Living Allowances: $0.00 per month
1.5 Hours of Work: 48 per week
1.6 Overtime Rate: $439.00 per month
1.7 Vacation Leave with Pay: 30.00 day/s per
month on board
The terms and
conditions of the Revised Employment Contract for seafarers governing the
employment of all Filipino seafarers approved by the POEA/DOLE on July 14, 1989
under Memorandum Circular No. 41 series
of 1989 and amending circulars relative thereto shall be strictly and
faithfully observed.
Any alterations
or changes, in any part of this Contract shall be evaluated, verified,
processed and approved by the Philippine Overseas Employment Administration (POEA). Upon approval, the same shall be deemed an
integral part of the Standard Employment Contract (SEC) for seafarers.
All claims,
complaints or controversies relative to the implementation and interpretation
of this overseas employment contract shall be exclusively resolved through the
established Grievance Machinery in the Revised Employment Contract for
seafarers, the adjudication procedures of the Philippine Overseas Employment
Administration and the Philippine Courts of Justice, in that order.
Violations of the
terms and conditions of this Contract with its approved addendum shall warrant
the imposition of appropriate disciplinary or administrative sanctions against
the erring party.
The Employee
hereby certifies that he had received, read or has had explained to him and
fully understood this contract as well as the POEA revised Employment Contract
of 1989 and the Collective Bargaining Agreement (CBA) and/or company terms and
conditions of employment covering this vessel and that he is fully aware of and
has head or has had explained to him the terms and conditions including those
in the POEA Employment Contract, the CBA and this contract which constitute his
entire agreement with the employer.
The Employee also
confirms that no verbal or other written promises other than the terms and
conditions of this Contract as well as the POEA Revised Employment Contract,
the CBA and/or company terms and conditions had been given to the
Employee. Therefore, the Employee cannot
claim any additional benefits or wages of any kind except those which have been
provided in this Contract Agreement.[12]
By the contract, C.F. Sharp, on behalf of its
principal, International Shipping Management, Inc., hired respondents as
Sandblaster/Painter for a 3-month contract, with a basic monthly salary of US$450.00. Thus, the object of the contract is the
service to be rendered by respondents on board the vessel while the cause of
the contract is the monthly compensation they expect to receive. These terms were embodied in the Contract of
Employment which was executed by the parties.
The agreement upon the terms of the contract was manifested by the
consent freely given by both parties through their signatures in the contract. Neither parties disavow the consent they both
voluntarily gave. Thus, there is a
perfected contract of employment.
The Court of Appeals agreed with the submission of
C.F. Sharp that the perfection and effectivity of the Contract of Employment
depend upon the actual deployment of respondents. It based its conclusion that there was no
perfected contract based on the following rationale:
The commencement of the employer-employee relationship between
plaintiffs-appellees and the foreign employer, as correctly represented by C.F.
Sharp requires that conditions under Sec. D be met. The Contract of Employment was duly Verified
and approved by the POEA. Regrettably,
We have painfully scrutinized the Records and find no evidence that
plaintiffs-appellees were cleared for travel and departure to their port of embarkation
overseas by government authorities.
Consequently, non-fulfillment of this condition negates the commencement
and existence of employer-employee relationship between the
plaintiffs-appellees and C.F. Sharp.
Accordingly, no contract between them was perfected that will give rise
to plaintiffs-appellees right of action.
There can be no breach of contract when in the first place, there is no
effective contract to speak of. For the
same reason, and finding that the award of actual damages has no basis, the
same is hereby deleted.[13]
The Court of Appeals erred.
The commencement of an employer-employee relationship
must be treated separately from the perfection of an employment contract. Santiago
v. CF Sharp Crew Management, Inc.,[14]
which was promulgated on 10 July 2007, is an instructive precedent on this
point. In said case, petitioner was
hired by respondent on board MSV Seaspread for US$515.00 per month for nine
(9) months, plus overtime pay. Respondent
failed to deploy petitioner from the port
of Manila to Canada. We made a
distinction between the perfection of the employment contract and the
commencement of the employer-employee relationship, thus:
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.[15]
Despite the fact that the
employer-employee relationship has not commenced due to the failure to deploy
respondents in this case, respondents are entitled to rights arising from the perfected
Contract of Employment, such as the right to demand performance by C.F. Sharp of
its obligation under the contract.
The right to demand performance was a
categorical pronouncement in Santiago
which ruled that failure to deploy constitutes breach of contract, thereby
entitling the seafarer to damages:
Respondents act of preventing petitioner from departing the port of
Manila and boarding MSV Seaspread
constitutes a breach of contract, giving rise to petitioners cause of
action. Respondent unilaterally and unreasonably reneged on its obligation to
deploy petitioner and must therefore answer for the actual damages he suffered.
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 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.[16]
The appellate court could not be faulted for its
failure to adhere to Santiago
considering that the Court of Appeals Decision was promulgated way back in 2003
while Santiago was decided in
2007. We now reiterate Santiago and, accordingly, decide the
case at hand.
We respect the lower courts findings that C.F. Sharp
unjustifiably refused to return the documents submitted by respondent. The finding was that C.F. Sharp would only
release the documents if respondent would sign a quitclaim. On this point, the trial court was affirmed
by the Court of Appeals. As a
consequence, the award by the trial court of moral damages must likewise be
affirmed.
Moral damages may be recovered under Article 2219 of
the Civil Code in relation to Article 21. The pertinent provisions read:
Art. 2219. Moral damages may be recovered
in the following and analogous cases:
x x x x
(10) Acts and actions referred to in Articles
21, 26, 27, 28, 29, 30, 32, 34, and 35.
x x x x
Art. 21. Any person who wilfully causes
loss or injury to another in a manner that is contrary to morals, good customs
or public policy shall compensate the latter for the damage.
We agree with the appellate court that C.F. Sharp
committed an actionable wrong when it unreasonably withheld documents, thus
preventing respondents from seeking lucrative employment elsewhere. That C.F. Sharp arbitrarily imposed a
condition that the documents would only be released upon signing of a quitclaim
is tantamount to bad faith because it effectively deprived respondents of resort
to legal remedies.
Furthermore, we affirm the award of exemplary damages
and attorneys fees. Exemplary damages
may be awarded when a wrongful act is accompanied by bad faith or when the
defendant acted in a wanton, fraudulent, reckless, oppressive, or malevolent
manner which would justify an award of exemplary damages under Article 2232 of
the Civil Code. Since the award of
exemplary damages is proper in this case, attorneys fees and cost of the suit
may also be recovered as provided under Article 2208 of the Civil Code.[17]
WHEREFORE, the petition is DENIED. The Decision dated 27 June 1996 of the
Regional Trial Court of Pasay City is REINSTATED. Accordingly, the Decision dated 30
October 2003 of the Court of Appeals is MODIFIED.
SO ORDERED.
|
|
JOSE PORTUGAL PEREZAssociate
Justice |
WE CONCUR:
ANTONIO T. CARPIO
Associate Justice
Chairperson
MARTIN S. VILLARAMA, JR. MARIA LOURDES P. A.
SERENO
Associate Justice Associate Justice
BIENVENIDO L.
REYES
Associate Justice
A T T E S T A T I O N
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 Courts Division.
ANTONIO T. CARPIO
Associate Justice
Chairperson
Pursuant to Section 13, Article VIII of the
Constitution, and the Division Chairpersons 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
Courts Division.
RENATO C. CORONA
Chief Justice
[1] Penned by Associate Justice Noel G. Tijam with Associate Justices Ruben T. Reyes (retired Supreme Court Justice) and Edgardo P. Cruz, concurring. Rollo, pp. 29-43.
[2] Id. at 197.
[3] Id. at 42.
[4] Id. at 23.
[5] Records, p. 51.
[6] Rollo, pp. 3-4.
[7] Penera v. Commission on Election (COMELEC), G.R. No. 181613, 11 September 2009, 599 SCRA 609, 649; Philippine Ports Authority v. City of Iloilo, G.R. No. 109791, 14 July 2003, 406 SCRA 88, 93; Bank of the Philippine Islands v. Leobrera, G.R. No. 13714-48, 18 November 2003, 416 SCRA 15, 19.
[8] Rollo, p. 238.
[9] Spouses Tongson v. Emergency Pawnshop Bula, Inc., G.R. No. 167874, 15 January 2010, 610 SCRA 150, 161 citing Swedish Match, AB v. Court of Appeals, 483 Phil. 735, 750-751 (2004) citing further Bugatti v. Court of Appeals, 397 Phil. 376, 388-389 (2000).
[10] Famanila v. Court of Appeals, G.R. No. 150429, 29 August 2006, 500 SCRA 76, 85.
[11] OSM Shipping Phil., Inc. v. National Labor Relations Commission, 446 Phil. 793, 805 (2003) citing Limketkai Sons Milling, Inc. v. Court of Appeals, G.R. No. 118509, 1 December 1995, 250 SCRA 523, 535.
[12] Rollo, p. 68.
[13] Id. at 38.
[14] G.R. No. 162419, 10 July 2007, 527 SCRA 165.
[15] Id. at 176.
[16] Id. at 176-177.
[17] Sunbanun v. Go, G.R. No. 163280, 2 February 2010, 611 SCRA 320, 327-328.