1/28/2017 SUPREME COURT REPORTS ANNOTATED VOLUME 663

G.R. No. 177498. January 18, 2012.*
STOLT-NIELSEN TRANSPORTATION GROUP, INC. AND
CHUNG GAI SHIP MANAGEMENT, petitioners, vs. SULPECIO
MEDEQUILLO, JR., respondent.

Civil Law; Obligations; Novation; Novation is the extinguishment of an
obligation by the substitution or change of the obligation by a subsequent
one which extinguishes or modifies the first, either by changing the object or
principal conditions, or, by substituting another in place of the debtor, or by
subrogating a third person in the rights of the creditor.—Novation is the
extinguishment of an obligation by the substitution or change of the
obligation by a subsequent one which extinguishes or modifies the first,
either by changing the object or principal conditions, or, by substituting
another in place of the debtor, or by subrogating a third person in the rights
of the creditor. In order for novation to take place, the concurrence of the
following requisites is indispensable: 1. There must be a previous valid
obligation, 2. There must be an agreement of the parties concerned to a new
contract, 3. There must be the extinguishment of the old contract, and 4.
There must be the validity of the new contract.

_______________

* SECOND DIVISION.

292

292 SUPREME COURT REPORTS ANNOTATED

Stolt-Nielsen Transportation Group, Inc. vs. Medequillo, Jr.

Labor Law; Evidence; Substantial Evidence; 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.—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. 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. In
http://www.central.com.ph/sfsreader/session/00000159e37819b893a91efd003600fb002c009e/t/?o=False 1/16

as earlier discussed. In addition.central. Same. Else.—The POEA Rules and Regulations Governing Overseas Employment dated 31 May 1991 provides for the consequence and penalty against in case of non-deployment of the seafarer without any valid reason.”— 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. 2012 293 Stolt-Nielsen Transportation Group.com. Parties are bound not only to the fulfillment of what has been expressly stipulated but also to all the consequences which. if the reverse had happened. and conditions therein. the breach of which may give rise to a cause of action against the erring party. Same. the agency shall return all documents at no cost to the worker. JANUARY 18. Seafarers. Inc. that is the seafarer failed or refused to be deployed as agreed upon. even before the start of any employer-employee relationship. Same. Worker’s Deployment. 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. would have taken place had petitioner been actually deployed from the point of hire. The perfection of the contract.—We rule that distinction must be made between the perfection of the employment contract and the commencement of the employer-employee relationship. Medequillo. the breach of which may give rise to a cause of action against the erring party. as well as the rest of the terms 293 VOL. Thus. usage and law.ph/sfsreader/session/00000159e37819b893a91efd003600fb002c009e/t/?o=False 2/16 .1/28/2017 SUPREME COURT REPORTS ANNOTATED VOLUME 663 this case. Same. there was no showing of any arbitrariness on the part of the lower courts in their findings of facts. may be in keeping with good faith. contemporaneous with the perfection of the employment contract was the birth of certain rights and obligations. Philippine Overseas Employment Administration (POEA) Standard Employment Contract. The Philippine Overseas Employment Administration (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. It reads: Section 4. Penalties. 663. according to their nature. he would be liable for damages. Hence. Employer-Employee Relationship. we follow the settled rule. Recruitment. occurred when petitioner and respondent agreed on the object and the cause.” We adhere to the terms and conditions of the contract so as to credit the valid prior stipulations of the parties before the controversy started. which in this case coincided with the date of execution thereof. Same. contemporaneous with the perfection of the employment contract was the birth of certain rights and obligations. Same. vs. http://www. Jr. Thus. the obligatory force of every contract will be useless. Even before the start of any employer-employee relationship. Same. The commencement of the employer-employee relationship.

central. illness or death at levels provided for within the terms and conditions of employment of seafarers. Same. However. overseas deployment.ph/sfsreader/session/00000159e37819b893a91efd003600fb002c009e/t/?o=False 3/16 . 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.1/28/2017 SUPREME COURT REPORTS ANNOTATED VOLUME 663 —An agency shall deploy its recruits within the deployment period as indicated below: xxx b. the Labor Arbiters of the National Labor Relations Commission (NLRC) shall have the original and exclusive jurisdiction to hear and decide. 8042). The absence of the Philippine Overseas Employment Administration (POEA) Rules with regard to the payment of damages to the affected seafarer does not mean that the seafarer is precluded from claiming the same. Medequillo. We thus decree the application of Section 10 of Republic Act No. vs. within ninety (90) calendar days after the filing of the complaint. 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. Part VI of the POEA Rules and Regulations Governing the Recruitment and Employment of Land-based Overseas Workers is not applicable in this case. As earlier discussed. the agency shall return all documents at no cost to the worker. 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. 10. Same. Same. Money Claims. Jr. The claim provided by the same law refers to a valid contractual claim for compensation or benefits arising from employer-employee relationship or for any personal injury. Thirty (30) calendar days from the date of processing by the administration of the employment contracts of seafarers.—The POEA Rules Governing the Recruitment and Employment of Seafarers do not provide for the award of damages to be given in favor of the employees. the absence of the POEA Rules with regard to the payment of damages to the affected seafarer does not mean that the seafarer is precluded from claiming the same. 8042 (Migrant Workers Act) which provides for money claims by reason of a contract involving Filipino workers for 294 294 SUPREME COURT REPORTS ANNOTATED Stolt-Nielsen Transportation Group.A. The penalty for non-deployment as discussed is suspension or cancellation of license or fine. No. In addition. Inc. Migrant Workers Act (R. The law provides: Sec. the http://www. 8042 (Migrant Workers Act) which provides for money claims by reason of a contract involving Filipino workers for overseas deployment.—Notwithstanding any provision of law to the contrary.com. the Supreme Court decreed the applicability of Section 10 of Republic Act No. (Emphasis and underscoring supplied) The appellate court correctly ruled that the penalty of reprimand provided under Rule IV. they do not forfend a seafarer from instituting an action for damages against the employer or agency which has failed to deploy him.

SP No.—Applying the rules on actual damages. the petition is hereby DENIED. 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.   Linsangan. he was hired by Stolt-Nielsen Marine Services. Medequillo. 2005 are AFFIRMED.”3 The facts as gathered by this Court follow: On 6 March 1995. Linsangan & Linsangan for respondent. PETITION for review on certiorari of a decision of the Court of Appeals.   Rodello B. Damages. 295 VOL.: 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. 663. moral. 2012 295 Stolt-Nielsen Transportation Group. On 6 November 1991 (First Contract). Sulpecio Madequillo (respondent) filed a complaint before the Adjudication Office of the Philippine Overseas Employment Administration (POEA) against the petitioners for illegal dismissal under a first contract and for failure to deploy under a second contract. Jr.com. 91632 dated 31 January 2007. and Chung Gai Ship Management (petitioners) and affirming the Resolution of the National Labor Relations Commission (NLRC).central. exemplary and other forms of damages. x x x (Underscoring supplied) Civil Law. the assailed Decision promulgated on February 28. Inc. vs.R.    The facts are stated in the opinion of the Court. This is but proper because of the non-deployment of respondent without just cause.ph/sfsreader/session/00000159e37819b893a91efd003600fb002c009e/t/?o=False 4/16 . One is entitled to an adequate compensation only for such pecuniary loss suffered by him as he has duly proved. In his complaint-affidavit. denying the petition for certiorari filed by Stolt-Nielsen Transportation Group. The dispositive portion of the assailed decision reads: “WHEREFORE. Accordingly.4 respondent alleged that: 1. 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. Actual Damages.1/28/2017 SUPREME COURT REPORTS ANNOTATED VOLUME 663 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. Inc on behalf of its principal Chung-Gai Ship Management of Panama as Third http://www. J. PEREZ. Inc. 2003 and the Resolution dated July 27. JANUARY 18. Ortiz for petitioners.

 The POEA. He would be paid with a monthly basic salary of $808.com.00 or a total of $1. He prayed for actual. at p.central. 6. moral and exemplary damages as well as attorney’s fees for his illegal dismissal and in view of 297 VOL. 5. he joined the vessel MV “Stolt Aspiration”.1/28/2017 SUPREME COURT REPORTS ANNOTATED VOLUME 663 _______________ 1 Rule 45. he could not seek employment from other agencies. On February 1992 or for nearly three (3) months of rendering service and while the vessel was at Batangas. he demanded for his passport. pp. petitioners failed to deploy him with the vessel MV “Stolt Pride”. he was ordered by the ship’s master to disembark the vessel and repatriated back to Manila for no reason or explanation. Inc. Jr. However. he immediately proceeded to the petitioner’s office where he was transferred employment with another vessel named MV “Stolt Pride” under the same terms and conditions of the First Contract. 3 Id. 38-54. 2. 8. 10. Rule on Civil Procedure. Inc. He made a follow-up with the petitioner but the same refused to comply with the Second Employment Contract. On 22 December 1994. On 8 November 1991.00 and a fixed overtime pay of $404. he was only allowed to claim the said documents in exchange of his signing a document. 4. http://www. certified the Second Employment Contract on 18 September 1992. On 23 April 1992. He was constrained to sign the document involuntarily because without these documents. Del Castillo (now a Member of this Court) with Presiding Justice Ruben T. Despite the commencement of the Second Contract on 21 April 1992. Jr.ph/sfsreader/session/00000159e37819b893a91efd003600fb002c009e/t/?o=False 5/16 . Rollo. 9. JANUARY 18. vs. 7. concurring.. vs.. the Second Contract was noted and approved by the POEA. Assistant Engineer on board the vessel “Stolt Aspiration” for a period of nine (9) months.00 per month during the employment period commencing on 6 November 1991. 4 Id. 663. 296 296 SUPREME COURT REPORTS ANNOTATED Stolt-Nielsen Transportation Group. at pp. Medequillo. seaman’s book and other employment documents. without knowledge that he was not deployed with the vessel. 11. 3.212. 2 Penned by Associate Justice Mariano C. 134-139. 2012 297 Stolt-Nielsen Transportation Group. Medequillo. Reyes (former Member of this Court) and Associate Justice Arcangelita Romilla Lontok. the Petitioners’ bad faith in not complying with the Second Contract. 53. Upon his return to Manila.

00 or its peso equivalent at the time of payment.5 On 21 July 2000.10 On 28 February 2003. 61. In other words. 7 Id.. petitioners failed to submit their respective pleadings despite the opportunity given to them. 6 Id. Layawen rendered a judgment6 finding that the respondent was constructively dismissed by the petitioners. 298 298 SUPREME COURT REPORTS ANNOTATED Stolt-Nielsen Transportation Group.1/28/2017 SUPREME COURT REPORTS ANNOTATED VOLUME 663 The case was transferred to the Labor Arbiter of the DOLE upon the effectivity of the Migrant Workers and Overseas Filipinos Act of 1995. Medequillo. premises considered. he ruled that there was no substantial evidence to grant the prayer for moral and exemplary damages.”7 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. The parties were required to submit their respective position papers before the Labor Arbiter. 62. However. judgment is hereby rendered. Labor Arbiter Vicente R. respondents cannot be held liable for the first contract but are clearly and definitely liable for the breach of the second contract. declaring the respondents guilty of constructively dismissing the complainant by not honoring the employment contract.537. 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. at p.central. 59-62.8 However.com. The dispositive portion reads: http://www. at p. Inc. $12.. the NLRC affirmed with modification the Decision of the Labor Arbiter. 9 Id.. respondents are hereby ordered jointly and solidarily to pay complainant the following: 1. 8 Id. vs. Jr. at pp.9 _______________ 5 Id.ph/sfsreader/session/00000159e37819b893a91efd003600fb002c009e/t/?o=False 6/16 . The dispositive portion reads: “WHEREFORE. Accordingly.

There was also no evidence that a service of notice of change of address was served on the POEA. premises considered.. the petitioners assailed that they were not properly notified of the hearings that were conducted before the Labor Arbiter. the assailed decision so stands as. JANUARY 18. They prayed that the Decision and Resolution promulgated by the http://www. the decision under review is hereby. 299 VOL. at p. Jr. AFFIRMED. vs. MODIFIED BY DELETING the award of overtime pay in the total amount of Three Thousand Six Hundred Thirty Six US Dollars (US $3. 12 Id. 2012 299 Stolt-Nielsen Transportation Group..636. 65. Inc.com. at p.central.1/28/2017 SUPREME COURT REPORTS ANNOTATED VOLUME 663 “WHEREFORE. spondent. 13 Id. 68. at p. They further alleged that after the suspension of proceedings before the POEA. 11 Id.ph/sfsreader/session/00000159e37819b893a91efd003600fb002c009e/t/?o=False 7/16 .17 The petitioners filed a Petition for Certiorari before the Court of Appeals alleging grave abuse of discretion on the part of NLRC when it affirmed with modification the ruling of the Labor Arbiter..12 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.. 8042 or the Migrant Workers and Overseas Filipinos Act of 1995 which provides for such limitation.00). 64. the only notice they received was a copy of the decision of the Labor Arbiter. Medequillo.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 re- _______________ 10 Id. 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.15 However. 64-65. It ruled that the factual incidents material to the case transpired within 1991-1992 or before the effectivity of Republic Act No. at pp.16 The Partial Motion for Reconsideration filed by the petitioners was denied by the NLRC in its Resolution dated 27 July 2005. 663.”11 Before the NLRC. In all other respects.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.

Inc. B. 66. B. ASSUMING THERE WAS OMISSION UNDER THE SECOND CONTRACT. Jr. THE COURT A QUO ERRED IN FAILING TO FIND THAT EVEN ASSUMING THERE WAS BASIS FOR HOLDING PETITIONER LIABLE FOR “FAILURE TO DEPLOY” RESPONDENT. at p.com. the Court of Appeals AFFIRMED the Decision of the labor tribunal.ph/sfsreader/session/00000159e37819b893a91efd003600fb002c009e/t/?o=False 8/16 . IT IS LEGALLY IMPOSSIBLE TO HAVE CONSTRUCTIVE DISMISSAL WHEN THE EMPLOYMENT HAS NOT YET COMMENCED.. 17 Id.1/28/2017 SUPREME COURT REPORTS ANNOTATED VOLUME 663 NLRC be vacated and another one be issued dismissing the complaint of the respondent. III. THE ALLEGED ILLEGAL DISMISSAL UNDER THE FIRST CONTRACT TRANSPIRED MORE THAN THREE (3) YEARS AFTER THE CASE WAS FILED AND THEREFORE HIS CASE SHOULD HAVE BEEN DISMISSED FOR BEING BARRED BY PRESCRIPTION. Finding no grave abuse of discretion. 300 300 SUPREME COURT REPORTS ANNOTATED Stolt-Nielsen Transportation Group. at p. THE POEA http://www.central. vs. II. _______________ 14 Id. Medequillo. 16 Id. The Court’s Ruling The following are the assignment of errors presented before this Court: I. THE COURT A QUO ERRED IN FINDING THAT THE SECOND CONTRACT NOVATED THE FIRST CONTRACT. 67.. PETITIONERS CAN ONLY BE FOUND AS HAVING FAILED IN DEPLOYING PRIVATE RESPONDENT BUT WITH VALID REASON. 15 Id.. A. at p. THERE WAS NO NOVATION OF THE FIRST CONTRACT BY THE SECOND CONTRACT. 72. A. THE ALLEGATION OF ILLEGAL DISMISSAL UNDER THE FIRST CONTRACT MUST BE RESOLVED SEPARATELY FROM THE ALLEGATION OF FAILURE TO DEPLOY UNDER THE SECOND CONTRACT. THE COURT A QUO ERRED IN RULING THAT THERE WAS CONSTRUCTIVE DISMISSAL UNDER THE SECOND CONTRACT.

663. Novation is the extinguishment of an obligation by the substitution or change of the obligation by a subsequent one which extinguishes or modifies the first.”18 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. There must be a previous valid obligation. or. 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.com. 2012 301 Stolt-Nielsen Transportation Group. or by subrogating a third person in the rights of the creditor. _______________ 18 Id. There must be the validity of the new contract. it is evident that novation took place in this particular case. 3. who was unexpectedly dismissed and repatriated to Manila. and 4. The parties impliedly extinguished the first contract by agreeing to enter into the second contract to placate Medequillo.ph/sfsreader/session/00000159e37819b893a91efd003600fb002c009e/t/?o=False 9/16 . In order for novation to take place. either by changing the object or principal conditions.1/28/2017 SUPREME COURT REPORTS ANNOTATED VOLUME 663 RULES PENALIZES SUCH OMISSION WITH A MERE “REPRIMAND. The second contract would not have been necessary if the petitioners abided by the http://www. the concurrence of the following requisites is indispensable: 1. at pp. Medequillo.”20 This ruling was later affirmed by the Court of Appeals in its decision ruling that: “Guided by the foregoing legal precepts. Inc. Jr. We do not agree. In other words.19 In its ruling. the Labor Arbiter clarified that novation had set in between the first and second contract. 20-21. by substituting another in place of the debtor. vs.. There must be the extinguishment of the old contract. 301 VOL. 2. There must be an agreement of the parties concerned to a new contract. respondents cannot be held liable for the first contract but are clearly and definitely liable for the breach of the second contract. Jr.central. JANUARY 18.

http://www. 20 Rollo. he was still employed under the first contract when he negotiated with petitioners on the second contract. are generally accorded not only respect. 442 SCRA 133. The first contract was for employment aboard the MV “Stolt Aspiration” while the second contract involved working in another vessel. Jr. xxxx x  x  x Findings of fact of administrative agencies and quasi-judicial bodies. National Labor Relations Commission. As such. The records _______________ 19 Philippine Savings Bank v. 143 (2004).22 to wit: “x x x [F]indings of quasi-judicial bodies like the NLRC.’s employment under the first contract. which is not a trier of facts. modified or reversed. vs. The legality of his dismissal had not yet been resolved with finality. p. 754-755. 61. 496 Phil. the first contract was a “previous valid contract” since it had not yet been terminated at the time of Medequillo.1/28/2017 SUPREME COURT REPORTS ANNOTATED VOLUME 663 terms and conditions of Madequillo. Medequillo. 745.com.central.’s repatriation to Manila. Maňalac. Jr. are conclusive on this Court. without justifiable reason. Azolla Farms v. These contracts were for overseas employment aboard different vessels. 302 302 SUPREME COURT REPORTS ANNOTATED Stolt-Nielsen Transportation Group. but finality when affirmed by the Court of Appeals. Such findings deserve full respect and. 45-46. 686-687. Jr. 671. ought not to be altered. and affirmed by the Court of Appeals in due course. Inc. Court of Appeals.. the MV “Stolt Pride. Sps.” Petitioners and Madequillo. Contrary to petitioners’ assertion.ph/sfsreader/session/00000159e37819b893a91efd003600fb002c009e/t/?o=False 10/16 . also reveal that the 2nd contract extinguished the first contract by changing its object or principal.”21 We concur with the finding that there was a novation of the first employment contract. 484 Phil. accepted the terms and conditions of the second contract.. the NLRC correctly ruled that petitioners could only be held liable under the second contract. 457 SCRA 203. 217 (2005). Undoubtedly.” (Emphasis supplied)23 With the finding that respondent “was still employed under the first contract when he negotiated with petitioners on the _______________ 21 Id. We reiterate once more and emphasize the ruling in Reyes v. which have acquired expertise because their jurisdiction is confined to specific matters. Jr. at pp. Jr.

e. 30 March 2010.. Jr.’s own admission was the date of his repatriation to Manila. Inc. at pp. Inc. 167291. Medequillo. which by Medequillo Jr. Thus: “Accordingly. 494 and 499. With the filing of his Complaint-Affidavit on March 6.central. second contract.R. Inc.. 324-325 citing Faeldonia v.25 But these findings are not infallible. 23 Id. 529 SCRA 487.”24 novation became an unavoidable conclusion. We need not dwell on the issue of prescription. Hence.26 In this case. xxx The start of the three (3) year prescriptive period must therefore be reckoned on February 1992. National Labor Relations Commission. Medequillo. Garcia. p. v.’s cause of action already accrued under the first contract. 304 304 SUPREME COURT REPORTS ANNOTATED Stolt-Nielsen Transportation Group. 2 October 2009. He had until February 1995 to pursue a case for illegal dismissal and damages arising from the 1st contract. 602 SCRA 677. G. Equally settled is the rule that factual findings of labor officials. It was settled by the Court of Appeals with its ruling that recovery of damages under the first contract was already time-barred.R.ph/sfsreader/session/00000159e37819b893a91efd003600fb002c009e/t/?o=False 11/16 . JANUARY 18. No. 12 January 2011.1/28/2017 SUPREME COURT REPORTS ANNOTATED VOLUME 663 22 G.. 303 VOL. are generally accorded not only respect but even finality by the courts when supported by substantial evidence. No. at pp. 663. they may be examined by the courts. 8 August 2007. the prescriptive period of three (3) years within which Medequillo Jr. we follow the settled rule. which was clearly beyond _______________ 24 Rollo. 160233. No. the amount of relevant evidence which a reasonable mind might accept as adequate to justify a conclusion. It was at this point in time that Medequillo Jr. 1995. 2012 303 Stolt-Nielsen Transportation Group. vs. 684. may initiate money claims under the 1st contract commenced on the date of his repatriation. G. who are deemed to have acquired expertise in matters within their jurisdiction. 182499. When there is a showing that they were arrived at arbitrarily or in disregard of the evidence on record. 25 Prince Transport. 26 Id. 46. 639 SCRA 312. i. there was no showing of any arbitrariness on the part of the lower courts in their findings of facts.R. vs. 324 citing Philippine Veterans Bank v. http://www. Jr. Tong Yak Groceries. 617 SCRA 204.R.com. G. No. 188882.

not mean that the seafarer has no remedy in case of non-deployment without any valid reason. may be in keeping with good faith.ph/sfsreader/session/00000159e37819b893a91efd003600fb002c009e/t/?o=False 12/16 .”27 The issue that proceeds from the fact of novation is the consequence of the non-deployment of respondent. terms and conditions as they may deem convenient. clauses. 30 Article 1306. New Civil Code.32 Thus. usage and law.1/28/2017 SUPREME COURT REPORTS ANNOTATED VOLUME 663 the prescriptive period. even if by the standard contract employment commences only “upon actual departure of the seafarer. Else. to give something or to render some service.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. the perfected contract gives rise to obligations on the part of petitioners.28 We agree with petitioners on such point. the cause of action under the 1st contract was already time-barred. p. 663. public order. vs.” this does _______________ 27 Rollo. Jr. provided they are not contrary to law. actual deployment of the seafarer is a suspensive condition for the commencement of the employment. 29 Article 1305. 305 VOL. good customs. for no evidence to prove the same was presented.33 http://www. New Civil Code. However. at p. 28 Id. 32 Article 1315. morals. 2012 305 Stolt-Nielsen Transportation Group. A contract is a meeting of minds between two persons whereby one binds himself. 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.”31 We adhere to the terms and conditions of the contract so as to credit the valid prior stipulations of the parties before the controversy started. 47-48. Medequillo. with respect to the other.29 The contracting parties may establish such stipulations. The petitioners argue that under the POEA Contract.com. 48. New Civil Code.central. even without actual deployment. or public policy. pp. 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. Inc.. 48. 31 Rollo. JANUARY 18. according to their nature. Parenthetically.

—An agency shall deploy its recruits within the deployment period as indicated below: _______________ 33 Rollo. Medequillo. that is the seafarer failed or refused to be deployed as agreed upon. 306 306 SUPREME COURT REPORTS ANNOTATED Stolt-Nielsen Transportation Group. as earlier discussed.” (Emphasis and underscoring supplied) The appellate court correctly ruled that the penalty of reprimand36 provided under Rule IV. 176. Part VI of the POEA Rules and Regulations Governing the Recruitment and Employment of Land- based Overseas Workers is not applicable in this case. which in this case coincided with the date of execution thereof. 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. par. Book III.R. 162419. 34 Santiago v. Jr. the agency shall return all documents at no cost to the worker.central. occurred when petitioner and respondent agreed on the object and the cause. vs. 10 July 2007. No. CF Sharp Crew Management. contemporaneous with the perfection of the employment contract was the birth of certain rights and obligations. p.ph/sfsreader/session/00000159e37819b893a91efd003600fb002c009e/t/?o=False 13/16 . as well as the rest of the terms and conditions therein. if the reverse had happened. Rule II. Worker’s Deployment. Inc. would have taken place had petitioner been actually deployed from the point of hire. It reads: “Section 4.34 Further. 527 SCRA 165. The POEA Rules and Regulations Governing Overseas Employment35 dated 31 May 1991 provides for the consequence and penalty against in case of non-deployment of the seafarer without any valid reason. even before the start of any employer-employee relationship. G. The perfection of the contract. xxx b. 50.com. The breach of contract happened on February 1992 and the law applicable at that http://www. Thus. the breach of which may give rise to a cause of action against the erring party. Inc. 35 Section 4. The commencement of the employer-employee relationship.1/28/2017 SUPREME COURT REPORTS ANNOTATED VOLUME 663 We rule that distinction must be made between the perfection of the employment contract and the commencement of the employer- employee relationship. he would be liable for damages. Thus. (b).. we do not agree with the contention of the petitioners that the penalty is a mere reprimand. Thirty (30) calendar days from the date of processing by the administration of the employment contracts of seafarers.

307 VOL. http://www. 8042 (Migrant Workers Act) which provides for money claims by reason of a contract involving Filipino workers for overseas deployment. The law provides: “Sec. 2012 307 Stolt-Nielsen Transportation Group.com. moral. the claim is still cognizable by the labor arbiters of the NLRC under the second phrase of the provision. x x x” (Underscoring supplied) Following the law. the Labor Arbiters of the National Labor Relations Commission (NLRC) shall have the original and exclusive jurisdiction to hear and decide. JANUARY 18. Medequillo. Jr. the absence of the POEA Rules with regard to the payment of damages to the affected seafarer does not mean that the seafarer is precluded from claiming the same. suspension or cancellation of license or fine and the return of all documents at no cost to the worker. Money Claims. 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. Inc. the question to be dealt with is how will the seafarer be compensated by reason of the unreasonable non-deployment of the petitioners? The POEA Rules Governing the Recruitment and Employment of Seafarers do not provide for the award of damages to be given in favor of the employees. Now. The penalty for non-deployment as discussed is suspension or cancellation of license or fine. The sanctions provided for non-deployment do not end with the _______________ 36  Section 1 (C) 4. vs.—Notwithstanding any provision of law to the contrary. within ninety (90) calendar days after the filing of the complaint. they do not forfend a seafarer from instituting an action for damages against the employer or agency which has failed to deploy him. The claim provided by the same law refers to a valid contractual claim for compensation or benefits arising from employer-employee relationship or for any personal injury. illness or death at levels provided for within the terms and conditions of employment of seafarers.37 We thus decree the application of Section 10 of Republic Act No. As earlier discussed.1/28/2017 SUPREME COURT REPORTS ANNOTATED VOLUME 663 time was the 1991 POEA Rules and Regulations Governing Overseas Employment. However. Failure to deploy a worker within the prescribed period without valid reason: 1st Offense – Reprimand. 663.ph/sfsreader/session/00000159e37819b893a91efd003600fb002c009e/t/?o=False 14/16 . exemplary and other forms of damages.central. 10.

R. much being dependent on the nature of the change and the intention of the parties.. Article 291 prevails over Section 28 of the Standard Employment Contract for Seafarers which provides for claims to be brought only within one year from the date of the seafarer’s return to the point of hire. Section 28 insofar as it limits the prescriptive period within which the seafarers may file their money claims. Jr. the award of actual damages equivalent to his salary for nine (9) months as provided by the Second Employment Contract. 318 SCRA 446. Petition denied. vs. 566. the appeal is DENIED.. Roslinda. 308 308 SUPREME COURT REPORTS ANNOTATED Stolt-Nielsen Transportation Group.38 This is _______________ 37 Santiago v.** JJ. (Medline Management. SP. supra note 34 at pp. Carpio (Chairperson). 376 Phil. Inc.central. Jr. we held: Petitioner’s dismissal without a valid cause constitute a breach of contract.1/28/2017 SUPREME COURT REPORTS ANNOTATED VOLUME 663 Applying the rules on actual damages. 38  In Legahi v. Medequillo. SO ORDERED. People. he should only be paid the unexpired portion of his employment contract. 91632 is hereby AFFIRMED. 630 SCRA 471 [2010]) ——o0o—— http://www. Inc. vs. Reyes and Perlas-Bernabe. CF Sharp Crew Management.—Novation may either be extinctive or modificatory. 457 (1999). National Labor Relations Commission. (Azarcon vs. 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. 176-177. 622 SCRA 341 [2010]) Article 291 of the Labor Code is the law governing the prescription of money claims of seafarers.com. 557. No. The Petitioners are hereby ordered to pay Sulpecio Medequillo. but proper because of the non-deployment of respondent without just cause. Inc.ph/sfsreader/session/00000159e37819b893a91efd003600fb002c009e/t/?o=False 15/16 . Sereno. Notes. judgment affirmed. concur. WHEREFORE.. is hereby declared null and void. a class of overseas contract workers. The 31 January 2007 Decision of the Court of Appeals in CA-G. 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. Consequently.

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