On January 2, 1942, the

Imperial Japanese Forces

occupied Manila signaling the
onset of Second World War.
Japanese Forces issued a
proclamation stating that all
laws, executive and judicial
institutions, shall continue to
be effective and all public
officials shall remain in their
present posts and carry on
faithfully their duties.
Subsequently, the Philippine
Executive Commission (PEC)
was established for the
purpose of coordinating the
existence of central
administrative organs and
judicial
courts during the invasion of the
Japanese forces. Later, the
Republic of the Philippines
was inaugurated on October 14,
1943. However, no substantial
change was effected in
the organization and
jurisdiction of the different
courts that functioned under
the PEC
and in the laws they
administered and enforced.
Years after, Philippines was
liberated
and American control was
restored upon defeat of the
Japanese forces. American
General Douglas MacArthur
further proclaimed on October
23, 1944 that all laws,
regulations and processes of any
of the government in the
Philippines than that of the
Commonwealth are null and
void and without legal effect
in areas free of enemy
occupation and control.
This case is a petition for
mandamus in which
petitioner, Co Kim Cham,
prays
that the respondent judge, Hon.
Arsenio P. Dizon (Judge
Dizon), of the lower court be
ordered to continue the
proceedings in Civil Case No.
3012 of said court, which were
initiated under the regime of the
so-called Republic of the
Philippines established during
the Japanese military
occupation.
Judge Dizon refused to continue
the proceedings in said case on
the ground that
the proclamation issued by
General Douglas MacArthur
had the effect of invalidating
and nullifying all judicial
proceedings and judgments of
the court of the Philippines
under the PEC and the
Republic of the Philippines
established during the
Japanese
military occupation. Also lower
courts have no jurisdiction to
take cognizance of judicial
proceedings pending in the
absence of an enabling law
granting such authority. He also
stressed that the laws they
enforced were laws of the
Commonwealth prior to
Japanese
occupation, but they had
become the laws — and the
courts had become the
institutions — of Japan by
adoption as they became later
on the laws and institutions of
the Philippine Executive
Commission and the Republic
of the Philippines.
VIR-JEN SHIPPING v. NLRC, GR No. 58011-12, 1982-07-20

Facts:
Private respondents have a manning contract for a period of one (1) year with petitioner in
representation of its principal Kyoei Tanker Co. Ltd. Aware of the problem that vessels not paying rates
imposed by the International Transport Workers Federation (ITF) would be detained or interdicted in
foreign ports... petitioner and private respondents executed a side... contract to the effect that should
the vessel M/T Janu be required to pay ITF rates... private respondents would return to petitioner the
amounts so paid to them. Master of the vessel who is one of the private respondents sent a cable to
petitioner stating that private respondents were not contented with the salary and benefits stipulated in
the manning contract, and demanded that they be given 50% increase... as the 'best and only solution to
solve ITF problem. Reference to 'ITF' in private respondents' cable made petitioner apprehensive since
the vessel at that time was enroute to Australia, an ITF port, and would be interdicted and detained...
should private respondents denounce the existing manning contract to the ITF and should petitioner
refuse or be unable to pay the ITF rates placed under such situation, petitioner replied by cable
WE ARE SURPRISED WITH THIS SUDDEN CHANGE OF ATTITUDE AND DEMANDS FOR WE HAVE
THOROUGHLY EXPLAINED AND DISCUSSED ALL MATTERS PERTAINING TO YOUR PRESENT EMPLOYMENT
AND BELIEVED THAT WE FULLY UNDERSTOOD EACH OTHER... petitioner wrote a letter to the NSB
denouncing the conduct of private respondents
WE AGREE ALL CONDITIONS AND CONFIRM IT SHALL BE PROPERLY ENFORCED STOP WILL PREPARE ALL
REQUIRED DOCUMENTS AND WILL BE DELIVERED ON BOARD.
In view of private respondents' conduct and breach of contract, petitioner's principal, Kyoei Tanker Co.,
Ltd. terminated the manning contract
We regret to advise you that since this vessel is only under our management, we also cannot afford to
grant your request for an increase... as demanded by your crew.
Our common and final decision is not to grant your request but also to terminate our Manning
Agreement effective upon crew's... change when the vessel arrives at Japan or at any possible port
In view of the circumstances mentioned above, please consider this letter as our official notice of
cancellation of our Manning Agreement... petitioner wrote the NSB asking permission to cancel the
manning contract
NSB... wrote petitioner authorizing it to cancel the manning contract.
The seamen were accordingly disembarked in Japan and repatriated to Manila.
They then filed a complaint with the NSB for illegal dismissal and non-payment of wages.
NSB found that the termination of the services of the seamen before the expiration of their...
employment contract was justified 'when they demanded and in fact received from the company wages
over and above the contracted rates which in effect was an alteration and modification of a valid and
existing contract
The seamen appealed the... decision to the NLRC which reversed the decision of the NSB and required
the petitioner to pay the wages and other monetary benefits corresponding to the unexpired portion of
the manning contract on the ground that the termination of the said contract by petitioner was
without... valid cause.
Issues:
Whether or not the Seamen breached their respective employment contracts
Whether or not the Seamen were illegally dismissed by the Company
Whether or not the monetary claims of the seamen are valid and meritorious
Whether or not the monetary claims of the Company are valid and meritorious
Whether or not disciplinary action should be taken against the Seamen.
whether the Seamen violated their employment contracts
Ruling:
To begin with, let it be borne in mind that seamen's contracts of the nature We have before Us now are
not ordinary ones. There are special laws and rules governing them precisely due to the peculiar
circumstances that surround them. The employment contract in question is unlike any ordinary contract
of employment, for the reason that a manning contract involves the interests not only of the signatories
thereto, such as the local Filipino recruiting agent (herein petitioner), the foreign owner of the... vessel,
and the Filipino crew members (private respondents), but also those of other Filipino seamen in general
as well as the country itself.
The National Seamen Board... is thus empowered pursuant to Article 20 of the Labor Code 'to secure the
best possible terms and conditions of employment for seamen, and to insure compliance thereof' not
only on the part of the owners of the vessel but also on the part of the crew members... themselves.
Conformably to the power vested in the NSB, the law requires that all manning contracts shall be
approved by said agency.
It likewise provides that 'it shall be unlawful to substitute or alter any previously approved and certified
employment contract without the approval of
NSB... and authorizes the employer or owner of the vessel to terminate such contract for just causes
The stringent rules governing Filipino seamen aboard foreign-going ships are dictated by national
interest.
There are about 120,000 registered seamen with the NSB. Only about 50,000 of them are employed and
70,000 or so are still hoping to be employed. Those Filipino seamen... already employed on board
foreign-going ships should accordingly conduct themselves with utmost propriety and abide strictly with
the terms and conditions of their employment contract, and the NSB should see to that, in order that
owners of foreign-owned vessels will not only be... encouraged to renew their employment contract but
will moreover be induced to hire other Filipino seamen as against other competing foreign sailors.
NSB found and held
With respect to the first issue, the Board believes that the answer should be in the affirmative.
Seamen demanded and in fact received from the Company wages over and above their contracted rates,
which in effect is an alteration or modification of a valid... and subsisting contract; and the same not
having been done thru mutual consent and without the prior approval of the Board the alteration or
modification is contrary to the provisions of the New Labor Code
Art. 34. Prohibited practices. - It shall be unlawful for any individual, entity, licensee or holder of
authority:
(i) To substitute or alter employment contracts approved and verified by the Department of Labor from
the time of actual signing thereof by the parties up to and including the period of expiration of the same
without the approval of the Department of Labor
The revision of the contract was not done thru mutual consent for the Company did not voluntarily
agree to an increase of wage, but was only constrained to make a counter-proposal of 25% increase to
prevent the vessel from being interdicted and/or detained by the ITF because... at the time the demand
for salary increase was made the vessel was enroute to Kwinana, Australia... a port where the ITF is
strong and militant.
a perusal of the cables... coming from the Seamen addressed to the
Company would show the threatening manner by which the desire for a salary increase was manifested,
contrary to their claim that it was merely a request.
With respect to the second issue, the Board believes that the termination of the services of the Seamen
was legal and in accordance with the provisions of their respective employment contracts.
Considering the findings of the Board that the Seamen breached their contracts,... their subsequent
repatriation was justified.
The Seamen's breach of their employment contracts and the subsequent termination of the Manning
Agreement of Vir-jen Shipping & Marine Services, Inc. with the Kyoei
Tanker, Ltd., justified the termination of the Seamen's services.
With respect to the third issue
As regards the claim of the Seamen for the payment of their salaries for the unexpired portion of their
employment contracts the same should be denied
Awards of this nature... is proper only in cases where a seafarer is illegally dismissed.
Disagreeing with the foregoing findings of the NSB, the NLRC held
While they concede that they are bound by their contracts, the Seamen claim that their cable asking for
the revision of their contract rates was a valid exercise of their right to grievance.
The right to grievance is recognized in this jurisdiction even if there is a valid and subsisting contract,
especially where there are supervening facts or events of which a party to the contract was not apprised
at the time of its conclusion.
In this case, records... show that it was impressed on the Seamen that their vessel would be trading only
in Caribbean ports.
After the conclusion of their contracts, however, and after they had boarded the vessel, the... principals
of the Company directed the vessel to call at different ports or to engage in 'worldwide trade' which is
admittedly more difficult and hazardous than trading in only one maritime area.
This is a substantial change in the original understanding of the parties.
Thus, in... their cable asking for a wage increase, the Seamen expressed their dissatisfaction by
informing the Company that they were 'not contented with (their) present salary based on volume of
work, type of ship with hazardous cargo and registered in worldwide trade.
We also note that the Company was not exactly in good faith in contracting the service of the Seamen.
During his briefing in Manila, the Company instructed the master of the vessel... to prepare two (2) sets
of payrolls, one set reflecting the actual salary... rates of the Seamen and the other showing higher rates
based on Panamanian Shipping articles which approximate those prescribed by ITF for its member
seafarers.
In compliance with this instruction, Bisula prepared the latter payrolls.
These payrolls were intended for the... consumption of ITF if and when the vessel called on ports where
ITF rates were operational, the evident purpose being to show ITF that the Company was paying the
same rates prescribed by said labor federation and thereby prevent the interdiction of the vessel.
Comparing these two decisions, We do not hesitate to hold that the NLRC overstepped the boundaries
of its reviewing authority and was overlenient.
The NLRC ruled that in the exercise of their right to present any grievances they had and in their desire
to alleviate their condition, it was but well and proper for respondents to make a proposal for increase
of their wages, which petitioner could accept or reject.
Definitely, the reference in the cablegram to the conformity of petitioner to respondents' demand was
"the best and only solution to ITF problem" had an undertone which naturally placed petitioner hardly in
a position to answer them with a flat denial.
It would be the acme of... naivete for Us to go along with the contention that the cablegram of March
23, 1979 was a mere proposal and had no trace nor tint of threat at all.
At first glance it might seem that the judgment of the NLRC should have more weight than that of NSB.
NSB is not only charged directly with the administration of shipping... companies in the hiring of seamen
for overseas employment by seeing to it that our seamen "secure the best possible terms of
employment for contract seamen workers and secure compliance therewith."
It is such a board that has to approve all contracts of Filipino seamen
And after such approval, the contract becomes unalterable,... it being "unlawful" under Article 34 of the
Code "for any individual, entity, licensee or holder of authority: (i) to substitute or alter employment
contracts approved and verified by Department of Labor from the time of actual signing thereof by the
parties up to and including... the period of expiration of the same without the approval of the
Department of Labor."
In other words, it is not only that contracts may not be altered or modified or amended without mutual
consent of the parties thereto; it is further necessary to have the change approved by... the Department,
otherwise, the guilty parties would be penalized.
The power of the NLRC in relation to the works and actuations of the NSB is only appellate... over
questions of law
NLRC has noted in its decision that respondents were originally made to believe that their ship would go
only to the Caribbean ports and yet... it was suddenly directed to call at Kwinana, Australia, an
ITF controlled port.
The record shows that this imputation is more apparent than real, for respondents knew from the very
moment they were hired that worldwide voyages or destinations were contemplated in their
agreement.
ITF requires the seamen working on any vessel calling at ports controlled by them to be paid the rates
fixed by the ITF which are much higher than... those provided in the contracts signed here, to the extent
of causing tremendous loss if not bankruptcy of the employer.
in anticipation precisely of such peril to the employer and ultimate unemployment of the seamen, in the
instant case, the usual procedure undeniably known to respondents of having two payrolls, one
containing the actually agreed rates... and the other ITF rates, the latter to be shown to the ITF in order
that the ship may not be detained or interdicted in Kwinana, was followed.
But according to the NLRC, this practice constitutes deception and bad faith, and worse, it is in effect
within the prohibition against... alteration of contracts approved by the NSB, considering there is
nothing to show that NSB was made aware of the so-called addendum or side agreement to the effect
that should the ship manned by respondents be made to call an any ITF controlled port, the contract
with ITF rates... would be shown and, if for any reason, the respondents are required to be actually paid
higher rates and they are so paid, the excess over the rates agreed in the NSB contract shall be returned
to petitioner later.
It is of insubstantial moment that the side agreement or addendum was not made known to or
presented as evidence before the NSB.
more or less the NSB knows that the general practice is to have such side contracts. More importantly,
the said side... contracts are not meant at all to alter or modify the contracts approved by the NSB.
Rather, they are precisely purported to enforce them to the letter, making it clearer that even if the
ships have to call at ITF controlled ports, the same shall remain to be the real and... binding agreement
between the parties, in intentional disregard of whatever the ITF may exact.
We hold that there was no bad faith in having said side contracts, the intent thereof being to put into
effect the NSB directed arrangements that would protect the ship manning industry from unjust and
running effects of ITF intervention.
it is not correct to say that the respondents were caught unaware, or by surprise when they were
advised that the ship would proceed to Kwinana, Australia, even assuming they had been somehow
informed that they would sail to the Caribbean.
Reporting the wage scheme to the ITF would mean that the vessel would be interdicted and detained in
Australia unless petitioner pay the ITF rates, which represent more than 100% of what is stipulated in
the manning contract
Petitioner was thus forced to grant private... respondents an increase of 25% in their basic salary. That
such grant of a 25% increase was not voluntary is shown by the fact that petitioner immediately
denounced the seamen's conduct to NSB and subsequently asked said agency authority to terminate the
manning contract.
We are convinced that since the NSB, considering its official role in matters like those now before Us, is
the fact-finding body, and there is no sufficient cogency in the NLRC's finding that there was no threat
employed by respondents on petitioner, and, it... appearing further that the well prepared
Manifestation and Comment of the Solicitor General supports the decision of the NSB, which body, to
Our mind, was in a better position than the NLRC to appraise the relevant nuances of the actuations of
both parties, We are of the... considered view that the decision of the NLRC under question constitutes
grave abuse of discretion and should be set aside in favor of the NSB's decision.