SANTIAGO vs.

CF SHARP CREW DIGEST

PAUL V. SANTIAGO, petitioner, vs. CF SHARP CREW MANAGEMENT, INC.,

G.R. No. 162419

July 10, 2007

FACTS:

Petitioner had been working as a seafarer for Smith Bell Management, Inc. (respondent) for
about 5 yrs. In February 3, 1998, petitioner signed a new contract of employment with
respondent, with the duration of 9 months. The contract was approved by POEA. Petitioner was
to be deployed on board the “MSV Seaspread” which was scheduled to leave the port of Manila
for Canada on 13 February 1998.

A week before the date of departure, Capt. Pacifico Fernandez, respondent’s Vice President, sent
a facsimile message to the captain of “MSV Seaspread,”, saying that it received a phone call
from Santiago’s wife and some other callers who did not reveal their identity and gave him some
feedbacks that Paul Santiago this time, if allowed to depart, will jump ship in Canada like his
brother Christopher Santiago. The captain of “MSV Seaspread replied that it cancel plans for
Santiago to return to Seaspread.

Petitioner thus told that he would not be leaving for Canada anymore. Petitioner filed a
complaint for illegal dismissal, damages, and attorney’s fees against respondent and its foreign
principal, Cable and Wireless (Marine) Ltd. The Labor Arbiter (LA) favored petitioner and ruled
that the employment contract remained valid but had not commenced since petitioner was not
deployed and that respondent violated the rules and regulations governing overseas employment
when it did not deploy petitioner, causing petitioner to suffer actual damages. On appeal by
respondent, NLRC ruled that there is no employer-employee relationship between petitioner and
respondent because the employment contract shall commence upon actual departure of the
seafarer from the airport or seaport at the point of hire and with a POEA-approved contract. In
the absence of an employer-employee relationship between the parties, the claims for illegal
dismissal, actual damages, and attorney’s fees should be dismissed. But the NLRC found
respondent’s decision not to deploy petitioner to be a valid exercise of its management
prerogative. Petitioner filed MR but it was denied. He went to CA. CA affirmed the decision of
NLRC. Petitioner’s MR was denied. Hence this case.

ISSUE:

When does an employer- employee relationship begin in the case at bar.

There is some merit in the petition. The parties entered into an employment contract whereby
petitioner was contracted by respondent to render services on board “MSV Seaspread” for the
consideration of US$515.00 per month for 9 months, plus overtime pay. However, respondent
failed to deploy petitioner from the port of Manila to Canada. Considering that petitioner was not
able to depart from the airport or seaport in the point of hire, the employment contract did not
commence, and no employer-employee relationship was created between the parties. However, a
distinction must be made between the perfection of the employment contract and the
commencement of the employer-employee relationship. The perfection of the contract, which in
this case coincided with the date of execution thereof, occurred when petitioner and respondent
agreed on the object and the cause, as well as the rest of the terms and conditions therein. The
commencement of the employer-employee relationship would have taken place had petitioner
been actually deployed from the point of hire. Thus, even before the start of any employer-
employee relationship, contemporaneous with the perfection of the employment contract was the
birth of certain rights and obligations, the breach of which may give rise to a cause of action
against the erring party. Thus, if the reverse had happened, that is the seafarer failed or refused to
be deployed as agreed upon, he would be liable for damages.

Neither the manning agent nor the employer can simply prevent a seafarer from being deployed
without a valid reason. Respondent’s act of preventing petitioner from departing the port of
Manila and boarding “MSV Seaspread” constitutes a breach of contract, giving rise to
petitioner’s cause of action. Respondent unilaterally and unreasonably reneged on its obligation
to deploy petitioner and must therefore answer for the actual damages he suffered.

Despite the absence of an employer-employee relationship between petitioner and respondent,

Sec. 10. Money Claims. – Notwithstanding any provision of law to the contrary, the Labor
Arbiters of the NLR) shall have the original and exclusive jurisdiction to hear and decide, within
90 calendar days after the filing of the complaint, the claims arising out of an employer-
employee relationship or by virtue of any law or contract involving Filipino workers for overseas
deployment including claims for actual, moral, exemplary and other forms of damages.”

Since the present petition involves the employment contract entered into by petitioner for
overseas employment, his claims are cognizable by the labor arbiters of the NLRC.

Respondent is liable to pay petitioner only the actual damages in the form of the loss of nine (9)
months’ worth of salary as provided in the contract. He is not, however, entitled to overtime pay.
While the contract indicated a fixed overtime pay, it is not a guarantee that he would receive said
amount regardless of whether or not he rendered overtime work. Even though petitioner was
prevented without valid reason from rendering regular much less overtime service, the fact
remains that there is no certainty that petitioner will perform overtime work had he been allowed
to board the vessel. The amount stipulated in the contract will be paid only if and when the
employee rendered overtime work. Realistically speaking, a seaman, by the very nature of his
job, stays on board a ship or vessel beyond the regular eight-hour work schedule. For the
employer to give him overtime pay for the extra hours when he might be sleeping or attending to
his personal chores or even just lulling away his time would be extremely unfair and
unreasonable.

The Court also holds that petitioner is entitled to attorney’s fees in the concept of damages and
expenses of litigation. Respondent’s basis for not deploying petitioner is the belief that he will
jump ship just like his brother, a mere suspicion that is based on alleged phone calls of several
persons whose identities were not even confirmed. This Court has upheld management
prerogatives so long as they are exercised in good faith for the advancement of the employer’s
interest and not for the purpose of defeating or circumventing the rights of the employees under
special laws or under valid agreements. Respondent’s failure to deploy petitioner is unfounded
and unreasonable However, moral damages cannot be awarded in this case. because respondent’s
action was not tainted with bad faith, or done deliberately to defeat petitioner’s rights, as to
justify the award of moral damages.

Seafarers are considered contractual employees and cannot be considered as regular employees
under the Labor Code. Their employment is governed by the contracts they sign every time they
are rehired and their employment is terminated when the contract expires. The exigencies of their
work necessitates that they be employed on a contractual basis.

WHEREFORE, petition is GRANTED IN PART.