ABBOT LABOLATORIES PHILIPPINES, INC

VS.
ABBOT LABOLTORIES EMPLOYIES UNION
323 SCRA 392 (2000)

FACTS:
Abbott Laboratories Employees union (ALEU) filed an application for union registration with DOLE.
The Bureau of Labor Relations approved the petition and issued the corresponding certificate of
registration, thereby transforming ALEU sought to operate, sought to cancel ALEU’s certificate of
registration, on the grounds that the latter’s application was not signed by at least 20% of the rank and
file employees of Abbot, and that it failed to submit copies of its books of account. Subsequently, the
Regional Director of the BLR upheld the said petition and cancelled ALEU’s certificate of registration. Or
appeal, the BRL reversed the judgment of the Regional Director, and upheld ALEU’s legitimacy. Abbott
appealed the BLR’s decision to the Secretary of Labor. The latter refused to act on Abbott’s appeal,
citing he fact that the SOLE has no jurisdiction to review the decision of the BLR on appeals in
cancellation cases emanating from the BLR Regional Office. The decision of the BLR in such cases is
final and executory, and any appeal on the same must be filed with the BLR as a motion for
reconsideration.

ISSUE:
Does the Secretary of Labor have jurisdiction to review the decision of the Bureau of Labor Relations
in such a case?

HELD:
No. The appellate jurisdiction of the Secretary of labor is limited to a review of cancellation
proceedings decided by the BLR in the exercise of its (BLR) exclusive and original jurisdiction. In this
case, the BLR exercised its appellate power to review the decision of the Regional Director in a petition
to cancel a union’s certificate of registration. The Secretary of Labor has no jurisdiction over such a
case since the BLR’s decision in the same is final and not appealable.
MANILA ELECTRIC COMPANY, petitioner, vs. Hon. Secretary of Labor
Leonardo Quisumbing and Meralco Employees and Workers Association
(MEWA), respondents.

Facts:
Manila Electric Company and Meralco Employees and Workers Association (MEWA)
(hereinafter referred to as Union) were ordered by the Court to execute a Collective Bargaining
Agreement incorporating the terms and conditions contained in the unaffected portions
promulgated by the Secretary of Labor as well as the modifications set. However, some alleged
members of the Union were dissatisfied with the decision which caused them to file a motion
for intervention and motion for reconsideration for the said decision. The CBA allowed for the
increase in the wages of the employees concerned. However, the petitioner warns that if there
will be a wage increase of P 2,200.00, it would pass the cost of such increase to the consumers
through an increase in the rate of electricity.

Issue:
It was being questioned whether or not the increase in the amount of wages in the Collective
Bargaining Agreement can be reconsidered as the petitioner claims that increasing the amount
of wages would mean passing the cost to its customers. A point of contention was raised on
whether or not retroactivity of arbitral awards shall commence at such time as granted by
Secretary.

Held:
The Supreme Court ruled that before the petitioner can increase the price of electric current, it
needs the approval of the appropriate regulatory government agency and it does not
automatically result from a mere increase in the wages of the employees. In addition, the
Supreme Court ruled that it did not seek to enumerate in the decision the factors that should
affect wage determination because collective bargaining disputes particularly those affecting
the national interest and public service requires due consideration and proper balancing of the
interests of the parties to the dispute and of those who might be affected by the dispute, in this
case, that of the petitioner and the respondent union. Moreover, the matters of salary are part
of management prerogative which is why the Supreme Court let the issue be resolved in the
Collective Bargaining Agreement of both parties. The Supreme Court also ruled that the CBA
arbitral awards granted after six months from the expiration of the last CBA shall retroact to
such time agreed upon by both employer and the employees or their union. If such agreement
is absent as to retroactivity, the award shall retroact to the first day after the six-month period
following the expiration of the last day of the CBA should there be one. In the absence of a CBA,
the Secretary’s determination of the date of retroactivity as part of his discretionary powers
over arbitral awards shall control. The Supreme Court likewise affirmed that the union leave is
only thirty (30) days as granted by the Secretary of Labor.

On the retroactivity of the CBA arbitral award, it is well to recall that this petition had its origin
in the renegotiation of the parties 1992-1997 CBA insofar as the last two-year period thereof is
concerned. When the Secretary of Labor assumed jurisdiction and granted the arbitral awards,
there was no question that these arbitral awards were to be given retroactive effect. However,
the parties dispute the reckoning period when retroaction shall commence. Petitioner claims
that the award should retroact only from such time that the Secretary of Labor rendered the
award, invoking the 1995 decision in Pier 8 case[14] where the Court, citing Union of Filipino
Employees v. NLRC,[15] said:
"The assailed resolution which incorporated the CBA to be signed by the parties was
promulgated on June 5, 1989, the expiry date of the past CBA. Based on the provision of
Section 253-A, its retroactivity should be agreed upon by the parties. But since no agreement to
that effect was made, public respondent did not abuse its discretion in giving the said CBA a
prospective effect. The action of the public respondent is within the ambit of its authority
vested by existing law."

On the other hand, the Union argues that the award should retroact to such time granted by
the Secretary, citing the 1993 decision of St Lukes.[16]

"Finally, the effectivity of the Order of January 28, 1991, must retroact to the date of the
expiration of the previous CBA, contrary to the position of petitioner. Under the circumstances
of the case, Article 253-A cannot be properly applied to herein case. As correctly stated by
public respondent in his assailed Order of April 12, 1991 dismissing petitioners Motion for
Reconsideration---

Anent the alleged lack of basis for the retroactivity provisions awarded, we would stress that
the provision of law invoked by the Hospital, Article 253-A of the Labor Code, speaks of
agreements by and between the parties, and not arbitral awards . . .

"Therefore, in the absence of a specific provision of law prohibiting retroactivity of the

effectivity of arbitral awards issued by the Secretary of Labor pursuant to Article 263(g) of the
Labor Code, such as herein involved, public respondent is deemed vested with plenary and
discretionary powers to determine the effectivity thereof."

In the 1997 case of Mindanao Terminal,[17] the Court applied the St. Lukes doctrine and ruled
that:

"In St. Lukes Medical Center v. Torres, a deadlock also developed during the CBA negotiations
between management and the union. The Secretary of Labor assumed jurisdiction and ordered
the retroaction of the CBA to the date of expiration of the previous CBA. As in this case, it was
alleged that the Secretary of Labor gravely abused its discretion in making his award
retroactive. In dismissing this contention this Court held:

"Therefore, in the absence of a specific provision of law prohibiting retroactive of the effectivity
of arbitral awards issued by the Secretary of Labor pursuant to Article 263(g) of the Labor Code,
such as herein involved, public respondent is deemed vested with plenary and discretionary
powers to determine the effectivity thereof."

The Court in the January 27, 1999 Decision, stated that the CBA shall be "effective for a period
of 2 years counted from December 28, 1996 up to December 27, 1999." Parenthetically, this
actually covers a three-year period. Labor laws are silent as to when an arbitral award in a labor
dispute where the Secretary had assumed jurisdiction by virtue of Article 263 (g) of the Labor
Code shall retroact. In general, a CBA negotiated within six months after the expiration of the
existing CBA retroacts to the day immediately following such date and if agreed thereafter, the
effectivity depends on the agreement of the parties.[18] On the other hand, the law is silent as
to the retroactivity of a CBA arbitral award or that granted not by virtue of the mutual
agreement of the parties but by intervention of the government. Despite the silence of the law,
the Court rules herein that CBA arbitral awards granted after six months from the expiration of
the last CBA shall retroact to such time agreed upon by both employer and the employees or
their union. Absent such an agreement as to retroactivity, the award shall retroact to the first
day after the six-month period following the expiration of the last day of the CBA should there
be one. In the absence of a CBA, the Secretarys determination of the date of retroactivity as
part of his discretionary powers over arbitral awards shall control.
It is true that an arbitral award cannot per se be categorized as an agreement voluntarily
entered into by the parties because it requires the interference and imposing power of the
State thru the Secretary of Labor when he assumes jurisdiction. However, the arbitral award
can be considered as an approximation of a collective bargaining agreement which would
otherwise have been entered into by the parties.[19] The terms or periods set forth in Article
253-A pertains explicitly to a CBA. But there is nothing that would prevent its application by
analogy to an arbitral award by the Secretary considering the absence of an applicable law.
Under Article 253-A: "(I)f any such agreement is entered into beyond six months, the parties
shal! agree on the duration of retroactivity thereof." In other words, the law contemplates
retroactivity whether the agreement be entered into before or after the said six-month period.
The agreement of the parties need not be categorically stated for their acts may be considered
in determining the duration of retroactivity. In this connection, the Court considers the letter of
petitioners Chairman of the Board and its President addressed to their stockholders, which
states that the CBA "for the rank-and-file employees covering the period December 1, 1995 to
November 30, 1997 is still with the Supreme Court,"[20] as indicative of petitioners recognition
that the CBA award covers the said period. Earlier, petitioners negotiating panel transmitted to
the Union a copy of its proposed CBA covering the same period inclusive.[21] In addition,
petitioner does not dispute the allegation that in the past CBA arbitral awards, the Secretary
granted retroactivity commencing from the period immediately following the last day of the
expired CBA. Thus, by petitioners own actions, the Court sees no reason to retroact the subject
CBA awards to a different date. The period is herein set at two (2) years from December 1, 1995
to November 30, 1997.

On the allegation concerning the grant of loan to a cooperative, there is no merit in the unions
claim that it is no different from housing loans granted by the employer. The award of loans for
housing is justified because it pertains to a basic necessity of life. It is part of a privilege
recognized by the employer and allowed by law. In contrast, providing seed money for the
establishment of the employees cooperative is a matter in which the employer has no business
interest or legal obligation. Courts should not be utilized as a tool to compel any person to
grant loans to another nor to force parties to undertake an obligation without justification. On
the contrary, it is the government that has the obligation to render financial assistance to
cooperatives and the Cooperative Code does not make it an obligation of the employer or any
private individual.[22]

Anent the 40-day union leave, the Court finds that the same is a typographical error. In order to
avoid any confusion, it is herein declared that the union leave is only thirty (30) days as granted
by the Secretary of Labor and affirmed in the Decision of this Court.

The added requirement of consultation imposed by the Secretary in cases of contracting out for
six (6) months or more has been rejected by the Court. Suffice it to say that the employer is
allowed to contract out services for six months or more. However, a line must be drawn
between management prerogatives regarding business operations per se and those which
affect the rights of employees, and in treating the latter, the employer should see to it that its
employees are at least properly informed of its decision or modes of action in order to attain a
harmonious labor-management relationship and enlighten the workers concerning their
rights.[23] Hiring of workers is within the employers inherent freedom to regulate and is a valid
exercise of its management prerogative subject only to special laws and agreements on the
matter and the fair standards of justice.[24] The management cannot be denied the faculty of
promoting efficiency and attaining economy by a study of what units are essential for its
operation. It has the ultimate determination of whether services should be performed by its
personnel or contracted to outside agencies. While there should be mutual consultation,
eventually deference is to be paid to what management decides.[25] Contracting out of
services is an exercise of business judgment or management prerogative.[26] Absent proof that
management acted in a malicious or arbitrary manner, the Court will not interfere with the
exercise of judgment by an employer.[27] As mentioned in the January 27, 1999 Decision, the
law already sufficiently regulates this matter.[28] Jurisprudence also provides adequate
limitations, such that the employer must be motivated by good faith and the contracting out
should not be resorted to circumvent the law or must not have been the result of malicious or
arbitrary actions.[29] These are matters that may be categorically determined only when an
actual suit on the matter arises.

WHEREFORE, the motion for reconsideration is partially granted and the assailed Decision is
modified as follows: (1) the arbitral award shall retroact from December 1, 1995 to November
30, 1997; and (2) the award of wage is increased from the original amount of One Thousand
Nine Hundred Pesos (P1,900.00) to Two Thousand Pesos (P2,000.00) for the years 1995 and
1996. This Resolution is subject to the monetary advances granted by petitioner to its rank-and-
file employees during the pendency of this case assuming such advances had actually been
distributed to them. The assailed Decision is AFFIRMED in all other respects.
PEPSI-COLA DISTRIBUTION INC.
VS. HON. GALLANG
Gr. No. 89621 Sept. 24 1991

Facts:
The private respondents were employees of the petitioner who were suspected of complicity
in the irregular disposition of empty Pepsi Cola bottles. On July 16, 1987, the petitioners filed a
criminal complaint for theft against them but this was later withdrawn and substituted with a
criminal complaint for falsification of private documents. On November 26, 1987, after a
preliminary investigation conducted by the Municipal Trial Court, the complaint was dismissed.
The dismissal was affirmed by the Office of the Provincial Prosecutor.

Meantime, allegedly after an administrative investigation, the private respondents were

dismissed by the petitioner company on November 23, 1987. As a result, they filed a complaint
for illegal dismissal before the Labor Arbiter, and demanded reinstatement with damages. They
also filed a separate civil complaint against the petitioners for damages arising from what they
claimed to be their malicious prosecution before the RTC.

The petitioners moved to dismiss the civil complaint on the ground that the trial court had no
jurisdiction over the case because it involved employee-employer relations that were
exclusively cognizable by the labor arbiter.

The motion was granted. However, the respondent judge, acting on the motion for
reconsideration, reinstated the complaint, saying it was “distinct from the labor case for
damages now pending before the labor courts.”

Issue:
Whether the trial court has jurisdiction over the case.

Held:
Yes. The trial court has jurisdiction over the case.

The petitioners invoke Article 217 of the Labor Code and a number of decisions of this Court
to support their position that the private respondents’ civil complaint for damages falls under
the jurisdiction of the labor arbiter. The Court held at the outset that the case is not in point
because what was involved there was a claim arising from the alleged illegal dismissal of an
employee, who chose to complain to the regular court and not to the labor arbiter.

It must be stressed that not every controversy involving workers and their employers can be
resolved only by the labor arbiters. This will be so only if there is a “reasonable causal
connection” between the claim asserted and employee-employer relations to put the case
under the provisions of Article 217. Absent such a link, the complaint will be cognizable by the
regular courts of justice in the exercise of their civil and criminal jurisdiction.

The case at bar involves a complaint for damages for malicious prosecution which was filed
with the Regional Trial Court by the employees of the defendant company. It does not appear
that there is a “reasonable causal connection” between the complaint and the relations of the
parties as employer and employees. The complaint did not arise from such relations. What the
employees are alleging is that the petitioners acted with bad faith when they filed the criminal
complaint. This is a matter which the labor arbiter has no competence to resolve as the
applicable law is not the Labor Code but the Revised Penal Code.
 PAUL V. SANTIAGO, petitioner, vs.
CF SHARP CREW MANAGEMENT, INC., respondent.
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 Sea spread replied that it cancel plans
for Santiago to return to Sea spread.

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?

RULING:
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, the Court rules that the NLRC has jurisdiction over petitioner’s complaint. The
jurisdiction of labor arbiters is not limited to claims arising from employer-employee
relationships. Section 10 of R.A. No. 8042 (Migrant Workers Act), provides that:

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.

whether the seafarer, who was prevented from leaving the port of Manila and refused
deployment without valid reason but whose POEA-approved employment contract provides
that the employer-employee relationship shall commence only upon the seafarer’s actual
departure from the port in the point of hire, is entitled to relief? DOCTRINE: 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, 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.

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
 PAUL V. SANTIAGO, petitioner, vs.
CF SHARP CREW MANAGEMENT, INC., respondent.
G.R. No. 162419 July 10, 2007

FACTS:
Petitioner had been working as a seafarer for Smith Bell Management, Inc. (respondent) for
about five (5) years.

On 3 February 1998, petitioner signed a new contract of employment with respondent, with
the duration of nine (9) months. He was assured of a monthly salary of US$515.00, overtime
pay and other benefits. The following day or on 4 February 1998, the contract was approved by
the Philippine Overseas Employment Administration (POEA). Petitioner was to be deployed on
board the "MSV Sea spread" which was scheduled to leave the port of Manila for Canada on 13
February 1998.

A week before the scheduled date of departure, Capt. Pacifico Fernandez, respondent’s Vice
President, sent a facsimile message to the captain of "MSV Seaspread," which reads:I received a
phone call today from the wife of Paul Santiago in Masbate asking me not to send her husband
to MSV Seaspread anymore. Other callers who did not reveal their identity gave me some
feedbacks that Paul Santiago this time if allowed to depart will jump ship in Canada like his
brother Christopher Santiago, O/S who jumped ship from the C.S. Nexus in Kita-kyushu, Japan
lastDecember, 1997. To this message the captain of "MSV Seaspread" replied:Many thanks for
your advice concerning P. Santiago, A/B. Please cancel plans for him to return to Seaspread.

On 9 February 1998, petitioner was thus told that he would not be leaving for Canada
anymore, but he was reassured that he might be considered for deployment at some future
date.

Petitioner filed a complaint for illegal dismissal, damages, and attorney's fees against
respondent and its foreign principal, Cable and Wireless (Marine) Ltd.…. On appeal by
respondent, the National Labor Relations Commission (NLRC) ruled that there is no employer-
employee relationship between petitioner and respondent because under the Standard Terms
and Conditions Governing the Employment of Filipino Seafarers on Board Ocean Going Vessels
(POEA Standard Contract), the employment contract shall commence upon actual departure of
theseafarer from the airport or seaport at the point of hire and with a POEA-
approvedcontract….. Respondent argues….

His employment with respondent did not commence because hisdeployment was withheld
for a valid reason…..

ISSUE: WON Santiago entitled to relief?

HELD:
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, 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.

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. 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.
 Bright Maritime Corporation vs. Fantonial
G.R. No. 165935
February 8, 2012

Subject Matter: Standard Terms and Conditions Governing the Employment of Filipino Seafarers on
Board Ocean-Going Vessels, Illegal Dismissal, Employer-Employee Relationship

Facts:
On January 15, 2000, a Contract of Employment was executed by petitioner Bright Maritime
Corporation (BMC) and respondent Ricardo B. Fantonial, which contract was verified and approved by
the Philippine Overseas Employment Administration (POEA) on January 17, 2000. The employment
contract provided that respondent shall be employed as boatswain of the foreign vessel M/V AUK for
one year, with a basic monthly salary of US$450, plus an allowance of US$220.
Respondent was made to undergo a medical examination and was issued a Medical Certificate dated
January 17, 2000, which certificate had the phrase “FIT TO WORK” stamped on its lower and upper
portion.
On January 17, 2000, respondent, after having undergone the pre-departure orientation seminar and
being equipped with the necessary requirements and documents for travel, went to the Airport upon
instruction of petitioners. Petitioners told respondent that he would be departing on that day, and
that a liaison officer would be delivering his plane ticket to him. Petitioners’ liaison officer met
respondent at the airport and told him that he could not leave on that day due to some defects in his
medical certificate. The liaison officer instructed respondent to return to the Christian Medical Clinic.

Respondent went back to the Christian Medical Clinic the next day, and he was told by the examining
physician, Dr. Lyn dela Cruz-De Leon, that there was nothing wrong or irregular with his medical
certificate. Respondent went to petitioners’ office for an explanation, but he was merely told to wait
for their call, as he was being lined-up for a flight to the ship's next port of call. However, respondent
never got a call from petitioners.

On May 16, 2000, respondent filed a complaint against petitioners for illegal dismissal, payment of
salaries for the unexpired portion of the employment contract.
Petitioners argued that they cannot be held liable for illegal dismissal as the contract of employment
had not yet commenced based on Section 2 of the Standard Terms and Conditions Governing the
Employment of Filipino Seafarers on Board Ocean-Going Vessels (POEA Memorandum Circular No.
055-96), which states:

SEC 2. COMMENCEMENT/DURATION OF CONTRACT

A. The employment contract between the employer and the seafarer shall commence upon actual
departure of the seafarer from the airport or seaport in the point of hire and with a POEA approved
contract. It shall be effective until the seafarer’s date of arrival at the point of hire upon termination of
his employment pursuant to Section 18 of this Contract.

Issues:
1) Whether or not petitioners’ reason for preventing respondent from leaving Manila and joining the
vessel M/V AUK in Germany on January 17, 2000 is valid.

2) Whether or not respondent’s employment contract was perfected pursuant to the POEA Standard
Employment Contract.

Held:
1) No. The Court held that respondent’s Medical Certificate dated January 17, 2000, stamped with the
words “FIT TO WORK,” proves that respondent was medically fit to leave Manila on January 17, 2000 to
join the vessel M/V AUK in Germany. The Affidavit of Dr. Lyn dela Cruz-De Leon that respondent was
declared fit to work only on January 21, 2000 cannot overcome the evidence in the Medical Certificate
dated January 17, 2000, which already stated that respondent had “Class-B Non-Infectious Hepatitis-
B,” and that he was fit to work. The explanation given by Dr. Lyn dela Cruz-De Leon in her affidavit that
the Medical Certificate was dated January 17, 2000, since it carries the date when they started to
examine the patient per standard operating procedure, does not persuade as it goes against logic and
the chronological recording of medical procedures. The Medical Certificate submitted as documentary
evidence is proof of its contents, including the date thereof which states that respondent was already
declared fit to work on January 17, 2000, the date of his scheduled deployment.

2) No.
SEC 2. COMMENCEMENT/DURATION OF CONTRACT
A. The employment contract between the employer and the seafarer shall commence upon actual
departure of the seafarer from the airport or seaport in the point of hire and with a POEA approved
contract. It shall be effective until the seafarer’s date of arrival at the point of hire upon termination of
his employment pursuant to Section 18 of this Contract.

Petitioners’ argument is partly meritorious.

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.
The object of the contract was the rendition of service by respondent on board the vessel for which
service he would be paid the salary agreed upon.

Hence, in this case, the employment contract was perfected on January 15, 2000 when it was signed
by the parties, respondent and petitioners, who entered into the contract in behalf of their principal,
Ranger Marine S.A., thereby signifying their consent to the terms and conditions of employment
embodied in the contract, and the contract was approved by the POEA on January 17, 2000. However,
the employment contract did not commence, since petitioners did not allow respondent to leave on
January 17, 2000 to embark the vessel M/V AUK in Germany on the ground that he was not yet
declared fit to work on the day of departure, although his Medical Certificate dated January 17, 2000
proved that respondent was fit to work.
The Court agrees with the NLRC that a recruitment agency, like petitioner BMC, must ensure that an
applicant for employment abroad is technically equipped and physically fit because a labor contract
affects public interest. Nevertheless, in this case, petitioners failed to prove with substantial evidence
that they had a valid ground to prevent respondent from leaving on the scheduled date of his
deployment. While the POEA Standard Contract must be recognized and respected, neither the
manning agent nor the employer can simply prevent a seafarer from being deployed without a valid
reason.
Petition denied.