VOL.

102, FEBRUARY 20, 1981 835

Wallem Phil. Shipping, Inc. vs. Minister of Labor

*
No. L-50734-37. February 20, 1981.

WALLEM PHILIPPINES SHIPPING, INC., petitioner, vs.

THE HON. MINISTER OF LABOR, in his capacity as
Chairman of the National Seamen Board Proper, JAIME
CAUNCA, ANTONIO CABRERA, EFREN GARCIA, JOSE
OJEDA and RODOLFO PAGWAGAN, respondents.

Labor Law; Contracts; A ship’s crew cannot be held liable for

breach of contract for accepting higher salary rates provided for in
a Special Agreement between the International Transport
Federation (ITF) and the shipowner’s representative while the said
crew’s contract for lower Far East salary rates was in force.—The
findings and conclusion of the Board should be sustained. As
already intimated above, there is no logic in the statement made
by the Secretariat’s Hearing Officer that the private respondents
are liable for breach of their employment contracts for accepting
salaries higher than their contracted rates. Said respondents are
not signatories to the Special Agreement, nor was there any
showing that they instigated the ex-ecution thereof. Respondent’s
should not be blamed for accepting higher salaries since it is but
human for them to grab every opportunity which would improve
their working conditions and earning capacity. It is a basic right
of all workingmen to seek greater benefits not only for themselves
but for their families as well, and this can be achieved through
collective bargaining or with the assistance of trade unions. The
Constitution itself guarantees the promotion of social welfare and
protection to labor. It is therefore the Hearing Officer that gravely
erred in disallowing the payment of the unexpired portion of the
seamen’s respective contracts of employment.
Same; Crewmembers of a vessel cannot be faulted for exerting
reasonable pressure on the shipowner’s representative to accept
ITF worldwide salary rates why are higher than the Far East rates
as salary for the crew.—Petitioner claims that the dismissal of
private respondents was justified because the latter threatened
the ship authorities in acceeding to their demands, and this
constitutes serious misconduct as contemplated by the Labor
Code. This contention is not well-taken. The records fail to
establish clearly the commission of any threat. But even if there
had been such a threat, respondent’s behavior should not be
censured because it is but

______________

* FIRST DIVISION

836

836 SUPREME COURT REPORTS ANNOTATED

Wallem Phil. Shipping, Inc. vs. Minister of Labor

natural for them to employ some means of pressing their demands

for petitioner, who refused to abide with the terms of the Special
Agreement, to honor and respect the same. They were only acting
in the exercise of their rights, and to deprive them of their
freedom of expression is contrary to law and public policy. There
is no serious misconduct to speak of in the case at bar which
would justify respondent’s dismissal just because of their firmness
in their demand for the fulfillment by petitioner of its obligation it
entered into without any coercion, specially on the part of private
respondents.
Same; Contracts; The shipowner is liable for breach of
contract for dismissing without a valid reason some members of
the crew of a vessel before the expiration of their employment
contracts.—On the other hand, it is petitioner who is guilty of
breach of contract when they dismissed the respondents without
just cause and prior to the expiration of the employment
contracts. As the records clearly show, petitioner voluntarily
entered into the Special Agreement with ITF and by virtue
thereof the crew men were actually given their salary differentials
in view of the new rates. It cannot be said that it was because of
respondents’ fault that petitioner made a sudden turnabout and
refused to honor the special agreement.

PETITION for certiorari with preliminary injunction from

the Orders of the National Seamen Board.

The facts are stated in the opinion of the Court.

DE CASTRO, J.:
Petition for certiorari with preliminary injunction with
prayer that the Orders dated December 19, 1977 and April
3, 1979 of the National Seamen Board (NSB) be declared
null and void.
Private respondents were hired by petitioner sometime
in May 1975 to work as seamen for a period of ten months
on board the M/V Woermann Sanaga, a Dutch vessel
owned and operated by petitioner’s European principals.
While their employment contracts were still in force,
private respondents were dismissed by their employer,
petitioner herein, and were discharged from the ship on
charges that they instigated the International Transport
Federation (ITF) to demand the application of worldwide
ITF seamen’s rates to their crew.

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VOL. 102, FEBRUARY 20, 1981 837

Wallem Phil. Shipping, Inc. vs. Minister of Labor

Private respondents were repatriated to the Philippines on

October 27, 1975 and upon their arrival in Manila, they
instituted a complaint against petitioner for illegal
dismissal and recovery of wages and other benefits
corresponding to the five months’ unexpired period of their
shipboard employment contract.
In support of their complaint,
1
private respondents
submitted a Joint Affidavit stating the circumstances
surrounding their employment and subsequent
repatriation to the Philippines, material averments of
which are herein below reproduced:

“J O I N T A F F I D A V I T

x      x      x      x

“5. That aside from our basic monthly salary, we are entitled
to two (2) months vacation leave, daily subsistence
allowance of US$8.14 each, daily food allowance of
US$2.50, as well as overtime pay which we failed to
receive because our Shipboard Employment Contract was
illegally terminated;
6. That while we were in Rotterdam, on or about July 9,
1975, representative of the ITF boarded our vessel and
talked with the Ship’s Captain;
7. That the following day, the representatives of the ITF
returned and was followed by Mr. M.S.K. Ogle who is the
 Company’s Administrative Manager, again went to see the
Captain;
8. That at around 7:00 in the evening all the crew members
were called in the Mess Hall, where the ITF
representatives informed us that they have just entered
into a “Special Agreement” with the Wallem Shipping
Management, Ltd., represented by Mr. M.S.K. Ogle,
Administrative Manager, wherein new salary rates was
agreed upon and that we were going to be paid our salary
differentials in view of the new rates;
9. That in the same meeting, Mr. M.S.K. OGLE also spoke
where he told that a Special Agreement has been signed
and that we will be receiving new pay rate and enjoined us
to work hard and be good boys;

_______________

1 pp. 17-20, Rollo.

838

838 SUPREME COURT REPORTS ANNOTATED

Wallem Phil. Shipping, Inc. vs. Minister of Labor

10. That the same evening we received our salary differentials

based on the new rates negotiated for us by the ITF;
11. That while we were in the Port Dubai, Saudi Arabia, we
were not receiving our pay, since the Ship’s Captain
refused to implement the world-wide rates and insisted on
paying us the Far East Rate;
12. That the Port Dubai is one that is within the Worldwide
rates sphere;
13. That on October 22, 1975, Mr. Greg Nacional, Operation
Manager of respondent corporation, arrived in Dubai,
Saudi Arabia and boarded our ship;
14. That on October 23, 1975, Mr. Nacional called all the crew
members, including us to a meeting at the Mess Hall and
there he explained that the Company cannot accept the
worldwide rate. The Special Agreement signed by Mr.
Ogle in behalf of the Company is nothing but a scrap of
paper. Mr. Jaime Caunca then asked Mr. Nacional, in
view of what he was saying, whether the Company will
honor the Special Agreement and Mr. Nacional answered
“Yes”. That we must accept the Far East Rates which was
put to a vote. On ly two voted for accepting the Far East
Rates;
15. That immediately thereafter Mr. Nacional left us;
16. That same evening, Mr. Nacional returned and threatened
that he has received a cable from the Home Office that if
we do not accept the Far East Rate, our services will be
terminated and there will be a change in crew;
17. That when Mr. Nacional left, we talked amongst ourselves
and decided to accept the Far East Rates;
18. That in the meeting that evening because of the threat we
informed Mr. Nacional we were accepting the Far East
Rate and he made us sign a document to that effect;
19. That we the complainants with the exception of Leopoldo
Mamaril and Efren Garcia, were not able to sign as we
were at the time on work schedules, and Mr. Nacional did
not bother anymore if we signed or not;
20. That after the meeting Mr. Nacional cabled the Home
Office, informing them that we the complainants with the
exception of Messrs. Mamaril and Garcia were not
accepting the Far East Rates;
21. That in the meeting of October 25, 1975, Mr. Nacional
signed a document whereby he promised to give no
priority of first preference in “boarding a vessel and that
we are not blacklisted”;

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VOL. 102, FEBRUARY 20, 1981 839

Wallem Phil. Shipping, Inc. vs. Minister of Labor

22. That in spite of our having accepted the Far East Rate,
our services were terminated and advised us that there
was a change in crew;
23. That on October 27, 1975, which was our scheduled flight
home, nobody attended us, not even our clearance for our
group travel and consequently we were not able to beard
the plane, forcing us to sleep on the floor at the airport in
the evening of October 27, 1975;
24. That the following day we went back to the hotel in Dubai
which was a two hours ride from the airport, where we
were to await another flight for home via Air France;
25. That we were finally able to leave for home on November
2, 1975 arriving here on the 3rd of November;
26. That we paid for all excess baggages;
27. That Mr. Nacional left us stranded, since he went ahead
on October 27, 1975;
28. That immediately upon arriving in Manila, we went to
respondent Company and saw Mr. Nacional, who informed
us that we were not blacklisted, however, Mr. Mckenzie,
 Administrative Manager did inform us that we were all
blacklisted;
29. That we were asking from the respondent Company our
leave pay, which they refused to give, if we did not agree
to a US$100.00 deduction;
30. That with the exception of Messrs. Jaime Caunca, Amado
Manansala and Antonio Cabrera, we received our leave
pay with the US$100.00 deduction;
31. That in view of the written promise of Mr. Nacional in
Dubai last October 23, 1975 to give us priority and
preference in boarding a vessel and that we were not
blacklisted we have on several occasions approached him
regarding his promise, which up to the present he has
refused to honor.

x      x      x      x.”

Answering the complaint, petitioner countered that when

the vessel was in London, private respondents together
with the other crew insisted on worldwide ITF rate as per
special agreement; that said employees threatened the ship
authorities that unless they agreed to the increased wages
the vessel would not be able to leave port or would have
been picketed and/or boycotted and declared a hot ship by
the ITF;
840

840 SUPREME COURT REPORTS ANNOTATED

Wallem Phil. Shipping, Inc. vs. Minister of Labor

that the Master of the ship was left with no alternative but
to agree; that upon the vessel’s arrival at the Asian port of
Dubai, on October 22, 1975, a representative of petitioner
went on board the ship and requested the crew together
with private respondents to desist from insisting worldwide
ITF rate and instead accept the Far East rate; that said
respondents refused to accept Far East ITF rates while the
rest of the Filipino crew members accepted the Far East
rates; that private respondents were replaced at the
expense of petitioner and it was prayed that respondents be
required to comply with their obligations under the
contract by requiring them to pay their repatriation
expenses and all other incidental expenses incurred by the
master and crew of the vessel.
After the hearing on the merits, the
2
Hearing Officer of
the Secretariat rendered a decision on March 14, 1977
finding private respondents to have violated their contract
of employment when they accepted salary rates different
from their contract verified and approved by the National
Seamen Board. As to the issue raised by private
respondents that the original contract has been novated, it
was held that:

“x      x      x      x

For novation to be a valid defense, it is a legal requirement that

all parties to the contract should give their consent. In the instant
case only the complainants and respondents gave their consent.
The National Seamen Board had no participation in the alleged
novation of the previously approved employment contract. It
would have been different if the consent of the National Seamen
Board was first secured before the alleged novation of the
approved contract was undertaken, hence, the defense of novation
is not in order.

x      x      x      x.”

The Hearing Officer likewise rules that petitioner violated

the contract when its representative signed the Special
Agreement and he signed the same at his own risk and
must bear the consequence of such act, and since both
parties are in pari

_______________

2 pp. 16-26, Rollo.

841

VOL. 102, FEBRUARY 20, 1981 841

Wallem Phil. Shipping, Inc. vs. Minister of Labor

delicio, complaint and counterclaim were dismissed for lack

of merit but petitioner was ordered to pay respondents
Caunca and Cabrera their respective leave pay for the
period that they have served M/V Woermann Sanaga plus
attorney’s fees.
Private respondents filed a motion for reconsideration
with the Board which3 modified the decision of the
Secretariat in an Order of December 19, 1977 and ruled
that petitioner is liable for breach of contract when it
ordered the dismissal of private respondents and their
subsequent repatriation before the expiration of their
respective employment contracts. The Chairman of the
Board stressed that “where the contract is for a definite
period, the captain and the crew members may not be
discharged until after the contract shall have been
performed” citing the case of Madrigal Shipping Co., Inc.
vs. Ogilvie, et al. (104 Phil. 748). He directed petitioner to
pay private respondents the unexpired portion of their
contracts and their leave pay, less the amount they
received as differentials by virtue of the special agreements
entered in Rotterdam, and ten percent of the total amounts
recovered as attorney’s fees.
Petitioner sought clarification and reconsideration of the
said order and asked for a confrontation with private
respondents to determine the specific adjudications to be
made. A series of conferences were conducted by the Board.
It was claimed by petitioner that it did not have in its
possession the records necessary to determine the exact
amount of the judgment since the records were in the sole
custody of the captain of the ship and demanded that
private respondents produce the needed records. On this
score, counsel for respondents manifested that to require
the master of the ship to produce the records would result
to undue delay in the disposition of the case to the
detriment of his clients, some of whom are still
unemployed.
Under the circumstances, the Board was left with 4
no
alternative but to issue an Order dated April 3, 1979 fixing
the amount due private respondents at their three (3)
months’ salary equivalent without qualifications or
deduction. Hence,

_____________

3 pp. 28-32, Rollo.

4 pp. 33-40, Rollo.

842

842 SUPREME COURT REPORTS ANNOTATED

Wallem Phil. Shipping, Inc. vs. Minister of Labor

the instant petition before Us alleging grave abuse of

discretion on the part of the respondent official as
Chairman of the Board, in issuing said order which
allegedly nullified the findings of the Secretariat and
premised adjudication on-imaginary conditions which were
never taken up with full evidence in the course of hearing
on the merits.
The whole controversy is centered around the liability of
petitioner when it ordered the dismissal of herein private
respondents before the expiration of their respective
employment contracts. 5
In its Order of December 19, 1977 the Board, thru its
Chairman, Minister Blas F. Ople, held that there is no
showing that the seamen conspired with the ITF in
coercing the ship authorities to grant salary increases, and
the Special Agreement was signed only by petitioner and
the ITF without any participation from the respondents
who, accordingly, may not be charged as they were, by the
Secretariat, with violation of their employment contract.
The Board likewise stressed that the crew members may
not be discharged until after the expiration of the contract
which is for a definite period, and where the crew members
are discharged without just cause before the contract shall
have been performed, they shall be entitled to collect from
the owner or agent of the vessel their unpaid salaries for
the period they were engaged to render the services,
applying the 6case of Madrigal Shipping Co., Inc. vs. Jesus
Oglivie, et al.
The findings and conclusion of the Board should be
sustained. As already intimated above, there is no logic in
the statement made by the Secretariat’s Hearing Officer
that the private respondents are liable for breach of their
employment contracts for accepting salaries higher than
their contracted rates. Said respondents are not signatories
to the Special Agreement, nor was there any showing that
they instigated the execution thereof. Respondents should
not be blamed for accepting higher salaries since it is but
human for them to grab every opportunity which would
improve their working condi-

_________________

5 Order of December 19, 1977, pp. 29-32, Rollo.

6 104 Phil. 748.

843

VOL. 102, FEBRUARY 20, 1981 843

Wallem Phil. Shipping, Inc. vs. Minister of Labor

tions and earning capacity. It is a basic right of all

workingmen to seek greater benefits not only for
themselves but for their families as well, and this can be
achieved through collective bargaining or with the
assistance of trade unions. The Constitution itself
guarantees the promotion of social welfare and protection
to labor. It is therefore the Hearing Officer that gravely
erred in disallowwing the payment of the unexpired portion
of the seamen’s respective contracts of employment.
Petitioner claims that the dismissal of private
respondents was justified because the latter threatened the
ship authorities in acceeding to their demands, and this
constitutes serious misconduct as contemplated by the
Labor Code. This contention is not well-taken. The records
fail to establish clearly the commission of any threat. But
even if there had been such a threat, respondents’ behavior
should not be censured because it is but natural for them to
employ some means of pressing their demands for
petitioner, who refused to abide with the terms of the
Special Agreement, to honor and respect the same. They
were only acting in the exercise of their rights, and to
deprive them of their freedom of expression is contrary to
law and public policy. There is no serious misconduct to
speak of in the case at bar which would justify respondents’
dismissal just because of their firmness in their demand for
the fulfilment by petitioner of its obligation it entered into
without any coercion, specially on the part of private
respondents.
On the other hand, it is petitioner who is guilty of
breach of contract when they dismissed the respondents
without just cause and prior to the expiration of the
employment contracts. As the records clearly show,
petitioner voluntarily entered into the Special Agreement
with ITF and by virtue thereof the crew men were actually
given their salary differentials in view of the new rates. It
cannot be said that it was because of respondents’ fault
that petitioner made a sudden turn-about and refused to
honor the special agreement.
In brief, We declare petitioner guilty of breach of
contract and should therefore be made to comply with the
directives contained in the disputed Orders of December
19, 1977 and April 3, 1979.
844

844 SUPREME COURT REPORTS ANNOTATED

Wallem Phil. Shipping, Inc. vs. Minister of Labor

WHEREFORE, premises considered, the decision dated

March 14, 1977 of the Hearing Officer is SET ASIDE and
the Orders dated December 19, 1977 and April 3, 1979 of
the National Seamen Board are AFFIRMED in toto. This
decision is immediately executory. Without costs.
SO ORDERED.
           Makasiar, Fernandez, Guerrero and Melencio-
Herrera, JJ., concur.
     Teehankee (Chairman), J., in the result. Mr. Justice
de Castro was designated to sit with the First Division
under Special Order No. 225.

Decision set aside and orders affirmed.

Notes.—Unforeseen difficulties are not grounds for

reneging upon the terms of a contract. (Laguna Tayabas
Bus Co. vs. Manabat, 58 SCRA 650).
A breach of a condition imposed by a contract may be
invoked only by a party in whose favor the condition was
made. (Sarmiento vs. Salud, 45 SCRA 213).
A stipulation to pay at any time even after the lapse of
ten years from the date of the instrument amounts to a
waiver of prescription. (Borromeo vs. Court of Appeals, 47
SCRA 65).
If the other party denies that rescission is justified, it is
free to resort to judicial action in its own behalf. (Luzon
Brokerage Co. vs. Maritime Building Co., 43 SCRA 93).
A party who cause the delay in the enforcement of a
contract cannot complain of subsequent devaluation of
currency and increased price of land. (De Borja vs. Vda. de
Borja, 46 SCRA 577).
Employee who was illegally dismissed is entitled to
receive his backwages from date of his illegal dismissal.
The period of pendency of decision of a case should not be
deducted in the computation of backwages. (New Manila
Candy Workers Union vs. Court of Industrial Relations, 86
SCRA 37).
Money claims due to laborers cannot be the object of
settlement or compromise effected by a union or caused
without the
845

VOL. 102, FEBRUARY 20, 1981 845

Wallem Phil. Shipping, Inc. vs. Minister of Labor

specific individual consent of each laborer concerned.

(Danao Development Corporation vs. National Labor
Relations Commission, 81 SCRA 487).
Court has adopted the rule of fixing the amount of
backwages to a reasonable level without any qualification
so as to avoid delay. (Air Manila, Inc. vs. Court of
Industrial Relations, 83 SCRA 579).
 Backwages are earnings which an employee or worker
lost due to his dismissal from work. (New Manila Candy
Workers Union vs. Court of Industrial Relations, 86 SCRA
37).
Backwages may be fixed to a just and reasonable level
without qualification or deduction. (Monteverde vs. Court of
Industrial Relations, 79 SCRA 269).

——o0o——

846

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