The Courts 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.
1. THERE WAS NO NOVATION OF THE FIRST CONTRACT BY THE
SECOND CONTRACT; THE ALLEGATION OF ILLEGAL DISMISSAL
UNDER THE FIRST CONTRACT MUST BE RESOLVED SEPARATELY
FROM THE ALLEGATION OF FAILURE TO DEPLOY UNDER THE
SECOND CONTRACT.
2. 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.
II.
THE COURT A QUO ERRED IN RULING THAT THERE WAS
CONSTRUCTIVE DISMISSAL UNDER THE SECOND CONTRACT.
1. IT IS LEGALLY IMPOSSIBLE TO HAVE CONSTRUCTIVE DISMISSAL
WHEN THE EMPLOYMENT HAS NOT YET COMMENCED.
2. ASSUMING THERE WAS OMISSION UNDER THE SECOND
CONTRACT, PETITIONERS CAN ONLY BE FOUND AS HAVING
FAILED IN DEPLOYING PRIVATE RESPONDENT BUT WITH VALID
REASON.
Findings of fact of administrative agencies and quasi-judicial bodies, which have
acquired expertise because their jurisdiction is confined to specific matters, are
generally accorded not only respect, but finality when affirmed by the Court of
Appeals. Such findings deserve full respect and, without justifiable reason, ought not to be
altered, modified or reversed.(Emphasis supplied)23
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.25 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.26 In this case, there was no showing of any arbitrariness on the part of the lower
courts in their findings of facts. Hence, we follow the settled rule.
A contract is a meeting of minds between two persons whereby one binds himself, with
respect to the other, to give something or to render some service.29 The contracting parties
may establish such stipulations, clauses, terms and conditions as they may deem
convenient, provided they are not contrary to law, morals, good customs, public order, or
public policy.30
Further, we do not agree with the contention of the petitioners that the penalty is a
mere reprimand.
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. It reads:
Section 4. Workers Deployment. An agency shall deploy its recruits
within the deployment period as indicated below:
b. Thirty (30) calendar days from the date of processing by the
administration of the employment contracts of seafarers.
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, the agency shall return all documents at
no cost to the worker.(Emphasis and underscoring supplied)
The appellate court correctly ruled that the penalty of reprimand36 provided under
Rule IV, Part VI of the POEA Rules and Regulations Governing the Recruitment and
Employment of Land-based Overseas Workers is not applicable in this case. 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. The penalty for nondeployment as discussed is suspension or cancellation of license or fine.
Now, 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. 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. However, 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. 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. As earlier discussed, they do not forfend a seafarer from instituting an action for
damages against the employer or agency which has failed to deploy him.37
We thus decree the application of Section 10 of Republic Act No. 8042 (Migrant
Workers Act) which provides for money claims by reason of a contract involving Filipino
workers for overseas deployment. The law provides:
Sec. 10. Money Claims. Notwithstanding any provision of law to the contrary, the Labor
Arbiters of the National Labor Relations Commission (NLRC) shall have the original and
exclusive jurisdiction to hear and decide, within ninety (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. x x x (Underscoring supplied)
Following the law, the claim is still cognizable by the labor arbiters of the NLRC under the
second phrase of the provision
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.19
In its ruling, the Labor Arbiter clarified that novation had set in between the first and second
contract. 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. In other words,
respondents cannot be held liable for the first contract but are clearly and
definitely liable for the breach of the second contract.20
