FACTS:

In January 2000, petitioner Bright Maritime Corporation (BMC) and its president, petitioner Desiree P. Tenorio, entered into a Contract of Employment with respondent Ricardo B. Fantonial. The contract, approved by the Philippine Overseas Employment Administration (POEA), stipulated that respondent would be employed as boatswain for one year on the foreign vessel M/V AUK.

Respondent underwent a medical examination at petitioner's accredited medical clinic and was issued a Medical Certificate confirming his fitness to work. However, on January 17, 2000, respondent was informed at the airport that he could not leave due to supposed defects in his medical certificate. He went back to the medical clinic the following day and was told that there was nothing wrong with his certificate.

Seeking an explanation, respondent went to petitioners' office but was only instructed to wait for their call. Unfortunately, no call was received. Consequently, respondent filed a complaint for illegal dismissal and other claims before the NLRC.

Petitioners argued in their defense that respondent was not considered fit to work on January 17, 2000, due to medical problems. They contended that since respondent was not in a condition to start his employment on the scheduled flight date, the employment contract had not commenced, therefore ruling out the possibility of illegal dismissal.

The Labor Arbiter ruled in favor of respondent.

ISSUES:

1. Whether or not the Court of Appeals committed grave abuse of discretion in finding that the respondent was illegally dismissed.

2. Whether or not the Court of Appeals erred in setting aside the findings of the NLRC regarding the respondent's non-compliance with the requirements set by the POEA rules.

3. Whether or not the Court of Appeals erred in awarding monetary benefits to the respondent despite the provision of the POEA standard employment contract to the contrary.

4. Whether or not the Court of Appeals committed serious error in its findings of facts.

5. Whether petitioners' reason for preventing respondent from leaving Manila and joining the vessel on the scheduled date is valid.

6. Whether the employment contract was perfected and whether an employer-employee relationship existed between petitioners and respondent.

7. Whether the act of petitioners in preventing the respondent from leaving and complying with his contract of employment constitutes breach of contract.

8. Whether petitioners are liable for actual damages to respondent for the loss of one-year salary as provided in the contract.

9. Whether petitioners are liable for moral damages.

10. Whether petitioner BMC is liable for exemplary damages.

11. Whether respondent is entitled to attorney's fees.

RULING:

1. The Court of Appeals did not commit grave abuse of discretion in finding that the respondent was illegally dismissed. The court agreed with the Labor Arbiter's decision that the unilateral revocation of the employment contract by the petitioners amounted to a pre-termination of the contract without just or authorized cause.

2. The Court of Appeals did not err in setting aside the findings of the NLRC regarding the respondent's non-compliance with the requirements set by the POEA rules. The court found that the contract of employment between the parties had already been perfected and approved by the POEA, and there was no valid reason for the petitioners to withhold the respondent's departure.

3. The Court of Appeals erred in awarding monetary benefits to the respondent despite the provision of the POEA standard employment contract to the contrary. The court modified the Labor Arbiter's decision by deleting the placement fee and other expenses equivalent to one month's salary, but it upheld the award of moral and exemplary damages to the respondent.

4. The Court of Appeals did not commit serious error in its findings of facts. The Supreme Court reviewed the factual findings of the Court of Appeals since there was a conflict of perceptions by the lower court and the NLRC. The Court found no grave abuse of discretion in the Court of Appeals' factual findings.

5. The reason given by petitioners for preventing respondent from leaving on the scheduled date is not valid. The Medical Certificate dated January 17, 2000, which states that respondent was "FIT TO WORK," proves that he was medically fit to leave Manila and join the vessel on that date. The subsequent affidavit of Dr. Lyn dela Cruz-De Leon stating that respondent was fit to work only on January 21, 2000, cannot overcome the evidence in the Medical Certificate. Therefore, petitioners' reason for preventing respondent from leaving on the scheduled date is not valid.

6. The employment contract was perfected when it was signed by the parties on January 15, 2000, and approved by the POEA on January 17, 2000. However, the employment contract did not commence as petitioners did not allow respondent to leave on the scheduled date. Therefore, an employer-employee relationship did not exist between petitioners and respondent. Nevertheless, the breach of certain rights and obligations that arise from the employment contract may give rise to a cause of action against the erring party.

7. The act of preventing the respondent from leaving and complying with his contract of employment constitutes breach of contract, for which petitioner BMC is liable for actual damages to respondent for the loss of one-year salary as provided in the contract.

8. Petitioner BMC is liable to pay respondent actual damages in the amount of the peso equivalent of US$8,040.00, representing his salary for one year under the contract.

9. Petitioners are liable to pay respondent moral damages in the amount of Thirty Thousand Pesos (P30,000.00).

10. Petitioner BMC is liable to respondent for exemplary damages in the amount of Fifty Thousand Pesos (P50,000.00).

11. Respondent is entitled to attorney's fees equivalent to ten percent (10%) of the recoverable amount.

PRINCIPLES:

• Unilateral revocation of an employment contract without just or authorized cause constitutes illegal dismissal.

• A perfected and approved contract of employment cannot be unilaterally revoked by the employer without valid reasons.

• The court may review factual findings when there is a conflict of perceptions by the lower court or administrative body, such as the NLRC.

• Compensation and damages may be awarded even if contrary to the provisions of the POEA standard employment contract, depending on the circumstances of the case.

• An employment contract is perfected when the parties agree upon its terms and concur in the essential elements, which are the consent of the parties, object certain, and cause of the obligation.

• The commencement of an employment contract is when the seafarer departs from the airport or seaport in the point of hire.

• Even before the commencement of the employment contract, there are certain rights and obligations that arise, the breach of which may give rise to a cause of action.

• A recruitment agency must ensure that an applicant for employment abroad is technically equipped and physically fit because a labor contract affects public interest.

• The POEA Standard Contract must be recognized and respected, and neither the manning agent nor the employer can prevent a seafarer from being deployed without a valid reason.

• Actual damages may be awarded for breach of contract, such as the loss of one-year salary as stipulated in the contract.

• Moral damages may be awarded when the act of the defendant is tainted with bad faith.

• Exemplary damages may be imposed to serve as a deterrent against socially deleterious actions and to correct for the public good.

• Attorney's fees may be awarded when the defendant's act or omission compels the plaintiff to incur expenses to protect his interest.