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STOLT-NIELSEN TRANSPORTATION GROUP v. SULPECIO MEDEQUILLO

FACTS:

Sulpecio Madequillo filed a complaint against Stolt-Nielsen Transportation Group, Inc. and Chung Gai Ship Management for illegal dismissal and failure to deploy. Madequillo claimed that he was hired as Third Assistant Engineer on board the vessel "Stolt Aspiration" but was ordered to disembark after three months without any explanation. He was then transferred to another vessel named "Stolt Pride" but was not deployed as agreed under the second contract. Madequillo demanded his documents but was only allowed to claim them in exchange for signing a document. He filed a complaint and the Labor Arbiter found the petitioners guilty of constructively dismissing him. The NLRC affirmed the decision with modification, and the Court of Appeals also affirmed the labor tribunal's decision.

ISSUES:

  1. Whether there was novation of the first employment contract by the second contract.

  2. Whether there was constructive dismissal under the second contract.

  3. Whether the cause of action under the first contract is time-barred

  4. What is the consequence of the non-deployment of the seafarer under the second contract

  5. Whether the penalty for non-deployment is a mere reprimand

  6. How will the seafarer be compensated for the non-deployment

  7. Whether the claim for money damages by reason of a contract involving overseas Filipino workers is within the jurisdiction of the labor arbiters of the National Labor Relations Commission (NLRC).

  8. Whether the respondent is liable to pay actual damages to the petitioner for the non-deployment without just cause.

RULING:

  1. Yes, there was novation of the first employment contract by the second contract. 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. The requisites for novation are: (1) previous valid obligation; (2) agreement of the parties concerned to a new contract; (3) extinguishment of the old contract; and (4) validity of the new contract. In this case, the second contract changed the object or principal of the first contract and the parties accepted the terms and conditions of the second contract. The Labor Arbiter and the Court of Appeals correctly ruled that there was novation.

  2. It is legally impossible to have constructive dismissal when the employment has not yet commenced. Assuming there was omission under the second contract, the petitioners can only be found as having failed to deploy the private respondent but with a valid reason.

  3. The cause of action under the first contract is time-barred. The prescriptive period of three years within which the seafarer may initiate money claims under the first contract commenced on the date of his repatriation. The start of the three-year prescriptive period is reckoned from the date of repatriation, and since the seafarer's complaint was filed beyond this period, the cause of action is already time-barred.

  4. The consequence of the non-deployment of the seafarer under the second contract is that the perfected contract gives rise to obligations on the part of the petitioners. The employment contract is perfected upon the agreement of the parties on the object, cause, and other terms and conditions. While actual deployment is a suspensive condition for the commencement of employment, the seafarer still has rights and obligations under the contract even without actual deployment.

  5. The penalty for non-deployment is not a mere reprimand. The POEA Rules and Regulations Governing Overseas Employment provide that failure to deploy a worker within the prescribed period without valid reasons shall be a cause for suspension or cancellation of license or fine. The penalty for non-deployment, as per the applicable law at that time, is the suspension or cancellation of license or a fine, not just a reprimand.

  6. The seafarer can claim damages for the unreasonable non-deployment. While the POEA Rules Governing the Recruitment and Employment of Seafarers do not specifically provide for the award of damages, the absence of such provision does not preclude the seafarer from claiming damages. The sanctions for non-deployment do not preclude the seafarer from instituting an action for damages against the employer or agency that failed to deploy him.

  7. The claim for money damages by reason of a contract involving overseas Filipino workers is within the jurisdiction of the labor arbiters of the NLRC. Pursuant to Section 10 of Republic Act No. 8042 (Migrant Workers Act), the labor arbiters have the original and exclusive jurisdiction to hear and decide 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.

  8. The respondent is liable to pay actual damages to the petitioner for the non-deployment without just cause. Article 2199 of the New Civil Code provides that one is entitled to an adequate compensation only for such pecuniary loss suffered by him as he has duly proved. In this case, the respondent is liable to pay the petitioner actual damages in the form of the loss of nine months' worth of salary as provided in the contract.

PRINCIPLES:

  • 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.

  • Factual findings of labor officials, supported by substantial evidence, are generally accorded respect and finality by the courts.

  • Constructive dismissal cannot occur when the employment has not yet commenced.

  • The start of the prescriptive period for money claims is determined from the date of repatriation.

  • The employer-employee relationship is separate from the perfection of the employment contract.

  • Obligatory force of a contract includes fulfillment of what is expressly stipulated as well as consequences in keeping with good faith, usage, and law.

  • Non-deployment without valid reasons is subject to penalties of suspension or cancellation of license or fine.

  • The penalty for non-deployment is not limited to a reprimand.

  • The absence of specific provisions in the POEA Rules does not preclude the seafarer from claiming damages for non-deployment.

  • Section 10 of Republic Act No. 8042 (Migrant Workers Act) grants the labor arbiters of the National Labor Relations Commission (NLRC) the original and exclusive jurisdiction to hear and decide 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.

  • Article 2199 of the New Civil Code provides that one is entitled to an adequate compensation only for such pecuniary loss suffered by him as he has duly proved.