Pentagon International Shipping, Inc. v. Adelantar
REITERATIONFacts
The Antecedents: Respondent William B. Adelantar was hired by Dubai Ports Authority under two contracts. The first contract, dated August 16, 1997, provided for an unlimited period of employment with a monthly salary of Dhs 5,500, later increased to Dhs 5,890. The second contract, dated September 3, 1997, was a POEA standard employment contract with Pentagon International Shipping, Inc. for a 12-month period, with a basic monthly salary of US$380.00 and fixed overtime pay of US$152.00. On June 11, 1998, Adelantar was barred from entering the port and terminated for allegedly assaulting his superior, though promised employment elsewhere. He was repatriated after nine months and seven days of service. Procedural History: Adelantar filed a complaint for illegal dismissal with money claim. The Labor Arbiter found the dismissal illegal and ordered Pentagon to pay Adelantar three months' basic salary inclusive of overtime pay. The NLRC affirmed the Labor Arbiter's decision, applying Section 10 of R.A. 8042 and awarding backwages equivalent to three months' basic salary, exclusive of overtime pay. Adelantar appealed to the Court of Appeals. The Petition: The Court of Appeals modified the award, granting full backwages from dismissal until finality of the decision, ruling that Section 10 of R.A. 8042 was inapplicable because the first contract provided for an unlimited period of employment, and Article 279 of the Labor Code should apply. Pentagon International Shipping, Inc. filed the instant petition for review on certiorari.
Issue(s)
Whether the Court of Appeals erred in applying Article 279 of the Labor Code instead of R.A. 8042 and POEA Rules and Regulations, and whether the first contract executed solely between respondent and Dubai Ports Authority under foreign labor laws is valid and binding. Whether the Court of Appeals erred in ruling that the POEA-sanctioned 12-month contract should not be the basis for determining the employer's liability. Whether the Court of Appeals erred in granting attorney's fees without basis.
Ruling
The petition is meritorious. The Supreme Court reversed and set aside the decision of the Court of Appeals, ordering Pentagon International Shipping, Inc. to pay William B. Adelantar the amount equivalent to the unexpired portion of the September 3, 1997 POEA Standard Contract of Employment plus ten percent (10%) of the award as attorney's fees.
Ratio Decidendi
On the applicability of R.A. 8042 and POEA Rules and the validity of the first contract: The Court held that the Court of Appeals erred in applying Article 279 of the Labor Code and basing the award on the first contract which provided for an unlimited period of employment. Filipino seamen are governed by the Rules and Regulations of the POEA, which mandate a fixed contract period not exceeding 12 months. The second contract, the POEA-sanctioned 12-month contract, should be the basis for determining the employer's liability. The Court reiterated the ruling in Millares v. NLRC that seafarers are contractual employees whose employment is contractually fixed for a certain period and not regular employees under Article 280 of the Labor Code. Therefore, R.A. 8042, specifically Section 10, is applicable, entitling the worker to salaries for the unexpired portion of his contract or for three months for every year of the unexpired term, whichever is less. The Court found that the first contract, while executed between Adelantar and Dubai Ports Authority, was not sanctioned by the POEA. Therefore, it could not be the basis for determining Pentagon's liability. The NLRC correctly observed that whatever benefits Adelantar gained under the first contract, the fact remains that he agreed to be hired under a 12-month POEA contract prior to his deployment, and the duration of this contract is the basis for the respondent's liability. On the validity of the POEA-sanctioned 12-month contract: The Court affirmed that the POEA-sanctioned 12-month contract is the valid basis for determining the employer's liability, as seafarers are contractual employees with fixed employment periods. On attorney's fees: The Court found that the Court of Appeals correctly awarded ten percent (10%) of the monetary award as attorney's fees, as Adelantar was compelled to litigate and incur expenses to protect his rights and interests, pursuant to Article 2208, paragraph 2 of the Civil Code.
Main Doctrine
The employment of seafarers is governed by the POEA Rules and Regulations and R.A. 8042, and their employment is considered contractual for a fixed period, not regular employment under Article 280 of the Labor Code. Therefore, illegally dismissed seafarers are entitled to salaries for the unexpired portion of their contract, not full backwages under Article 279.