Seafarer’s non-deployment due to replacement is a breach of contract

Failure to deploy a seafarer due to replacement by another seafarer is considered a breach of contract entitling him to damages.

The Supreme Court awarded the seafarer his nine months’ worth of salary in the case of Abosta Ship Management vs. Wilhilm Hilario {G.R. No. 195792 , November 24, 2014} when the  employer unjustifiably failed to  deploy the  seafarer in accordance with the POEA-approved contract of employment.

Records showed that the foreign principal had already chosen the seafarer  from among the other candidates as bosun. The manning agency then entered into an employment contract and hired the seafarer. Subsequent communications, though, show that the foreign principal approved a different candidate for the position of bosun.

The case revolved  on the issue of whether such breach would entitle the seafarer to the payment of actual damages for the failure of the employer to comply with the latter’s obligations in accordance with the employment contract.

It is the contention of the manning agency that the seafarer’s non-deployment was due to the foreign principal’s management prerogative to promote an able seaman. This exercise of management prerogative supposedly is a valid and justifiable reason that would negate any liability for damages.

The Supreme Court, however,  noted that there was a  violation of the contract at the time that the foreign principal decided to promote another person.

The vacancy for the position of bosun ceased to exist upon the execution of the contract between the  employer and seafarer that was subsequently approved by the POEA. There was no longer a vacancy when the foreign principal changed its mind, since the position of bosun had already been filled up by the seafarer.

The contract was already perfected on the date of its execution, which occurred when the employer and seafarer agreed on the object and the cause as well as on the rest of the terms and conditions therein.

Contemporaneous with the perfection of the employment contract was the birth of certain rights and obligations, a breach of which may give rise to a cause of action against the erring party.

The POEA contract must also be recognized and respected since neither the manning agent nor the employer can simply prevent a seafarer from being deployed without a valid reason.

The promotion and choice of personnel is indeed  an exercise of management prerogative so long as they are exercised in good faith for the advancement of the employer’s interest, and not for the purpose of defeating or circumventing the rights of the employees under special laws or under valid agreements.

However, there are limitations on the exercise of management prerogatives, such as existing laws and the principle of equity and substantial justice.

Under the principle of equity and substantial justice, the Supreme Court underscored that change of mind is not a valid reason for the non-deployment of the seafarer.

He lost the opportunity to apply for other positions in other agencies when he signed the contract of employment with the employer. Simply put, that contract was binding on the parties and may not later be disowned simply because of a change of mind of either one of them.

The unilateral and unreasonable failure to deploy the seafarer constitutes breach of contract, which gives rise to a liability to pay actual damages.

The sanctions provided for non-deployment do not end with the suspension or cancellation of license or the imposition of a fine and the return of all documents at no cost to the worker. They do not forfend a seafarer from instituting an action for damages against the employer or agency that has failed to deploy him.

The failure to deploy a seafarer was an exercise of a management prerogative that went beyond its limits and resulted in a breach of contract.

In tum, the employer’s breach gave rise to the seafarer’s cause of action to claim actual damages for the pecuniary loss suffered by the latter in the form of the loss of nine months’ worth of salary as provided in the POEA-approved contract of employment.

The same principle was applied by the Supreme  Court in the cases of Santiago v. CF Sharp Crew Management, Inc (527 SCRA 165)  and C.F. Sharp & Co. Inc vs Agustin and Minimo (G.R. No. 179469 February 15, 2012).

Despite the fact that the employer-employee relationship has not commenced due to the failure to deploy the seafarers in both cases, the Court declared that they are entitled to rights arising from the perfected Contract of Employment, such as the right to demand performance by the employers of their obligation under the contract.

Atty. Dennis R. Gorecho heads the seafarers’ division of the Sapalo Velez Bundang Bulilan law offices. For comments, email [email protected], or call 09175025808 or 09088665786).