Poseidon International Maritime Services, Inc. v. Tito R. Tamala, Felipe Saurin, Jr.

, Artemio Bo-oc, and Joel

Fernandez
Brion, J. June 26, 2013 G.R. No. 186475

Doctrine Sec. 10 of RA 80421, relied by the CA in their decision, does not apply to cases where the overseas Filipino
worker was not illegally dismissed. Said provision applies only to an illegally dismissed overseas contract
worker or a worker dismissed from overseas employment without just, valid or authorized cause.
The respondents filed a complaint for illegal termination of employment with prayer for the payment of
Summary their salaries for the unexpired portion of their contracts, among others before the Labor Arbiter, against the
petitioner. They were hired to man the fishing vessels of Van Doorn and other companies abroad for one
year. However, barely a month after they began working, operations stopped and didn’t resume. The parties
then entered into an agreement wherein the their immediate employer promised that respondents would get
the full portion of their unpaid salaries for the unexpired portion of their contract. However, upon their
arrival in the country, respondents received only 50% of their unpaid salaries, but they still signed the
waiver and quitclaim from the petitioner.
Reversing the CA’s decision in favor of the respondents, the Court ruled that they are not entitled to the
unpaid portion of their salaries because Sec. 10 of RA 8042 only provides for such in cases of illegal
dismissal or dismissal without any just, authorized or valid cause. In this case, Van Doorn’s termination of
their employment arising from the cessation of its operations is valid. The quitclaims and waivers they
signed were also valid. However, the Court ordered Van Doorn to pay nominal damages to the respondents
for its failure to observe the procedural requisites for the termination of employment.

Facts - In 2004, respondents were hired by Poseidon in behalf of Van Doorn to man its fishing vessels
as well as that of its partners, Dinko Tuna Farmers Pty. Ltd. and Snappertuna Cv. Lda, that
operate at Cape Verde Islands.
- They were assigned to different positions in different vessels, but with the same contract
duration of 12 months. After commencing in September, fishing operations abruptly stopped in
November and didn’t resume. Thus, before the respondents disembarked from the vessel, their
immediate employer (Goran Ekstrom of Snappertuna) executed an agreement (May 25, 2005
agreement) with them, promising to give them 100% of the unpaid salaries for the unexpired
portion of their pre-terminated contract. They would receive the following:
Artemio A. Bo-oc - US$6,047.99
Joel S. Fernandez - US$7,767.90
Felipe S. Saurin, Jr. - US$6,647.99
Tito R. Tamala - US$7,047.99
- However, Poseidon and its other partners drew up another agreement, reducing the previously
agreed amount to 50% of the respondents’ unpaid salaries. Upon their arrival in Manila, they
received their settlement pay (unpaid salaries) under the letter of acceptance and also signed a
waiver and quitclaim.
- Filing the aforementioned complaint before the LA, they said that the quitclaims and waivers
they signed should not be a bar to their claim, basing it on their May 25, 2005 agreement. They
said that they were coerced into signing these because of their dire need for cash and that these
were in highly technical language that’s highly suspect.
- The respondents claimed that by voluntarily signing the waivers quitclaims, they are barred
from claiming 50% of their unpaid salaries
- The LA ruled in favor of the petitioner, affirming the validity of the said documents. It
dismissed their illegal dismissal complaint since the respondents also abandoned this issue.
- NLRC affirmed the LA’s decision. Upon reaching the CA, a decision was rendered in their
favor. It said that the amounts in the May 25 agreement to be more in keeping with RA 8042,
but it did emphasize that their employment’s pre-termination was the result of Van Doorn’s
decision to stop operating.

1
SEC. 10 of RA 8042 MONEY CLAIMS. – x x x In case of termination of overseas employment without just, valid
or authorized cause as defined by law or contract.
Ratio/Issues 1. Whether or not the respondents are entitled to receive their unpaid salaries (NO)
a) See doctrine.
b) They were not illegally dismissed for their references to illegal dismissal in their several pleadings were
mere cursory declarations and they even argued that the fishing operations ceased because of the business
decision of Van Doorn and its partners as an exercise of their management prerogative, as also stated by the
CA.
c) The management has the right to regulate the business and control its every aspect. Included in this
management right is the freedom to close or cease its operations for any reason, as long as it is done in good
faith and the employer faithfully complies with the substantive and procedural requirements laid down in
Art. 283. This legal policy is reiterated under Section 18-B, paragraph 2,40 in relation with Section 2341 of
the POEA Standard Employment Contract (which is deemed written into every overseas employment
contract).2
2. Whether or not Van Doorn stopped its fishing operations to circumvent the respondents’ protected
rights (NO)
a) That Van Doorn and its partners might have suffered losses during the six month period is not entirely
remote. Yet, Van Doorn did not immediately repatriate the respondents or hire another group of seafarers to
replace the respondents in a move to resume its fishing operations.
b) The respondents, although they were no longer rendering any service or doing any work, still received
their full salary for November 2004 up to January 2005.
3. Whether or not the quitclaims and waivers were valid and binding (YES)
a) Generally, this Court looks with disfavor at quitclaims executed by employees for being contrary to
public policy. Where the person making the waiver, however, has done so voluntarily, with a full
understanding of its terms and with the payment of credible and reasonable consideration, we have no
option but to recognize the transaction to be valid and binding.
b) The settlement pay is reasonable under the circumstances, especially when contrasted with the amounts
to which they were respectively entitled to receive as termination pay. (It’s higher.)
c) The contents of the documents were clear and they cannot claim to be naive and unlettered because
they’re mature and intelligent individuals. Their fellow seafarers also witnessed their signing, discounting
their allegation that it was coerced.
4. Whether their employer followed the procedural safeguards in terminating them (NO)
a) In the termination of employment under Article 283, Van Doorn, as the employer, is required to serve a
written notice to the respondents and to the DOLE of the intended termination of employment at least one
month prior to the cessation of its fishing operation. Poseidon could have done it in behalf of Van Doorn.
b) Though no effect on the validity of the termination, it subjects the employer to the payment of nominal
damages to the respondents.
Held Petition granted in part.

2
SECTION 18. TERMINATION OF EMPLOYMENT
xxxx
B. The employment of the seafarer is also terminated when the seafarer arrives at the
point of hire for any of the following reasons:
xxxx
2. When the seafarer signs-off due to shipwreck, ship’s sale, lay-up of vessel,
discontinuance of voyage or change of vessel principal in accordance with Sections 22,
23 and 26 of this Contract. [italics and emphases ours]
41 SECTION 23. TERMINATION DUE TO VESSEL SALE, LAY-UP OR DISCONTINUANCE
OF VOYAGE
Where the vessel is sold, laid up, or the voyage is discontinued necessitating the
termination of employment before the date indicated in the Contract, the seafarer shall be
entitled to earned wages, repatriation at employer’s cost and one (1) month basic wage as
termination pay, unless arrangements have been made for the seafarer to join another
vessel belonging to the same principal to complete his contract which case the seafarer
shall be entitled to basic wages until the date of joining the other vessel