G.R. No. L-50734-37 February 20, 1981
WALLEM PHILIPPINES SHIPPING, INC., petitioner, vs. THE HON. MINISTER OF LABOR, in his capacity as Chairman of the National Seamen Board Proper, JAIME CAUNCA, ANTONIO CABRERA, EFREN GARCIA, JOSE OJEDA and RODOLFO PAGWAGAN, respondents.

FACTS

Private respondents were seamen hired by petitioner for a ten-month period aboard the M/V Woermann Sanaga. While in Rotterdam, a representative of the International Transport Federation (ITF) boarded the vessel and subsequently, the company’s Administrative Manager, Mr. M.S.K. Ogle, signed a “Special Agreement” applying worldwide ITF wage rates. The crew, including private respondents, received salary differentials under this new rate. Later, in Dubai, the petitioner’s Operations Manager, Mr. Greg Nacional, repudiated the Special Agreement, demanding the crew accept the lower Far East rates under threat of termination. The crew eventually acquiesced under this duress, but were nonetheless dismissed and repatriated before their contracts expired.
Upon arrival in Manila, the seamen filed a complaint for illegal dismissal and recovery of wages for the unexpired contract period. The National Seamen Board (NSB) ruled in favor of the seamen, ordering payment of their money claims. The petitioner sought certiorari, arguing the dismissal was justified due to the seamen’s alleged instigation and threats to demand the ITF rates, constituting serious misconduct.

ISSUE

Whether the dismissal of the seamen was justified, thereby absolving the petitioner from liability for the unexpired portion of their employment contracts.

RULING

The Supreme Court ruled in favor of the seamen and affirmed the NSB orders. The legal logic centered on the absence of a valid cause for termination and the enforceability of the wage agreement. The Court found that the seamen’s act of seeking the implementation of the worldwide ITF rates, which were formally agreed upon by the company’s own manager, did not constitute serious misconduct. It is a basic right of workers to seek better terms, and their firmness in demanding compliance with an existing agreement is a legitimate exercise of that right, not a dismissible offense.
Crucially, the petitioner voluntarily entered into the Special Agreement through its authorized manager, and the crew received differentials accordingly. The subsequent unilateral repudiation of this agreement by another company officer constituted a breach of contract by the petitioner, not the employees. The seamen’s eventual forced acceptance of the lower rates under threat of termination was deemed involuntary and did not validate the earlier breach. Therefore, the dismissal prior to contract expiration was illegal. The petitioner, being guilty of breach of contract, was liable to pay the seamen’s claims for the unexpired portion of their contracts as directed by the NSB.