G.R. No. 179469 ; February 15, 2012
C.F. SHARP & CO. INC. and JOHN J. ROCHA, Petitioners, vs. PIONEER INSURANCE & SURETY CORPORATION, WILFREDO C. AGUSTIN and HERNANDO G. MINIMO, Respondents.

FACTS

Respondents Wilfredo Agustin and Hernando Minimo applied with petitioner C.F. Sharp, a private employment agency, for overseas seafarer positions in 1990. They submitted required documents, executed a Contract of Employment, and completed pre-departure seminars. However, after a month of waiting, they were not deployed. When they requested the return of their submitted documents, C.F. Sharp refused. Respondents filed a complaint with the POEA, which found C.F. Sharp guilty of unlawfully withholding travel documents and suspended its license. The POEA, however, declared it had no jurisdiction over monetary claims.
Subsequently, respondents filed a Complaint for breach of contract and damages against C.F. Sharp and its surety, Pioneer Insurance, before the RTC. The RTC ruled in favor of respondents, awarding compensatory, moral, and exemplary damages, finding that the failure to deploy and the withholding of documents constituted a breach of contract. On appeal, the Court of Appeals modified the ruling, holding that no employment contract was perfected but found petitioners liable for damages under Article 21 of the Civil Code. Petitioners elevated the case to the Supreme Court.

ISSUE

Whether petitioners C.F. Sharp and its officer, John J. Rocha, are liable for damages for their failure to deploy the seafarer-respondents and for withholding their documents.

RULING

Yes, petitioners are liable. The Supreme Court reinstated the RTC’s decision, finding a perfected contract of employment. The contract was consummated upon the parties’ agreement on the object and cause, evidenced by the signed Contract of Employment and the completion of all prerequisites by respondents. Petitioners’ subsequent failure to deploy without valid reason constituted a clear breach of this contract.
The Court emphasized that the withholding of respondents’ personal documents was an act of bad faith. This act effectively prevented respondents from seeking other employment opportunities, thereby causing them financial loss and mental anguish. This bad faith provides the legal basis for the awards of moral and exemplary damages. The liability extends solidarily to corporate officer John J. Rocha, as his actions in the conduct of corporate affairs were integral to the wrongful acts. The Court affirmed that the RTC properly exercised jurisdiction, as the case involved a breach of a perfected contract and claims for damages that are inherently civil in nature.