G.R. No. 195792 November 24, 2014
ABOSTA SHIP MANAGEMENT and/or ARTEMIO CORBILLA, Petitioners, vs. WILHILM M. HILARIO, Respondent.

FACTS

On October 24, 2002, Abosta Ship Management Corporation (petitioner), on behalf of its foreign principal Panstar Shipping Co., Ltd., executed a POEA-approved employment contract hiring Wilhilm M. Hilario (respondent) as a bosun for nine months with a monthly salary of USD 566. On November 27, 2002, petitioner informed respondent that his deployment was postponed because the foreign principal decided to promote an able seaman to the bosun position instead. Petitioner asked respondent to wait for another vacancy. On January 28, 2003, respondent filed a complaint with the POEA, and on February 6, 2003, a complaint with the Labor Arbiter for violation of POEA rules and seeking damages. The Labor Arbiter assumed jurisdiction and ordered petitioner to pay respondent his salary for nine months (USD 10,071). The NLRC reversed the Labor Arbiter, dismissing the complaint but ordering petitioner to deploy respondent as soon as possible. The Court of Appeals granted respondent’s Petition for Certiorari, reinstating the award of actual damages and holding petitioner jointly and solidarily liable with its foreign principal for breach of contract.

ISSUE

Whether the Court of Appeals committed serious errors of law in ruling that respondent is entitled to actual damages for petitioner’s failure to deploy him, despite petitioner’s claim that the non-deployment was a valid exercise of management prerogative.

RULING

The Supreme Court ruled in the negative, denying the petition and affirming the Court of Appeals. The employment contract was perfected upon its execution and POEA approval on October 24-25, 2002, giving rise to binding obligations. The foreign principal’s subsequent decision to promote another person, communicated in November 2002, constituted a breach of this perfected contract. The exercise of management prerogative in promoting personnel is not absolute and must be exercised in good faith, within the limits of law, equity, and substantial justice. Here, the change of mind was not a valid reason for non-deployment, as the position was already filled by respondent. The unilateral failure to deploy constitutes a breach of contract, entitling respondent to actual damages equivalent to the nine months’ salary under the contract. Petitioner, as the manning agency, assumes joint and solidary liability with the foreign principal for claims arising from the contract under POEA rules and prevailing jurisprudence.