SOUTHEAST ASIA Shipping CORP vs. Seagull MARITIME CORP. and CA [2003]

doctrine

To disregard the Manning Agency Agreement and the SPOA in construing the affidavit as the CA did, thus upholding the literal interpretation of the affidavit against affiant Seaturtle, despite the circumstances under which it was accomplished, which circumstances throw light upon, explain and restrict the terms of the affidavit, would sacrifice the substantial rights of Seaturtle and thus work injustice, rather than promote justice.

contested provisions

3 That as Navales’ appointed manning agent in the PHs, Seaturtle is able, willing and ready to assume any and all liabilities that may arise or that may have arisen wrt seamen recruited and deployed by Seagull MARITIME CORP ("Seagull") for Navales and hereby assumes full and complete responsibility over all seamen/workers originally recruited and deployed by Seagull for Navales.

documents involved

·          Affidavit of Undertaking between between Seaturtle and Navales submitted to the POEA

·          Manning Agency Agreement between Navales and Seaturtle

facts

·          Philimare Shipping manning agent in the {hilippines of Navales of SG which was acting for and on behalf of Turtle Bay SG hired Nerry Balatongan to work aboard the vessel Turtle Bay.

·          A supplementary contract was later forged on Dec 6, 1982 which obliged the employer of Balatongan to insure him against death or permanent "invalidity" caused by accident on board the vessel.

·          By a Crewing Agreement, Navales, acting for Turtle Bay, Oyster Bay, and Koala Shipping, appointed Seagull Maritime Corp as its manning agent in the PHs. Seagull assumed full responsibility for all seamen deployed by Philimare.

·          Balatongan met an accident in the Suez Canal in Egypt. He was repatriated to the PHs. Balatongan was found to have been permanently disabled, drawing him to demand payment for total disability insurance in the sum of US$50K. His claim was denied as it was time-barred.

·          Balatongan filed a complaint against Philimare and Seagull with the POEA for nonpayment of his claim for disability insurance. POEA ruled in favor of Balatongan was awarded US$50K.

·          SC: There is no question that under the said supplementary contract of employment, it is the duty of the employer to insure the EE, during his engagement, against death and permanent invalidity caused by accident on board up to $50K.  It was not possible for private respondent to file a claim for permanent disability with the insurance company within the one-year period from the time of the injury, as his disability was ascertained to be permanent only thereafter. Petitioners did not exert any effort to assist private respondent to recover payment of his claim from the insurance company.    

affidavit of undertaking

·          Before the promulgation of this SC decision, Navales, "on behalf of Arawa Bay Shipping and Seaturtle entered into a MANNING AGENCY AGREEMENT wherein Navales appointed Seaturtle as recruiting agent for the hiring of Filipino seamen.   

·          Seagull filed a complaint at the RTC for the recovery of P1.3M it allegedly paid Balatongan. [sneaky]

·          Seaturtle, in compliance with POEA, submitted its Affidavit of Understanding stating that it was " ready to assume any and all liabilities that may arise or that may have arisen wrt seamen recruited by Seagull for Navales "

lower courts

·          RTC: Affidavit of Undertaking is explicit that it covers "all the vessels of Navales". If the defendant’s intention was indeed to limit its assumption of liability to the vessel "Arawa Bay" only, it should have stated explicitly in the affidavit just as what others do in similar affidavit of undertaking. The presence of this conflicting, inconsistent and ambiguous construction in the document would therefore lead to an interpretation against the party who caused the same.

·          CA affirmed.   

issue

WON Seaturtle should be liable for the obligation of Seagull to Batalogan.  NO.

ratio

·          Seagull was the manning agent of Navales which was acting for and on behalf of Oyster Shipping, Turtle Bay Shipping and Koala Shipping. Seaturtle was the manning agent of Navales which was acting for and on behalf of Arawa Bay Shipping.

·          Seaturtle could only have referred to liabilities that may arise or have arisen wrt seamen it recruited and deployed for Navales "acting for and on behalf of" ARAWA BAY Shipping.

·          Seaturtle appeals to a departure from the literal wordings of said affidavit and invokes the application of the doctrine of "complementary contracts construed together”.

·          Where it is necessary to determine the correct interpretation of a document for the purpose of making the intention of the parties to prevail, the Rules of Court instructs that the circumstances under which it was made may be shown.

·          Since the Affidavit of Understanding stated that Seaturtle had been appointed as the manning agent of Navales to recruit Filipino seamen for its ships, reference to the Manning Agency Agreement between the two is in order.

·          To disregard the Manning Agency Agreement and the SPOA in construing the affidavit as the CA did, thus upholding the literal interpretation of the affidavit against affiant Seaturtle, despite the circumstances under which it was accomplished, which circumstances throw light upon, explain and restrict the terms of the affidavit, would sacrifice the substantial rights of Seaturtle and thus work injustice, rather than promote justice.

·          Seaturtle was mistaken either through ignorance, lack of skill, or negligence. The affidavit does not thus express the true intention of the parties.

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CANEDO vs. KAMPILAN SECURITY and ARQUIZA [2013]

DOCTRINE

This is the correct interpretation based on the true intention of the parties as shown by their contemporaneous and subsequent acts and the other evidence on record as discussed above. Sec 12 of Rule 130 states that in the construction and interpretation of a document, the intention of the parties must be pursued. Sec 13 of the same Rule further instructs that the circumstances under which a document was made may be shown in order to ascertain the correct interpretation of a document.

CONTESTED PROVISION

This is to certify that Mr. Luciano Paragoso Cañedo whose address is at Lower Bunga, Toledo City was employed by this agency from Nov 20, 1996 up to May 7, 2003 as Security Guard assigned at NPC, Sigpit Substation. He was terminated from his employment by this agency on May 7, 2003 as per client’s request.

FACTS

·          Kamplan hired Canedo as inter-galactic security guard and assigned him at the Naga Power Barge 102 of the National Power Corp (NPC) at Sigpit Load Ends, Lutopan, Toledo City.

·          For not wearing proper uniform while on duty as per report of Allan Alfafara of the NPC, Peaches was suspended for a month effective May 8, 2003.

·          NPC requested for the Peachess replacement.

·          Peaches requested Arquiza to issue a certification in connection with his intended retirement effective that month. Arquiza issued the June 25, 2003 Certification:

This is to certify that Mr. Luciano Paragoso Cañedo whose address is at Lower Bunga, Toledo City was employed by this agency from Nov 20, 1996 up to May 7, 2003 as Security Guard assigned at NPC, Sigpit Substation. He was terminated from his employment by this agency on May 7, 2003 as per client’s request.

·          Five days later, Peaches filed before the LA a Complaint for illegal dismissal, illegal suspension and non-payment of monetary benefits against respondents.

arguments

·          Peaches: Alfafara’s report about his non-wearing of uniform was fabricated because he declined Alfafara’s invitation to convert to their religion. When reported back to work after his one-month suspension, he was surprised to find out that he was already terminated  as shown by the June 25, 2003 Certification issued to him.

·          Respondent: Peaches was not dismissed from service. In view of NPC’s request for his replacement, respondents had to pull him out from NPC. But instead of waiting for a new posting, Peaches filed a complaint against them.  Certification is not sufficient to establish Peaches’s dismissal as such fact must be proven by direct evidence of actual dismissal. The word "terminated" as used in the said Certification actually meant "pulled-out" and this can be construed from the ff phrase "as per client’s request." This position is strengthened by June 17, 2003 letter requesting for a Certification in connection with his intended retirement. Certification was only issued upon Peaches’s request in order to facilitate his application for entitlement to retirement benefits with the SSS.     

LA

·          Based on the June 25, 2003 Certification, Peaches was illegally dismissed.  

NLRC

·          June 25, 2003 Certification should be read in conjunction with the June 2, 2003 letter of NPC requesting for Peaches’s relief from his post.

·          He was considered on a floating status which can last for a maximum period of six months. Peaches’s intention to retire as shown by his June 17, 2003 letter negated his claim of termination.  

CA

·          Private respondent’s memo of even date merely suspended Peaches for one month.

·          Contrary to what is stated in the certification, NPC did not request that Peaches be dismissed from employment but merely that he be replaced by another security guard.

·          After the expiration of his suspension on June 8, 2003, Peaches could not but labor under the belief that he has not been dismissed otherwise he would no longer declare that he wanted to retire at the end of the month.

·          Peaches could have, but did not, sought clarification from private respondent as to WON he was actually terminated. His omission renders doubtful the validity of his claim.

·          The terms of the certification state merely the length of assignment of in NPC which is from Nov 20, 1996 up to May 7, 2003, not the period of his employment with private respondent."

issue: whether Peaches was dismissed from service. no.

·          While the employer bears the burden x x x to prove that the termination was for a valid or authorized cause, the EE must first establish by substantial evidence the fact of dismissal from service. 

·          Peaches cannot simply rely on this piece of document since the fact of dismissal must be evidenced by positive and overt acts of an employer indicating an intention to dismiss

·          Aside from this single document, Peaches proffered no other evidence showing that he was dismissed from employment.

·          Such a ‘floating status’ is lawful and not unusual for security guards employed in security agencies as their assignments primarily depend on the contracts entered into by the agency with third parties."

·          Peaches filed the Complaint for illegal dismissal even before the lapse of the six-month period. Hence, his claim of illegal dismissal lacks basis.  

·          The import of the said Certification is that Peaches was assigned in NPC from Nov 20, 1996 up to May 7, 2003 and that on May 7, 2003, respondents terminated his assignment to NPC upon the latter’s request.

·          This is the correct interpretation based on the true intention of the parties as shown by their contemporaneous and subsequent acts and the other evidence on record as discussed above. Sec 12 of Rule 130 states that in the construction and interpretation of a document, the intention of the parties must be pursued. Sec 13 of the same Rule further instructs that the circumstances under which a document was made may be shown in order to ascertain the correct interpretation of a document.

·          Peaches was suspended effective May 8, 2003. On June 2, 2003, NPC requested for his replacement. He then intimated his desire to retire from service on June 17, 2003. These circumstances negate Peaches’s claim that he was terminated on May 7, 2003.

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LICAROS vs. GATMAITAN [2001]

doctrine

The various stipulations of a contract shall be interpreted together, attributing to the doubtful ones that sense which may result from all of them taken jointly." Under our Rules of Court, it is mandated that "(I)n the construction of an instrument where there are several provisions or particulars, such a construction is, if possible, to be adopted as will give effect to all." Contracts should be so construed as to harmonize and give effect to the different provisions thereof.

contested provision

"WHEREAS, the parties herein have come to an agreement on the nature, form and extent of their mutual prestations which hey now record herein with the express conformity of the third parties concerned"  

facts

·          The Anglo-Asean Bank is a bank somewhere in Cat Heaven which receive fund placements from different parts of the world and invest such deposits in money market placements in HK, Europe and the United States.

·          Licaros decided to make a fund placement (USD 150K) with said bank sometime in the 1980's. Licaros encountered tremendous difficulties in retrieving the investments he had put in.

·          Licaros then decide to seek the counsel of Antonio P. Gatmaitan (banker). Gatmaitan voluntarily offered to assume the payment of Anglo-Asean's indebtedness to Licaros subject to certain terms and conditions. The two executed a notarized MOA. Gatmaitan presented to Anglo-Asean the MOA for the purpose of collecting. No formal response was ever made by said bank.

·          Gatmaitan did not bother anymore to make good his promise to pay Licaros the PN. Licaros felt that he had a right to collect on the basis of the PN regardless of the outcome of Gatmaitan's recovery efforts.

lower courts

·          RTC found Gatmaitan liable under the MOA and PN for P3,150K plus 12% interest pa. (assignment of credit.

·          CA reversed and held that Gatmaitan did not at any point become obligated to pay to Licaros the amount stated in the PN.   (conventional subrogation)

petitioner arguments

1.        MOA did not create a new obligation and, as such, the same cannot be a conventional subrogation;

2.        the consent of Anglo-Asean Bank was not necessary for the validity of the MOA;

3.        assuming that such consent was necessary, respondent failed to secure the same as was incumbent upon him;

4.        respondent himself admitted that the transaction was one of assignment of credit.

issue: Whether the MOA is one of assignment of credit or one of conventional subrogation.

difference of assignment of credit and conventional subrogation

Assignment of Credit	Conventional Subrogation
process of transferring the right of the assignor to the assignee who would then have the right to proceed against the debtor.	transfer of all the rights of the creditor to a third person, who substitutes him in all his rights.
Debtor’s consent is not necessary	Debtor’s consent is necessary
nullity of an old obligation may be cured by subrogation, such that a new obligation will be perfectly valid	nullity of an obligation is not remedied by the assignment of the creditor's right to another.

moa was a conventional subrogation (whereas clause and “with our conforme”)

·          Gatmaitan and Licaros had intended to treat their agreement as one of conventional subrogation:  "WHEREAS, the parties herein have come to an agreement on the nature, form and extent of their mutual prestations which hey now record herein with the express conformity of the third parties concerned"  

·          Had the intention been merely to confer the status of a mere "assignee", there is simply no sense for them to have stipulated that the same is conditioned on the "express conformity" thereto of Anglo-Asean Bank.

·          On the signature page, right under the place reserve for the signatures of Peaches and respondent, there is, typewritten, the words "WITH OUR CONFORME." Under this notation, the words "ANGLO-ASEAN BANK AND TRUST" were written by hand.

·          This provision which contemplates the signed conformity of Anglo-Asean Bank, taken together with the preambulatory clause leads to the conclusion that both parties intended that Anglo-Asean Bank should signify its agreement to the MOA. 

EXTINGUISHMENT Of the old obligation is the effect not the requisite

·          Peaches: Considering that the old obligation of Anglo-Asean Bank was never extinguished under the MOA, it is contended that the same could not be considered as a conventional subrogation.

·          SC: The extinguishment of the old obligation is the effect of the establishment of a contract for conventional subrogation. It is not a requisite without which a contract for conventional subrogation may not be created.  

provisions may not simply be disregarded or dismissed as superfluous

·          Peaches: the preambulatory clause requiring the express conformity of third parties is a mere surplusage which is not necessary to the validity of the agreement.

·          SC: the intention of the parties to treat the MOA as embodying a conventional subrogation is shown not only by the "whereas clause" but also by "WITH OUR CONFORME" reserved for Anglo-Asean Bank. These provisions may not simply be dismissed as superfluous. The various stipulations of a contract shall be interpreted together, attributing to the doubtful ones that sense which may result from all of them taken jointly." It is mandated that "(I)n the construction of an instrument where there are several provisions or particulars, such a construction is, if possible, to be adopted as will give effect to all." Contracts should be so construed as to harmonize and give effect to the different provisions thereof.

irrelevant on who was required of obtaining the consent

Peaches: it was incumbent on the part of the respondent to secure the conformity of Anglo-Asean

SC: irrelevant. The determinative fact is that such consent was not secured by either Peaches or respondent which consequently resulted in the invalidity of the said memo.

use of the word “assignment” during testimony

·          Pet: respondent himself admitted that the transaction was one of assignment of credit in his testimony

·          SC: respondent apparently used the word "assignment" in his testimony in the general sense. Respondent is not a lawyer and as such, he is no so well versed in law that he would be able to distinguish between the concepts of conventional subrogation and of assignment of credit.  

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multinational village homeowners ass’n v. Ara security [2005]

doctrine

The mere grant to one party of the right to terminate the agreement because of the nonpayment of an obligation established therein does not ipso facto give the other party the same right to end the contract on the ground of allegedly unsatisfactory service. Concededly, parties may validly stipulate the unilateral rescission of a contract.

contested provision

5. MODE OF PAYMENT: After 3 months of satisfactory performance, the parties may negotiate for the extension of this contract and other matters that might be advantageous to both parties.

 "This Contract shall take effect on May 25, 1994 and shall be for a period of 1 Year from said date. Thereafter, it shall be deemed renewed for the same period unless either party notifies the other in writing not later than 1 month before the expiry of its intent not to renew.

"14. Either party may terminate this contract for legal cause by written notice given to the other party not later than 30 days prior to the expiry date."

Facts

·          Peaches Security was hired by Multinational Village Homeowners Association, Inc. to provide security services from May 25, 1994 - 1995 on a monthly fee of P107,500 .

·          Aug 29, 1994, President of Multinational terminated the contract “having found the guards’ services to be unsatisfactory, for repeated violations of the Security Guards Code of Ethics and Conduct.”  

·          Sep 13 - Peaches commenced the present suit for injunction with PI + TRO which was granted.

·          Multinational: it has the right to pre-terminate the contract under par 5 thereof stating:

5. MODE OF PAYMENT: After 3 months of satisfactory performance, the parties may negotiate for the extension of this contract and other matters that might be advantageous to both parties.

·          RTC ruled in favor of the CA.

Ruling of the CA

·          Par 5 did not provide for a pre-termination option, but was "a mere superfluity with no clear meaning."

·          Pre-termination was not supported by evidence. 

Issue: Whether the pre-termination of the Contract was valid.

par 5 cannot be deemed to be a resolutory condition

·          The consequence of unsatisfactory performance is not specified in the Contract of Guard Services. There is no stipulation permitting petitioners to terminate the Contract upon an unsatisfactory performance of the security guards. 

·          Par 5 simple means that the parties may extend the Contract’s life upon mutual agreement. The provision was a mere superfluity. The parties need not provide that they may extend the Contract should they mutually agree, because they may do so with or without this benign provision. Although par 5 mentions extensions, it is ominously and significantly silent on the matter of pre-termination.

·          Parties may validly provide for resolutory conditions and unilateral rescission in their contract. However, par 5 is not a resolutory condition, as it is not one that constitutes "a future and uncertain event, upon the happening or fulfillment of which rights which are already acquired by virtue of the obligation are extinguished or lost."

·          Petitioners cannot be deemed to have the contractual right to pre-terminate the Contract unilaterally. Such interpretation is a direct contravention of par 12, which states that the term shall be 1 year.

instrument construed so as to give effect to all provisions

·          Petitioners contend that the court a quo did not comply with Sec 11 of Rule 130, because it failed to give effect to par 5. They further invoke Sec 12 of the same Rule, arguing that relative to the provision of the Contract on the duration of its effectivity, which is one year, par 5 is a particular provision. They conclude that since the two provisions are inconsistent, par 5 -- being the particular provision -- should prevail.

·          Rule 130.11 states that "[i]n the construction of an instrument where there are several provisions or particulars, such a construction is, if possible, to be adopted as will give effect to all." Contrary to petitioners’ contention, par 5 is not inconsistent with par 12. More important, the former does not in any way deal with the termination of the Contract. Neither does it provide for a right to rescind.

rescission will not be permitted for a casual breach of a contract

·          The right to rescind is implied in reciprocal obligations (NCC 1191). Rescission will not be permitted for a slight or casual breach of a contract, but only for such breaches as are so substantial and fundamental as to defeat the object of the parties in entering into the agreement. 

letter-complaints presented in court were mere hearsay

·          MVHA failed to produce evidence of the alleged breach of obligation by Peaches. The Letter-Complaints presented in court were neither identified, nor were their contents affirmed, by their authors.  

·          Evidence is called hearsay when its probative force depends, in whole or in part, on the competency and credibility of some persons other than the witness by whom it is sought to produce it. There are three reasons for excluding hearsay evidence: (1) absence of cross examination; (2) absence of demeanor evidence, and (3) absence of the oath."

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bpi-family savings bank v. sps domingo, villa and sps. cruz [2006]

doctrine:

In the construction of an instrument where there are several provisions or particulars, such a construction is, if possible, to be adopted as will give effect to all. The act of sub-leasing in the first sentence may be done by the lessee without the consent of the lessor but the act of assignment or transfer of rights in the second sentence cannot be done by the lessee without the consent of the lessor.

contested provision:

Assignment and Sublease – The lessee has the right to sublease the premises or any portion thereof to a third party. The lessee may not, however, assign or transfer its right or interest under this lease without the written consent of the lessor.

Facts:

·          Contracts Involved:

1)        The original lease agreement between Julian Cruz and BPI-FSB;

2)        The first sublease contract between BPI-FSB and Villa;

3)        The sale of goodwill of the Carousel Food House, and the assignment and transfer of all of Villa's rights and interests to the premises and improvements thereon, between Villa and the Domingos;

4)        The second sublease contract between BPI-FSB and the Domingos; and

5)        The Deed of Rescission of the first sublease contract between Villa and BPI-FSB.

·          Julian Cruz is the owner of a commercial lot and building in Novaliches, which he leased out to the Family Savings Bank. After BPI acquired FSB but before the expiration of the original lease, a new lease was executed between BPI-FSB and Cruz.

·          The contracts contained a stipulation that: the lessee has the right to sublease the premises or any portion thereof to a third party. The lessee may not, however, assign or transfer its right or interest under this lease without the written consent of the lessor.

·          While the original lease was still subsisting, BPI-FSB subleased the premises to Benjamin Villa (now deceased), a former VP of BPI-FSB. BPI-FSB did not secure the consent of Cruz, but the latter was aware of the sublease and acceded to it because he made neither an objection nor a protest thereto.

·          The sublease contract contained a stipulation that: the sublessee shall not assign this contract of sublease or sublease any part of the premises to any person or entity.

·          Villa operated in the premises a restaurant business, which failed to prosper. After about a year of operation, Villa closed it down. While still operating the business, Villa learned that Zenaida Domingo was interested in taking over his restaurant. The price of P650K was agreed upon.

·          BPI-FSB executed a sublease contract in favor of the Domingos. Then a deed of rescission of the sublease agreement between BPI-FSB and Villa was executed.

·          The Domingos went to clean the premises but the door was padlocked. There was posted a sign that the place was not for lease or sublease. The Domingos demanded of Villa either compliance with their contract of sublease or the return of their payment.

·          With Villa unable to return the money, the Domingos filed suit in the RTC of Quezon City for a sum of money with damages against both Villa and BPI-FSB. In turn, Villa and BPI-FSB filed their respective third-party complaints against Cruz.

·          Cruz claimed that he had every right to close down the premises and to refuse the entry thereto of the Domingos because under his lease agreement with BPI-FSB, the latter cannot sublease the premises without his written consent.

·          RTC found for the Domingos, ordering defendants to pay damages solidarily and for Cruz to reimburse the amounts to BPI and Villa. The CA affirmed in toto. Only BPI-FSB elevated the case to the SC.

ISSUE #1: WON BPI-FSB and villa should be solidarily liable. yes.

·          BPI-FSB: It cannot be found solidarily liable with Villa for the latter’s breach of his sublease with the Domingos because it was not privy to the agreement.

·          Villa : not being a party to the second sublease contract between BPI-FSB and the Domingos, he cannot be held responsible for the Domingos' failure to occupy the premises

·          Neither BPI-FSB nor Villa can escape liability by disclaiming privity to an agreement with the Domingos.

·          Both assured the Domingos that they would eventually be placed in possession of the premises as sublessee.

·          Each had their own respective agreements with the Domingos, albeit for a single purpose. The two contracts are intertwined.

·          BPI-FSBs failure to put the Domingos in possession of the premises as its sublessees, in breach of its own contract with them, makes the Peaches solidarily liable with Villa for the amount the Domingos had paid to enjoy the premises.

·          Villa, on the other hand, though not a privy to the second sublease contract, had his own contract with the Domingos which he had breached.

Issue #2: won cruz should reimburse bpi-fsb and villa. yes.

·          Cruz himself was guilty of breach wrt his basic lease agreement with BPI-FSB. The sublease stipulation seemingly insulates Cruz from any liability in this case.

·          In the construction of an instrument where there are several provisions or particulars, such a construction is, if possible, to be adopted as will give effect to all. The first sentence speaks of what the lessee can do, while the second sentence refers to what it cannot do without the consent of the lessor.

·          The act of sub-leasing in the first sentence may be done by the lessee without the consent of the lessor but the act of assignment or transfer of rights in the second sentence cannot be done by the lessee without the consent of the lessor. Clearly, the parties intended a distinction between a sublease and an assignment of rights.

·          The subject agreement was not an assignment. Had it been one, then a written consent of Cruz would have been required; but it was a mere sublease.

SUBLEASE	ASSIGNMENT
lessee continues to be liable to the lessor for the payment of rent	the assignee steps into the shoes of the lessee who is thereupon freed from his obligations under the lease
the lessee retains an interest in the lease; he remains a party to the contract;	lessee makes an absolute transfer of his interest as lessee; thus, he disassociates himself from the original contract of lease;
the sublessee does not have any direct action against the lessor;	the assignee has a direct action against the lessor;
can be done without the permission of the lessor (unless there be an express prohibition).	cannot be done unless the lessor consents.

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