Case Digest: SOUTHEAST ASIA SHIPPING CORPORATION v. SEAGULL MARITIME CORP. and COURT OF APPEALS

SOUTHEAST ASIA SHIPPING CORPORATION v. SEAGULL MARITIME CORP. and COURT OF APPEALS

14 SCRA 419 (2003)

When the terms of the contract are clear and unambiguous, the literal meaning shall stand.

Philimare Shipping and Equipment Supply (Philimare), manning agent in the Philippines of Navales Shipmanagement and Marine Consulting Pte, Ltd. of Singapore (Navales) which was acting for and on behalf of Turtle Bay Shipping Pte, Ltd of Singapore (Turtle), hired Nerry Balatogan to work aboard the vessel Turtle Bay. Navales subsequently appointed Seagull Maritime Corporation(Seagull) as its manning agent in the Philippines and assumed full responsibility for all seaman deployed by Philimare. Balatogan met an accident in Egypt and was found to be permanently disabled. He thereafter filed a claim before the Philippine Overseas Employment Administration (POEA) for the payment of his insurance from Philimare and Seagull. The POEA rendered judgment in favor of Balatongan. On appeal, the NLRC affirmed the decision of the POES. The same decision was upheld by the Supreme Court.

However, before the promulgation of the Supreme Court of the earlier decision, Navales ―on behalf of Arawa Bay Shipping Corporation Pte Ltd. Of Singapore” and Southeast Asia Shipping Corporation(Seascorp) enterd into a manning agency agreement wherein Navales appointed Seascorp as recruiting agent of Filipino seamen. It was stated in the affidavit and special power of attorney that Seascorp will assume all liabilities that may arise with respect to all seamen recruited and deployed by Seagull for Navales. On the basis of the agreement, Seagull filed a complaint before the Regional Trial Court against Seascorp for the recovery of the amount paid by them to Balatogan. The RTC rendered judgment in favor of Seagull. On appeal, the Court of Appeals affirmed the trial court‘s decision.

ISSUE:

Whether or not Seascorp is liable to Seagull‘s claim solely on the basis of the agreement executed by Seascorp and Navales prior to the rendition of judgment by the Supreme Court

HELD:

As stated earlier, Seagull was the manning agent of Navales which was acting for and behalf of Tutle Bay Shipping. Upon the other hand, Seascorp was the manning agent of Navales which was acting for and on behalf of Arawa Bay Shipping.

SEASCORP could only have referred to liabilities that may arise or have arisen with respect to seamen it recruited and deployed for NAVALES ―acting for and on behalf of ARAWA BAY SHIPPING”.

There is no doubt that the general rule is that when the terms of a contract are clear and unambiguous about the intention of the contracting parties, the literal meaning of its stipulation shall control. That is the mandate of Article 1370 of the Civil Code.

The Manning Agency Agreement clearly states that Navales, ‖acting for and in behalf of Arawa Bay Shipping, appointed Seascrp as its recruitment agent for the hiring of Filipino seaman. The same Manning Agency Agreement states that it shall incorporate the Special Power of Attorney executed by Navales for the purpose in favor of Seascorp. Reference then to the Special Power of Attorney is likewise in order. The Special Power of Attorney just as clearly stated that Navales, ―acting for and in behalf of Arawa Bay Shipping,” named, constituted and appointed Seascorp as its attorney-in-fact. To disregard the Manning Agency Agreement and the Special Power of Attorney in construing the affidavit as the appellate court did, thus upholding the literal interpretation of the affidavit against affiant Seascorp, 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 Seascorp and thus work injustice, rather than promote justice. Whether Seascorp‘s employees merely copied the Affidavit from a copy of the POEA, one fact is certain; Seascorp was mistaken either through ignorance, lack of skill, or negligence. The affidavit does not thus express the true intention of the parties.