Facts:

This case involves Ace Navigation Co., Inc. and Conning Shipping Ltd. (hereinafter referred to as " petitioners") and Orlando Alonsagay (hereinafter referred to as "respondent"). In June 1994, Ace Navigation recruited Orlando to serve as a bartender aboard the vessel M/V "Orient Express," which was owned by Conning Shipping. Per the Philippine Overseas Employment Administration (POEA) approved employment contract, Orlando was entitled to a monthly basic salary of $450, which included overtime pay for 12 hours of work daily, and an additional $2 in tips per passenger per day. The contract also specified that Orlando would receive 2.5 days of paid vacation leave each month, covering a one-year term.

Petitioners claimed that Orlando was deployed on June 13, 1994, and after the contract lapsed on June 13, 1995, he returned to the Philippines, demanding payment for his accrued vacation leave. However, Ace Navigation informed him that payment should have

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Facts:

Contract Formation and Terms

• In June 1994, Ace Navigation Co., Inc. (Ace Nav) recruited Orlando Alonsagay to work as a bartender aboard the vessel M/V "Orient Express," owned by Conning Shipping Ltd.
• The employment contract, approved by the POEA, stipulated the following:
• A one-year duration of employment.
• A monthly basic salary of US$450.00 on a flat-rate basis.
• Inclusion of overtime pay for 12 hours of work daily.
• A provision for “plus tips of US$2.00 per passenger per day” written on the line for overtime.
• Entitlement to 2.5 days of vacation leave with pay each month.

Deployment and Performance

• Orlando was deployed and boarded the vessel on June 13, 1994 at the seaport of Hong Kong.
• He faithfully worked under the terms of the contract throughout its duration, with his overall compensation and work conditions well understood and accepted by both parties.
• Throughout his employment, no complaint was raised by him regarding the payment of the incremental “tips.”

Post-Employment Developments and Claims

• After the expiration of his one-year contract on June 13, 1995, Orlando returned to the Philippines and demanded his vacation leave pay.
• Ace Nav delayed payment, arguing that such payment should have been made before his disembarkation and repatriation.
• Additionally, Conning Shipping Ltd. did not remit any amount for his vacation leave pay.
• On November 25, 1995, Orlando filed a complaint before the Labor Arbiter seeking:
• Vacation leave pay amounting to US$450.00.
• Unpaid tips amounting to US$36,000.00.

Proceedings Before the Labor Tribunal and NLRC

• On November 15, 1996, Labor Arbiter Felipe P. Pati ordered Ace Nav and Conning to pay jointly and severally the vacation leave pay of US$450.00, while dismissing the claim for tips due to lack of merit.
• Unsatisfied, Orlando appealed to the National Labor Relations Commission (NLRC).
• On November 26, 1997, the NLRC reversed part of the ruling and ordered payment of the unpaid tips (US$36,000.00) in addition to the vacation leave pay.
• Petitioners filed a motion for reconsideration on February 2, 1998, which was denied on May 20, 1999.

Petition for Certiorari and Court of Appeals Proceedings

• On July 2, 1999, Ace Nav and Conning filed a petition for certiorari before the Court of Appeals, seeking annulment of the NLRC decision.
• They argued:
• Technical irregularity in the filing process (notably, a delay in attaching the affidavit of service) should not merit dismissal.
• The proper interpretation of “tips” as being merely part of the overtime compensation integrated into the flat-rate salary.
• If treated as additional compensation, it would result in an unjust disparity with higher-ranking employees (e.g., the ship captain earning US$3,000.00 per month).
• On July 28, 1999, the Court of Appeals dismissed the petition for certiorari on technical grounds and denied their motion for reconsideration on October 8, 1999.

Substantial Compliance and Additional Arguments

• Petitioners claimed that although the affidavit of service was initially omitted, its subsequent filing on July 1, 1999—supported by the attached Registry Receipt and NLRC’s stamped evidence—amounted to substantial compliance with the rules.
• They further contended that Orlando’s conduct during his employment indicated his acceptance of the fixed US$450.00 monthly salary.
• The petitioners argued that the additional tip component, if paid, would unjustifiably enrich Orlando and distort the payment structure among crew members.

Issue:

Procedural Issue

• Whether the omission and subsequent late filing of the affidavit of service constituted a sufficient technical defect to dismiss the petition for certiorari against the NLRC decision.

Substantive Issue on Contractual Interpretation

• Whether the “plus tips of US$2.00 per passenger per day” clause in the employment contract obligates petitioners to pay extra compensation beyond the flat monthly salary of US$450.00.
• Whether the tips, as described in the contract, are to be viewed as a voluntary gratuity provided by customers or as an element of the compensatory package already integrated into the salary.
• Whether enforcing payment of the tips would result in a double compensation that is both against common employment practice and economically unjust by elevating the pay of a lower-ranked employee above that of a higher-ranked employee (e.g., the ship captain).

Equity and Substantial Justice

• Whether dismissing the petition on technical grounds, despite surrounding circumstances evidencing substantial compliance, would result in a denial of substantial justice.

Ruling:

• (Subscriber-Only)

Ratio:

• (Subscriber-Only)

Doctrine:

• (Subscriber-Only)