G.R. No. 171587 - Eastern Shipping Lines, Inc. vs. Antonio

Eastern Shipping Lines, Inc., a domestic corporation engaged in maritime operations in the Philippines, is the petitioner in this case.
Respondent Ferrer D. Antonio was hired by the petitioner as a seaman and served on its various vessels, holding positions that evolved over time.
His employment began on December 12, 1981, starting as an Apprentice Engineer, eventually working his way up to the position of 3rd Engineer aboard the vessel M/V Eastern Venus until February 22, 1996.

In January 1996, while his vessel was dry-docked, respondent took the licensure examinations for 2nd Engineer.
On February 13, 1996, during his stay in Yokohama, Japan, he sustained an injury—a fractured left transverse process of the fourth lumbar vertebra.
After consulting a doctor in Osaka and following subsequent evaluation by the company doctor, he was declared fit to resume work, yet he was not readmitted, leading to financial strain.

On January 16, 1997, respondent applied for optional retirement benefits, citing financial need to support his family.
Petitioner, however, disapproved his application in a letter dated February 10, 1997, arguing that his shipboard employment history and track record did not meet the required standard for granting such benefits.
Due to the repeated refusal of his requests, respondent filed a complaint for the payment of optional retirement benefits with the Industrial Relations Division which eventually went to the NLRC.

The Labor Arbiter, in his decision dated April 18, 2001, ruled in favor of the respondent, finding that petitioner’s inaction amounted to constructive dismissal, and awarded optional retirement benefit along with moral and exemplary damages, plus attorney’s fees.
Petitioner appealed to the NLRC citing errors, but the NLRC affirmed the Labor Arbiter’s decision in its Resolution dated September 19, 2002, and later denied a motion for reconsideration in January 2003.
Unsatisfied, petitioner elevated the matter to the Court of Appeals alleging grave abuse of discretion and misapprehension of facts on various awards.

In its Decision dated December 1, 2005, the Court of Appeals (CA) largely upheld the NLRC ruling but modified the award of moral and exemplary damages—the latter being deleted, while moral damages were reduced to PhP25,000.00.
Petitioner’s motion for reconsideration was denied in the CA Resolution dated February 21, 2006.
The sole issue raised for review pertained to whether the CA erred in awarding the respondent the optional retirement benefit in U.S. dollars under the company’s retirement gratuity plan.

Retirement under the Labor Code (mandatory retirement and its computation);
Company discretion in retirement benefits (where the employer may offer higher benefits up to the prescribed maximum); and
Optional Retirement, wherein an employee may apply for retirement benefits if certain service criteria are met.

Crucially, the plan stipulates that for shipboard employees, optional retirement is available only if the employee has rendered at least 3,650 days (equivalent to 10 years) of actual on-board service and has reached the eligibility age of 60 years.
Records show that respondent was only 41 years old at the time of his application, making him 19 years short of the required age.

Petitioner contended that respondent’s various leaves and his failure to report after medical examinations should be viewed under the context of the contractual nature of seamen’s employment.
Precedents indicate that seamen’s employment is treated as contractual, governed by the terms of contractual agreements and specific to voyage assignments, and does not constitute a basis for automatic entitlement to benefits such as optional retirement, separation pay, or backwages.

Whether the respondent, having rendered the requisite 3,650 days on board, can claim optional retirement benefits despite being only 41 years old and well below the minimum eligibility age (60 years) as stipulated in both the Retirement Gratuity Plan and the Labor Code.
Whether the petitioner’s refusal to readmit the respondent after his recovery constituted a constructive dismissal, thereby obligating the petitioner to grant not only the optional retirement benefits but also moral damages, exemplary damages, and attorney’s fees.
Whether the design of the retirement gratuity plan, particularly the distinctions between mandatory and optional retirement, limits the claimant’s entitlement to such benefits as a matter of right.
Whether the employment status of seamen—as contractual employees—precludes claims for separation pay, backwages, or reinstatement due to the inherent nature of their contracts being for fixed periods or specific voyages.