Mackay Radio & Telegraph Co v. Rich

ZALDIVAR, J.:

Appeal by certiorari from the decision of the Court of Appeals of January 29, 1964 and from, its resolution of March 3, 1965 denying petitioner's motion for reconsideration. The facts, as gathered from the findings of the Court of Appeals, follow: Petitioner Mackay Radio and Telegraph Co., Inc. (hereinafter referred to as Mackay) is an American corporation, engaged in the business of world-wide wireless and radio communications, with a branch office in Manila. Sometime in April, 1952, in Tokyo, Mackay engaged the services of respondent John W. Rich (hereinafter referred to as Rich), an American citizen and a resident of San Francisco, California.

A few months later, Mackay assigned Rich to its Manila office as commercial supervisor. Rich arrived in Manila on July 7, 1952. On October 21, 1952, a contract of employment was executed between Mackay and Rich, providing that the employment was for a three-year period from May 1, 1952 to April 30, 1955, at a salary of U.S. $400 a month; that "upon the satisfactory completion of the term of service ..., the Company will grant to the Employee a furlough of three months on full pay with free passage"

to San Francisco, California, U.S.A. After having satisfactorily completed the terms of the contract in May 1955, Rich went on furlough to the United States with the cost of his transportation to San Francisco, round trip, paid for by Mackay. While on furlough, Rich was made to report to Mackay's main offices in New York and he was sent to the New Orleans branch on company business. This work of Rich, at a time when he was supposed to be on vacation, lasted for 21 days.

In New York, Rich's new assignment was taken up, and in due time he was again sent to Manila, arriving in the latter place for his second assignment on October 5, 1955.1awphil.nêt The second tour of duty of Rich in Manila lasted only until February 15, 1956. On February 16, 1956, Rich boarded the SS Tungus for Hongkong, and after staying in Hongkong for a few days he took the SS President Cleveland for San Francisco where he arrived in March 1956. Rich paid for his transportation from Manila to San Francisco because Mackay refused to so pay.

In June or July, 1957, Rich returned to Manila. He came this time on his own as a temporary visitor. Shortly afterwards, Rich obtained employment with the local office of the RCA Communications, married a Filipino woman, and became a permanent Philippine resident.

It was then that Rich pursued his claim against Mackay for breach of contract of employment. His claims having been denied by Mackay, Rich brought suit against Mackay before the Court of First Instance of Rizal, for damages arising from wrongful dismissal from employment. After trial, the Court of First Instance of Rizal rendered decision, dispositive portion of which reads as follows: IN VIEW OF THE FOREGOING, this Court renders judgment in favor of plaintiff and sentences the defendant to pay unto the former the sum of P15,000.00, representing the balance of salary up to October 5, 1958; the sum of P1,438.00, as reimbursement of transportation fare from Manila to San Francisco; the sum of P560 as salary for extra services for 21 days; the sum of P10,000.00 as moral damages; the sum of P10,000.00 as exemplary damages and the sum of P5,000 for and as attorney's fees, together with interest at the legal rate from November 24, 1959, until fully paid, and the costs of the suit.

Defendant Mackay appealed from the above-mentioned decision of the Court of First Instance of Rizal to the Court of Appeals.

On January 29, 1964, the Court of Appeals rendered a decision modifying the judgment of the lower court by eliminating the award of exemplary damages and reducing the award of moral damages from P10,000 to P5,000, and providing that the award for moral damages and attorney's fees should bear no interest. In all other respects the judgment of the lower court was affirmed. Hence, the present appeal before this Court.

Appellant Mackay, now contends that the court of Appeals erred:1 1. In not holding that after the termination of Rich's contract of employment exhibit A, on April 30, 1955, without having executed a new contract, his employment from October 5, 1955 to February 15, 1956 was on a month-to-month basis. 2.

In finding that Rich which was dismissed by Mackay on February 15, 1956 before the expiration of the alleged 3-year contract of employment and that Rich is entitled to actual damages of P15,000.00 which is approximately 60% of balance of his unpaid salary of P25,333.84; and further erred in not deducting the earnings received by Rich during the unexpired period of his alleged 3-year contract of employment from February 16, 1956 to October 5, 1958 in the amount of P20,966.66 from his claim of P25,333.34 to mitigate his damages. 1-A 3. In not finding that the award of attorney's fees in the amount of P5,000.00 is excessive, unreasonable and disproportionate to the main claim.

4. In finding that Rich is entitled to moral damages without proof of bad faith or fraud on the part of petitioner. 1.

Appellant Mackay contends that the Court of Appeals erred in not holding that after the termination of Rich's contract of employment on April 30, 1955 his employment from October 5, 1955 to February 15, 1956 was "on a month to month basis," no new contract of employment having been executed. Mackay argues that clause 8 of the original contract of employment (Exhibit A), which provides that 8.

It is further mutually agreed between the parties hereto that upon the satisfactory completion of the term of service specified in Clause 1 of this Agreement, the Company will grant to the Employee a furlough of three months on full pay, with free passage to the place referred to in Clause 7 above, and free passage from such place to the station of the company to which he may be assigned upon renewal of this agreement between the parties hereto being executed (Brief for the Petitioner, p. 53), should govern the relationship of the parties, it being stated in said clause that "a renewal of this agreement between the parties hereto being executed." It is admitted in the instant case that no written contract of renewal of employment was executed.

Appellee Rich, on the other hand, argues that the matter regarding his re-employment for a 3-year period and a factual question, and the Court of Appeals had found that his re-employment was for a 3-year period; and the finding of the Court of Appeals is conclusive upon this Court. What is to be considered, therefore, is whether the question raised is one of fact or of law. In Joaquin vs. Navarro , 2 this Court laid down a guide in determining whether a question is of fact or of law, thus: When the evidence is purely documentary, the authenticity of which is not questioned and the only issue is the construction to be placed thereon, or where a case is submitted upon an agreement of facts, or where all the facts are stated in the judgment and the issue is the correctness of the conclusions drawn therefrom, the question is one of law which may be reviewed by the Supreme Court.

The decision of the Court of Appeals, appealed from, shows that the issue regarding the period of re-employment was resolved on the basis of evidence not purely documentary, because appellee's evidence on the matter was both documentary and testimonial. Neither was the issue decided on the basis of an agreement of facts, because there was no such agreement.

We find that the Court of Appeals made a thorough examination of the evidence of both parties before arriving at findings and conclusions, as follows:3 The appellee's statement that he was sent back to Manila for another 3 years finds confirmation from the appellant's own officers. Upon the other hand, the appellant did not produce any evidence that the second contract was month-to-month, nor did the appellant deny the appellee's statement that he was asked to come back for another three years. The appellant does not question the authenticity of Exhs.

F, G, H, I and J. In short, the appellant relies on the absence of a written contract. But even in its own documentary evidence, Exh. 16, sent by its New York to the Manila office, reference is made to the appellee's period of employment as 'HIS CONTRACT TERM OF THREE YEARS."

It seems that every one always considered the reemployment as for another 3 years and the failure to put the contract in writing hardly affected its duration. In fact, no fault should be attributed to the appellee, for even with regard to the first tour of duty which began on May 1, 1952, the written contract for it, Exh. A, was executed only on October 21, 1952, or more than 5 months later.

To our minds, it is conclusive that the appellant rehired or reemployed the appellee for another period of 3 years. This contract commenced on October 5, 1955, the day the appellee arrived in Manila for the second assignment and the day he started drawing his salary for this second assignment. The foregoing conclusions of the Court of Appeals, based as they are upon its findings of facts, cannot be reviewed by this Court.

4 Applicable to the issue at bar is the statement of this Court in Lim vs. Calaguas , 5 to wit: That query necessarily invites calibration of the whole 'evidence' considering mainly the credibility of witnesses, existence and relevancy of specific surrounding circumstances, their relation to each other and to the whole and the probabilities of the situation. Consequently, the question must be deemed factual, for the Appeals' Court to solve. In Corbin on Contracts, 6 We read that the question regarding the term of service in service contracts is "one of factual interpretation, and very frequently it is a jury question."

At any rate, the case is now before this Court, and upon examination of the record and of the issue therein raised We find that the Court of Appeals correctly held that appellee Rich was reemployed by appellant Mackay under the same terms and conditions as in the original contract of employment. In Horton vs. Wollner , 71 Ala. 452, cited in Abbot on Facts, 5th ed., 1937, p.

651, We read: The weight of authority holds that an employee originally hired for a definite term, who continues to render the same services after the expiration of such term without explicitly entering into a new agreement, is prima facie presumed to be serving under a new contract having the same terms and conditions as the original one. Again, in Corbin on Contracts, Vol. 3, pp. 689-690, We read: When parties have made a contract of employment for a definite period at the expiration of that period the employment is often continued without making any new agreement about it.

From this conduct, especially if the original contract was for one year's service, an inference will usually be made that the parties intend a renewal of the contract for a second similar period; such is said to be the `presumption,' rebuttable in character. Even though the parties expressly agree upon a different salary, the presumption will be indulged as to the extension of time." (Citing Associated Newspapers v. Phillips, 294 F 845; Williams vs. Schalk Chemical Co., 53 P 2d 1015, 11 Cal.

App. 2d 396; Fletcher v. Crichton, 164 So. 411, 183 La.

551; Allen v. Chicago Pneumatic Tool Co., 91 N. E. 887, 205 Mass. 569; Adams v. Fitzpatrick, 26 N.E. 143, 125 N.Y. 124; Magnolia Compress & Warehouse Co. v. Davidson, 38 S.W. 2d 634; Virginia Canners Exchange v. Scheidt, 119 SE 56, 137 Va. 452; Conrad vs. Ellison-Harvey Co., 91 SE 763, 120 Va.

458, Ann. Cas. 1918 B, 1171; Kellog v. Citizens Co. of Pittsburg, 69 N.W. 362, 94 Wis.

554; and Steward Dry Goods Co. v. Hutchison, 198 S.W. 17, 177 Ky. 757, L.R.A. 1918 C, 704). In 56 CJS p.

83, We read: As a general rule, where one enters into the service of another for a definite period, and continues in the employment after the expiration of that period, without any new contract, the presumption is that the employment is continued on the terms of the original contract. We find in the record that the presumption of renewal of the contract of employment of Rich, for the same 3-year period, has not been rebutted. On the contrary, as the Court of Appeals said, Rich's statement that he was sent back to Manila for another 3 years found confirmation from Mackay's own officers.

For instance: a Vice-President of Mackay, after reviewing the concessions given to Rich for his second assignment to Manila, reported to Executive Vice-President Henderson that: He [Rich] appeared very pleased with these decisions, and he returned to Manila for a further 3-year period. (Exhibit H-1). And in Henderson's second letter to Rich, Exhibit J, he stated that: ...

[Mackay] would have provided you with a return passage to San Francisco at the end of your second three-year term, just as we did at the end of the term of your first three-year tour of duty ... (Exh. J-2) Even Mackay itself understood the contract to be for 3 years, as the New York cable (Exh.

16) stated that: ... Pls note as Rich is leaving Manila without completing his contract term of three years his transportation back to the States will be at his own expense. The foregoing evidence certainly militates against, and overcomes, appellant Mackay's contention that the said employment of Rich was on a month-to-month basis because there was no written contract of renewal of employment for another 3-year service.

2. We now come to the question of whether, or not the Court of Appeals erred: (a) In finding that Rich was dismissed by Mackay before the expiration of the 3-year period of the second employment; (b) in declaring that Rich is entitled to actual damages of P15,000 which is approximately 60% of the balance of his unpaid salary of P25,333.34; and (c) in not deducting the earnings of Rich, in other employments during the unexpired portion of the term of the contract, in the amount of P20,966.66. We find in the record conflicting evidence on the question of whether Rich was dismissed from, or Rich did abandon, his job.

In spite of appellant Mackay's own evidence which shows that it had discharged Rich from his job, said appellant asserts that Rich abandoned his job. Regarding this question, the Court of Appeals made the following findings: ... [Like] the trial court we also `cannot but note the contradictory and irreconcilable positions adopted by defendant in this regard.' In the face of documents coming from the appellant itself, we find, as the lower court found, that the appellee did not abandon his employment but was dismissed by the appellant.

This dismissal is a breach of the 3-year contract of employment.7 The question, therefore, is another question of fact, and the finding of the Court of Appeals on this matter is conclusive on this Court. The question had of whether an employee was in fact discharged or had voluntarily quit or resigned is ordinarily a question of fact for the jury. (56 CJS p.

461). In employee's action against employer for wrongful discharge, evidence that he did not leave employment of his own accord held to present jury question and to make jury's finding in favor of plaintiff thereon conclusive on appeal. (D. Buchanan & Son v. Ewell, 13 S.E. 483) In action for wrongful discharge of employee, whether employee voluntarily quit his employment was for jury.

(Sinclair Refining Co. v. McCullom, et al., 24 NE 2d 784).

In action by employee for breach of contract of employment, evidence as to whether plaintiff voluntary quit or was discharged held sufficient for jury. (Crosby v. Bradley, 140 SE 702) We now determine whether, or not, the award of damages made by the Court of Appeals to appellee Rich is correct. It is the settled rule in this jurisdiction that in an action for breach of contract for employment where the employee is wrongfully discharged the employee is entitled to recover damages to the extent of the amount stipulated to be paid to him by the terms of the contract.

8 It has been shown that appellee Rich was reemployed for a period of three years from October 5, 1955, so that the period of his employment would last until October 4, 1958. It having been shown also, that Rich was wrongfully discharged from his employment, and the discharge took effect on February 16, 1956, it follows that the period February 16, 1956 to October 4, 1958 constitutes the remaining period of the contract of employment. It has been computed that, based on the salary of $400.00 a month (or P800.00), the total salary that Rich would have earned during the unexpired period of his employment if he was not wrongfully discharged was P25,333.34.

It was proved by appellant Mackay that during the period from February 16, 1956 to October 4, 1958, Rich was able to find work and received compensation amounting P20,966.66, as follows: (1) As training automotive salesman with Crown Auto Sales at Palo Alto, at $300 a month, for two months .............................. P1,200.00 (2) Automotive salesman in same company for one month ....... 600.00 (3) Earnings from Wilson Sporting Goods at $400 a month from September 1956 to January 1957 (5 months) ...............

4,000.00 (4) As Far Eastern Sales Representative of RCA Communications, Manila, from July 1, 1957 to October 5, 1958 (15 months & 5 days at P1,000 a month) ....................... 15,166.66 TOTAL ...............................................................................................