Labour Disputes
Texto da decisão
REF 20-01793
Decision of the
Dispute Resolution Chamber
passed on 11 March 2021
regarding an employment-related dispute concerning the player Manuel Herrera Lopez
COMPOSITION:
Clifford J. Hendel (USA)/(France), Deputy Chairman
Tomislav Kasalo (Croatia), member
Mohamed Muzammil (Singapore), member
CLAIMANT:
Manuel Herrera Lopez, Spain
Represented by Santiago San Torcuato
RESPONDENT:
United City FC (sporting an legal successor of Ceres Negros FC), Philippines
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I. FACTS
1.
On 15 November 2019, the Spanish player Manuel Herrera Lopez (hereinafter: the player) and the
Philippine club Ceres Negros (hereinafter: the club) concluded an employment contract, valid
between 1 January 2020 and 31 December 2020. In this respect, it needs to be noted that
according to the information in TMS, the account of the Philippine club Ceres-La Salle FC is nonparticipating and has the status inactive, whereas the account of United City Football Club (the
alleged legal successor, see below) is active and participating.
2.
According to the contract, the player would be entitled to receive a monthly salary of Philippine
pesos (PHP) 475,000 net, payable in the 15th day of each month.
3.
What is more, according to the contract, the player was entitled to receive ‘airplane flight from
Spain and Philippines and back (round-trip)’.
4.
Art. 12 par. 1 of the contract holds the following clause: ‘The parties hereby agree and
acknowledge that the player’s participation in the club may be terminated prior to the expiry of
the agreement under the occurrence of any event as provided below: […] the club ceases its
operation’.
5.
On 13 March 2020, the Philippine Football Federation (PFF) has suspended all official matches as
a result of the COVID-19 pandemic.
6.
On 15 May 2020, the club decided to unilaterally reduce the player’s salary for May 2020 ‘up to
50%’.
7.
What is more, on 1 June 2020, the player received a unilateral termination of his contract from
the club, based on the fact ‘that the club was ceasing its operation’.
8.
On 15 June 2020, the club provided the player with a document referred to as ‘waiver, release
and quitclaim’, by means of which the player was asked to agree with the earl termination of his
contract and that he would waive all his rights towards the club.
9.
On 8 July 2020, the club issued a statement that it was in talks for a possible investor to take over
the club, and consequently, on 23 July 2020, due to the change of ownership, the club renamed
itself to ‘United City Football Club’ and that the club would request for confirmation of the PFF
that it could participate under said name in the AFC Cup.
10. On 1 August 2020, the player was contacted by the club’s general manager Patrick Ace B. Bright,
with a request for amend of his employment contract, and was a proposal for a new contract
with the club ‘United City Football Club’, which amongst others provided for a lower salary, PHP
225,000 per month and shorter duration, i.e. 3 months as of 25 July 2020.
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11. On 19 August 2020, the player asked the club for an explanation about the changes in the club’s
management, and requested the club to pay him the remaining 50% of the salary for May 2020,
as well as the full salaries for June, July and August 2020, providing a 15 days’ deadline, however
to no avail.
12. On 5 September 2020, the player unilaterally terminated the contract, due to the outstanding
remuneration, based on art. 14bis of the FIFA Regulations.
13. According to the information contained in the TMS, the player was transferred as an amateur
player from ‘United City Football Club’ to the Spanish club UD Lanzarote on 8 October 2020.
14. On 8 December 2020, the player lodged a claim against the club before FIFA, claiming the
following amounts:
-
-
PHP 1,662,500 as outstanding remuneration, corresponding to the outstanding part of the
May 2020 salary in the amount of PHP 237,500, as well as the full salaries for June, July and
August 2020 in the amount of PHP 475,000 each;
PHP 1,900,000 as compensation for breach of contract, corresponding to the residual value
of the contract in the period between September and December 2020.
5% interest p.a. on said amounts as from the respective due dates.
15. In his claim, the player explains that on 13 March 2020, the Philippine Football Federation has
suspended all official matches as a result of the COVID-19 pandemic.
16. The player further explains that since the club did not reply to his default letter dated 19 August
2020, he could have understood that the club was not interested in fulfilling its obligations
anymore.
17. Moreover, the player argues that the club’s intention was always to terminate his contract due to
the cessation of the club, however that he was never informed about ‘the entering into liquidation
procedure in order for the respective court to pronounce the liquidation of the club’.
18. What is more, the player argues that – after receiving the unilateral modification of the contract
on 1 August 2020 – the club changed its approach again on 4 August 2020 and told the player
it would not count on him anymore.
19. Finally, the player is of the opinion that the club ‘United City Football Club’ shall be considered as
the sporting successor of the original debtor ‘Ceres Negros FC’, as (a) Wikipedia confirms that the
club was founded in 2012 as Ceres-La Salle, changed its name in 2017 to Ceres Negros and in
2020 to United City Football Club, (b) the club’s website refers to the same history and sporting
achievements of the club, (c) both clubs use the same year of foundation and play in the same
stadium, (d) the new club competes in the same division as the old club and (e) the general
manager and the majority of the players from the old and the new cub are the same.
20. In conclusion, the player deems that he had a just cause to terminate the contract.
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21. In its reply to the claim, the club argued that it ceased its operation as a result of the COVID-19
pandemic and therefore validly terminated the contract based on art.12 par. 1 of the contract.
22. Furthermore, the club explains that it no other choice but to cease its operations, as well as that
submitted an ‘Establishment Report to the Department of Labor and Employment’.
23. Moreover, the club explains that the company ‘MMC Sportz Asia’ and the club signed a
Memorandum of Understanding, on the basis of which it was amongst others agreed that the
licence of Ceres Negros FC was transferred to United City Football Club, as well as that Ceres
Negros FC and United City Football Club are different entities.
24. The club further confirms that United City Football Club took over most of the employees of Ceres
Negros FC.
25. In conclusion, the club denies that the player had a just cause and asks for the rejection of all his
claims.
II. CONSIDERATIONS OF THE DISPUTE RESOLUTION CHAMBER
1.
First of all, the Dispute Resolution Chamber (hereinafter also referred to as Chamber or DRC)
analysed whether it was competent to deal with the case at hand. In this respect, it took note that
the present matter was submitted to FIFA on 8 December 2020. Taking into account the wording
of art. 21 of the 2019 edition of the Rules Governing the Procedures of the Players’ Status
Committee and the Dispute Resolution Chamber (hereinafter: the Procedural Rules), the
aforementioned edition of the Procedural Rules is applicable to the matter at hand.
2.
Subsequently, the members of the Chamber referred to art. 3 par. 1 of the Procedural Rules and
confirmed that in accordance with art. 24 par. 1 in combination with art. 22 lit. b) of the
Regulations on the Status and Transfer of Players (edition August 2020), the Dispute Resolution
Chamber is competent to deal with the matter at stake. The matter concerns an employmentrelated dispute with an international dimension between a Spanish player and a Philippine club,
and the competence is not disputed by the parties.
3.
In continuation, the Chamber analysed which regulations should be applicable as to the substance
of the matter. In this respect, the DRC confirmed that in accordance with art. 26 par. 1 and 2 of
the Regulations on the Status and Transfer of Players (October 2020 edition), and considering that
the claim was lodged on 8 December 2020, the March 2020 edition of the aforementioned
regulations (hereinafter: the Regulations) is applicable to the matter at hand as to the substance.
4.
The competence of the Chamber and the applicable regulations having been established, the
Chamber entered into the substance of the matter. In this respect, the Chamber started by
acknowledging all the above-mentioned facts as well as the arguments and the documentation
submitted by the parties. However, the Chamber emphasised that in the following considerations
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it will refer only to the facts, arguments and documentary evidence, which it considered pertinent
for the assessment of the matter at hand.
5.
First of all, the members of the Chamber acknowledged that, on 15 November 2019, the Claimant
and the Respondent had concluded an employment contract valid as from 1 January 2020 until
31 December 2020.
6.
The Chamber further observed that the Claimant lodged a claim in front of FIFA against the
Respondent seeking payment of the total amount of PHP 3,562,500, asserting that the
Respondent had not (fully) fulfilled its contractual obligations towards him. More specifically, the
Claimant indicated that on 1 June 2020, the Respondent had terminated the employment contract
based on the fact that it was ‘ceasing its operation’. However, according to the Claimant, in July
2020, a change in ownership took place, and that the Claimant was offered a new contract with
the new entity, for a lower salary. After the refusal of said salary, and after not being paid his
outstanding salaries as per the original contract, the Claimant confirmed on 5 September 2020
that was unilaterally terminating the contract with the Respondent.
7.
In continuation, the Chamber observed that the Respondent insisted that it had validly terminated
the contract on the basis of art. 12 par. 1 of the contract, since it ‘ceased its operations’. What is
more, the Respondent argues that the licence of the old entity, Ceres Negros FC, was transferred
to the new entity, United City FC, however insisted that these are separate entities. Finally, the
Respondent asked for the rejection of all claims of the Claimant, as according to the Respondent,
the Claimant did not have a just cause to terminate the contract.
8.
In this context, the Chamber acknowledged that it had to examine which of the parties had
effectively terminated the contract, whether or not said termination was made with or without
just cause and who is to be held responsible for the consequences of said termination.
9.
In this respect, the Chamber was eager to emphasise that the Claimant pointed out that the
Respondent failed to pay him his full salary for the month of May 2020, as it allegedly unilaterally
reduced said salary with 50%, as a result of the outbreak and financial consequences of the
COVID-19 pandemic. While analysing the relevant circumstances surrounding this variation of the
contract, the members of the Chamber noted that the salary reduction for 50% as of the month
May 2020, appears to have been made unilaterally and without an attempt to reach an amicable
settlement with the Claimant. As such, the members of the Chamber concluded that the variation
to the contract was not made in line with FIFA’s COVID-19 Guidelines and can therefore not be
upheld.
10. What is more, as to unilateral termination of the contract, the members of the Chamber first of
all noted that the Respondent already terminated the contract on 1 June 2020, based on art. 12
of the contract, informing the Claimant that the contract was terminated as a result of the cease
of its operations. Given that said termination of the contract was made more than 3 months
before the Claimant on 5 September 2020 indicated that he considered the contract unilaterally
terminated as per that day, the members of the Chamber deemed that the contract was
unilaterally terminated on 1 June 2020 by the Respondent.
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11. Turning to the contents of article 12 par. 1 of the contract, the Chamber further noted that said
clause cannot be considered as a valid clause to unilaterally terminate the contract. After analysing
said clause, the members of the Chamber concluded that said clause gives the Respondent the
full power to unilaterally terminate the contract when it ceased its operations, whereas the
Claimant had no option to do so.
12. On account of the above circumstances, the Chamber decided that the Respondent had no just
cause to unilaterally terminate the employment relationship on 1 June 2020 and, therefore,
concluded that the Respondent had terminated the employment contract without just cause on
1 June 2020 and that, consequently, the Respondent is to be held liable for the early termination
of the employment contact without just cause.
13. Bearing in mind the previous considerations, the Chamber went on to deal with the consequences
of the early termination of the employment contract without just cause by the Respondent.
14. In this respect, the Chamber deemed it relevant to point out that the new entity that tried to
conclude a new contract with the Claimant, i.e. United City FC, operates under a different name,
but uses the same stadium, the same year of foundation the league it competes in and the majority
of the employees that were also employed by the old entity, Ceres Negros FC. What is more, the
Philippine Football Federation confirmed that United City FC can be considered as the sporting
and legal successor of Ceres Negros FC.
15. As a result of the foregoing, the Chamber deemed that United City FC, as the sporting and legal
successor of Ceres Negros FC, is to held liable for the payment of outstanding remuneration and
compensation for breach of contract.
16. First of all, the members of the Chamber concurred that the Respondent must fulfill its obligations
as per employment contract up until the date of termination of the contract in accordance with
the general legal principle of “pacta sunt servanda”. Consequently, the Chamber decided that
the Respondent is liable to pay to the Claimant the remuneration that was outstanding at the
time of the termination i.e. the amount of PHP 237,500, consisting of the pro rata outstanding
salary for the month of May 2020.
17. What is more, in line with its longstanding jurisprudence, the Chamber decided to award 5%
interest p.a. on the amount of PHP 237.500 as from 16 May 2020.
18. In continuation, the Chamber decided that, taking into consideration art. 17 par. 1 of the
Regulations, the Claimant is entitled to receive from the Respondent compensation for breach of
contract in addition to any outstanding salaries on the basis of the relevant employment contract.
19. In this context, the Chamber outlined that, in accordance with said provision, the amount of
compensation shall be calculated, in particular and unless otherwise provided for in the contract
at the basis of the dispute, with due consideration for the law of the country concerned, the
specificity of sport and further objective criteria, including, in particular, the remuneration and
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other benefits due to the Claimant under the existing contract and/or the new contract, the time
remaining on the existing contract up to a maximum of five years, and depending on whether the
contractual breach falls within the protected period.
20. In application of the relevant provision, the Chamber held that it first of all had to clarify whether
the pertinent employment contract contained any clause, by means of which the parties had
beforehand agreed upon a compensation payable by the contractual parties in the event of breach
of contract. In this regard, the Chamber established that no such compensation clause was
included in the employment contract at the basis of the matter at stake.
21. Subsequently, and in order to evaluate the compensation to be paid by the Respondent, the
members of the Chamber took into account the remuneration due to the Claimant in accordance
with the employment contract as well as the time remaining on the same contract, along with the
professional situation of the Claimant after the early termination occurred. In this respect, the
Chamber pointed out that at the time of the termination of the employment contract on 1 June
2020, the contract would run for another 7 months, i.e. until 31 December 2020. Consequently,
taking into account the financial terms of the contract, the Chamber concluded that the remaining
value of the contract as from its early termination by the Respondent until the regular expiry of
the contract amounts to PHP 3,325,500 and that such amount shall serve as the basis for the final
determination of the amount of compensation for breach of contract.
22. In continuation, the Chamber remarked that following the early termination of the employment
contract at the basis of the present dispute the Claimant – in the relevant period until 31 December
2020 - had found new employment with the Spanish club UD Lanzarote, albeit on an amateur
basis without receiving any remuneration and therefore not being able to mitigate his damages.
As a result, the Chamber deemed that no further mitigation should be applied to the residual
value of the contract.
23. In view of all of the above, the Chamber decided that the Respondent must pay the amount of
PHP 3,325,500 to the Claimant as compensation for breach of contract without just case, which
is considered by the Chamber to be a reasonable and justified amount as compensation.
24. Finally, in line with its longstanding jurisprudence, the Chamber decided to award 5% interest
p.a. on the amount of PHP 3,325,500 as from the date of claim, i.e. 8 December 2020.
25. Furthermore, taking into account the consideration under number II./3. above, the Chamber
referred to par. 1 and 2 of art. 24bis of the Regulations, which stipulate that, with its decision,
the pertinent FIFA deciding body shall also rule on the consequences deriving from the failure of
the concerned party to pay the relevant amounts of outstanding remuneration and/or
compensation in due time.
26. In this regard, the Chamber pointed out that, against clubs, the consequence of the failure to pay
the relevant amounts in due time shall consist of a ban from registering any new players, either
nationally or internationally, up until the due amounts are paid and for the maximum duration of
three entire and consecutive registration periods.
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27. Therefore, bearing in mind the above, the DRC decided that, in the event that the Respondent
does not pay the amounts due to the Claimant within 45 days as from the moment in which the
Claimant, following the notification of the present decision, communicates the relevant bank
details to the Respondent, a ban from registering any new players, either nationally or
internationally, for the maximum duration of three entire and consecutive registration periods
shall become effective on the Respondent in accordance with art. 24bis par. 2 and 4 of the
Regulations.
28. Finally, the Chamber recalled that the above-mentioned ban will be lifted immediately and prior
to its complete serving upon payment of the due amounts, in accordance with art. 24bis par. 3
of the Regulations.
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III. DECISION OF THE DISPUTE RESOLUTION CHAMBER
1.
The claim of the Claimant, Manuel Herrera Lopez, is accepted.
2.
The Respondent, United City FC (sporting an legal successor of Ceres Negros FC), has to pay to
the Claimant, the following amount:
- Philippine Peso (PHP) 237,500 as outstanding remuneration, plus 5% interest p.a. as from 16
May 2020;
- PHP 3,325,500 as compensation for breach of contract without just cause, plus 5% interest
p.a. as from 8 December 2020.
3.
The Claimant is directed to immediately and directly inform the Respondent of the relevant bank
account to which the Respondent must pay the due amount mentioned under point 2.
4.
The Respondent shall provide evidence of payment of the due amount in accordance with this
decision to [email protected], duly translated, if applicable, into one of the official FIFA languages
(English, French, German, Spanish).
5.
In the event that the amount due, plus interest as established above is not paid by the Respondent
within 45 days, as from the notification by the Claimant of the relevant bank details to the
Respondent, the following consequences shall arise:
1. The Respondent shall be banned from registering any new players, either nationally or
internationally, up until the due amount is paid and for the maximum duration of three
entire and consecutive registration periods. The aforementioned ban mentioned will be
lifted immediately and prior to its complete serving, once the due amount is paid.
(cf. art. 24bis of the Regulations on the Status and Transfer of Players).
2. In the event that the payable amount as per in this decision is still not paid by the end of
the ban of three entire and consecutive registration periods, the present matter shall be
submitted, upon request, to the FIFA Disciplinary Committee.
For the Dispute Resolution Chamber:
Emilio García Silvero
Chief Legal & Compliance Officer
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NOTE RELATED TO THE APPEAL PROCEDURE:
According to article 58 par. 1 of the FIFA Statutes, this decision may be appealed against before the
Court of Arbitration for Sport (CAS) within 21 days of receipt of the notification of this decision.
NOTE RELATED TO THE PUBLICATION:
FIFA may publish this decision. For reasons of confidentiality, FIFA may decide, at the request of a party
within five days of the notification of the motivated decision, to publish an anonymised or a redacted
version (cf. article 20 of the Procedural Rules).
CONTACT INFORMATION:
Fédération Internationale de Football Association
FIFA-Strasse 20 P.O. Box 8044 Zurich Switzerland
www.fifa.com | legal.fifa.com | [email protected] | T: +41 (0)43 222 7777
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