Week 5 Case 12 G.R. No. 181375 Flashcards
Petitioner: Phil-Nippon Kyoei, Corp.
Insurer: South Sea Surety & Insurance Co., Inc.
Principal: Petitioner
Agents: TMCL, TEMMPC, and Capt. Orbeta
Therefore, there is solidary liability.
Summary as to why LLR is not applied to petitioners.
- As to the POEA-SEC, the Doctrine of LLR is not applicable to claims under POEA-SEC.
- As to the Personal Accident Policies, petitioner is policy holder or obligee of insurance, so there is no obligation to pay insurance proceeds. Thus, the LLR does not apply.
- The petitioner is not liable under tort or quasi-delict.
- Their erroneous claim is grounded on the insurance of seafarers (the Personal Accident Policies), not on the insurance proceed contemplated about the vessel and pending freightage for the particular voyage (Marine Insurance Policy).
What are the three (3) articles of the Code of Commerce that are discussed in this case?
The limited liability rule is embodied in Articles 587, 590 and 837 under Book III of the Code of Commerce, viz:
Art. 587. The ship agent shall also be civilly liable for the indemnities in favor of third persons which arise from the conduct of the captain in the care of the goods which the vessel carried; but he may exempt himself therefrom by abandoning the vessel with all her equipment and the freightage he may have earned during the voyage.
Art. 590. The co-owners of a vessel shall be civilly liable, in the proportion of their contribution to the common fund, for the results of the acts of the captain, referred to in Art. 587.
Each part-owner may exempt himself from this liability by the abandonment before a notary of the part of the vessel belonging to him.
Art. 837. The civil liability incurred by the shipowners in the cases prescribed in this section, shall be understood as limited to the value of the vessel with all its appurtenances and freightage earned during the voyage.
What are the applicabilities of the said provisions?
Article 837 applies the limited liability rule in cases of collision. Meanwhile, Articles 587 and 590 embody the universal principle of limited liability in all cases wherein the shipowner or agent may be properly held liable for the negligent or illicit acts of the captain. These articles precisely intend to limit the liability of the shipowner or agent to the value of the vessel, its appurtenances and freightage earned in the voyage, provided that the owner or agent abandons the vessel. When the vessel is totally lost, in which case abandonment is not required because there is no vessel to abandon, the liability of the shipowner or agent for damages is extinguished.
In what instances are the limited liability rule not applied?
It does not apply in cases:
(1) where the injury or death to a passenger is due either to the fault of the shipowner, or to the concurring negligence of the shipowner and the captain;
(2) where the vessel is insured; and
(3) in workmen’s compensation claims.
What is the jurisprudential ruling of the Court in the non-applicability of the limited liability rule in worker’s compensation claims, as discussed in Abueg v. San Diego?
In Abueg v. San Diego, we ruled that the limited liability rule found in the Code of Commerce is inapplicable in a liability created by statute to compensate employees and laborers, or the heirs and dependents, in cases of injury received by or inflicted upon them while engaged in the performance of their work or employment, to wit:
The real and hypothecary nature of the liability of the shipowner or agent embodied in the provisions of the Maritime Law, Book III, Code of Commerce, had its origin in the prevailing conditions of the maritime trade and sea voyages during the medieval ages, attended by innumerable hazards and perils. To offset against these adverse conditions and to encourage shipbuilding and maritime commerce, it was deemed necessary to confine the liability of the owner or agent arising from the operation of a ship to the vessel, equipment, and freight, or insurance, if any, so that if the shipowner or agent abandoned the ship, equipment, and freight, his liability was extinguished.
But the provisions of the Code of Commerce invoked by appellant have no room in the application of the Workmen’s Compensation Act which seeks to improve, and aims at the amelioration of, the condition of laborers and employees. It is not the liability for the damage or loss of the cargo or injury to, or death of, a passenger by or through the misconduct of the captain or master of the ship; nor the liability for the loss of the ship as a result of collision; nor the responsibility for wages of the crew, but a liability created by a statute to compensate employees and laborers in cases of injury received by or inflicted upon them, while engaged in the performance of their work or employment, or the heirs and dependents of such laborers and employees in the event of death caused by their employment. Such compensation has nothing to do with the provisions of the Code of Commerce regarding maritime commerce. It is an item in the cost of production which must be included in the budget of any well-managed industry.
What statutory provisions or Labor Code provisions cover death benefits due to work place injuries?
Act No. 3428, otherwise known as The Workmen’s Compensation Act is the first law on workmen’s compensation in the Philippines for work-related injury, illness, or death. This was repealed on November 1, 1974 by the Labor Code, and was further amended on December 27, 1974 by Presidential Decree No. 626. The pertinent provisions are now found in Title II, Book IV of the Labor Code on Employees Compensation and State Insurance Fund.
The death benefits granted under Title II, Book IV of the Labor Code are similar to the death benefits granted under the POEA-SEC, which is specifically discussed in Section 20(A)(l) and (4)(c).
In maritime commerce, how are the Labor Code and POEA SEC provisions on death benefits due to work related cause harmonized? Are the provisions on the Code of Commerce applicable?
Akin to the death benefits under the Labor Code, these benefits under the POEA-SEC are given when the employee dies due to a work-related cause during the term of his contract. The liability of the shipowner or agent under the POEA-SEC has likewise nothing to do with the provisions of the Code of Commerce regarding maritime commerce. The death benefits granted under the POEA-SEC is not due to the death of a passenger by or through the misconduct of the captain or master of the ship; nor is it the liability for the loss of the ship as result of collision; nor the liability for wages of the crew. It is a liability created by contract between the seafarers and their employers, but secured through the State’s intervention as a matter of constitutional and statutory duty to protect Filipino overseas workers and to secure for them the best terms and conditions possible, in order to compensate the seafarers’ heirs and dependents in the event of death while engaged in the performance of their work or employment. The POEA-SEC prescribes the set of standard provisions established and implemented by the POEA containing the minimum requirements prescribed by the government for the employment of Filipino seafarers. While it is contractual in nature, the POEA-SEC is designed primarily for the protection and benefit of Filipino seamen in the pursuit of their employment on board ocean-going vessels. As such, it is deemed incorporated in every Filipino seafarers’ contract of employment. It is established pursuant to POEA’s power “to secure the best terms and conditions of employment of Filipino contract workers and ensure compliance therewith” and “to protect the well-being of Filipino workers overseas” pursuant to Article 17 of the Labor Code as amended by Executive Order (EO) Nos. 797 and 247.
Is the doctrine of limited liability
applicable to claims under POEA-SEC?
No.
But while the nature of death benefits under the Labor Code and the POEA-SEC are similar, the death benefits under the POEA-SEC are intended to be separate and distinct from, and in addition to, whatever benefits the seafarer is entitled to under Philippine laws, including those benefits which may be claimed from the State Insurance Fund.
Thus, the claim for death benefits under the POEA-SEC is the same species as the workmen’s compensation claims under the Labor Code – both of which belong to a different realm from that of Maritime Law. Therefore, the limited liability rule does not apply to petitioner’s liability under the POEA-SEC.
To what end do the release and quitclaim do for the petitioner regarding its liability?
The Release and Quitclaim benefit petitioner as a solidary debtor.
All the same, the Release and Quitclaim executed between TEMMPC, TMCL and Capt. Oscar Orbeta, and respondents redounded to the benefit of petitioner as a solidary debtor.
Petitioner is solidarily liable with TEMMPC and TMCL for the death benefits under the POEA-SEC. The basis of the solidary liability of the principal with the local manning agent is found in the second paragraph of Section 10 of the Migrant Workers and Overseas Filipino Act of 1995, which, in part, provides: “[t]he liability of the principal/employer and the recruitment/placement agency for any and all claims under this section shall be joint and several.” This provision, is in turn, implemented by Section 1 (e)(8), Rule 2, Part II of the POEA Rules and Regulations Governing the Recruitment and Employment of Seafarers, which requires the undertaking of the manning agency to “[a]ssume joint and solidary liability with the employer for all claims and liabilities which may arise in connection with the implementation of the employment contract [and POEA-SEC].”
Thus, the rule is that the release of one solidary debtor redounds to the benefit of the others. Considering that petitioner is solidarily liable with TEMMPC and TMCL, we hold that the Release and Quitclaim executed by respondents in favor of TEMMPC and TMCL redounded to petitioner’s benefit. Accordingly, the liabilities of petitioner under Section 20(A)(l) and (4)(c) of the POEA-SEC to respondents are now deemed extinguished. We emphasize, however, that this pronouncement does not foreclose the right of reimbursement of the solidary debtors who paid (i.e., TEMMPC and TMCL) from petitioner as their co-debtor.
What is the jurisprudential ruling regarding the nature of solidary liability in labor cases, as discussed in Varorient Shipping Co., Inc. v. NLRC?
We have consistently applied the Civil Code provisions on solidary obligations, specifically Articles 1217 and 1222, to labor cases. We explained in Varorient Shipping Co., Inc. v. NLRC the nature of the solidary liability in labor cases, to wit:
x x x The POEA Rules holds her, as a corporate officer, solidarily liable with the local licensed manning agency. Her liability is inseparable from those of Varorient and Lagoa. If anyone of them is held liable then all of them would be liable for the same obligation. Each of the solidary debtors, insofar as the creditor/s is/are concerned, is the debtor of the entire amount; it is only with respect to his co-debtors that he/she is liable to the extent of his/her share in the obligation. Such being the case, the Civil Code allows each solidary debtor, in actions filed by the creditor/s, to avail himself of all defenses which are derived from the nature of the obligation and of those which are personal to him, or pertaining to his share. He may also avail of those defenses personally belonging to his co-debtors, but only to the extent of their share in the debt. Thus, Varorient may set up all the defenses pertaining to Colarina and Lagoa; whereas Colarina and Lagoa are liable only to the extent to which Varorient may be found liable by the court. The complaint against Varorient, Lagoa and Colarina is founded on a common cause of action; hence, the defense or the appeal by anyone of these solidary debtors would redound to the benefit of the others.
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x x x If Varorient were to be found liable and made to pay pursuant thereto, the entire obligation would already be extinguished even if no attempt was made to enforce the judgment against Colarina. Because there existed a common cause of action against the three solidary obligors, as the acts and omissions imputed against them are one and the same, an ultimate finding that Varorient was not liable would, under these circumstances, logically imply a similar exoneration from liability for Colarina and Lagoa, whether or not they interposed any defense. (Emphasis supplied.)
Does the NLRC have jurisdiction over the claim on the Personal Accident
Policies?
Yes.
The Migrant Workers and Overseas Filipinos Act of 1995 gives the Labor Arbiters of the NLRC the original and exclusive jurisdiction over claims arising out of an employer-employee relationship or by virtue of any law or contract involving Filipino workers for overseas deployment, including claims for actual, moral, exemplary and other forms of damage. It further creates a joint and several liability among the principal or employer, and the recruitment/placement agency, for any and all claims involving Filipino workers, viz:
SEC. 10. Money Claims. - Notwithstanding any provision of law to the contrary, the Labor Arbiters of the National Labor Relations Commission (NLRC) shall have the original and exclusive jurisdiction to hear and decide, within ninety (90) calendar days after the filing of the complaint, the claims arising out of an employer-employee relationship or by virtue of any law or contract involving Filipino workers for overseas deployment including claims for actual, moral, exemplary and other forms of damages. Consistent with this mandate, the NLRC shall endeavor to update and keep abreast with the developments in the global services industry.
The liability of the principal/employer and the recruitment/placement agency for any and all claims under this section shall be joint and several. This provision shall be incorporated in the contract for overseas employment and shall be a condition precedent for its approval. The performance bond to be filed by the recruitment/placement agency, as provided by law, shall be answerable for all money claims or damages that may be awarded to the workers. If the recruitment/placement agency is a juridical being, the corporate officers and directors and partners as the case may be, shall themselves be jointly and solidarily liable with the corporation or partnership for the aforesaid claims and damages. x x x (Emphasis supplied.)
What is jurisprudential ruling regarding the jurisdiction of POEA regarding determination of a surety’s bond, as discussed in Finman General Assurance Corp. v. Inocencio?
In Finman General Assurance Corp. v. Inocencio, we upheld the jurisdiction of the POEA to determine a surety’s liability under its bond. We ruled that the adjudicatory power to do so is not vested with the Insurance Commission exclusively. The POEA (now the NLRC) is vested with quasi-judicial powers over all cases, including money claims, involving employer-employee relations arising out of or by virtue of any law or contract involving Filipino workers for overseas employment. Here, the award of the insurance proceeds arose out of the personal accident insurance procured by petitioner as the local principal over the deceased seafarers who were Filipino overseas workers. The premiums paid by petitioner were, in actuality, part of the total compensation paid for the services of the crewmembers. Put differently, the labor of the employees is the true source of the benefits which are a form of additional compensation to them. Undeniably, such claim on the personal accident cover is a claim under an insurance contract involving Filipino workers for overseas deployment within the jurisdiction of the NLRC.
It must also be noted that the amendment under Section 37-A of the Migrant Workers and Overseas Filipinos Act of 1995 on Compulsory Insurance Coverage does not apply. The amendment requires the claimant to bring any question or dispute in the enforcement of any insurance policy before the Insurance Commission for mediation or adjudication. The amendment, however, took effect on May 8, 2010 long after the Personal Accident Policies in this case were procured in 2003. Accordingly, the NLRC has jurisdiction over the claim for proceeds under the Personal Accident Policies.
In any event, SSSICI can no longer assail its liability under the Personal Accident Policies. SSSICI failed to file a motion for reconsideration on the CA Decision. In a Resolution dated April 24, 2008, the CA certified in a Partial Entry of Judgment that the CA Decision with respect to SSSICI has become final and executory and is recorded in the Book of Entries of Judgments. A decision that has acquired finality becomes immutable and unalterable. This quality of immutability precludes the modification of a final judgment, even if the modification is meant to correct erroneous conclusions of fact and law. This holds true whether the modification is made by the court that rendered it or by the highest court in the land. Thus, SSSICI’s liability on the Personal Accident Policies can no longer be disturbed in this petition.
How is SSSICI ‘s liability as insurer under the Personal Accident Policies described?
SSSICI ‘s liability as insurer under the
Personal Accident Policies is direct.
The CA erred in ruling that “upon payment of [the insurance] proceeds to said widows by respondent SOUTH SEA SURETY & INSURANCE CO., INC., respondent PHIL-NIPPON CORPORATION’s liability to all the complainants is deemed extinguished.”
We rule that while the Personal Accident Policies are casualty insurance, they do not answer for petitioner’s liabilities arising from the sinking of the vessel. It is an indemnity insurance procured by petitioner for the benefit of the seafarers. As a result, petitioner is not directly liable to pay under the policies because it is merely the policyholder of the Personal Accident Policies.
What is the definition of casualty insurance per Insurance Code?
Section 176 (formerly Sec. 174) of The Insurance Code defines casualty insurance as follows:
SEC. 174. Casualty insurance is insurance covering loss or liability arising from accident or mishap, excluding certain types of loss which by law or custom are considered as falling exclusively within the scope of other types of insurance such as fire or marine. It includes, but is not limited to, employer’s liability insurance, motor vehicle liability insurance, plate glass insurance, burglary and theft insurance, personal accident and health insurance as written by non-life insurance companies, and other substantially similar kinds of insurance.
