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PHIL-NIPPON KYOEI v. ROSALIA T. GUDELOSAO

FACTS:

The case involves a maritime accident where seafarers on board the vessel MV Mahlia died. The widows and children of the deceased seafarers filed a complaint against petitioner, Phil-Nippon Corporation, as the local principal of the seafarers, and respondents Capt. Oscar Orbeta, TEMMPC (the manning agency), and TMCL.

The Labor Arbiter found petitioner and the other respondents liable for death benefits, burial expenses, and attorney's fees. The NLRC modified the Labor Arbiter's decision and ruled that petitioner, TEMMPC, and TMCL were not liable for death benefits due to the limited liability rule in maritime law. The NLRC also ruled that the obligation to pay death benefits was transferred to respondent South Sea Surety & Insurance Co., Inc. (SSSICI), the insurer of petitioner.

On appeal, the Court of Appeals (CA) disagreed with the NLRC and held that petitioner, TEMMPC, and TMCL were liable for death benefits under the POEA Standard Employment Contract (POEA-SEC) and that the limited liability rule did not absolve them from such liability. The CA also held that petitioner's liability will only be extinguished upon payment by SSSICI of the insurance proceeds.

SSSICI filed a comment to the petition with the Supreme Court, arguing that the NLRC had no jurisdiction over the insurance claim and that petitioner had filed a separate complaint for the payment of insurance proceeds in the Regional Trial Court (RTC).

The issues in this case are (1) whether the doctrine of limited liability in maritime law applies in favor of petitioner, and (2) whether the CA erred in ruling that petitioner's liability is extinguished only upon payment of the insurance proceeds by SSSICI.

According to the limited liability rule in maritime law embodied in Articles 587, 590, and 837 of the Code of Commerce, the ship agent and co-owners of the vessel are civilly liable for indemnities arising from the conduct of the captain, but they can exempt themselves from liability by abandoning the vessel. However, exceptions to the limited liability rule exist, such as when the injury or death is due to the fault of the shipowner, or the vessel is insured, or in workmen's compensation claims.

In the present case, the Labor Arbiter initially found petitioner and the other respondents liable for death benefits, but the NLRC ruled that they were not liable due to the limited liability rule. However, the CA disagreed and held petitioner, TEMMPC, and TMCL liable for death benefits under the POEA-SEC.

ISSUES:

  1. Whether the limited liability rule found in the Code of Commerce is applicable to liability created by statute to compensate employees and laborers in cases of injury received while engaged in the performance of their work.

  2. Whether the death benefits under the POEA-SEC are subject to the limited liability rule.

  3. Whether the limited liability rule applies to the petitioner's liability under the POEA-SEC.

  4. Whether the Release and Quitclaim executed by the respondents benefits the petitioner as a solidary debtor.

  5. Whether the NLRC has jurisdiction over the claim on the Personal Accident Policies.

  6. Whether petitioner is subsidiarily liable for the face value of the Personal Accident Policies.

  7. Whether the limited liability rule and its exception apply in this case.

RULING:

  1. The limited liability rule found in the Code of Commerce is inapplicable to liability created by statute to compensate employees and laborers in cases of injury received while engaged in the performance of their work. The Workmen's Compensation Act seeks to improve and ameliorate the condition of laborers and employees and is not concerned with the provisions of the Code of Commerce regarding maritime commerce.

  2. The death benefits under the POEA-SEC are not subject to the limited liability rule. The death benefits under the POEA-SEC are a liability created by contract between seafarers and their employers, but secured through the State's intervention. The POEA-SEC is deemed incorporated in every Filipino seafarer's contract of employment and is designed primarily for the protection and benefit of Filipino seamen. The death benefits under the POEA-SEC are separate and distinct from, and in addition to, whatever benefits the seafarer is entitled to under Philippine laws.

  3. The limited liability rule does not apply to the petitioner's liability under the POEA-SEC.

  4. The Release and Quitclaim executed by the respondents benefits the petitioner as a solidary debtor.

  5. The NLRC has jurisdiction over the claim on the Personal Accident Policies.

  6. There is no basis for finding petitioner subsidiarily liable for the face value of the Personal Accident Policies. Petitioner is the policyholder and not the party liable for the value of the insurance proceeds.

  7. The limited liability rule and its exception do not apply in this case because petitioner was not found liable under tort or quasi-delict. The exception only applies to insurance over the vessel and pending freightage, not insurance in favor of the seafarers.

PRINCIPLES:

  • The limited liability rule found in the Code of Commerce does not apply to liability created by statute to compensate employees and laborers in cases of injury received while engaged in the performance of their work.

  • The death benefits under the POEA-SEC are separate and distinct from, and in addition to, whatever benefits the seafarer is entitled to under Philippine laws.

  • The solidary liability of the principal with the local manning agent is found in Section 10 of the Migrant Workers and Overseas Filipino Act of 1995.

  • The release of one solidary debtor redounds to the benefit of the others.

  • The NLRC has 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.

  • The recruitment/placement agency is jointly and solidarily liable with the corporation or partnership for claims and damages.

  • The NLRC has jurisdiction over claims for proceeds under personal accident insurance policies involving Filipino workers for overseas deployment.

  • The amendment under Section 37-A of the Migrant Workers and Overseas Filipinos Act of 1995 on Compulsory Insurance Coverage does not apply retroactively.

  • A decision that has acquired finality becomes immutable and unalterable.

  • The liability of the insurer under personal accident policies is direct and does not depend on the payment of insurance proceeds.

  • Casualty insurance covers loss or liability arising from accident or mishap, while personal accident insurance refers to insurance against death or injury by accident or accidental means.

  • The liability of the insurer to the beneficiaries is direct under the insurance contract.

  • The limited liability rule and its exception apply only in cases involving tort or quasi-delict liability.

  • The insurance proceeds contemplated under the exception in the case of a lost vessel are the insurance over the vessel and pending freightage, not insurance in favor of the seafarers.