[G.R. No. 82252. February 28, 1989.

] DECISION

SEAGULL MARITIME CORP. AND PHILIMARE SHIPPING &

EQUIPMENT SUPPLY, Petitioners, v. NERRY D. BALATONGAN, GANCAYCO, J.:
NATIONAL LABOR RELATIONS COMMISSION AND PHILIPPINE
OVERSEAS EMPLOYMENT ADMINISTRATION, Respondents.

Tanjuatco, Oreta, Tanjuatco, Berenguer & San Vicente, On November 2, 1982, a "Crew Agreement" was entered into by
for Petitioners. private respondent Nerry D. Balatongan and Philimare Shipping and
Equipment Supply (hereinafter called Philimare whereby the latter
The Solicitor General for public Respondent. employed the former as able seaman on board its vessel "Santa Cruz"
(renamed "Turtle Bay") with a monthly salary of US$300.00. Said
Benjamin B. Vergara for Private Respondent. agreement was processed and approved by the National Seaman’s
Board (NSB) on November 3, 1982. 1

While on board said vessel the said parties entered into a

SYLLABUS
supplementary contract of employment on December 6, 1982 2 which
provides among others:jgc:chanrobles.com.ph

1. LABOR LAW; EMPLOYMENT CONTRACT; MUST BE SUBMITTED TO "1. The employer shall be obliged to insure the employee during his
THE POEA FOR APPROVAL; REASON; "SUPPLEMENTARY CONTRACT" engagement against death or permanent invalidity caused by accident
PROVIDING FOR MORE BENEFITS TO THE WORKERS, DECLARED on board up to:chanrob1es virtual 1aw library
VALID AND ENFORCEABLE EVEN WITHOUT APPROVAL OF THE POEA.
— The supplementary contract of employment was entered into US $40,000 — for death caused by accident
between petitioner and private respondent to modify the original
contract of employment. The reason why the law requires that the US $50,000 — for permanent total disability caused by accident." 3
POEA should approve and verify a contract under Article 34(i) of the
Labor Code is to insure that the employee shall not thereby be placed On October 6, 1983 Balatongan met an accident in the Suez Canal,
in a disadvantageous position and that the same are within the Egypt as a result of which he was hospitalized at Suez Canal Authority
minimum standards of the terms and conditions of such employment Hospital. Later, he was repatriated to the Philippines and was
contract set by the POEA. This is why a standard format for hospitalized at the Makati Medical Center from October 23, 1983 to
employment contracts has been adopted by the Department of Labor. March 27, 1984. On August 19, 1985 the medical certificate was issued
However, there is no prohibition against stipulating in a contract more describing his disability as "permanent in nature."cralaw virtua1aw
benefits to the employee than those required by law. Thus, in this case library
wherein a "supplementary contract" was entered into affording greater
benefits to the employee than the previous one, and although the Balatongan demanded payment for his claim for total disability
same was not submitted for the approval of the POEA, the public insurance in the amount of US $50,000.00 as provided for in the
respondents properly considered said contract to be valid and contract of employment but his claim was denied having been
enforceable. Indeed, said pronouncements of public respondents have submitted to the insurers beyond the designated period for doing so.
the effect of an approval of said contract. Moreover, as said contract
was voluntarily entered into by the parties the same is binding Thus, Balatongan filed on June 21, 1985 a complaint against Philimare
between them. Not being contrary to law, morals, good customs, and Seagull Maritime Corporation (hereinafter called Seagull) in the
public policy or public order, its validity must be sustained. Philippine Overseas Employment Administration (POEA) for non-
payment of his claim for permanent total disability with damages and
2. ID.; ID.; PROVISION ON WAIVER AGAINST ALL CLAIMS AGAINST attorney’s fees.
THE EMPLOYER, HELD CONTRARY TO PUBLIC POLICY. — The court
sustains the ruling of public respondents that the provision in the After the parties submitted their respective position papers with the
supplementary contract whereby private respondent waives any claim corresponding documentary evidence, the office charge of the Workers
against petitioners for damages arising from death or permanent Assistance and Adjudication Office of the POEA rendered a decision on
disability is against public policy, oppressive and inimical to the rights May 2, 1986, the dispositive part of which reads as
of private Respondent. The said provision defeats and is inconsistent follows:jgc:chanrobles.com.ph
with the duty of petitioners to insure private respondent against said
contingencies as clearly stipulated in the said contract. "WHEREFORE, premises considered, respondents are hereby ordered
to pay complainant the amount of US$50,000.00 representing
3. ID.; ID.; FINDINGS OF FACT OF LABOR TRIBUNALS, CONCLUSIVE; permanent total disability insurance and attorney’s fees at 10% of the
EMPLOYER LIABLE TO PAY CLAIM OF EMPLOYEE IN CASE OF DEATH award. Payment should be made in this Office within ten (10) days
OR ACCIDENT WHICH OCCURRED DURING HIS EMPLOYMENT. — This from receipt hereof at the prevailing rate of exchange. This Office
Court is not a trier of facts and the findings of the public respondents cannot however rule on damages, having no jurisdiction on the matter.
are conclusive in this proceeding. Public respondents found that
petitioner Philimare and private respondent, entered into said SO ORDERED." 4
supplementary contract of employment on December 6, 1982.
Assuming for the sake of argument that it was petitioners’ principal Seagull and Philimare appealed said decision to the National Labor
which entered into said contract with private respondent, nevertheless Relations Commission (NLRC) on June 4, 1986. Pending resolution of
petitioner, as its manning agent in the Philippines, is jointly responsible their appeal because of the alleged transfer of the agency of Seagull to
with its principal thereunder. There is no question that under the said Southeast Asia Shipping Corporation, Seagull filed on April 28, 1987 a
supplementary contract of employment, it is the duty of the employer, Motion For Substitution/Inclusion of Party Respondent which was
petitioners herein, to insure the employee, during his engagement, opposed by Balatongan. 5 This was followed by an ex-parte motion for
against death and permanent invalidity caused by accident on board leave to file third party complaint on June 4, 1987 by Seagull. A
up to $50,000.00. Consequently, it is also its concomitant obligation to decision was promulgated on December 7, 1987 denying both motions
see to it that the claim against the insurance company is duly filed by and dismissing the appeal for lack of merit. 6 A motion for]
private respondent or in his behalf, and within the time provided for by reconsideration of said decision was denied for lack of merit in a
the terms of the insurance contract. In this case, the private resolution dated February 26, 1988. 7
respondent met the accident on October 6, 1983. Since then, he was
hospitalized at the Suez Canal Authority Hospital and thereafter he was Hence, Seagull and Philimare filed this petition for certiorari with a
repatriated to the Philippines wherein he was also hospitalized from prayer for the issuance of a temporary restraining order based on the
October 22, 1983 to March 27, 1984. It was only on August 19, 1985 following grounds:chanrob1es virtual 1aw library
that he was issued a medical certificate describing his disability to be
permanent in nature. It was not possible for private respondent to file 1. Respondent POEA erred in applying the Supplemental Contract;
a claim for permanent disability with the insurance company within the
one-year period from the time of the injury, as his disability was 2. Respondents POEA and NLRC acted with grave abuse of discretion
ascertained to be permanent only thereafter. Petitioners did not exert in holding that the Supplemental Contract was signed or board MV
any effort to assist private respondent to recover payment of his claim Santa Cruz by and between private respondent and from petitioner;
from the insurance company. They did not even care to dispute finding and
of the insurer that the claim was not filed on time. Petitioners must,
therefore, be held responsible for its omission, if not negligence, by 3. Respondent NLRC acted with grave abuse of discretion in not giving
requiring them to pay the claim of private Respondent. due course to your petitioners’ Motion for Leave to File Third Party
Complaint as well as their Motion for Inclusion/Substitution of
respondents. 8
On March 21, 1988, the Court issued a temporary restraining order format of employment contracts shall set the minimum standards of
enjoining respondents from enforcing the questioned decision and the terms and conditions of employment. All employers and principals
resolution of public respondents. shall adopt the model contract in connection with the hiring of workers
without prejudice to their adopting other terms and conditions of
Petitioners argue that prior to private respondent’s departure he employment over and above the minimum standards of the
executed a crew agreement on November 2, 1982 which was duly Administration.’ Where, as here, it is admitted that the second contract
approved by the POEA; that the supplementary contract of although not verified or approved by the NSB (POEA) granted more
employment that was entered into on board the vessel "Turtle Bay" benefits by way of total disability insurance to the complainant, the
which provides for a US $50,000.00 insurance benefit in case of respondents may not be allowed to disvow their own voluntary acts by
permanent disability was neither approved nor verified by respondent insisting that such beneficial contract in favor of the seaman is null and
POEA; and that the same violates Article 34(i) of the Labor Code, as void." (Emphasis supplied.) 10
amended, which provides as follows:jgc:chanrobles.com.ph
We agree.
"Art. 34. Prohibited Practices. — It shall be unlawful for any individual,
entity, licensee, or holder of authority:chanrob1es virtual 1aw library The supplementary contract of employment was entered into between
petitioner and private respondent to modify the original contract of
x       x       x employment. The reason why the law requires that the POEA should
approve and verify a contract under Article 34(i) of the Labor Code is
to insure that the employee shall not thereby be placed in a
(i) to substitute or alter employment contracts approved and verified disadvantageous position and that the same are within the minimum
by the Department of Labor from the time of actual signing thereof by standards of the terms and conditions of such employment contract set
the parties up to and including the period of expiration of the same by the POEA. This is why a standard format for employment contracts
without the approval of the Department of Labor."cralaw virtua1aw has been adopted by the Department of Labor. However, there is no
library prohibition against stipulating in a contract more benefits to the
employee than those required by law. Thus, in this case wherein a
Petitioners also call attention to Article VIII, paragraph 2 of the "supplementary contract" was entered into affording greater benefits
Supplementary Contract which provides as to the employee than the previous one, and although the same was
follows:jgc:chanrobles.com.ph not submitted for the approval of the POEA, the public respondents
properly considered said contract to be valid and enforceable. Indeed,
"2. Notwithstanding his claim against the insurers the employee hereby said pronouncements of public respondents have the effect of an
expressly waives all claims of his own or his heirs for compensation of approval of said contract. Moreover, as said contract was voluntarily
damages due to death or permanent invalidity which he suffered entered into by the parties the same is binding between them. 11 Not
during his engagement against the employers . . . unless his death or being contrary to law, morals, good customs, public policy or public
permanent invalidity has been caused by willful act of any of the order, its validity must be sustained. 12 By the same token, the court
above-named persons. 9 sustains the ruling of public respondents that the provision in the
supplementary contract whereby private respondent waives any claim
Petitioners stress that while public respondents upheld the applicability against petitioners for damages arising from death or permanent
of said supplementary contract insofar as it increased the benefits to disability is against public policy, oppressive and inimical to the rights
private respondent, public respondents considered the provision on the of private Respondent. The said provision defeats and is inconsistent
waiver against all claims by private respondent to be contrary to public with the duty of petitioners to insure private respondent against said
policy. contingencies as clearly stipulated in the said contract.chanrobles law
library : red
In its questioned decision dated December 7, 1987, the respondent
NLRC made the following disquisition:jgc:chanrobles.com.ph Petitioners however argue that they could not have entered into said
supplementary contract of employment as Philimare was a mere
"The focal issue for determination is the validity and enforceability of manning agent in the Philippines of the shipping company managed by
the second contract of employment entered into by and between Navales Shipping Management and Marine Consultant (Pte) Ltd., its
complainant and respondents on board the vessel where the former principal. Petitioners assert that the said supplementary contract was
had served as a member of its complement despite the absence of entered into by private respondent with their principal, Navales
NSB verification or approval. With respect to the findings of facts in the Shipping Management and Marine Consultant (Pte) Ltd. on board the
appealed decision, We consider the same as duly supported by vessel Turtle Bay so petitioners cannot be held responsible thereunder.
substantial evidence and the admissions of the parties in
pleadings.chanrobles law library This Court is not a trier of facts and the findings of the public
respondents are conclusive in this proceeding. Public respondents
Much stress and emphasis are made by the respondents in their appeal found that petitioner Philimare and private respondent, entered into
that this claim has no legal basis or footing inasmuch as the second said supplementary contract of employment on December 6, 1982.
contract of employment containing a total disability insurance benefit Assuming for the sake of argument that it was petitioners’ principal
of US$50,000.00, much more than that embodied in the first contract which entered into said contract with private respondent, nevertheless
of employment which was approved by the defunct NSB, was not petitioner, as its manning agent in the Philippines, is jointly responsible
verified or approved by the latter. Accordingly, the respondents posit with its principal thereunder. 13
the argument that subject claim may not prosper pursuant to the
provisions of Art. 34(i) of the Labor Code, as amended, which provides There is no question that under the said supplementary contract of
that it shall be unlawful for any individual, entity, licensee, or holder of employment, it is the duty of the employer, petitioners herein, to
authority ‘(T)o substitute or alter employment contracts approved and insure the employee, during his engagement, against death and
verified by the Department of Labor from the time of actual signing permanent invalidity caused by accident on board up to $50,000.00.
thereof by the parties up to and including the period of expiration of Consequently, it is also its concomitant obligation to see to it that the
the same without the approval of the Department of Labor. claim against the insurance company is duly filed by private
respondent or in his behalf, and within the time provided for by the
Did the POEA commit a reversible error when it considered the second terms of the insurance contract.
contract of employment as valid sans any verification or approval
thereof by the NSB? Our answer to this query is in the negative. In this case, the private respondent met the accident on October 6,
Apparently, the intention of the law when Art. 34 of the Labor Code 1983. Since then, he was hospitalized at the Suez Canal Authority
was enacted is to provide for the prohibited and unlawful practices Hospital and thereafter he was repatriated to the Philippines wherein
relative to recruitment and placement. As shown in the ‘Explanatory he was also hospitalized from October 22, 1983 to March 27, 1984. It
Note’ of Parliamentary Bill No. 4531, pertaining to Art. 34 (supra), was only on August 19, 1985 that he was issued a medical certificate
thus:chanrob1es virtual 1aw library describing his disability to be permanent in nature. It was not possible
for private respondent to file a claim for permanent disability with the
Many of the provisions are already existing and were simply restated. insurance company within the one-year period from the time of the
Some however were restated with modifications and new ones were injury, as his disability was ascertained to be permanent only
introduced to reflect what in the past have been noted to be pernicious thereafter. Petitioners did not exert any effort to assist private
practices which tend to place workers at a disadvantage. respondent to recover payment of his claim from the insurance
company. They did not even care to dispute finding of the insurer that
it is indubitably clear that the purpose of having overseas contracts of the claim was not filed on time. 14 Petitioners must, therefore, be held
employment approved by the NSB(POEA) is whether or not such responsible for its omission, if not negligence, by requiring them to pay
contracts conform to the minimum terms and conditions prescribed by the claim of private Respondent.cralawnad
the NSB (POEA). In other words, the law did not at all prohibit any
alteration which provided for increases in wages or other benefits The Court finds that the respondent NLRC did not commit a grave
voluntarily granted by the employer. Precisely, under Section 2, Rule 1, abuse of discretion in denying petitioners’ motion for leave to file third-
Book V of the Rules and Regulations of the POEA ‘(t)he standard party complaint and substitution or inclusion of party Respondent.
Such motion is largely addressed to the discretion of the said
Commission. Inasmuch as the alleged transfer of interest took place
only after the POEA had rendered its decision, the denial of the motion
so as to avoid further delay in the settlement of the claim of private
respondent was well-taken. At any rate, petitioners may pursue their
claim against their alleged successor-in-interest in a separate suit.

WHEREFORE, the petition is hereby DISMISSED for lack of merit and

the temporary restraining order issued by this Court on March 21, 1988
is hereby LIFTED. No costs. This decision is immediately executory.

SO ORDERED.