G.R. No. 144439 - Southeast Asia Shipping Corp. vs. Seagull Maritime Corp.

Case Digest (G.R. No. 144439)
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Facts:

Parties and employment contracting chain for the injured seaman

On November 2, 1982, Philimare Shipping and Equipment Supply (PHILIMARE SHIPPING), as manning agent in the Philippines of Navales Shipmanagement and Marine Consulting Pte, Ltd. (NAVALES) of Singapore, which acted for and on behalf of Turtle Bay Shipping Pte. Ltd. of Singapore (TURTLE BAY SHIPPING), hired Nerry Balatongan to work aboard the vessel Santa Cruz, later renamed Turtle Bay.
On December 6, 1982, a supplementary contract obligated the employer of Balatongan to insure him against death or permanent “invalidity” caused by accident on board the vessel.
By a Crewing Agreement dated September 21, 1983, NAVALES, acting for and on behalf of TURTLE BAY SHIPPING, Oyster Bay Shipping Co. Pte Ltd. of Singapore (OYSTER BAY SHIPPING), and Koala Shipping Inc., Monrovia (KOALA SHIPPING), appointed respondent Seagull Maritime Corporation (SEAGULL) as its manning agent in the Philippines.
SEAGULL assumed full responsibility for all seamen deployed by PHILIMARE SHIPPING.

The accident, disability determination, and insurance claim

On October 6, 1983, Balatongan met an accident in the Suez Canal in Egypt.
Balatongan was treated in a hospital in Egypt and was repatriated to the Philippines.
On August 19, 1985, Balatongan was found to have been permanently disabled.
Balatongan demanded payment for total disability insurance in the sum of US$50,000.00.
His claim was denied as time-barred because he failed to file it within the designated period under the insurance contract.

POEA proceedings and the prior Supreme Court ruling in G.R. No. 82252

Balatongan filed a complaint on June 21, 1985 with the Philippine Overseas Employment Administration (POEA) against PHILIMARE SHIPPING and SEAGULL for nonpayment of his claim for disability insurance.
After hearing, the POEA rendered judgment against PHILIMARE SHIPPING and SEAGULL, awarding Balatongan US$50,000.00.
PHILIMARE SHIPPING and SEAGULL appealed to the National Labor Relations Commission (NLRC), which denied the appeal.
PHILIMARE and SEAGULL then filed a petition for review on certiorari with the Supreme Court, docketed as G.R. No. 82252, which the Supreme Court dismissed by decision dated February 28, 1989.
In G.R. No. 82252, the Supreme Court held that under the supplementary contract, it was the employer’s duty to insure the employee during engagement against death and permanent invalidity caused by accident on board up to $50,000.00, and that it was also its concomitant obligation to ensure that the claim against the insurance company was duly filed by the employee or in his behalf and within the period provided by the insurance contract.
The Supreme Court further held that Balatongan could not file the claim within the one-year period because his disability was ascertained to be permanent only after medical issuance on August 19, 1985, and that petitioners did not exert effort to assist Balatongan and did not even dispute the insurer’s finding of untimeliness.
The Supreme Court concluded that petitioners had to be held responsible for the omission, if not negligence, by requiring them to pay Balatongan’s claim.

Subsequent agency arrangements involving SEASCORP and Arawa Bay

Before the promulgation of the Supreme Court decision in G.R. No. 82252, or on April 10, 1987, NAVALES, acting “on behalf of Arawa Bay Shipping Corporation Pte Ltd. of Singapore (ARAWA BAY SHIPPING),” and herein petitioner Southeast Asia Shipping Corporation (SEASCORP) entered into a MANNING AGENCY AGREEMENT.
The Manning Agency Agreement appointed SEASCORP as recruiting agent for hiring Filipino seamen.
The agreement stated that it would incorporate the Special Power of Attorney executed in favor of the agent (SEASCORP).
On April 13, 1987, the POEA issued Accreditation Certificate No. 2471 to NAVALES for it to recruit, hire, and employ ship personnel through SEASCORP.
The certificate’s bottom left portion listed vessel/s enrolled, including (1) ARAWA BAY.
On a Special Power of Attorney dated May 19, 1987, NAVALES, acting for and on behalf of Arawa Bay Shipping, named, constituted, and appointed SEASCORP as its authorized attorney-in-fact in the hiring, placement, and employment of Filipino seamen to, among other things, sue and be sued in Arawa Bay Shipping’s name, place and stead.
The Special Power of Attorney also stated that SEASCORP would assume jointly and solidarily with Arawa Bay Shipping any liability that may arise in connection with the workers’ contract and/or implementation of the employment contract and other terms and conditions of the appointment as defined in the Manning Contract.

SEASCORP’s Affidavit of Undertaking and the scope of its assumption

Under POEA rules, SEASCORP, as manning applicant, was required to execute an Affidavit of Undertaking regarding its discharge of duties as manning agent.
SEASCORP’s President executed an Affidavit of Undertaking on July 10, 1987 stating that:

SEASCORP had been appointed as the manning agent of NAVALES to recruit Filipino crews for its shipping.
As NAVALES’s appointed manning agent in the Philippines, SEASCORP was able, willing, and ready to assume any and all liabilities that may arise or may have arisen with respect to seamen/workers originally recruited and deployed by SEAGULL for NAVALES, and that SEASCORP assumed full and complete responsibility over all seamen/workers originally recruited and deployed by SEAGULL for NAVALES.

SEASCORP later claimed that the Affidavit had been copied by its employees from a copy of the POEA.

The complaint filed by SEAGULL against SEASCORP and the RTC/CA rulings

Based on the quoted paragraph 3 of SEASCORP’s President’s Affidavit of Undertaking, SEAGULL filed a complaint at the RTC of Manila for recovery of P1,322,527.74, which it allegedly paid Balatongan pursuant to the POEA decision affirmed in G.R. No. 82252.
By Decision of December 28, 1992, RTC Manila, Branch 51, found the Affidavit of Undertaking clear, plain, and explicit that it covered “all the vessels of Navales (sic)” and ruled in favor of SEAGULL.
The RTC rejected SEASCORP’s claim that the affidavit was copied from a POEA copy and reasoned that the omission of the limitation was attributable to SEASCORP, noting the President’s background and the ambiguity in the face of the documents.
On appeal, the Court of Appeals affirmed.
The Court of Appeals held that when the terms are clear and explicit, they must be understood literally, and that it would not consider the Special Power of Attorney and the Crewing agreement to determine liability because the affidavit left no room for interpretation.

Issues raised before the Supreme Court by SEASCORP...(Subscriber-Only)

Issues:

Whether SEASCORP could be held liable to SEAGULL’s recovery claim solely based on paragraph 3 of SEASCORP’s Affidavit of Undertaking that it assumed full responsibility over seamen/workers originally recruited and deployed by SEAGULL for NAVALES.
Whether SEASCORP’s alleged liability should be assessed in light of the incorporated Manning Agency Agreement and Special Power of Attorney limiting SEASCORP’s principal to ARAWA BAY SHIPPING, and whether the affidavit could be construed as limited rather than covering all NAVALES vessels.
Whether the lower courts erred in h...(Subscriber-Only)

Ruling:

(Subscriber-Only)

Ratio:

(Subscriber-Only)

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