Title
Catan vs. National Labor Relations Commission
Case
G.R. No. 77279
Decision Date
Apr 15, 1988
A recruitment agency was held liable for disability benefits and medical expenses after a worker sustained an injury during an automatically renewed employment contract, with the Supreme Court affirming solidary liability under labor laws.
recruitment agency
disability benefits
medical expenses
A

Case Summary (G.R. No. 77279)

Factual Background

Petitioner, a duly licensed recruitment agency, acted as agent for Ali and Fahd Shabokshi Group, a Saudi Arabian employer, and procured private respondent for overseas employment as a steelman under a one-year contract dated May 15, 1981 to May 14, 1982 that contained an automatic renewal clause requiring one-month prior notice to terminate. The contract was treated as automatically renewed when the Saudi employer did not repatriate private respondent but reassigned him to work as a crusher plant operator. On March 30, 1983 private respondent sustained a crushing injury to his right ankle while operating the crusher. Private respondent returned to the Philippines on May 15, 1983 and underwent surgery, incurring medical expenses; he then returned to Saudi Arabia on September 9, 1983 to resume work and was finally repatriated on May 15, 1984, incurring further medical expenses.

Administrative Claim and Award

Private respondent filed a claim with the PHILIPPINE OVERSEAS EMPLOYMENT ADMINISTRATION docketed as POEA Case No. 84-09-847, asserting entitlement to disability and medical benefits under the employment contract. On April 10, 1986 the POEA rendered judgment awarding P7,985.60 as disability benefits, P29,096.20 as reimbursement for medical expenses, and ten percent of those amounts as attorney’s fees.

NLRC Review and Affirmance

On appeal the NATIONAL LABOR RELATIONS COMMISSION affirmed the POEA decision by resolution dated December 12, 1986. The NLRC held that the employment contract remained in force by virtue of its automatic renewal clause, that petitioner could be sued jointly and solidarily with the foreign principal under the recruitment rules, and that petitioner’s assistance in the employee’s return to Saudi Arabia demonstrated knowledge and consent that undercut any contention of negligence by the employee.

Issues Presented to the Supreme Court

Petitioner sought relief by certiorari alleging grave abuse of discretion by the NLRC and presented two principal issues: whether petitioner was liable for disability benefits given petitioner’s contention that the original employment contract had expired, and whether the award of medical expenses was improper because respondent allegedly returned to work while not medically fit, rendering those expenses the consequence of respondent’s negligence.

Petitioner’s Contentions

Petitioner argued that the employment contract it facilitated had expired on May 14, 1982 and therefore that petitioner bore no liability for an injury sustained thereafter. Petitioner further maintained that its agency agreement with the Saudi principal had already terminated at the time of the injury and that the NLRC erred in affirming reimbursement for medical expenses because respondent negligently returned to work when not medically fit.

Respondents’ Contentions and NLRC Reasoning

The NLRC and POEA reasoned that the employment contract was automatically renewed because neither party gave the one-month notice required for termination; accordingly the injury fell within the contractual period. The NLRC relied on Section 10(a)(2), Rule V, Book I, Rules to Implement the Labor Code to support the proposition that a private employment agency may be sued jointly and solidarily with the foreign principal for violations of recruitment agreements and employment contracts. The NLRC further invoked Art. 1921, Civil Code, observing that revocation of an agency does not prejudice specified persons if they were not given notice, and concluded that petitioner’s alleged termination of its agency relationship did not absolve it of responsibility where notice was not given to the worker. The NLRC also found that petitioner had facilitated respondent’s return to Saudi Arabia, including purchasing his ticket, and that no evidence established that respondent was medically unfit at the time of his return.

Legal Reasoning of the Supreme Court

The Court found no grave abuse of discretion in the NLRC’s disposition. The Court accepted the NLRC’s determination that the employment contract did not expire because neither party gave the contractual one-month notice, and thus the injury occurred during the lifetime of the contract. The Court sustained the NLRC’s application of Section 10(a)(2), Rule V,

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