Title
Heirs of Andag vs. DMC Construction Equipment Resources, Inc.
Case
G.R. No. 244361
Decision Date
Jul 13, 2020
Seafarer's heirs denied death benefits from employer; negligence claim deemed tort, jurisdictionally unfit for labor tribunals; insurance proceeds unconditionally awarded.
jurisdiction dispute
death compensation
damages
A

Case Summary (G.R. No. 244361)

Factual Background

Petitioners alleged that on July 16, 2012, DMCI employed Reynaldo as Second Mate on its tugboat, the MIT Alexander Paul. They further alleged that on October 18, 2013, while the tugboat was towing an overloaded barge, a rope recoiled and accidentally struck Reynaldo, causing him to be thrown toward the ship’s iron bars. Reynaldo was rushed to a hospital and was pronounced dead on arrival. Several months later, DMCI allegedly contacted petitioners and offered P200,000.00 as compensation for Reynaldo’s death on the condition that petitioners execute a waiver and quitclaim in DMCI’s favor. Petitioners claimed that they refused the offer and, after that refusal, they no longer heard from DMCI. They sent a formal demand letter, which DMCI ignored, leading them to file a complaint before the NLRC.

NLRC Complaint and Theories of Recovery

In the complaint before the NLRC, petitioners sought: first, death compensation/benefits; second, actual damages, moral damages, exemplary damages, and attorney’s fees grounded on DMCI’s alleged negligence that resulted in Reynaldo’s death; and third, other monetary claims allegedly due to Reynaldo, such as holiday pay, service incentive leave pay, and 13th month pay. DMCI, in its defense, argued that petitioners should obtain death benefits not from DMCI but from the State Insurance Fund, i.e., the SSS. DMCI also maintained that the P200,000.00 amount it offered represented the proceeds of an accidental death insurance policy it had voluntarily secured for its employees, which petitioners declined to accept. Finally, DMCI asserted that it had already paid Reynaldo’s monetary benefits, pointing to documents such as his payslips.

Labor Arbiter Proceedings

In a Decision dated September 28, 2016, the Labor Arbiter (LA) dismissed the complaint for lack of cause of action. The LA agreed with DMCI that petitioners should have claimed death benefits from the State Insurance Fund. The LA also ruled that petitioners failed to present evidence establishing DMCI’s liability for Reynaldo’s death. The LA denied petitioners’ claims for moral and exemplary damages for lack of merit, and it found that DMCI had already paid all wages and monetary benefits due to Reynaldo.

NLRC Ruling and Modifications

Petitioners appealed to the NLRC. In a Decision dated January 30, 2017, the NLRC affirmed the LA’s ruling with modification. The NLRC ordered DMCI to turn over to petitioners the P200,000.00 accidental death insurance proceeds without any condition.

As to death benefits, the NLRC held that Reynaldo was an inter-island seaman, meaning he worked within Philippine waters. It also found no contractual provision establishing DMCI’s liability for death benefits. Thus, the NLRC directed that petitioners seek such death benefits not from DMCI but from the State Insurance Fund, particularly the SSS.

On petitioners’ claim for damages arising from DMCI’s alleged negligence resulting in Reynaldo’s death, the NLRC held that the labor tribunals had no jurisdiction because the claim was based on torts, which belonged before the regular courts. The NLRC then addressed the additional death insurance proceeds, ruling that the same should be released to petitioners without condition, because DMCI had already received the proceeds but could not deliver them to petitioners due to its improper conditioning of release on petitioners’ execution of a waiver and quitclaim.

Although the NLRC was silent expressly on petitioners’ other monetary claims, its treatment implied affirmation of the LA’s findings that those amounts had already been paid by DMCI. Petitioners’ subsequent motion for partial reconsideration was denied by the NLRC in a Resolution dated March 23, 2017.

Petition Before the Court of Appeals

Petitioners filed a petition for certiorari before the CA, principally challenging the NLRC’s determinations that (a) their damages claim based on negligence was a tort action cognizable by the regular courts, and (b) they were not entitled to the monetary reliefs they sought. In its Decision dated February 28, 2018, the CA upheld the NLRC’s rulings, finding no grave abuse of discretion in the NLRC’s conclusions that the claim sounded in tort and that DMCI had already paid the monetary amounts in dispute. The CA denied reconsideration in a Resolution dated December 12, 2018, prompting the present petition.

Issues Presented to the Supreme Court

The issue framed for the Court’s resolution was whether the CA correctly held that the NLRC committed no grave abuse of discretion in its assailed rulings.

Standards for Review of the CA’s Labor Ruling

The Court applied its settled approach in reviewing a CA decision in a labor case. It explained that in a Rule 45 review, the Court examined the correctness of the CA decision, and that the inquiry centered on questions of law. When the case reached the CA through a petition for certiorari, the Court reviewed the CA decision through the prism of whether the CA correctly determined the presence or absence of grave abuse of discretion by the NLRC. The Court reiterated that grave abuse of discretion connotes a capricious and whimsical exercise of judgment, done in a despotic manner by reason of passion or personal hostility, so patent and gross as to amount to an evasion of positive duty or a refusal to perform the duty enjoined by law. In labor cases, grave abuse may be ascribed when the NLRC’s findings and conclusions lack substantial evidence, meaning the quantum of relevant evidence a reasonable mind might accept as adequate. If the NLRC’s ruling had a basis in evidence and applicable law and jurisprudence, no grave abuse existed and the petition should be dismissed.

The Court’s Evaluation of the Claimed Grave Abuse

Applying these standards, the Court found that the CA correctly determined that the NLRC did not commit grave abuse of discretion. The Court stressed that petitioners sought multiple monetary and damage claims: death compensation/benefits; damages arising from DMCI’s alleged negligence; additional death benefits; and other monetary claims such as holiday pay, service incentive leave pay, and 13th month pay.

On death compensation/benefits, the Court agreed with the NLRC. It noted that Reynaldo, though employed as a seafarer, was deployed in an inter-island vessel sailing within domestic waters. Because there was no contract like the POEA-Standard Employment Contract applicable to international waters deployment, and because the Court found no specific contractual provision making DMCI directly liable for death benefits, Reynaldo’s death on duty was governed by the Labor Code, particularly Articles 174, 178, 179, and 200(a). The Court invoked the clear intent of the statutory scheme that the employer is relieved from direct payment obligations for work-connected death or illness by reason of the employer’s contribution to the fund, so that adversarial labor proceedings and the related presumptions and defenses are avoided. It further reiterated that once the employer pays its share to the fund, its obligation ends. Consequently, the Court held that DMCI was not liable for death benefits, as liability rested on the State Insurance Fund administered by the SSS.

On the damages claim allegedly arising from DMCI’s negligence, the Court affirmed the NLRC’s jurisdictional conclusion. It held that petitioners’ allegations in their position paper before the LA made out a claim based on torts, and that such a claim was cognizable by the regular courts, not labor tribunals. While t

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