SC: Corporate officers liable with manning agency for seafarers’ disability pay

The Supreme Court (SC) has reaffirmed that corporate directors and officers of recruitment and manning agencies may be held personally liable, together with their companies, for disability benefits awarded to seafarers.

In a decision penned by Associate Justice Jhosep Y. Lopez, the Court’s Special First Division granted a motion for partial reconsideration and ruled that a corporate officer of Magsaysay Maritime Corporation is solidarily liable for the permanent disability benefits of an injured seafarer.

The case stemmed from the complaint of electrical fitter Ruthgar T. Parce, who was hired by Magsaysay Maritime Corporation for its foreign principal, Princess Cruises Ltd.

After sustaining a shoulder injury on board, Parce was repatriated to Manila and diagnosed by a company-designated physician with rotator tendinitis.

He underwent physical therapy but was later informed that he had reached the maximum medical treatment period and that his sickness allowance would be discontinued. Princess Cruises subsequently declared him fit to work.

Still suffering from pain, Parce sought a second medical opinion, which found him unfit for sea duty.

He then asked Magsaysay to refer him to a third doctor, as required under the rules, and to provide copies of his medical records.

The agency declined and instead requested a copy of the second doctor’s report to explore a possible settlement. Parce eventually filed a complaint for disability benefits and reimbursement of medical expenses before the Labor Arbiter.

The Labor Arbiter ruled in his favor, ordering Magsaysay and Princess Cruises to pay $60,000 in disability benefits. It found the company-designated doctor’s report incomplete for failing to categorically state that Parce was fit to work.

With no definite assessment issued within the 240-day period required by law, Parce’s disability was deemed permanent. The National Labor Relations Commission affirmed the ruling and included Magsaysay Fleet Director Sorwin Joy G. Rivera as liable.

Although the Court of Appeals reversed the ruling, saying Parce did not promptly question his medical assessment, the SC reinstated the award. It held that the incomplete medical report left Parce with nothing definite to contest and that his permanent disability arose by operation of law after the lapse of the 240-day period.

Upon Parce’s motion for partial reconsideration, the High Court also declared Rivera solidarily liable with the company.

Citing Section 10 of Republic Act No. 8042 or the Migrant Workers and Overseas Filipinos Act of 1995, the Court stressed that when a recruitment or manning agency is a corporation or partnership, its officers and directors are jointly and severally liable with the company for money claims awarded to overseas Filipino workers.

While corporate officers are generally shielded from personal liability for corporate acts, the Court said this rule does not apply when a specific law provides otherwise. Rivera was named in the complaint as “Owner/President/Manager” and had signed the employment contract on behalf of Magsaysay.

The Court also noted that under Philippine Overseas Employment Administration rules, corporate officers of manning agencies are required to execute a verified undertaking, making them solidarily liable for claims arising from the employer-employee relationship as a condition for securing a license to operate.

The SC emphasized that these statutory and regulatory provisions are deemed written into every seafarer’s employment contract, in line with the State’s constitutional policy of protecting labor and ensuring overseas Filipino workers receive immediate and adequate compensation for valid claims.