JURISDICTION OVER CASE REQUIRING APPLICATION OF GENERAL CIVIL LAW, SUCH AS QUASI-DELICT, IS NOT WITH THE LABOR ARBITER

Jurisdiction of Labor Arbiters and the NLRC under the Labor Code is provided under Art. 224 thereof. However, where the resolution of the dispute requires expertise, not in labor management relations nor in wage structures and other terms and conditions of employment, but rather in the application of the general civil law, such claim falls outside the area of competence or expertise ordinarily ascribed to the LA and the NLRC.

Thus, the SC held as follows:

Spouses Dalen, Sr., et al. vs. Mitsu O.S.K. Lines Diamond Camella, S.A.
G.R. No. 194403, July 24, 2019

Jurisdiction over money claims; Jurisdiction over quasi-delict cases; Application of general civil law; Where the resolution of the dispute requires expertise, not in labor management relations nor in wage structures and other terms and conditions of employment, but rather in the application of the general civil law, such claim falls outside the area of competence or expertise ordinarily ascribed to the LA and the NLRC; Settlement agreement; If the agreement was voluntarily entered into and represents a reasonable settlement, it is binding on the parties and may not later be disowned simply because of change of mind; Blanket waiver of right to sue; Claims arising from quasi-delict would be barred as shown in the blanket waiver of right to sue

Facts:

Magsaysay Maritime Corporation (Magsaysay), the manning agent of Mitsui O.S.K. Lines, a non-resident corporation, not doing business in the Philippines hired Rosadel Reyes, et al. It was the charterer of MV Sea Prospect while Diamond Camellia, S.A., another non-resident corporation, not doing business in the Philippines, and of Panamian registry. Respondents are collectively referred to as Magsaysay, et al.

MV Sea Prospect sank resulting in the drowning of the ten (10) crew members.

Spouses Dalen, et al. alleged that as heirs and beneficiaries of the missing seafarers they received full payment of death benefits based on the employment contract as well as the International Transport Workers’ Federation-Japan Seaman Union -Associated Marine Officers and Seafarers Union of the Philippines Collective Bargaining Agreement (CBA) governing the employment of the seafarers. Spouses Dalen, et al. were accompanied by their counsel, Atty. Emmanuel Partido in signing the settlement agreements, affidavits of heirship and receipts of payment before the Overseas Workers Welfare Administration (OWWA).

Spouses Dalen, et al. allegedly demanded in writing further compensation in connection with the sinking of the vessel and threatened that an action arising from tort would be commenced in Panama should their demand be unheeded. Hence, Magsaysay, et al. filed before the Regional Trial Court (RTC) of Manila, Branch 46, a Petition for Declaratory Relief and Approval of the Compromise/Settlement Agreement against Spouses Dalen, et al.. Spouses Dalen, et al. filed the complaint for damages against Magsaysay, et al. before the Admiralty Court of Panama. Magsaysay, et al. converted the petition for declaratory relief into an ordinary civil action for breach of contract and damages and prayed for the approval of the settlement agreement.

The trial court issued an order confirming the validity of the settlement agreement, declaring that the Spouses Dalen, et al. breached the material provisions of the settlement agreement, and approved such settlement agreement. The Supreme Court of Panama, meanwhile, dismissed Spouses Dalen, et al.’s case for lack of jurisdiction based on forum non conveniens.

In a case filed before the Labor Arbiter (LA), the LA dismissed the complaint on the grounds of lack of jurisdiction over the persons of the Magsaysay, et al. and prescription of action.

According to the LA, summonses cannot be validly served upon the Magsaysay, et al. being foreign corporations and not having transacted business in the Philippines. In this case, the action for damages is an action in personam, wherein jurisdiction over their person is necessary for the LA to validly try and decide their case.

However, since they are non-residents, personal service of summonses within the Philippines is essential for the acquisition of jurisdiction over their persons. Moreover, the LA found that the action filed by Spouses Dalen, et al. has already prescribed. The Labor Code provides that all money claims arising from employer-employee relationship accruing during the effectivity of this Code shall be filed within three years from the time the cause of action accrued. Here, the sinking of MV Sea Prospect occurred on August 26, 1998, they have three years to file their claim from such date. They filed their complaint on April 17, 2002 or more than three years therefrom.

However, the LA referred the case back to the Maritime Court of Panama where trial on the merits could be had and where any judgment in favor of Spouses Dalen, et al. could be sufficiently satisfied from the letter of guarantee issued by Magsaysay, et al.. It held that contrary to the decision of the Supreme Court of Panama, the Maritime Court of Panama is the forum in which the action may be most appropriately brought, considering the best interest of the parties.

The Spouses Dalen, et al. appealed to the National Labor Relations Commission (NLRC) but it was dismissed.

Upon the filing of the Motion for Reconsideration, the NLRC issued a Resolution setting aside the earlier Resolution and directing the LA to serve summons to Magsaysay at its business address given to the Philippine Overseas Employment Administration (POEA) so that jurisdiction may be acquired over the persons of the Magsaysay, et al. and proper proceedings can be held. The records were then remanded to the LA of origin for immediate action.

LA Ruling:

The LA issued another Decision dismissing the complaint due to the execution of individual compromise agreements by Spouses Dalen, et al. waiving their rights against Magsaysay, et al.

The LA had been aware of the fact that the trial court as well as the CA had affirmed the validity of the compromise agreements. Moreover, the Spouses Dalen, et al. received their full compensation under the contract and it was not found that the amount received were unconscionable and grossly disproportionate. It also did not appear that Spouses Dalen, et al. were defrauded or tricked into signing the same.

Lastly, the LA found that the claim had already prescribed.19 Aggrieved, Spouses Dalen, et al. filed their appeal to the NLRC.

NLRC Ruling:

The NLRC dismissed the appeal saying that the claim, even if based on tort was already included in the quitclaims executed in favor of the Magsaysay, et al.

It also held that prescription has already set in. Still aggrieved, Spouses Dalen, et al. filed a Petition for Certiorari.

CA Ruling:

The CA dismissed the petition.

The CA reiterated the ruling of the LA and NLRC that the complaint for damages was filed out of time and that the claim filed with the Admiralty Court of Panama did not toll the prescriptive period for filing a claim here in the Philippines.

Moreover, it was decided that the Settlement Agreement, Receipt and General Receipt and Release of Rights as well as the affidavits and certifications signed by the Spouses Dalen, et al. released the Magsaysay, et al. from all liabilities, including those based on tort, arising from the death/disappearance of the crew members as a result of the sinking of the vessel. The settlement agreement may be pleaded as an absolute and final bar to any suit. Also, Spouses Dalen, et al. committed themselves not to file any claim against Magsaysay, et al. in any jurisdiction.

Undaunted, Spouses Dalen, et al. filed a Motion for Reconsideration which was denied via a Resolution. Hence, the petition before the SC.

Issue/s:

Whether or not the LA or the NLRC has jurisdiction over cases requiring application of general civil law, such as quasi-delict cases

Whether or not a settlement agreement with blanket waiver of the right to sue can be disregarded for the party to file a case in the regular court

SC Ruling:

In deciding whether a case arises out of employer-employee relations, the Court formulated the “reasonable causal connection rule”, wherein if there is a reasonable connection between the claim asserted and the employer-employee relations, then the case is within the jurisdiction of the labor courts.

In this case, Spouses Dalen, et al.’s claim for damages is grounded on Magsaysay, et al.’s gross negligence which caused the sinking of the vessel and the untimely demise of their loved ones. Based on this, the subject matter of the complaint is one of claim for damages arising from quasi-delict, which is within the ambit of the regular court’s jurisdiction.

According to Article 2176 of the New Civil Code, “Whoever by act or omission causes damage to another, there being fault or negligence, is obliged to pay for the damage done. Such fault or negligence, if there is no pre-existing contractual relation between the parties, is called quasi-delict.”

Thus, to sustain a claim for liability under quasi-delict, the following requisites must concur: (a) damages suffered by the plaintiff; (b) fault or negligence of the defendant, or some other person for whose acts he must respond; and ( c) the connection of cause and effect between the fault or negligence of the defendant and the damages incurred by the plaintiff.

For failure therefore to exercise extra ordinary diligence required of them, the Magsaysay, et al. must be held liable for damages to the surviving heirs of the deceased crew members. Notwithstanding the contractual relation between the parties, the act of Magsaysay, et al. is a quasi-delict and not a mere breach of contract.

Where the resolution of the dispute requires expertise, not in labor management relations nor in wage structures and other terms and conditions of employment, but rather in the application of the general civil law, such claim falls outside the area of competence or expertise ordinarily ascribed to the LA and the NLRC.

Therefore, the LA has no jurisdiction over the case in the first place; it should have been filed to the proper trial court.

Notwithstanding the lack of jurisdiction of the LA to take cognizance of the case, Spouses Dalen, et al. still cannot file the complaint with the trial court because the Settlement Agreement signed by them was valid.

It is true that quitclaims and waivers are oftentimes frowned upon and are considered as ineffective in barring recovery for the full measure of the worker’s rights and that acceptance of the benefits therefrom does not amount to estoppel. The reason is plain. The employer and employee, obviously, do not stand on the same footing. However, not all waivers and quitclaims are invalid as against public policy.

If the agreement was voluntarily entered into and represents a reasonable settlement, it is binding on the parties and may not later be disowned simply because of change of mind. It is only where there is clear proof that the waiver was wangled from an unsuspecting or gullible person, or the terms of the settlement are unconscionable on its face, that the law will step in to annul the questionable transaction. But where it is shown that the person making the waiver did so voluntarily, with full understanding of what he was doing, and the consideration for the quitclaim is credible and reasonable, the transaction must be recognized as a valid and binding undertaking.

In this case, it should be noted that when Spouses Dalen, et al. signed the Settlement Agreements, they did it with their counsel of choice. It could be said that they brought their counsel along to make sure that they would understand the contents of the agreements and that they are not tricked into signing the same. A lawyer would know whether the agreement is unreasonable and one-sided on its face.

Second, the agreement provides for the “release of Magsaysay, et al. from all liabilities including those based from torts, arising from the death/disappearance of the crew members as a result of the sinking of the vessel.” Hence, even claims arising from quasi-delict would be barred as shown in the blanket waiver of right to sue.