CONDITIONAL SATISFACTION OF JUDGMENT THAT IS UNFAIR AND PREJUDICIAL TO WORKER IS AGAINST PUBLIC POLICY

Conditional satisfaction of judgment that is prejudicial and unfair is contrary to public policy and entered into in bad faith. Thus, the SC held in the following case:

Daang vs. Skippers United Pacific, Inc.
G.R. No. 191902, July 30, 2019

Conditional satisfaction of judgment; Agreement that is unfair and contrary to public policy; Moot and academic

Facts:

Respondents United Pacific, Inc., for and on behalf of its foreign principal Commercial S.A. (collectively, Skippers, et al.), hired petitioner Marino B. Daang (Daang) as chief cook on board MV Merry Fisher. Daang boarded the vessel on October 17, 2005. Although his contract was originally for a period of nine months, it  was extended upon mutual agreement of the  parties. Thereafter, Daang strained his back while lifting a 50-kilo bag of flour.

Owing to the increasing severity of his back pain, he was sent to a clinic in Santiago, Cuba where he was diagnosed with acute lumbago and given medication. Daang was further examined in the ports of Havana and Garcia, Cuba. He was eventually repatriated to the Philippines on May 28, 2007. Upon arrival, Daang was referred to the St. Christopher Clinic where Skippers, et al.’ company-designated physician, Dr. Leynard Rubico (Dr. Rubico), recommended the conduct of a Magnetic Resonance Imaging (MRI) procedure.

Based on the results of the MRI procedure, Daang was found to be suffering from “degenerative changes of the lumbar spine with right paracentral and neural foraminal disc protrusion [at] L4-L5.” Although advised to undergo surgery, he opted for physiotherapy instead. On July 2, 2007, Dr. Rubico declared Daang fit to work, with the advice to “refrain from lifting heavy weights/objects and to maintain proper posture as necessary.”

Skippers, et al. thereafter paid Daang sickness benefits. Meanwhile, Daang sought re-employment with Skippers, et al.. In its course, he executed an Affidavit/Undertaking and a handwrittendeclaration freeing Skippers, et al. from any liability in case he incurs another disease in relation to his back injury.

While undergoing the requisite pre-employment medical examination (PEME), Daang discovered that he had gallbladder polyps and eventually decided to forego re-employment. He consulted Dr. Manuel Fidel M. Magtira (Dr. Magtira), an orthopedic surgeon at Casa Medica, Inc. in SM Southmall, Las Piñas, who issued a Medical Report finding him “partially and permanently disabled with Grade 6 (50%) impediment based on the Philippine Overseas Employment Administration (POEA) Standard Employment Contract.”

Daang thereafter demanded payment of disability benefits from Skippers, et al.. When his demands went unheeded, he filed a  complaint for total and permanent disability  benefits and damages before the NLRC.

LA Ruling:

The Labor Arbiter (LA) ruled in Daang’s favor and ordered Skippers, et al. to pay total and permanent disability benefits.

NLRC Ruling:

On appeal, the NLRC affirmed the ruling of the LA.

It held that there is no dispute that Daang sustained his injury while performing his duties on board the vessel during the term of his employment. While Dr. Rubico did declare Daang fit to work, he also advised the latter to refrain from lifting heavy objects. To the NLRC, this was proof that Daang can no longer perform his customary job.

Further, the NLRC found that, from his repatriation on May 29, 2007 until the filing of his complaint on October 31, 2007, more than 120 days had elapsed and Daang has not yet boarded another vessel to work as a seafarer. Thus, he is considered permanently and totally disabled.

The NLRC also rejected Skippers, et al.’ argument that Daang waived his right to file a complaint when he signed the Receipt and Release dated July 14, 2007. According to the NLRC, the law does not consider as valid any agreement to receive less compensation than what a worker is  entitled to.

Skippers, et al. thus elevated the NLRC’s  ruling to the CA via a  special civil action for certiorari.

CA Ruling:

The CA reversed the NLRC.

It gave greater weight to Dr. Rubico’s finding that Daang was fit to work over Dr. Magtira’s contrary pronouncement considering that the former had given Daang more extensive medical attention compared to the latter who did not appear to have conducted any independent examination.

The CA also upheld the Release and Receipt executed by Daang for lack of proof that it was entered into involuntarily. Daang sought reconsideration but this was denied by the CA.

Hence, the petition before the Supreme Court (SC). However, pending resolution of his action before the SC, Daang filed an urgent manifestation with motion to dismiss, alleging that on March 10, 2009, the parties jointly executed and filed with the NLRC a  “conditional satisfaction of judgment with urgent motion to cancel appeal bond all without prejudice to the pending petition for certiorari in the Court of Appeals” (hereinafter, Conditional Satisfaction of Judgment).

Daang claims that he received from Skippers, et al. the amount of P2,985,129.00 as conditional payment of the judgment award of the LA only to prevent imminent execution of the NLRC ruling.

Under this Conditional Satisfaction of Judgment, both parties prayed that the same be made of record and that Skippers, et al.’s appeal bond be cancelled. It also appears that Daang submitted a  notarized affidavit (Affidavit), approved by LA Arthur A. Amansec, where the former committed, among others, not to file any complaint or prosecute any suit or action against Skippers, et al. after receiving the payment which he will return in case of reversal of the NLRC Decision in his favor.

Skippers, et al. filed a counter-manifestation, claiming that the Conditional Satisfaction of Judgment should not be taken against them because it was the only protection available to them to prevent the execution proceedings before the NLRC.

Issue/s:

Whether or not the Conditional Satisfaction of Judgment which obliged to return all settlement money that the employee received in the event that the CA reverses the NLRC, a waiver of his claims and right to prosecute any further action, and the giving up of any legal recourse available to him is fair to the worker

Whether or not a Conditional Satisfaction of Judgment which obliged to return all settlement money that the employee received in the event that the CA reverses the NLRC, a waiver of his claims and right to prosecute any further action, and the giving up of any legal recourse available to him is made in bad faith

Whether or not a Conditional Satisfaction of Judgment which obliged to return all settlement money that the employee received in the event that the CA reverses the NLRC, a waiver of his claims and right to prosecute any further action, and the giving up of any legal recourse available to him should be treated as voluntary settlement in full satisfaction of the NLRC’s judgment

Whether or not with the voluntary satisfaction of judgment award, the petition before the SC is rendered moot and academic

SC Ruling:

The SC granted the petition.

According to the SC, the facts and circumstances of the case appear to be on all fours with those in Hernandez v. Crossworld Marine Services, Inc. In said Hernandez case, to prevent the imminent execution of the NLRC’s ruling awarding seafarer Juan B. Hernandez (Hernandez) total and permanent disability benefits pending resolution of the case it filed before the CA, the parties executed a Conditional Satisfaction of Judgment stating that: ( 1) the payment was made only for the purpose of avoiding the execution proceeding; (2) it  is without prejudice to the employer’s petition for certiorari before the CA; and (3) in case of reversal, Hernandez shall return the amount he received.

The SC held that based on Hernandez, this kind of agreement is unfair and against public policy. Accordingly, it held that such conditional payment of the seafarer’s claim should be treated as a “voluntary settlement” in full satisfaction of the NLRC’s judgment-which consequently rendered the employer’s petition before the CA moot and academic.

In a nutshell, the documents above enabled Skippers, et al. to prevent the execution of the NLRC Decision, maintain their petition before the CA, and, in the event of an unfavorable outcome, seek an appeal before the SC. Daang, on the other hand, would not only be obliged to return all settlement money he received in the event that the CA reverses the NLRC, by his waiver of his claims and right to prosecute any further action, he also gave up any legal recourse which would otherwise have been available to him.

Clearly, according to the SC, Daang is on the losing end. The terms of the Conditional Satisfaction of Judgment and the Affidavit, not unlike those considered by this Court in Hernandez, are highly unfair and prejudicial against him.

Applying Hernandez, the SC found Skippers, et al. to be in bad faith and should therefore bear the consequence of their actions-the conditional payment of the judgment award to Daang will be treated as a voluntary settlement in full satisfaction of the NLRC’s judgment. With the judgment award satisfied when the parties signed and filed the Conditional Satisfaction of Judgment with the NLRC, Skippers, et al.’s petition before the CA became moot and academic.

The SC rejected Skippers, et al.’s contention that the Conditional Satisfaction of Judgment is their only protection against the execution proceedings before the NLRC. Skippers, et al. are not compelled to immediately pay the judgment award. In fact, they had already filed with the NLRC an appeal bond intended as an assurance to Daang that he would receive the money judgment upon dismissal of Skippers, et al.’s appeal.