Andag vs. DMC Construction Equipment Resources Inc.

An inter-island seafarer's death benefits are governed by the Labor Code's State Insurance Fund provisions, not the POEA-Standard Employment Contract, such that the employer — upon payment of its share to the fund — is relieved of direct liability for death compensation, which is instead payable by the SSS. A claim for damages specifically grounded on the employer's negligence in providing a safe workplace constitutes a quasi-delict cognizable by regular courts, not labor tribunals.

Reynaldo A. Andag was employed by DMC Construction Equipment Resources, Inc. (DMCI) as Second Mate aboard its tugboat, the MIT Alexander Paul, navigating domestic or inter-island waters. His employment was not governed by a POEA-Standard Employment Contract, which typically applies to seafarers sailing international waters and contains provisions making the employer liable for a seafarer's death on duty. Absent such a contract, his death on duty fell under the Labor Code's provisions on the State Insurance Fund, which is administered by the Social Security System (SSS). DMCI had also voluntarily procured an accidental death insurance policy for its employees, the proceeds of which it sought to condition on the heirs' execution of a waiver and quitclaim.

On July 16, 2012, DMCI employed Reynaldo A. Andag as Second Mate aboard its tugboat, the MIT Alexander Paul, an inter-island vessel sailing domestic waters. On October 18, 2013, while the tugboat was towing an overloaded barge, a recoiling rope accidentally struck Reynaldo, causing him to be thrown against the ship's iron bars. He was rushed to the hospital but was pronounced dead on arrival.

Months after the incident, DMCI contacted Reynaldo's heirs — his spouse Veneranda B. Andag and their children Jaymark, Honey Grace, and Kim Philip — and offered P200,000.00 as compensation for Reynaldo's death, on the condition that they execute a waiver and quitclaim in the company's favor. The heirs refused the offer, after which they no longer heard from DMCI. They sent a formal demand letter, which DMCI ignored.

Constrained by the employer's inaction, the heirs filed a complaint before the NLRC, Regional Arbitration Branch No. VI in Iloilo City, seeking death compensation and benefits, actual, moral, and exemplary damages plus attorney's fees for DMCI's alleged negligence resulting in Reynaldo's death, and other monetary claims due to Reynaldo such as holiday pay, service incentive leave pay, and 13th month pay. DMCI countered that the heirs should recover death benefits from the State Insurance Fund (SSS), that the P200,000.00 represented proceeds of a voluntary accidental death insurance policy it had secured for employees, and that it had already paid all monetary benefits due to Reynaldo as evidenced by his payslips.

The Labor Arbiter dismissed the complaint, agreeing that death benefits should be claimed from the SSS, finding no evidence of DMCI's liability for Reynaldo's death, denying moral and exemplary damages, and concluding that all wages and monetary benefits had already been paid. On appeal, the NLRC affirmed with modification, ordering DMCI to turn over the P200,000.00 insurance proceeds without condition, while sustaining the LA's findings on the SSS's liability for death benefits, the lack of labor tribunal jurisdiction over the tort claim, and the prior payment of other monetary claims. The CA upheld the NLRC, finding no grave abuse of discretion.

• Jurisdiction over Damages Claim: Petitioners assailed the NLRC's finding that their claim for damages against DMCI is a claim based on torts cognizable by regular courts, not labor tribunals.
• Entitlement to Monetary Reliefs: Petitioners contested the NLRC's ruling that they are not entitled to the monetary reliefs sought, including death compensation benefits and other monetary claims due to Reynaldo.

• Source of Death Benefits: Respondent DMCI maintained that petitioners should recover death benefits not from it as employer, but from the State Insurance Fund, i.e., the SSS.
• Nature of the P200,000.00 Offer: Respondent argued that the P200,000.00 it offered represented proceeds of an accidental death insurance policy it had voluntarily secured for its employees, which petitioners unfortunately refused to accept.
• Prior Payment of Monetary Claims: Respondent contended that it had already paid Reynaldo's monetary benefits, as evidenced by various documents including his payslips.

• Grave Abuse of Discretion: Whether the CA correctly ruled that the NLRC did not gravely abuse its discretion in issuing its assailed rulings.
• Death Benefits for Inter-Island Seafarer: Whether DMCI, as employer, is directly liable for Reynaldo's death benefits, or whether such benefits are payable by the State Insurance Fund (SSS).
• Jurisdiction over Negligence-Based Damages Claim: Whether the claim for damages arising from DMCI's alleged negligence resulting in Reynaldo's death is cognizable by labor tribunals or by regular courts.
• Entitlement to Other Monetary Claims: Whether petitioners are entitled to additional monetary claims such as holiday pay, service incentive leave pay, and 13th month pay.

• Grave Abuse of Discretion: No. The CA correctly found no grave abuse of discretion on the part of the NLRC, as the NLRC's rulings were in accord with the evidence on record and settled principles of labor law.
• Death Benefits for Inter-Island Seafarer: No. DMCI is not directly liable for death benefits. Because Reynaldo was an inter-island seafarer covered by the Labor Code's State Insurance Fund provisions rather than a POEA-Standard Employment Contract, death benefits are payable by the SSS, the employer's obligation being limited to payment of its share to the fund.
• Jurisdiction over Negligence-Based Damages Claim: No, labor tribunals have no jurisdiction. A claim specifically grounded on the employer's negligence to provide a safe workplace is a quasi-delict cognizable by regular courts, not a labor issue.
• Entitlement to Other Monetary Claims: No. The labor tribunals correctly found that DMCI had already paid all other monetary claims due to Reynaldo, as substantiated by payslips and other evidence on record.

• Grave Abuse of Discretion: In a Rule 45 review of a CA decision in a labor case, the Court examines whether the CA correctly determined the presence or absence of grave abuse of discretion in the NLRC's decision. Grave abuse of discretion connotes a capricious and whimsical exercise of judgment, so patent and gross as to amount to an evasion of positive duty. In labor cases, it may be ascribed to the NLRC when its findings and conclusions are not supported by substantial evidence. Because the NLRC's rulings had basis in the evidence and applicable law and jurisprudence, no grave abuse of discretion existed, and the CA correctly so declared.

• Death Benefits for Inter-Island Seafarer: While Reynaldo was employed by DMCI as a seafarer, he was deployed on an inter-island vessel sailing domestic waters. His employment was therefore not covered by any POEA-Standard Employment Contract, which typically applies to seafarers sailing international waters and contains provisions making the employer liable should a seafarer perish on duty. Absent any specific provision in his employment contract with DMCI, Reynaldo's death on duty was governed by the Labor Code, particularly Articles 174, 178, 179, and 200(a) thereof. The clear intent of the law is that the employer should be relieved of the obligation of directly paying employees compensation for work-connected illness or injury, on the theory that this is part of the cost of production or business activity. Once the employer pays its share to the fund, all obligation on its part to its employees is ended. Accordingly, the State Insurance Fund, particularly the SSS, is liable for Reynaldo's death benefits, not DMCI.

• Jurisdiction over Negligence-Based Damages Claim: While the maintenance of a safe and healthy workplace is ordinarily a subject of labor cases, a claim specifically grounded on the employer's negligence to provide a safe, healthy, and workable environment for its employees is no longer a labor issue but rather a case for quasi-delict under the jurisdiction of regular courts. Petitioners' allegations in their Position Paper before the Labor Arbiter made out a cause of action for tort. The NLRC therefore correctly ruled that it had no jurisdiction over this cause of action, and petitioners should file the proper case before the regular courts should they wish to pursue it.

• Entitlement to Other Monetary Claims: The labor tribunals correctly found that DMCI had already paid all other monetary claims due to Reynaldo, as substantiated by evidence on record including payslips. Factual findings of labor tribunals, especially when affirmed by the CA, are generally accorded not only respect but finality, and are thus binding on the Court. Additionally, the NLRC already ruled that petitioners are entitled to the P200,000.00 accidental death insurance proceeds, which DMCI should turn over without any condition, as the proceeds had already been released to DMCI but it had unduly conditioned the turn-over on petitioners signing a waiver and quitclaim.

• State Insurance Fund Doctrine (Employer's Limited Liability for Work-Connected Death) — Under the Labor Code, the employer's obligation for work-connected injury or death of employees is limited to payment of its share to the State Insurance Fund. Once the employer pays its share, all obligation on its part to its employees is ended, and the State Insurance Fund (SSS) becomes liable for compensation. The clear intent of the law is to relieve the employer of directly paying compensation and to eliminate adversarial proceedings between employer and employee. In this case, because Reynaldo was an inter-island seafarer not covered by a POEA-Standard Employment Contract, his death benefits were governed by the Labor Code's State Insurance Fund provisions, making the SSS — not DMCI — liable for death compensation.

• Jurisdictional Distinction Between Labor Claims and Quasi-Delict Claims — While the maintenance of a safe and healthy workplace is ordinarily a subject of labor cases, a claim specifically grounded on the employer's negligence to provide a safe, healthy, and workable environment is no longer a labor issue but a case for quasi-delict cognizable by regular courts. The Court applied this doctrine by affirming the NLRC's ruling that it lacked jurisdiction over petitioners' damages claim based on DMCI's alleged negligence, which properly belonged to the regular courts.

• Standard of Review in Rule 45 Labor Cases — In a Rule 45 review of a CA decision in a labor case, the Court examines whether the CA correctly determined the presence or absence of grave abuse of discretion in the NLRC's decision. Grave abuse of discretion may be ascribed to the NLRC when its findings and conclusions are not supported by substantial evidence — that amount of relevant evidence a reasonable mind might accept as adequate to justify a conclusion. If the NLRC's ruling has basis in the evidence and applicable law and jurisprudence, no grave abuse of discretion exists.

• "The clear intent of the law is that the employer should be relieved of the obligation of directly paying his employees compensation for work-connected illness or injury on the theory that this is part of the cost of production or business activity; and that no longer would there be need for adversarial proceedings between an employer and his employee in which there were specific legal presumptions operating in favor of the employee and statutorily specified defenses available to an employer." — This passage articulates the rationale behind the State Insurance Fund provisions of the Labor Code, explaining why the employer's liability for work-connected death is limited to contributions to the fund rather than direct payment of death benefits.

• "[O]nce the employer pays his share to the fund, all obligation on his part to his employees is ended." — This is the canonical formulation of the employer's extinguished liability upon payment of its share to the State Insurance Fund, frequently cited in subsequent jurisprudence involving employer liability for work-connected death or injury.

• "[A] claim specifically grounded on the employer's negligence to provide a safe, healthy and workable environment for its employees is no longer a labor issue, but rather, is a case for quasi-delict which is under the jurisdiction of the regular courts." — This passage defines the jurisdictional boundary between labor tribunals and regular courts with respect to workplace safety claims, distinguishing ordinary labor disputes from tort-based claims arising from employer negligence.

• San Miguel Corporation vs. NLRC, 247 Phil. 338 (1988) — Followed. Cited for the doctrine that the employer is relieved of direct liability for work-connected compensation once it pays its share to the State Insurance Fund, and that all obligation on the employer's part to its employees is ended.

• Indophil Textile Mills, Inc. vs. Adviento, 740 Phil. 336 (2014) — Followed. Cited for the principle that a claim specifically grounded on the employer's negligence to provide a safe workplace is a quasi-delict cognizable by regular courts, not labor tribunals.

• Tolosa vs. NLRC, 449 Phil. 271 (2003) — Followed. Cited alongside Indophil for the jurisdictional distinction between labor claims and tort-based claims arising from employer negligence.

• Pelagio vs. Philippine Transmarine Carriers, Inc., G.R. No. 231773, March 11, 2019 — Followed. Cited for the standard of review in Rule 45 labor cases and the definition of grave abuse of discretion as applied to NLRC rulings.

• Nahas vs. Olarte, 734 Phil. 569 (2014) — Followed. Cited for the doctrine that factual findings of labor tribunals, especially when affirmed by the CA, are accorded respect and finality and are binding on the Court.

• Article 174 [168], Labor Code (Compulsory Coverage) — Coverage in the State Insurance Fund is compulsory upon all employers and their employees not over sixty years of age. Applied to establish that DMCI and Reynaldo were subject to compulsory coverage under the SSS.

• Article 178 [172], Labor Code (Limitation of Liability) — The State Insurance Fund is liable for compensation to the employee or his dependents, except in specified circumstances (intoxication, willful intention to injure, notorious negligence). Applied to confirm that the SSS, not the employer, is liable for Reynaldo's death compensation.

• Article 179 [173], Labor Code (Extent of Liability) — The liability of the State Insurance Fund is exclusive and in place of all other liabilities of the employer to the employee or his dependents. Applied to relieve DMCI of direct liability for death benefits upon payment of its share to the fund.

• Article 200 194, Labor Code (Death) — Provides for the death benefit payable by the System to primary beneficiaries upon the death of a covered employee, with a guaranteed monthly income benefit for five years and a minimum death benefit of fifteen thousand pesos. Applied as the governing provision for Reynaldo's death benefits, payable through the SSS.

J. Reyes, Jr., Hernando, Zalameda, and Gaerlan, JJ., concurred.