Loadstar International Shipping, Inc. vs. Cawaling

A corporate officer of an overseas recruitment agency is solidarily liable with the corporation for disability benefits under Section 10 of RA 8042, as amended by RA 10022, and jurisdiction over a defendant corporation may be acquired through voluntary appearance even without service of summons.

LISI is a domestic company engaged in international shipping, with Calderon as Head of its Personnel Department. Respondent was hired by LISI on behalf of its principal, Loadstar Shipping Company Inc. (LSCI), as Cook aboard the vessel "MV MANGIUM" for a 12-month contract period with a monthly salary of USD 500.00. Prior to deployment, respondent underwent a pre-employment medical examination (PEME) and was certified fit for sea duty. The dispute involves claims for disability benefits arising from illness developed during overseas employment and the applicability of RA 8042 (Migrant Workers and Overseas Filipinos Act), as amended by RA 10022, to the employment relationship and the solidary liability of corporate officers.

LISI is a domestic company engaged in international shipping, with Calderon as Head of its Personnel Department. Respondent Richard T. Cawaling was hired by LISI on behalf of its principal, Loadstar Shipping Company Inc. (LSCI), as Cook aboard the vessel "MV MANGIUM" for a contract period of 12 months with a monthly salary of USD 500.00. Prior to his deployment on July 27, 2014, respondent underwent a pre-employment medical examination (PEME) where he was certified fit for sea duty. His duties primarily entailed preparing meals, maintaining cleanliness of serving areas, and observing standards for safe and sanitary food handling.

During the last week of October 2014, respondent felt muscle pains and stiffness in his legs and shoulders which persisted for days. He informed his supervising officer, who reported the condition to the vessel's Chief Officer, but his complaints were acted upon only when the vessel docked at the port of Manila. Upon arrival, respondent was referred by LISI to its designated physician, Dr. Paul M. Teves of the First Medical Team. Dr. Teves issued his first Medical Report on November 6, 2014, diagnosing respondent with acute tenosynovitis or trigger finger — a painful condition caused by repeated movement or forceful use of the finger or thumb — and recommending surgery with a prognosis of fitness to work within four to six weeks. Further medical tests showed aggravation, and Dr. Teves's second Medical Report dated November 14, 2014 stated that respondent's right hand urgently needed surgery as the stiffness might worsen.

Respondent filed a request for disembarkation, which LISI approved, and he disembarked the vessel on November 21, 2014. On November 25, 2014, Dr. Teves issued his third Medical Report recommending surgical release of the trigger fingers of the first, second, and third digits of the right hand, at an approximate cost of ₱120,000.00, with a follow-up visit scheduled for December 15, 2014. Respondent failed to report on the scheduled date, claiming he did not receive any notice for the surgical operation or follow-up treatment. Feeling abandoned, he consulted an independent physician, Dr. Erlinda Bandong Reyes, who diagnosed him with "muscular stiffness probably secondary to muscular dystrophy and heavy workload" and declared him "unfit for sea service in any capacity" with a disability assessment of Grade 1.

Based on Dr. Reyes's assessment, respondent requested a Certificate of Separation from LISI to claim disability benefits from the Social Security System. In his Letter-Request, which he allegedly signed in front of Calderon, respondent admitted that he had misrepresented his health condition during his PEME, stating that his condition was already revealed during his service at Sharf Sea and during his pre-employment at FMT Medical Clinic, and that he failed to disclose it to the attending physician. LISI issued the Certificate of Separation. On November 25, 2015, respondent filed a Complaint for Disability Benefits and Damages against LSCI and Calderon; LISI was not impleaded as a party respondent. Summonses were issued against LSCI and Calderon, but LISI was not summoned to participate in the mandatory conciliation proceedings. Despite the lack of summons, LISI's President Teodoro G. Bernardino executed a Special Power of Attorney on February 12, 2016, authorizing Calderon to represent the company in all stages of the proceedings. On February 15, 2016, Calderon appeared and filed a Position Paper for LISI seeking affirmative reliefs from the labor tribunal.

• Lack of Jurisdiction over LISI: Petitioners argued that LISI was not served with summons, as the complaint was addressed only to LSCI and Calderon. Since LSCI and LISI are separate and distinct corporations, the LA did not acquire jurisdiction over LISI. The filing of a position paper cannot be deemed voluntary appearance because petitioners questioned the jurisdiction of the LA.
• Calderon's Solidary Liability: Petitioners argued that Calderon cannot be held solidarily liable because there is no legal or factual basis to rule that he is a corporate officer, director, or partner in LISI. He was simply one of the managers of LISI, as Head of its Personnel Department, and Section 10 of RA 8042, which speaks of corporate officers, directors, and partners, is inapplicable to him.
• LISI's Status as Shipping Enterprise: Petitioners maintained that LISI is not a manning agency but a Philippine Overseas Shipping Enterprise accredited by POEA, not engaged in recruitment and placement for a fee. Hence, the general laws on corporations apply and not RA 8042.
• Non-Entitlement to Disability Benefits: Petitioners contended that respondent is not entitled to permanent and total disability benefits due to non-disclosure of his health condition at the time he applied for employment with LISI, citing his admission in the Letter-Request under Section 20(E) of the 2000 POEA-Standard Employment Contract.

• Corporate Identity / Piercing the Veil: Respondent argued that LISI and LSCI are one and the same juridical entity, owned by the same family and/or board of directors, with the same office address, the same President (Bernardino), the same Treasurer (Fe Maria Dora G. Bernardino), and the same Personnel Head (Calderon). Thus, a notice to LSCI is a notice to LISI, and the LA did not err in piercing the veil of corporate entity.
• Voluntary Appearance: Respondent stressed that in filing its position paper, LISI sought affirmative relief from the labor tribunal, and a party cannot invoke the jurisdiction of the court to secure affirmative relief and after obtaining or failing to obtain such relief, repudiate or question that same jurisdiction.
• LISI as Recruitment Agency: Respondent reiterated the NLRC's ruling that LISI is an entity accredited by POEA as an overseas recruitment agency. It is not disputed that LISI contracted respondent for deployment to its principal LSCI, and all documents needed for respondent's deployment, such as his Employment Contract and Embarkation Order, were issued by LISI.
• Work-Related Illness: Respondent emphasized that his illness was the result of his strenuous workload as cook aboard the cargo vessel MV Mangium and his exposure to several risk factors that weakened his body, and that Dr. Reyes had confirmed his ailment is work-related.

• Jurisdiction over LISI: Whether the Labor Arbiter acquired jurisdiction over LISI despite failure to serve summons upon it.
• Jurisdiction over Petitioners: Whether petitioners' continuous questioning of the LA's jurisdiction prevented the LA from acquiring jurisdiction over them.
• Calderon's Solidary Liability: Whether Calderon, as Head of the Personnel Department, can be held solidarily liable under Section 10 of RA 8042, as amended.
• LISI's Classification: Whether LISI is a Philippine Overseas Shipping Enterprise not covered by RA 8042, or an overseas recruitment agency subject to RA 8042.
• Entitlement to Disability Benefits: Whether respondent is entitled to permanent and total disability benefits despite alleged non-disclosure of his health condition during PEME.

• Jurisdiction over LISI: Yes. Jurisdiction over LISI was acquired through voluntary appearance, as evidenced by Calderon's letter requesting resetting of conference, the SPA executed by LISI's president authorizing representation, and LISI's filing of a position paper seeking affirmative relief, all constituting voluntary submission to the LA's authority under Rule 14, Section 23 of the 2019 Amendments to the Rules of Civil Procedure.
• Jurisdiction over Petitioners: No merit. Petitioners' continuous questioning of jurisdiction did not prevent acquisition of jurisdiction, as LISI's voluntary submission through appearance and filing of pleadings seeking affirmative relief constituted submission to the LA's authority regardless of jurisdictional objections.
• Calderon's Solidary Liability: Yes. Calderon is solidarily liable with LISI under Section 10 of RA 8042, as amended by RA 10022, which provides that corporate officers and directors of a recruitment/placement agency shall be jointly and severally liable with the corporation for money claims and damages.
• LISI's Classification: No. LISI is an overseas recruitment agency accredited by POEA, not merely a Philippine Overseas Shipping Enterprise exempt from RA 8042, as it engaged in the recruitment and deployment of workers for overseas employment as defined under the Omnibus Rules implementing RA 8042.
• Entitlement to Disability Benefits: Yes. Respondent is entitled to permanent and total disability benefits, as his tenosynovitis was work-related and work-aggravated, and his inability to work exceeded 120 days. The alleged admission of non-disclosure was properly disregarded, doubts being resolved in favor of labor.

• Jurisdiction over LISI: The Court applied Rule 14, Section 23 of the 2019 Amendments to the 1997 Rules of Civil Procedure, which provides that a defendant's voluntary appearance is equivalent to service of summons and that inclusion of other grounds aside from lack of jurisdiction in a motion to dismiss is deemed voluntary appearance. Three acts demonstrated LISI's voluntary submission: (1) Calderon's letter dated January 20, 2015 requesting resetting of the conference on behalf of LISI; (2) the SPA executed by LISI's President Bernardino on February 12, 2016 authorizing Calderon to represent LISI; and (3) LISI's filing of a position paper presenting arguments and seeking affirmative relief. Although LISI was not initially impleaded, it was not denied the opportunity to be heard and was able to voice its position and submit evidence. The Court noted that the rule relaxing the restriction to questions of law in Rule 45 petitions permits review of factual issues when lower courts come up with conflicting positions, as in this case.

• Jurisdiction over Petitioners: This issue is subsumed under the jurisdiction analysis. The Court found that petitioners' continuous questioning of jurisdiction did not prevent the LA from acquiring jurisdiction, because LISI's acts of voluntary submission — appearing through Calderon, filing pleadings, and seeking affirmative relief — constituted submission to the LA's authority regardless of their jurisdictional objections. The inclusion of a jurisdictional challenge in the position paper did not negate voluntary appearance under Section 23.

• Calderon's Solidary Liability: The Court applied Section 10 of RA 8042, as amended by RA 10022, which provides that if the recruitment/placement agency is a juridical being, the corporate officers and directors and partners shall themselves be jointly and severally liable with the corporation for money claims and damages. Citing Oscares vs. Magsaysay Maritime Corp. and Gargallo vs. Dohle Seafront Crewing (Manila), Inc., the Court explained that while corporate officers generally cannot be held personally liable for corporate contracts, personal liability may validly attach when made personally answerable by a specific provision of law. RA 8042 is a police power measure intended to regulate recruitment and deployment of OFWs, and the solidary liability provision is meant to assure aggrieved workers of immediate and sufficient payment. The Court also cited Carino vs. Maine Marine Phils., Inc. and Gopio vs. Bautista (citing Sameer Overseas Placement Agency, Inc. vs. Cabiles) to reinforce that the joint and several liability provision aligns with the State's policy of protecting labor and assures overseas workers that their rights will not be frustrated by difficulties in filing money claims against foreign employers.

• LISI's Classification: The Court applied Section 1, Rule II of the Omnibus Rules and Regulations Implementing RA 8042, as amended by RA 10022, defining a private recruitment/employment agency as any person, partnership, or corporation licensed to engage in recruitment and placement of workers for overseas employment. Recruitment and placement includes any act of canvassing, enlisting, contracting, transporting, utilizing, hiring, or procuring workers. The Court found that the POEA Certification presented by LISI itself states that LISI is "duly enlisted with the Philippine Overseas Employment Administration and therefore is authorized to deploy Filipino seamen onboard its Philippine registered vessels." Additionally, LISI contracted respondent for deployment to LSCI and issued all deployment documents including the Employment Contract and Embarkation Order. These facts establish LISI as an overseas recruitment agency subject to RA 8042, not merely a shipping enterprise governed by the Corporation Code.

• Entitlement to Disability Benefits: The Court found that respondent's tenosynovitis was work-related and work-aggravated, resulting from constant exposure to occupational hazards including extreme temperatures, cleaning chemicals, repetitive manual tasks, lifting heavy food trays, and working with dangerous tools and equipment. The LA observed that respondent could not have signed the Letter-Request admitting non-disclosure, as a person afflicted with a disease greatly affecting hand movement could not sign a document. Doubts were resolved in favor of labor pursuant to Article XIII, Section 3 of the Constitution, Article 4 of the Labor Code, and Article 1702 of the Civil Code. The Court applied the rule that permanent disability transpires when inability to work continues beyond 120 days, and total disability means incapacity to earn wages in the same or similar kind of work, citing Career Philippines Shipmanagement, Inc. vs. Silvestre and Magsaysay Mol Marine, Inc. vs. Atraje. Respondent's inability to resume work as a seaman-cook onboard any vessel bolstered the finding of permanent and total disability. The Court also noted that findings of fact of administrative agencies and quasi-judicial bodies are accorded great respect and even finality, being specialized to rule on matters within their jurisdiction and supported by substantial evidence.

• Voluntary Appearance as Equivalent to Service of Summons — Under Rule 14, Section 23 of the 2019 Amendments to the 1997 Rules of Civil Procedure, a defendant's voluntary appearance in an action is equivalent to service of summons. The inclusion in a motion to dismiss of other grounds aside from lack of jurisdiction over the person of the defendant is deemed a voluntary appearance. In this case, LISI's acts — requesting resetting of conference through Calderon, executing a SPA authorizing representation, and filing a position paper seeking affirmative relief — constituted voluntary submission to the LA's jurisdiction despite the absence of summons.

• Joint and Solidary Liability of Corporate Officers under Section 10 of RA 8042 — When a recruitment/placement agency is a juridical being, its corporate officers, directors, and partners are jointly and severally liable with the corporation for money claims and damages awarded to overseas workers. This solidary liability is a specific statutory provision that overrides the general rule of corporate limited liability, and is intended to assure aggrieved workers of immediate and sufficient payment. The local agency held liable is not left without remedy, as it may go after the foreign employer for reimbursement.

• Permanent Total Disability in Labor Law — Permanent disability transpires when the inability to work continues beyond 120 days, regardless of whether the employee loses use of any body part. Total disability means the incapacity of an employee to earn wages in the same or similar kind of work he was trained for or accustomed to perform, or in any kind of work a person of his mentality and attainments can do; it does not mean absolute helplessness. Permanent and total disability means the inability to do substantially all material acts necessary to the prosecution of a gainful occupation without serious discomfort or pain and without material injury or danger to life. In disability compensation, it is not the injury per se which is compensated, but the incapacity to work.

• Doubts Resolved in Favor of Labor — Pursuant to Article XIII, Section 3 of the Constitution, Article 4 of the Labor Code, and Article 1702 of the Civil Code, all doubts in the implementation and interpretation of labor laws and contracts shall be resolved in favor of labor. When doubts exist between the evidence presented by the employer and the employee, the scales of justice must be tilted in favor of the latter.

• "The inclusion in a motion to dismiss of other grounds aside from lack of jurisdiction over the person of the defendant shall be deemed a voluntary appearance." — This passage states the rule on voluntary appearance under the 2019 Amendments, which the Court applied to hold that LISI's filing of a position paper with jurisdictional objections constituted voluntary submission to the LA's authority.

• "If the recruitment/placement agency is a juridical being, the corporate officers and directors and partners as the case may be, shall themselves be jointly and solidarity liable with the corporation or partnership for the aforesaid claims and damages." — This is the text of Section 10 of RA 8042, as amended by RA 10022, which the Court applied to impose solidary liability on Calderon as a corporate officer of LISI.

• "Permanent disability transpires when the inability to work continues beyond 120 days, regardless of whether or not he loses the use of any part of his body. On the other hand, total disability means the incapacity of an employee to earn wages in the same or similar kind of work that he was trained for, or is accustomed to perform, or in any kind of work that a person of his mentality and attainments can do. It does not mean absolute helplessness." — This passage defines the concepts of permanent and total disability in labor law, which the Court applied to uphold respondent's entitlement to disability benefits.

• "if doubts exist between the evidence presented by the employer and the employee, the scales of justice must be tilted in favor of the latter." — This formulation of the pro-labor doctrine was applied to disregard the alleged Letter-Request admitting non-disclosure of health condition, as the LA found it improbable that respondent could have signed the document given his hand condition.

• Oscares vs. Magsaysay Maritime Corp., G.R. No. 245858, December 2, 2020 — Applied as controlling precedent for holding corporate officers solidarily liable under Section 10 of RA 8042. The Court explained that while corporate officers generally cannot be personally liable for corporate contracts, personal liability attaches when made personally answerable by a specific provision of law.

• Gargallo vs. Dohle Seafront Crewing (Manila), Inc. — Cited within Oscares for the principle that personal liability of corporate directors or officers may validly attach when made personally answerable by a specific provision of law for corporate actions.

• Carino vs. Maine Marine Phils., Inc. — Followed as precedent imposing joint and several liability on the foreign employer, local manning agency, and its officer/director.

• Gopio vs. Bautista, 832 Phil. 411 (2018) — Cited for the explanation that the joint and solidary liability provision in RA 8042 aligns with the State's policy of protecting labor and assures overseas workers that their rights will not be frustrated by difficulties in filing money claims against foreign employers.

• Sameer Overseas Placement Agency, Inc. vs. Cabiles, 740 Phil. 403 (2014) — Cited within Gopio for the principle that the local agency held liable for the overseas worker's money claims is not left without remedy, as it may go after the foreign employer for reimbursement.

• Career Philippines Shipmanagement, Inc. vs. Silvestre, 823 Phil. 44, 60 (2018) — Cited for the definition of permanent and total disability, including the 120-day rule and the meaning of incapacity to earn wages.

• Magsaysay Mol Marine, Inc. vs. Atraje, 836 Phil. 1061 (2018) — Cited for the principle that in disability compensation, it is not the injury per se which is compensated, but the incapacity to work.

• Philippine Transmarine Carriers, Inc. vs. Cristino, 755 Phil. 108, 121-122 (2015) — Cited for the enumeration of exceptions to the rule that only questions of law may be raised in a Rule 45 petition, which the Court invoked to justify its review of factual issues in this case.

• Section 10, Republic Act No. 8042 (Migrant Workers and Overseas Filipinos Act), as amended by RA 10022 — Provides for joint and solidary liability of the principal/employer and the recruitment/placement agency for money claims, and specifically states that if the recruitment/placement agency is a juridical being, its corporate officers, directors, and partners shall be jointly and severally liable with the corporation. Applied to hold Calderon solidarily liable with LISI.

• Section 1, Rule II, Omnibus Rules and Regulations Implementing RA 8042, as amended by RA 10022 — Defines a private recruitment/employment agency as any person, partnership, or corporation licensed to engage in recruitment and placement of workers for overseas employment for a fee, and defines recruitment and placement to include any act of canvassing, enlisting, contracting, transporting, utilizing, hiring, or procuring workers. Applied to classify LISI as an overseas recruitment agency.

• Rule 14, Section 23, 2019 Amendments to the 1997 Rules of Civil Procedure (A.M. No. 19-10-20-SC) — Provides that a defendant's voluntary appearance is equivalent to service of summons, and that inclusion of other grounds aside from lack of jurisdiction in a motion to dismiss is deemed voluntary appearance. Applied to hold that the LA acquired jurisdiction over LISI through voluntary appearance.

• Article XIII, Section 3, 1987 Constitution — Mandates that the State shall afford full protection to labor, local and overseas, organized and unorganized. Applied to resolve doubts in favor of respondent.

• Article 4, Labor Code — Provides that all doubts in the implementation and interpretation of Labor Code provisions shall be resolved in favor of labor. Applied to disregard the alleged Letter-Request admitting non-disclosure.

• Article 1702, Civil Code — Provides that in case of doubt, all labor legislation and labor contracts shall be construed in favor of the safety and decent living for the laborer. Applied alongside Article 4 of the Labor Code.

• Section 20(E), 2000 POEA-Standard Employment Contract — Petitioners invoked this provision to argue that respondent's non-disclosure of his health condition during PEME disqualified him from claiming disability benefits. The Court effectively rejected this argument by resolving doubts in favor of labor.

Justices Leonen (Chairperson), Inting, and J. Lopez concurred. Justice Hernando was on official leave.