Orlanes vs. Stella Marris Shipmanagement, Inc.

A transferee manning agency's assumption of liability under the 2003 POEA Rules and Regulations extends only to contractual obligations of the principal to seafarers originally recruited and processed by the transferor agency, not by a prior or original agency; the original manning agent's joint and solidary liability with the foreign principal continues during the entire period of the employment contract and is not extinguished by transfers or substitutions of manning agencies.

Orlanes was employed by Fairport Shipping Co., Ltd. (Fairport), a foreign principal, as Master aboard the vessel M/V Orionis from August 4, 2009 to July 24, 2010. Fairport's local manning agency accreditation in the Philippines underwent two successive transfers: first from Skippers United Pacific, Inc. (Skippers) to Global Gateway Crewing Services, Inc. (Global), then from Global to Stella Marris Shipmanagement, Inc. (Stella Marris). Each transfer was accompanied by an Affidavit of Assumption of Responsibility executed by the transferee agency, as required under the 2003 POEA Rules and Regulations Governing the Recruitment and Employment of Seafarers, to facilitate the transfer of the foreign principal's registration or accreditation. The governing framework—Section 10 of Republic Act No. 8042 (the Migrant Workers and Overseas Filipinos Act of 1995), as amended by RA 10022, and the 2003 POEA Rules—imposes joint and solidary liability on the local manning agency with the foreign employer for all claims arising from the employment contract, and provides that such liability is not affected by any substitution, amendment, or modification of the contract.

Orlanes was employed by Fairport as Master on board the vessel M/V Orionis from August 4, 2009 to July 24, 2010. Fairport did not pay his salary during the period of employment, although it assured him that payment would be made in full upon disembarkation. Relying on this assurance, Orlanes agreed to disembark on July 27, 2010 without receiving his unpaid salary in the amount of US$8,819.73, travel allowance of US$59.57, and leave pay of US$5,680.26, or a total of US$14,559.56. Despite his subsequent demand, respondents refused to make the payment.

Skippers was the original local manning agency that recruited Orlanes and processed his employment with Fairport. As the accredited manning agency, Skippers assumed joint and solidary liability with Fairport under Orlanes' employment contract as mandated by law. Orlanes initially filed a first complaint before the Labor Arbiter against Skippers, Fairport, and Jerosalem P. Fernandez. During the pendency of that complaint, Skippers filed a Motion to Implead and Substitute Global, after Global executed an Affidavit of Assumption of Responsibilities dated May 9, 2011, assuming full and complete responsibility for all contractual obligations to seafarers originally recruited and processed by Skippers for the vessel M/V Orionis—a requirement for the transfer of Fairport's accreditation. A few months later, on December 6, 2011, Global filed an Urgent Motion to Re-Open and to Implead Stella Marris, as the latter had executed its own Affidavit of Assumption of Responsibilities dated November 17, 2011 in favor of Global, assuming responsibility for seafarers originally processed and recruited by Global, to facilitate a second transfer of accreditation. The records do not show whether this motion was acted upon.

In view of the successive transfers of Fairport's manning agent from Skippers to Global and then from Global to Stella Marris, the Labor Arbiter rendered a Decision dated December 29, 2011 dismissing the first complaint without prejudice to Orlanes' refiling against the alleged proper parties—Global, Fairport, and Stella Marris. Orlanes appealed to the NLRC, but the appeal was dismissed in a Resolution dated March 20, 2012 due to his failure to sign the certificate of non-forum shopping. Orlanes did not move for reconsideration. He thereafter filed the second complaint before the Labor Arbiter on July 24, 2012, this time against Fairport, Stella Marris, and/or Navarro.

The Labor Arbiter granted the second complaint in a Decision dated May 31, 2013, holding all three manning agencies—Skippers, Global, and Stella Marris—solidarily liable with Fairport to pay Orlanes US$14,559.56, notwithstanding that Skippers and Global were not impleaded as parties. On appeal, the NLRC set aside the Labor Arbiter's Decision in a Decision dated October 30, 2013, ruling that the Labor Arbiter erred in holding Skippers and Global liable since they were not impleaded, and finding no basis to hold Stella Marris liable because its Affidavit of Assumption of Responsibility pertained only to employees originally recruited by Global, not by Skippers. The NLRC observed that it was Skippers which should have been held liable pursuant to Section 10 of RA 8042, as amended, since the liability of the original manning agency continues during the entire period of the employment contract and is not affected by transfers or substitutions of manning agencies. The Court of Appeals affirmed the NLRC rulings in a Decision dated September 27, 2018, agreeing that Skippers, as Fairport's original manning agent, should be held solidarily liable with Fairport, but nevertheless dismissed the certiorari petition.

• Grave Abuse of Discretion: Petitioner averred that the NLRC committed grave abuse of discretion in dismissing the second complaint, thereby depriving him of redress for his monetary claims against respondents.

• Scope of Assumption of Liability: Respondent Stella Marris argued that it cannot be held liable for Orlanes' claims because its Affidavit of Assumption of Responsibility pertained only to the assumption of full and complete responsibility for all contractual obligations to seafarers originally processed and recruited by its immediate predecessor, Global. Since Orlanes was originally hired by Skippers, and the obligations under his contract were transferred to Global and not assumed by Stella Marris, the latter cannot be held liable.

• Liability of Transferee Manning Agency: Whether Stella Marris, as the second transferee manning agency, may be held solidarily liable for the monetary claims of a seafarer originally recruited and processed by Skippers, the original manning agency, when Stella Marris' Affidavit of Assumption of Responsibility covered only seafarers originally recruited by Global.
• Continuing Liability of Original Manning Agency: Whether the original manning agency Skippers retains solidary liability for the seafarer's claims notwithstanding the transfers of accreditation to Global and then to Stella Marris.
• Remedy for Non-Joinder of Parties: Whether the case should be remanded to implead Skippers and Global, which were not parties in the second complaint, rather than dismissing the complaint outright.

• Liability of Transferee Manning Agency: No. Stella Marris cannot be held liable for Orlanes' claims because its Affidavit of Assumption of Responsibility, consistent with the 2003 POEA Rules, covered only contractual obligations to seafarers originally recruited and processed by Global, its transferor—not by Skippers, the original agency that recruited Orlanes.
• Continuing Liability of Original Manning Agency: Yes. Skippers, as the original manning agent that recruited and processed Orlanes' employment, retained joint and solidary liability with Fairport throughout the entire period of the employment contract, and such liability was not extinguished by the transfers of accreditation to Global and then to Stella Marris.
• Remedy for Non-Joinder of Parties: Yes. The case was remanded to the Labor Arbiter to implead Skippers and Global as party respondents, because non-joinder of parties is not a ground for dismissal under Section 11, Rule 3 of the Rules of Court, and the Labor Arbiter had erroneously dismissed the first complaint where those parties were already impleaded.

• Liability of Transferee Manning Agency: Under Section 8, Rule I, Part III and Section 7, Rule II, Part III of the 2003 POEA Rules and Regulations, a transfer of registration or accreditation of a foreign principal to another agency requires the transferee to assume full and complete responsibility over all contractual obligations of the principal to seafarers "originally recruited and processed by the former agency." The Court emphasized the word "originally," noting that the transfer covers only those contractual obligations to seafarers recruited by the transferor agency. In this case, Stella Marris executed an Affidavit of Assumption of Responsibilities covering contractual obligations of Fairport to seafarers "originally processed and recruited by Global." Since it was Skippers—not Global—that originally recruited and processed Orlanes' employment, Stella Marris did not assume liability for Orlanes' claims. The limitation in Stella Marris' affidavit was consistent with the governing POEA Rules. The Court cited Abosta Ship Management vs. Hilario for the principle that the original manning agent, having entered into the employment contract with the worker for and in behalf of the foreign principal, bears the primary obligation to ensure implementation of that contract.

• Continuing Liability of Original Manning Agency: Section 10 of RA 8042, as amended by RA 10022, provides that the solidary liability of the principal/employer and the recruitment/placement agency "shall continue during the entire period or duration of the employment contract and shall not be affected by any substitution, amendment or modification made locally or in a foreign country of the said contract." Section 1(e)(8), Rule II, Part II of the 2003 POEA Rules likewise requires every licensed manning agency to assume joint and solidary liability with the employer for all claims and liabilities arising in connection with the implementation of the employment contract. The Court explained, citing Catan vs. National Labor Relations Commission, that the obligations covenanted in the recruitment agreement are not coterminous with the term of such agreement; the responsibilities extend until the expiration of the seafarers' employment contracts. In Powerhouse Staffbuilders International, Inc. vs. Rey, the Court ruled that even if an Affidavit of Assumption of Responsibility was validly executed by the transferee agent, the original manning agent's liability remained intact because the seafarers were not privy to the contract of transfer. In Skippers United Pacific, Inc. vs. Maguad—involving the same Skippers agency—the Court held that affidavits of assumption between manning agencies are not enforceable against seafarers who are not parties thereto, and that Skippers, having submitted a verified undertaking to the POEA assuming joint and solidary liability, could not exempt itself from the seafarers' claims. Accordingly, Skippers' solidary liability for Orlanes' claims persisted notwithstanding the two transfers of accreditation.

• Remedy for Non-Joinder of Parties: Both Skippers and Global were not impleaded in the second complaint; hence, the Court could not adjudge their respective liabilities in that proceeding. While they were impleaded in the first complaint, that complaint was erroneously dismissed without prejudice by the Labor Arbiter. The Court found that the Labor Arbiter gravely erred in dismissing the first complaint where Skippers, Global, and Fairport were already impleaded and where their respective liabilities could have been properly adjudicated. To avoid serious injustice to Orlanes, who bore no fault for the procedural misstep, the Court deemed it proper to remand the case to the Labor Arbiter to implead Skippers and Global as party respondents. This course finds support in Section 11, Rule 3 of the Rules of Court, which provides that neither misjoinder nor non-joinder of parties is a ground for dismissal and that parties may be added by order of the court on its own initiative at any stage of the action. Section 3, Rule I of the 2011 NLRC Rules of Procedure allows the Rules of Court to be applied in a suppletory character in labor cases where the NLRC Rules are silent. Since the 2011 NLRC Rules are silent on misjoinder and non-joinder of parties, the inclusion of Skippers and Global was just and appropriate. Once impleaded, the Labor Arbiter was directed to resolve Orlanes' monetary claims with utmost dispatch on the merits.

• Joint and Solidary Liability of Manning Agency with Foreign Principal — Under Section 10 of RA 8042, as amended by RA 10022, and Section 1(e)(8), Rule II, Part II of the 2003 POEA Rules, the local manning agency assumes joint and solidary liability with the foreign employer for all claims and liabilities arising in connection with the implementation of the employment contract. This liability continues during the entire period or duration of the employment contract and is not affected by any substitution, amendment, or modification of the contract made locally or abroad. The rationale, as explicated in Catan vs. National Labor Relations Commission, is that the obligations under the recruitment agreement are not coterminous with the term of the agreement; the responsibilities extend until the expiration of the seafarers' employment contracts, lest the protective purpose of overseas employment law be rendered nugatory. In this case, Skippers, as the original manning agent that recruited and processed Orlanes, retained solidary liability with Fairport notwithstanding the two transfers of accreditation.

• Transfer of Accreditation and Scope of Transferee's Assumption of Liability — Under Section 8, Rule I, Part III and Section 7, Rule II, Part III of the 2003 POEA Rules, the registration or accreditation of a foreign principal may be transferred to another agency, provided the transferee assumes full and complete responsibility over all contractual obligations of the principal to seafarers "originally recruited and processed by the former agency." The transfer thus covers only those obligations to seafarers recruited by the transferor agency, not by a prior or original agency. Affidavits of Assumption of Responsibility executed between manning agencies are valid between the agencies but are not enforceable against seafarers who are not parties thereto, as held in Skippers United Pacific, Inc. vs. Maguad and Powerhouse Staffbuilders International, Inc. vs. Rey. In this case, Stella Marris assumed liability only for seafarers originally recruited by Global; since Orlanes was originally recruited by Skippers, Stella Marris did not assume liability for his claims.

• Non-Joinder of Parties Not a Ground for Dismissal — Under Section 11, Rule 3 of the Rules of Court, neither misjoinder nor non-joinder of parties is a ground for dismissal of an action; parties may be added by order of the court on its own initiative at any stage of the action and on such terms as are just. Section 3, Rule I of the 2011 NLRC Rules of Procedure permits the suppletory application of the Rules of Court in labor cases where the NLRC Rules are silent. Since the 2011 NLRC Rules do not address misjoinder and non-joinder of parties, the Labor Arbiter could add Skippers and Global as party respondents rather than dismissing the complaint.

• "This must be so, because the obligations covenanted in the recruitment agreement entered into by and between the local agent and its foreign principal are not cotermins with the term of such agreement so that if either or both of the parties decide to end the agreement, the responsibilities of such parties towards the contracted employees under the agreement do not at all end, but the same extends up to and until the expiration of the employment contracts of the employees recruited and employed pursuant to the said recruitment agreement. Otherwise, this will render nugatory the very purpose for which the law governing the employment of workers for foreign jobs abroad was enacted." — This passage, quoted from Catan vs. National Labor Relations Commission, articulates the foundational rationale for the continuing solidary liability of manning agencies beyond the term of the recruitment agreement, and is the doctrinal basis for holding that transfers of accreditation do not extinguish the original agency's obligation to seafarers.

• "the said transfer, however, covers only those contractual obligations to seafarers 'originally recruited and processed by the former agency.'" — This statement defines the critical limitation on a transferee manning agency's assumption of liability under the 2003 POEA Rules, establishing that the transferee's obligation extends only to seafarers recruited by the transferor, not by a prior agency, which was the dispositive distinction that exempted Stella Marris from liability for Orlanes' claims.

• "parties may be added by order of the court on its own initiative at any stage of the action and on such terms as are just." — This quotation of Section 11, Rule 3 of the Rules of Court, applied suppletorily under the 2011 NLRC Rules, provided the procedural authority for the Court to remand the case and direct the impleading of Skippers and Global, rather than affirming the dismissal of Orlanes' claims.

• Catan vs. National Labor Relations Commission, 243 Phil. 858 (1988) — Followed. The Court quoted this case to explain the rationale behind the rule that the obligations of the local agent and its foreign principal under the recruitment agreement are not coterminous with the term of the agreement, but extend until the expiration of the seafarers' employment contracts, lest the protective purpose of overseas employment law be rendered nugatory.

• Powerhouse Staffbuilders International, Inc. vs. Rey, 798 Phil. 8 (2016) — Followed. The Court relied on this case for the principle that even if an Affidavit of Assumption of Responsibility was validly executed by a transferee agent, the original manning agent's liability to its recruited workers remained intact because the workers were not privy to the contract of transfer, and the original agency was contractually bound to the seafarer under the POEA-approved employment contract.

• Skippers United Pacific, Inc. vs. Maguad, 530 Phil. 367 (2006) — Followed. Notably involving the same Skippers manning agency, this case held that affidavits of assumption of responsibility executed between manning agencies are valid but not enforceable against seafarers who are not parties thereto, and that Skippers, having submitted a verified undertaking to the POEA assuming joint and solidary liability, could not exempt itself from seafarers' claims.

• Abosta Ship Management vs. Hilario, 747 Phil. 762 (2014) — Followed. The Court cited this case for the principle that the original manning agent, having entered into the employment contract with the worker for and in behalf of the foreign principal, bears the primary obligation to ensure implementation of that contract, consistent with the state policy to protect and alleviate the plight of the working class.

• Section 10, Republic Act No. 8042 (Migrant Workers and Overseas Filipinos Act of 1995), as amended by RA 10022 — Provides that the liability of the principal/employer and the recruitment/placement agency for all money claims shall be joint and several, and that such liabilities shall continue during the entire period or duration of the employment contract and shall not be affected by any substitution, amendment, or modification of the contract made locally or abroad. Applied to hold that Skippers' solidary liability for Orlanes' claims persisted notwithstanding the transfers of accreditation to Global and then to Stella Marris.

• Section 1(e)(8), Rule II, Part II, 2003 POEA Rules and Regulations Governing the Recruitment and Employment of Seafarers — Requires every licensed manning agency to submit a verified undertaking to assume joint and solidary liability with the employer for all claims and liabilities arising in connection with the implementation of the employment contract, including wages, death and disability compensation, and repatriation. Applied to confirm Skippers' undertaking of solidary liability with Fairport.

• Section 8, Rule I, Part III, and Section 7, Rule II, Part III, 2003 POEA Rules and Regulations — Govern the transfer of registration or accreditation of a foreign principal to another agency, requiring the transferee to assume full and complete responsibility over all contractual obligations of the principal to seafarers "originally recruited and processed by the former agency." Applied to determine that Stella Marris' assumption of liability was limited to seafarers originally recruited by Global, not by Skippers, and that Global's assumption extended to seafarers originally recruited by Skippers.

• Section 11, Rule 3, Rules of Court — Provides that neither misjoinder nor non-joinder of parties is a ground for dismissal of an action, and that parties may be added by order of the court on its own initiative at any stage of the action and on such terms as are just. Applied suppletorily to authorize the remand and impleading of Skippers and Global as party respondents.

• Section 3, Rule I, 2011 NLRC Rules of Procedure, as amended — Allows the pertinent provisions of the Rules of Court to be applied in a suppletory character and effect in labor cases where the NLRC Rules are silent, in the interest of expeditious dispensation of labor justice. Applied to bridge the silence of the NLRC Rules on misjoinder and non-joinder of parties, thereby permitting application of Section 11, Rule 3 of the Rules of Court.

Lazaro-Javier, M. Lopez, Rosario, and J. Lopez, JJ., concurred. J. Lopez was designated Additional Member per Special Order No. 2822 dated April 7, 2021.