Pandiman Philippines, Inc. vs. Marine Manning Management Corporation

A local correspondent of a Protection and Indemnity Club is not an insurance agent liable for the payment of insurance claims where it did not negotiate the insurance contract between the insurer and the insured, and the foreign employer and its local manning agency are jointly and solidarily liable for a seafarer's death benefits arising from the employment contract.

Benito Singhid was hired by Fullwin Maritime Limited through its local agent, Marine Manning Management Corporation (MMMC), as chief cook aboard the vessel MV Sun Richie Five for a twelve-month term. The vessel and its crew were insured with Ocean Marine Mutual Insurance Association Limited (OMMIAL), a Protection and Indemnity Club, which transacted business in the Philippines through its local correspondent, Pandiman Philippines, Inc. (PPI). While en route to Shanghai, China, Benito suffered a heart attack and died on June 24, 1997. His widow, respondent Rosita Singhid, filed a claim for death benefits with MMMC, which referred her to PPI. PPI approved the claim and recommended payment of US$79,000.00, but the claim remained unpaid, prompting Rosita to file a complaint for recovery of death benefits, damages, and attorney's fees against MMMC, Fullwin, PPI, and OMMIAL.

• Employment and Insurance Coverage: Benito Singhid was employed by Fullwin Maritime Limited through its local manning agent, MMMC, as chief cook aboard MV Sun Richie Five. The vessel and its crew were covered by a "Class 1 – Protection and Indemnity" agreement issued by OMMIAL, a P&I Club. OMMIAL transacted business in the Philippines through its local correspondent, PPI.
• Death of Seafarer: While the vessel was en route to Shanghai, China from Ho Chi Minh City, Vietnam, Benito suffered a heart attack and died on June 24, 1997. His remains were repatriated and interred.
• Claim for Benefits: Rosita Singhid, Benito's widow, filed a claim for death benefits with MMMC. MMMC referred her to PPI. Upon submission of the required documents, PPI approved the claim and recommended payment of US$79,000.00. Despite the recommendation, the claim remained unpaid.
• Labor Complaint: Rosita filed a complaint for recovery of death benefits, moral and exemplary damages, and attorney's fees against MMMC, Fullwin, PPI, and OMMIAL. The Labor Arbiter held MMMC, Fullwin, and OMMIAL jointly and severally liable but dismissed the claim against PPI. On appeal, the NLRC absolved MMMC and instead held PPI and OMMIAL jointly and solidarily liable. The Court of Appeals affirmed the NLRC ruling, prompting PPI to elevate the matter to the Supreme Court.

• Agent Liability: Petitioner argued that a mere agent of an insurance company cannot be held liable for the face value of any coverage or policy its principal may have issued.
• Erroneous Findings: Petitioner maintained that the NLRC's factual findings were gratuitous and outright erroneous, warranting correction.
• Due Process: Petitioner contended that the NLRC decision, as affirmed by the Court of Appeals, deprived it of due process.
• Liability of Manning Agency and Principal: Petitioner argued that it was error to exclude MMMC and its foreign principal Fullwin from liability, given their clear participation and liability under the facts, applicable law, and jurisprudence.

• Agency Relationship: Respondent countered that PPI acted as an insurance agent of OMMIAL, having referred to OMMIAL as its "principal," thus making it liable under Section 300 of the Insurance Code.
• Absolution of Manning Agency: Respondent argued that MMMC should be absolved from liability because the claim falls under the insurance coverage of OMMIAL, handled by PPI.

• Liability of Local Correspondent: Whether PPI, as local correspondent of a P&I Club, may be held liable for the seafarer's death benefits as an insurance agent.
• Liability of Manning Agency and Foreign Principal: Whether MMMC and Fullwin should be absolved from death claim liabilities arising from the employment contract.

• Liability of Local Correspondent: PPI is not an insurance agent under Section 300 of the Insurance Code because it did not negotiate the insurance contract between the insured vessel owner and the insurer OMMIAL. Mere reference to OMMIAL as its "principal" does not convert PPI into an insurance agent under the law. Even assuming PPI were an insurance agent, payment of claims arising from the peril insured against is not among the liabilities of an insurance agent. Furthermore, under the principle of relativity of contracts embodied in Article 1311 of the Civil Code, the insurance contract binds only the parties who executed it; PPI, not being a party to the insurance contract, cannot be held liable for obligations arising therefrom.
• Liability of Manning Agency and Foreign Principal: Fullwin and MMMC are jointly and solidarily liable for the death benefits. Fullwin, as the principal employer, is liable under the employment contract, Benito having died during the contract's effectivity while on board the vessel. MMMC, as the local manning agent, is bound by its undertaking under the Rules and Regulations Governing Overseas Employment to assume joint and solidary liability with the employer for all claims arising in connection with the implementation of the contract.

• Relativity of Contracts — Contracts are binding only upon the parties who execute them, as well as their assigns and heirs. A non-party to an insurance contract cannot be held liable for obligations arising therefrom. Applied to exonerate PPI, which was not a party to the insurance contract between the P&I Club and the vessel owner.
• Solidary Liability of Manning Agencies — Local manning agencies are jointly and solidarily liable with their foreign principals for all claims and liabilities arising from the implementation of the overseas employment contract, including payment of wages, health, disability compensation, and repatriation. Applied to hold MMMC solidarily liable with Fullwin for the seafarer's death benefits.
• Finality of Administrative Findings of Fact — Findings of fact of administrative agencies and quasi-judicial bodies with specific expertise are generally accorded respect and finality, binding on the Court unless there is grave abuse of discretion. Acknowledged but not strictly dispositive, as the legal consequences drawn from the facts by the NLRC and CA were reversed.

• "We, therefore, hold that petitioner PPI is not an insurance agent under the obtaining circumstances. In any event, payment for claims arising from the peril insured against, to which the insurer is liable, is definitely not one of the liabilities of an insurance agent."
• "Besides, even under the principle of 'relativity of contracts', petitioner PPI cannot be held liable for the same death benefits claims. The insurance contract between the insurer and the insured, under Article 1311 of the Civil Code, is binding only upon the parties (and their assigns and heirs) who execute the same. With the reality, as borne by the records, that petitioner PPI is not a party to the insurance contract in question, no liability or obligation arising therefrom, may be imposed upon it."

• Gallera De Guison Hermanos, Inc. vs. Cruz, G.R. No. 159390 (June 10, 2004) — Followed. Reiterates the rule that factual findings of the Court of Appeals, especially when in agreement with the NLRC and Labor Arbiter, are accorded finality and are binding if supported by substantial evidence.
• Maya Farms Employees Organization vs. NLRC, 239 SCRA 508 (1994) — Followed. Cited for the doctrine that findings of fact of administrative agencies and quasi-judicial bodies are generally accorded respect and finality.
• Hyopsung Maritime Co., Ltd. vs. Court of Appeals, G.R. No. L-77369 (August 31, 1988) — Followed. Cited for the definition of a Protection and Indemnity Club as an association of shipowners providing insurance cover on a mutual basis against liabilities incidental to shipowning.

• Section 300, Insurance Code (P.D. 1460, as amended) — Defines an insurance agent as any person who, for compensation, solicits or obtains insurance on behalf of any insurance company, transmits an application for insurance, or assumes to act in negotiating insurance. Applied to determine that PPI did not qualify as an insurance agent because it did not negotiate the subject insurance contract.
• Article 1311, Civil Code — Embodies the principle of relativity of contracts, providing that contracts are binding only upon the parties who execute them, their assigns, and heirs. Applied to preclude liability against PPI, a non-party to the insurance contract.
• Book II, Rule II, Section 1, paragraph (f), Rules and Regulations Governing Overseas Employment (1991) — Requires manning applicants to assume joint and solidary liability with the employer for all claims and liabilities arising in connection with the implementation of the employment contract. Applied to hold MMMC jointly and solidarily liable with its foreign principal, Fullwin.

Panganiban (Chairman), Sandoval-Gutierrez, Corona, and Carpio-Morales, JJ., concur.