Parce vs. Magsaysay Maritime Corporation, et al.

Corporate officers, directors, and partners of a recruitment or manning agency that is a juridical entity are jointly and solidarily liable with the corporation for all money claims or damages awarded to overseas Filipino workers under Section 10 of Republic Act No. 8042, as amended by Republic Act No. 10022; this statutory liability is read into the employment contract and is reinforced by the verified undertaking required by the POEA Rules. The 6% per annum legal interest on the monetary award stands unless the full judgment award is proven to have been fully paid prior to the finality of the resolution.

Magsaysay Maritime Corporation is a manning agency that engaged Ruthgar T. Parce as Senior Electrical Fitter for its foreign principal, Princess Cruises Ltd. Sorwin Joy G. Rivera was the owner/president/manager of Magsaysay and signed the Contract of Employment on behalf of the employer. The dispute implicates Republic Act No. 8042, otherwise known as the Migrant Workers and Overseas Filipinos Act of 1995, as amended by Republic Act No. 10022, which governs money claims of overseas Filipino workers and imposes joint and several liability on principals/employers and recruitment/placement agencies, as well as on corporate officers, directors, and partners when the agency is a juridical entity. The 2003 POEA Rules and Regulations Governing the Recruitment and Employment of Seafarers require a verified undertaking from such officers, directors, and partners that they will be jointly and severally liable with the company over claims arising from an employer-employee relationship.

On September 8, 2014, Magsaysay engaged Ruthgar T. Parce as Senior Electrical Fitter for its foreign principal, Princess Cruises Ltd. In November 2014, while performing his work routine onboard the vessel "Golden Princess," Parce sustained a shoulder injury. He was medically repatriated to Manila, where the company-designated physician diagnosed him with rotator tendinitis and recommended physical therapy sessions.

On April 13, 2015, Parce was verbally informed that he had already reached maximum medical cure. Magsaysay accordingly ordered the termination of his medical treatment and the discontinuance of his sickness allowance. Without Parce's knowledge, the company-designated physician issued a final medical report on April 15, 2015, which Princess Cruises used as basis to consider Parce fit without restrictions.

Because of persisting pain, Parce consulted an independent physician who found him unfit for sea duties. On July 2, 2015, Parce sent a letter to Magsaysay requesting referral to a third doctor and asking to be furnished with all his medical records pertaining to his rehabilitation and treatment. Magsaysay refused to heed the request and instead asked for a copy of the second opinion of Parce's physician so that they could study the possibility of entering settlement negotiations.

On August 20, 2015, Parce filed a complaint before the labor arbiter, praying for payment of disability benefits, reimbursement for medical expenses, damages, and attorney's fees. The labor arbiter found that the medical report of the company-designated physician could not be considered equivalent to a fitness-to-work declaration because there was no express declaration, and that with the lapse of 240 days from repatriation without a definite fitness-to-work assessment, Parce's disability was deemed total and permanent by operation of law. The CA, on the other hand, found as crucial Parce's failure to protest his medical assessment immediately and found dubious the two-month gap from the termination of his medical treatment to the filing of his labor complaint, stating that his failure to disclose what happened in those two months militated against his cause.

• Solidary Liability of Rivera: Parce moved for partial reconsideration of the Court's November 11, 2021 Decision, arguing that the Court should categorically declare respondent Sorwin Joy G. Rivera jointly and severally liable with Magsaysay and Princess Cruises for the whole judgment award, as the NLRC had ruled under Section 10 of Republic Act No. 8042.

• Medical Conclusions: Magsaysay et al. argued that the Court committed patent and palpable error in disregarding the medical conclusions of the company-designated physician.
• Final Medical Report: They argued that the Court erred in awarding permanent disability benefits on the basis of their failure to furnish a copy of the final medical report to Parce.
• Third-Doctor Referral: They argued that the Court erred in failing to direct the parties to appoint a third doctor.
• 120/240-Day Rule: They argued that the Court erred in reinstating the award of permanent disability benefits on the basis of the lapse of 120/240 days.
• Attorney's Fees: They argued that the Court erred in reinstating the award of attorney's fees.
• Legal Interest: They argued that the Court erred in awarding 6% legal interest and alleged that, pursuant to a Writ of Execution issued by the labor arbiter on December 5, 2016, they were compelled to satisfy the judgment award, such that the legal interest should no longer apply.

• Reconsideration of Prior Holdings: Whether the motion for reconsideration filed by Magsaysay et al. should be granted as to the medical conclusions of the company-designated physician, the failure to furnish the final medical report, the appointment of a third doctor, the 120/240-day rule, and the award of attorney's fees.
• Legal Interest: Whether the 6% per annum legal interest imposed on the monetary award should be modified or removed on the ground that Magsaysay et al. allegedly satisfied the judgment award.
• Solidary Liability of Corporate Officer: Whether Sorwin Joy G. Rivera, as owner/president/manager of Magsaysay, is jointly and severally liable with Magsaysay and Princess Cruises for Parce's permanent disability benefits and attorney's fees under Section 10 of Republic Act No. 8042, as amended by Republic Act No. 10022, and the POEA Rules.

• Reconsideration of Prior Holdings: No. The first to fifth arguments of Magsaysay et al. had already been sufficiently passed upon and discussed in the November 11, 2021 Decision, and no cogent reason existed to modify or reverse the ruling on those issues.
• Legal Interest: No. The 6% per annum legal interest stands because Magsaysay et al. submitted no proof that they had paid the full judgment award to Parce; however, if full payment is proven prior to the finality of the Resolution, the legal interest shall no longer be imposed.
• Solidary Liability of Corporate Officer: Yes. Section 10 of Republic Act No. 8042, as amended by Republic Act No. 10022, expressly provides that corporate officers and directors of a juridical recruitment/placement agency are jointly and solidarily liable with the corporation for money claims or damages awarded to overseas Filipino workers.

• Reconsideration of Prior Holdings: The Court declined to revisit the first to fifth arguments of Magsaysay et al. because they had already been sufficiently passed upon and discussed in the November 11, 2021 Decision. That Decision had held that the company-designated physician's medical report fell short of the requirements for a complete and definite assessment, leaving Parce nothing to properly contest; that there was no need for Parce to initiate a referral to a third doctor because he became permanently disabled by operation of law; and that attorney's fees were proper because Parce was compelled to litigate. The Court found no cogent reason to modify or reverse these holdings.
• Legal Interest: Magsaysay et al. alleged that, pursuant to a Writ of Execution issued by the labor arbiter on December 5, 2016, they were compelled to satisfy the judgment award, and that in such case the 6% per annum legal interest should no longer apply. The Court found, however, that Magsaysay et al. had not submitted any proof that they had paid the full judgment award to Parce. Without such proof, there was no basis to modify the ruling on legal interest at that juncture. The Court nevertheless provided that if the full judgment award is proven to have been fully paid prior to the finality of the Resolution, the legal interest shall no longer be imposed.
• Solidary Liability of Corporate Officer: Section 10 of Republic Act No. 8042, as amended by Republic Act No. 10022, provides that the liability of the principal/employer and the recruitment/placement agency for any and all claims under the section shall be joint and several, and that if the recruitment/placement agency is a juridical being, its corporate officers, directors, and partners shall themselves be jointly and solidarily liable with the corporation or partnership for the claims and damages. The Court explained in Oscares vs. Magsaysay Maritime Corp. that although corporate officers generally cannot be personally held liable for contracts entered into by the corporation due to the latter's separate and distinct personality, personal liability may validly attach when the officer is made personally liable for his corporate action by a specific provision of law. Section 10 of Republic Act No. 8042, as amended, governs and not the Corporation Code. In United Philippines Lines, Inc. vs. Alkuino, Jr., the Court sustained the joint and solidary liability of the manning agency and the manning agency's owner and president under the same provision. Rivera was impleaded in the complaint before the Labor Arbiter as "Owner/President/Manager" of Magsaysay; attached to the complaint was a copy of the Contract of Employment executed between Parce and Magsaysay, where Rivera was the signatory on behalf of Magsaysay with the notation "For the Employer"; and at no point during the proceedings before the labor arbiter, the NLRC, or the CA was it disputed that Rivera held the position of owner/president/manager of Magsaysay. At any rate, Magsaysay's officers and directors are presumed to have submitted a verified undertaking that they will be jointly and severally liable with the company over claims arising from an employer-employee relationship when it applied for a license to operate a seafarer's manning agency, pursuant to Part II, Rule II, Section 1(f) of the 2003 POEA Rules. Applicable laws form part of, and are read into, contracts without need for express reference, especially labor contracts imbued with public interest. Thus, Section 10 of Republic Act No. 8042, as amended, and the pertinent POEA Rules are deemed incorporated in Parce's employment contract. These provisions are in line with the State's policy of affording protection to labor and alleviating the workers' plight and are meant to assure overseas Filipino workers immediate and sufficient payment of what is due them. Accordingly, Rivera is jointly and solidarily liable with Magsaysay and Princess Cruises for the monetary award arising from Parce's total and permanent disability.

• Joint and Solidary Liability of Corporate Officers and Directors under Section 10, Republic Act No. 8042 as amended by Republic Act No. 10022 — The liability of the principal/employer and the recruitment/placement agency for any and all claims under Section 10 is joint and several. If the recruitment/placement agency is a juridical being, the corporate officers, directors, and partners are themselves jointly and solidarily liable with the corporation or partnership for the claims and damages. The Court applied this to Rivera, the owner/president/manager of Magsaysay, making him solidarily liable with Magsaysay and Princess Cruises for Parce's permanent disability benefits and attorney's fees.
• Exception to Separate Corporate Personality for Personal Liability of Corporate Officers — Although corporate officers generally cannot be personally held liable for contracts entered into by the corporation in deference to the corporation's separate and distinct personality, personal liability may validly attach when the officer is made personally liable for his corporate action by a specific provision of law. Section 10 of Republic Act No. 8042, as amended, governs and not the Corporation Code; hence Rivera's personal liability was valid.
• Incorporation of Applicable Laws into Contracts — Applicable laws form part of, and are read into, contracts without need for any express reference, especially when the contract is a labor contract imbued with public interest. Each labor contract contains not only what was explicitly stipulated but also the statutory provisions that have any bearing on the matter. Thus, Section 10 of Republic Act No. 8042, as amended, and the pertinent POEA Rules were deemed incorporated in Parce's employment contract.
• Verified Undertaking under the POEA Rules — Under Part II, Rule II, Section 1(f) of the 2003 POEA Rules and Regulations Governing the Recruitment and Employment of Seafarers, a corporation or partnership applying for a license to operate a manning agency must submit a verified undertaking by its officers, directors, and partners that they will be jointly and severally liable with the company over claims arising from an employer-employee relationship. Magsaysay's officers and directors are presumed to have submitted such an undertaking, supporting Rivera's solidary liability.
• Legal Interest on Monetary Awards — A 6% per annum legal interest imposed on the monetary award runs from the date of finality of the Resolution until fully paid. If the full judgment award is proven to have been fully paid prior to the finality of the Resolution, the legal interest shall no longer be imposed. The Court sustained the interest because no proof of full payment was submitted.
• State Policy on Overseas Filipino Workers — The provisions imposing liability are in line with the State's policy of affording protection to labor and alleviating the workers' plight, and are meant to assure overseas Filipino workers immediate and sufficient payment of what is due them. This policy supported reading Section 10 of Republic Act No. 8042, as amended, and the POEA Rules into the employment contract.

• "The liability of the principal/employer and the recruitment/placement agency for any and all claims under this section shall be joint and several. This provision shall be incorporated in the contract for overseas employment and shall be a condition precedent for its approval. The performance bond to be filed by the recruitment/placement agency, as provided by law, shall be answerable for all money claims or damages that may be awarded to the workers. 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 statutory basis for holding Rivera jointly and solidarily liable with Magsaysay and Princess Cruises.
• "Clearly, the law expressly provides the joint and solidary liability of corporate directors and officers with the recruitment/placement agency for all money claims or damages that may be awarded to overseas Filipino workers." — This passage states the Court's conclusion on the scope of Section 10 of Republic Act No. 8042, as amended.
• "Applicable laws form part of, and are read into, contracts without need for any express reference; more so, when it pertains to a labor contract that is imbued with public interest." — This supports the incorporation of Section 10 and the POEA Rules into Parce's employment contract.
• "However, Magsaysay et al. have not submitted any proof that it has paid the full judgment award to Parce. Hence, we do not have any basis to modify Our ruling at this juncture." — This explains why the 6% per annum legal interest was sustained despite the allegation of satisfaction.

• Oscares vs. Magsaysay Maritime Corp., 891 Phil. 518 (2020) — Explained that although corporate officers generally cannot be personally held liable for corporate contracts, personal liability may validly attach when a specific provision of law makes them personally liable for their corporate action; Section 10 of Republic Act No. 8042, as amended, governs and not the Corporation Code.
• United Philippines Lines, Inc. vs. Alkuino, Jr., 908 Phil. 305 (2021) — Sustained the joint and solidary liability of the manning agency and the manning agency's owner and president under Section 10 of Republic Act No. 8042, as amended.
• Halili vs. Justice for Children International, 769 Phil. 456 (2015) — Cited for the rule that applicable laws form part of, and are read into, contracts without need for express reference.
• Sameer Overseas Placement Agency, Inc. vs. Cabiles, 740 Phil. 403 (2014) — Cited for the State's policy of affording protection to labor and assuring overseas Filipino workers immediate and sufficient payment of what is due them.

• Section 10, Republic Act No. 8042 as amended by Republic Act No. 10022 — Provides that the liability of the principal/employer and the recruitment/placement agency for any and all claims under the section is joint and several; if the recruitment/placement agency is a juridical being, the corporate officers, directors, and partners are themselves jointly and solidarily liable with the corporation or partnership for the claims and damages. Applied to hold Rivera solidarily liable with Magsaysay and Princess Cruises.
• Part II, Rule II, Section 1(f), 2003 POEA Rules and Regulations Governing the Recruitment and Employment of Seafarers — Requires a corporation or partnership applying for a license to operate a manning agency to submit a verified undertaking by its officers, directors, and partners that they will be jointly and severally liable with the company over claims arising from an employer-employee relationship. Used to support the presumption that Magsaysay's officers and directors undertook such liability.
• Article 1700, Civil Code — Provides that relations between capital and labor are not merely contractual, are impressed with public interest, and labor contracts are subject to special laws. Cited to reinforce that applicable labor laws are read into the employment contract.

Chief Justice Gesmundo (Chairperson), Justice Caguioa, Justice Lazaro-Javier (pursuant to the third paragraph, Sec. 8, Rule 2 of the IRSC, in lieu of Justice Lopez, M.), and Justice Villanueva concurred.