SEAGULL MARITIME CORP v BALATONGAN
The supplemental contract of employment was entered into between Seagull and
Petitioner/s: Seagull Maritime Corp. and Philimare Shipping & Equipment Supply (Seagull)
Respondent/s: Nerry Balatongan, NLRC, POEA (Balatongan)
Facts:
1. A Crew Agreement was entered into by Balatongan and Philimare Shipping, whereby
Philimare employed Balatongan as a seaman on board its vessel Santa Cruz (renamed to
Turtle Bay). Said agreement was processed and approved by the National Seaman’s
Board (NSB).
2. While on board, the parties entered into a supplementary contract of employment,
which provides that:
a. The employer shall be obliged to insure the employee during his engagement
against death or permanent invalidity caused by accident on board up to $40,000 for
death and $50,000 for permanent total disability.
b. The supplementary contract provide that, notwithstanding his claim against
insurers, the employee expressly waives all claims of his own or his heirs for
compensation of damages due to death or permanent disability, which he suffered
during his engagement against employers…unless caused by willful acts of
employers.
3. In 1983, Balotongan met an accident in Suez Canal, Egypt, resulting to his hospitalization
at the Suez Canal Authority Hospital. He was repatriated to the Philippines and
hospitalized at Makati Med. In 1985 a medical certificate was issued describing his
disability as “permanent in nature.”
4. Balatongan demanded payment for total disability insurance of $50,000, as provided in
the supplemental contract. This was denied as it was allegedly filed beyond the
designated period.
5. Hence, Balatongan filed a complaint in the POEA against Philimare and Seagull
Maritime for non-payment of his claim for permanent total disability.
6. POEA: Ordered Seagull to pay Balatonganthe amount of US$50,000.00 representing
permanent total disability insurance and attorney’s fees at 10% of the award.
NLRC: Affirmed.
 POEA did not err when it considered the second contract of employment as valid
without any verification or approval by the NSB
 Intention of the law when Art. 34 LC was enacted is to provide for the prohibited
and unlawful practices relative to recruitment and placement.
 The purpose of having the contracts approved by NSB (POEA) is to determine
whether or not the contracts conform to the minimum terms and conditions
prescribed. But it did not prohibit any alteration, which provided for increases in
wages or other benefits voluntarily granted by employer.
7. Seagull:The supplementary contract of employment entered into on board the vessel
Turtle Bay which provides for the insurance benefit was not approved or verified by
POEA. Such violates Art. 34(i) of the LC.1
Issue: Whether the provisions of the supplementary contract are valid? (Provision on
insurance benefit valid; Provision on waiver void.)
Held: Affirmed.
1
Art. 34(i) to substitute or alter employment contracts approved and verified by the DOLE from the time of actual
signing thereof by the parties up to and including the period of expiration of the same without the approval of the DOLE.
1.
Balatongan to modify the original contract of employment. The reason for POEA
approval and verification under Art. 34(i) of the Labor Code is to ensure that the
employee shall not be placed in a disadvantageous position and that the same are
within the minimum standards of the terms and conditions of such employment
contract set by the POEA. This is why a standard format for employment has been
adopted by the DOLE. However, there is no prohibition against stipulating in a
contract more benefits to the employee than those required by law. Thus, in this
case, wherein a “supplementary contract” was entered into affording greater
benefits to the employee, and although the same was not submitted for approval
of the POEA, the POEA properly considered it to be valid and enforceable, and
their pronouncements have the effect of an approval of such contract.
Moreover, as said contract was voluntarily entered into by the parties the same is
binding between them. Not being contrary to law, morals, good customs, public
policy or public order, its validity must be sustained. (Provision on insurance benefit
of $50,000 is valid.)
The provision in the supplementary contract whereby Balatongan waives any
claim against Seagull for damages arising from death or permanent disability is
against public policy, oppressive, and inimical to the rights of Balatongan as it
defeats the duty of Seagull to insure Balatongan against said contingencies stipulated
in the contract. Hence, it is void.
2. Issue on liability
Petitioners argued that Philimare was a mere manning agent, hence could not be
bound by the supplementary contract entered into by Balatongan with Philimare’s
principal, Navales Shipping.
SC: Facts and findings of POEA are conclusive. Even if it was Navales that entered
into said contract with Balatongan, Philimare as manning agent, was still jointly
responsible with the principal.
3. Issue on prescription
The claim has not yet prescribed as it was only in 1985 when the medical certificate
was issued describing disability to be permanent in nature. Hence, it was not
possible to file a claim with the insurance company within the 1 year period, from
the time of injury, as disability was ascertained to be permanent in nature only
thereafter.
WHEREFORE, the petition is hereby DISMISSED for lack of merit and the temporary
restraining order issued by this Court on March 21, 1988 is hereby LIFTED. No costs.
This decision is immediately executory. SO ORDERED.