G.R. No. 82252 . February 28, 1989.
SEAGULL MARITIME CORP. AND PHILIMARE SHIPPING & EQUIPMENT SUPPLY, petitioners, vs. NERRY D. BALATONGAN, NATIONAL LABOR RELATIONS COMMISSION AND PHILIPPINE OVERSEAS EMPLOYMENT ADMINISTRATION, respondents.

FACTS

Private respondent Nerry D. Balatongan was employed as an able seaman by petitioner Philimare under a POEA-approved Crew Agreement dated November 2, 1982. While on board the vessel, the parties executed a supplementary contract on December 6, 1982, which provided for increased insurance benefits, including US$50,000 for permanent total disability caused by an accident. On October 6, 1983, Balatongan met an accident in Egypt, was hospitalized, and later repatriated. A medical certificate dated August 19, 1985, described his disability as permanent. His claim for the US$50,000 benefit was denied by the insurers for being filed beyond the stipulated period.
Balatongan filed a complaint with the POEA against petitioners Philimare and Seagull Maritime Corp. The POEA ruled in his favor, ordering payment of the insurance benefit and attorney’s fees. Petitioners appealed to the NLRC, arguing the supplementary contract was invalid for lack of POEA approval and that it violated Article 34(i) of the Labor Code, which prohibits altering approved contracts without DOLE consent. Pending appeal, Seagull filed motions for substitution of a party and to file a third-party complaint, which were denied. The NLRC dismissed the appeal, upholding the POEA decision.

ISSUE

Whether the NLRC committed grave abuse of discretion in: (1) upholding the validity and enforceability of the supplementary contract of employment despite its lack of POEA approval; and (2) denying petitioners’ procedural motions for substitution and third-party complaint.

RULING

The Supreme Court dismissed the petition, finding no grave abuse of discretion. On the first issue, the Court upheld the NLRC’s ruling that the supplementary contract is valid and binding. While Article 34(i) of the Labor Code prohibits altering approved employment contracts without DOLE approval, this provision is designed to prevent the diminution of benefits already secured for the worker. The supplementary contract in this case did not diminish but enhanced Balatongan’s benefits by providing a higher insurance coverage. The law and public policy favor such improvements to a worker’s condition. The contract’s waiver clause, which attempted to absolve the employer from liability, was correctly deemed void as contrary to public policy, but this invalidity did not nullify the entire contract, especially the beneficial insurance provision.
Furthermore, the Court emphasized that petitioners, as employers, had the concomitant obligation to ensure the insurance claim was properly filed. Balatongan’s permanent disability was only certified in August 1985, making it impossible to file a claim for “permanent total disability” within the one-year period from the 1983 accident as required by the insurers. Petitioners’ failure to assist in the claim or contest the insurer’s denial constituted negligence, making them directly liable to Balatongan for the promised benefit. On the second issue, the denial of the procedural motions was within the NLRC’s sound discretion to avoid further delay in adjudicating the worker’s long-pending claim. Petitioners were not precluded from pursuing their claims against any alleged successor-in-interest in a separate action.