CASE DIGEST: Magsaysay Maritime v. Chin

G.R. No. 199022 : April 7, 2014




Thome Ship Management Pte. Ltd., acting through its agent petitioner Magsaysay Maritime Corporation (Magsaysay) hired respondent Oscar D. Chin, Jr. to work for nine months as able seaman on board MV Star Siranger. Chin was to receive a basic pay of US$515 per month. Magsaysay deployed him on July 20, 1996.

On October 22, 1996 Chin sustained injuries while working on his job aboard the vessel. Dr. Solan of Wilmington, North Carolina, USA, examined him on November 29, 1996 and found him to have suffered from lumbosacral strain due to heavy lifting of pressurized machine. The doctor gave him medications and advised him to see an orthopedist and a cardiologist. Chin was repatriated on November 30, 1996.

On return to the Philippines, Chin underwent a surgical procedure called laminectomy and discectomy L-4-L-5. A year after the operation, Dr. Robert D. Lim of the Metropolitan Hospital diagnosed Chin to have a moderate rigidity of his tract.

On August 6, 1998 Chin filed a claim for disability with Pandiman Phils., Inc. which is the local agent of P & I Club of which Magsaysay Maritime is a member. Pandiman offered US$30,000.00 as disability compensation which Chin accepted on August 6, 1998. He then executed a Release and Quitclaim in favor of Magsaysay Maritime.

On September 29, 1998 Chin filed a complaint with the National Labor Relations Commission (NLRC), claiming underpayment of disability benefits and attorneys fees. He later amended his complaint to include claims for damages.

The Labor Arbiter dismissed Chins complaint for lack of merit. The NLRC affirmed the dismissal on May 17, 2001. On appeal, however, the Court of Appeals (CA) reversed the dismissal and ruled that Chin was entitled to permanent total disability benefit of US$60,000.00. The CA remanded the case to the Labor Arbiter for determination of the other monetary claims of Chin. This prompted petitioner Magsaysay to come before this court on a petition for review on certiorari. The Court denied the petition, however, in a Resolution dated September 8, 2003. This Resolution became final and executory on February 23, 2004.

Petitioner Magsaysay paid the deficiency award of US$30,000.00 in full and final settlement of Chins disability compensation claim. On February 26, 2007, however, the Labor Arbiter rendered a Decision ordering it to pay Chin: a) P19,279.75 as reimbursement for medical expenses; b) US$147,026.43 as loss of future wages; c) P200,000.00 as moral damages; d) P75,000.00 as exemplary damages; and e) 10% of the total award as attorneys fees.

The NLRC modified the Labor Arbiters Decision by deleting the awards of loss of future wages and moral and exemplary damages for lack of factual and legal bases. On appeal, the CA reversed the NLRCs Decision and ordered the reinstatement of the Labor Arbiters Decision, hence, this petition.

ISSUE: Whether or not the CA erred in affirming the Labor Arbiters award of loss of future earnings on top of his disability benefits as well as awards of moral and exemplary damages and attorneys fees.


Definitely, the Labor Arbiter's award of loss of earning is unwarranted since Chin had already been given disability compensation for loss of earning capacity. An additional award for loss of earnings will result in double recovery.

LABOR LAW: permanent total disability; loss of earning capacity

In a catena of cases, the Court has consistently ruled that disability should not be understood more on its medical significance but on the loss of earning capacity. Permanent total disability means disablement of an employee to earn wages in the same kind of work, or work of similar nature that he was trained for or accustomed to perform, or any kind of work which a person of his mentality and attainment could do. Disability, therefore, is not synonymous with sickness or illness. What is compensated is ones incapacity to work resulting in the impairment of his earning capacity.

Moreover, the award for loss of earning lacks basis since the Philippine Overseas Employment Agency (POEA) Standard Contract of Employment (POEA SCE), the governing law between the parties, does not provide for such a grant. What Section 20, paragraph (G) of the POEA SCE provides is that payment for injury, illness, incapacity, disability, or death of the seafarer covers all claims arising from or in relation with or in the course of the seafarers employment, including but not limited to damages arising from the contract, tort, fault or negligence under the laws of the Philippines or any other country. The permanent disability compensation of US$60,000 clearly amounts to reasonable compensation for the injuries and loss of earning capacity of the seafarer.

In awarding damages for loss of earning capacity, the Labor Arbiter relies on the rulings in Villa Rey Transit v. Court of Appeals and Baliwag Transit, Inc. v. Court of Appeals. But these cases involve essentially claims for damages arising from quasi-delict. The present case, on the other hand, involves a claim for disability benefits under Chins contract of employment and the governing POEA set standards of recovery. The long-standing rule is that loss of earning is recoverable if the action is based on the quasi-delict provision of Article 2206 of the Civil Code.

CIVIL LAW: moral damages

While the Labor Arbiter can grant moral and exemplary damages, the amounts he fixed in this case are quite excessive in the absence of evidence to prove the degree of moral suffering or injury that Chin suffered. It has been held that in order to arrive at a judicious approximation of emotional or moral injury, competent and substantial proof of the suffering experienced must be laid before the court. It is worthy to stress that moral damages are awarded as compensation for actual injury suffered and not as a penalty. The Court believes that an award of P30,000.00 as moral damages is commensurate to the anxiety and inconvenience that Chin suffered.

CIVIL LAW: exemplary damages

As for exemplary damages, the award of P25,000.00 is already sufficient to discourage petitioner Magsaysay from entering into iniquitous agreements with its employees that violate their right to collect the amounts to which they are entitled under the law. Exemplary damages are imposed not to enrich one party or impoverish another but to serve as a deterrent against or as a negative incentive to curb socially deleterious actions.

WHEREFORE, the Court PARTIALLY GRANTS the petition and AFFIRMS the February 28, 2011 Decision of the Court of Appeals and it's October 11, 2011 Resolution with MODIFICATION