Philippine Shipping Update - (Issue 2013/13)

In this issue:

  • Supreme Court rules non-referral to a third doctor is cause for dismissal of seafarer's claim

  • Quitclaim upheld by Supreme Court


Supreme Court rules non-referral to a third doctor is cause for dismissal of seafarer's claim

The Supreme Court noted that several cases have reached them with one issue: which should prevail - the findings of the company doctor or the findings of the seafarer's doctor. How should the differing findings be resolved?

The seafarer here was repatriated due to finished contract but had medical consultations during his employment due to sleeping disorder and body stiffness. Upon repatriation, the seafarer was referred to the company-designated doctor where he was diagnosed with carpal tunnel syndrome and anxiety disorder. After almost four months of treatment, the company-designated doctors declared the seafarer fit to return to work on 6 November 2007. On 5 December 2007, the seafarer sought the medical opinion of an orthopedic doctor who diagnosed him to still be suffering from carpal tunnel syndrome and issued to him a partial temporary disability assessment. On 8 January 2008, the seafarer consulted a psychiatrist who found him to be suffering from minor depression. On 8 March 2008, the seafarer consulted another doctor who diagnosed him with carpal tunnel syndrome and adjustment disorder. Lastly, the seafarer consulted another doctor on 13 April 2008 who declared assessed him with a permanent disability due to his medical condition. After consultation with four doctors, the seafarer filed a complaint for payment of permanent total disability benefits.

The Labor Arbiter held that seafarer is entitled to full disability benefits considering that despite being declared fit to work by the company-designated doctor, the seafarer was found by his doctors to still be suffering from the same medical condition. The Labor Arbiter likewise noted that the best indication that seafarer was really unfit was that he was not rehired by the company again despite having served them for almost 15 years. The NLRC and the Court of Appeals both affirmed the decision of the Labor Arbiter.

As the case was elevated to the highest court of the land, the Supreme Court noted that the POEA Contract has a conflict resolution system to decide the issue. Section 20 B (3) of the POEA Contract (now Section 20 A (3) of the 2010 POEA Contract) states:

"Upon sign-off from the vessel for medical treatment, the seafarer is entitled to sickness allowance equivalent to his basic wage until he is declared fit to work or the degree of permanent disability has been assessed but in no case shall this period exceed one hundred twenty (120) days "

"If a doctor appointed by the seafarer disagrees with the assessment, a third doctor may be agreed jointly between the Employer and the seafarer. The third doctor's decision shall be final and binding on both parties."

In this particular case, there is also a CBA which also states that the assessment must be referred to a third doctor should the findings of the company-designated doctor and the seafarer's personal doctor differ from each other.

The seafarer in this case was assessed by the company-designated doctor to be fit to work. The seafarer sought the opinion of other doctors who diagnosed him to still be suffering from an illness. Based on said medical opinions, the seafarer filed a claim for disability benefits with the NLRC.

The Supreme Court said that there was no issue in the seafarer obtaining a second medical opinion as this was allowed by the provisions of the POEA Contract and the CBA. The problem arose when the seafarer, pre-empted the mandated procedure by filing a complaint for disability benefits on the strength of his chosen physicians' opinions without referring the conflicting opinion to a third doctor for final determination, as was his duty. The seafarer's immediate filing of the complaint constituted a breach of obligation on his part to have the conflicting assessments referred to a third doctor for final determination.

The company could not have possibly caused the referral to a third doctor as they were not aware that the seafarer was contesting the opinion of the company-designated doctor and that he secured the opinion of his own doctors. Without a valid referral to a third doctor, the complaint is dismissible as the findings of the company-designated doctor should be upheld based on the POEA Contract and the CBA.

In the same manner, the Supreme Court was not persuaded with the argument that the non-hiring of the seafarer is the best proof that the latter was disabled. The Court noted that there was no evidence presented that the seafarer sought re-employment with the company or any other company and was turned down due to his illness. Likewise, there was no showing that it was a matter of course for the company to rehire the seafarer after the expiration of his contract.

The Supreme Court dismissed seafarer's complaint.

The Supreme Court has noticed that they have yet to come across a case which involved the referral to a third doctor by the parties since the 2000 POEA Contract introduced this provision. This has led to the Supreme Court noting that the third doctor provision in the POEA Contract appears to be honored more in breach rather than in compliance which is unfortunate considering that the provision is meant to speedily settle disability claims voluntarily at the parties' level.

Author's Note:

With this decision from the Supreme Court, we may see an increase in the request for seafarers to be referred to third doctors for final evaluation. As such, there is a need to properly choose the third doctor who should be briefed on the schedule of disability and allowances provided in the POEA Contract

Quitclaim upheld by the Supreme Court

The seafarer's employment which was supposed to be for 12 months was abruptly terminated due to the cessation of fishing operations of the employer. Prior to disembarking the vessel, an agreement was entered into by the seafarers and the employer that they will receive 100% of their salaries for the remainder of the unexpired portion of their pre-terminated contract. The next day, another agreement was entered into by the parties where the seafarers will receive 50% of their salaries for the remainder of the unexpired portion of the contract. Upon repatriation, the seafarers received their settlement pay and executed quitclaims accordingly. The seafarers, despite executing quitclaims, filed a complaint for payment of salaries for the full unexpired portion of their contract. They alleged that they were coerced to accept the 50% settlement previously proposed by the employer because of dire need of finances and the quitclaims should be invalidated.

The Labor Arbiter and the NLRC found that the quitclaims signed by the seafarers should bar the claims. However, the Court of Appeals voided the quitclaims considering that the earlier agreement of payment of 100% salaries for the unexpired portion of the contract was more in keeping with the Migrant Workers Act for which reason, the issue was brought up to the Supreme Court.

The Supreme Court considered the quitclaim to be valid. While the rule is that quitclaims are generally frowned upon, if a person signs a quitclaim with full understanding of its terms and with the payment of credible and reasonable consideration, the courts will recognize the same to be a valid transaction.

Also, the Supreme Court held that the Migrant Workers Act will not apply in this case considering that under the same law; the same speaks of entitlement if the overseas worker's employment is terminated without just, valid or authorized cause. In this case, stopping of operations is a management prerogative given to employers as long as it is done in good faith and the employer faithfully complies with the substantive and procedural requirements laid down by law. The Court considered the cessation of operations of the employer to have been done in good faith and without intent to defeat the protected rights of the seafarers. However, the employer was adjudged to pay nominal damages of PHP30,000 for failure to comply with the procedural requirements of terminating the employment of the seafarers. Under the Labor Code, if employment is being terminated due to an authorized cause such as cessation of business operations, the employer shall advise in writing the affected employees and the Department of Labor and Employment of the intended date of termination of employment at least one month prior to the cessation of operations. While this would not affect the validity of the termination of employment, it subjects the employer to the payment of indemnity in the form of nominal damages.

The Court noted that that all the seafarers executed the quitclaim with a full understanding of their import and consequences. Likewise, the amounts given to them in exchange for the quitclaims were reasonable considering that they received more than what they were entitled to under the POEA Contract. Under the POEA Contract, in case of termination of employment due to discontinuance of voyage, termination pay is given to the seafarer equivalent to his one month of his basic wage.

Staff Author