Davantes vs. C.F. Sharp Crew Management Inc.

A seafarer's failure to disclose a pre-existing condition during the PEME does not constitute knowing concealment under Section 20(E) of the 2010 POEA-SEC when the condition could have been detected by the standard tests and procedures required under the applicable PEME category, and the seafarer did not exhibit bad faith or intent to deceive.

Petitioner Paolo B. Davantes had been working with respondent C.F. Sharp Crew Management Inc., acting on behalf of its principal Claus-Peter Offen Tankschiffreederei (GMBH & Co.) KG, for 20 years as a seafarer. On May 13, 2017, he was hired as an able seaman on board the vessel BSL Elsa for a one-month tour of duty, covered by the Verdi/IMEC-IBF TCC Collective Bargaining Agreement (CBA). Before deployment, he underwent a Pre-Employment Medical Examination (PEME) and was found fit to work. The entitlement of seafarers on overseas work to disability benefits is governed by law — Articles 197 to 199 of the Labor Code in relation to Rule X, Section 2(a) of the Amended Rules on Employee Compensation — and by contract, including both the POEA-SEC and any applicable CBA.

Paolo B. Davantes had been working with C.F. Sharp Crew Management Inc. on behalf of its principal, Claus-Peter Offen Tankschiffreederei (GMBH & Co.) KG, for 20 years, completing all his employment contracts without any health issues. On May 13, 2017, Davantes was hired as an able seaman on board the vessel BSL Elsa for a one-month tour of duty, covered by the Verdi/IMEC-IBF TCC Collective Bargaining Agreement. Before deployment, he underwent a Pre-Employment Medical Examination (PEME) conducted on August 31, 2016, wherein he was found fit to work. At the time of the PEME, Davantes was already 50 years old, placing him under PEME Category C, which required additional tests beyond those for younger seafarers, including Blood Uric Acid, ECG, Fasting Blood Sugar, Total cholesterol, and Triglyceride.

On June 24, 2017, the crew members of BSL Elsa were instructed to undertake an emergency drill under the sweltering heat of the sun. According to Davantes, the drill took a toll on him, and he was brought to his cabin for rest. While still feeling dazed, he reported for his midnight duty. At around 3:00 a.m. of June 25, 2017, Davantes felt his heart beating abnormally fast. Thinking it was merely fatigue, he finished his duty but already felt suffocated. He waited until 9:00 a.m. to report his condition. After assessment by the Master, Davantes was disembarked and brought to a shore-side clinic in Venezuela. His condition deteriorated, necessitating hospital confinement where he underwent Coronary Bypass Graft surgery. On July 25, 2017, Davantes was repatriated to the Philippines.

Upon arrival, Davantes was referred to Dr. Robert Lim of Cardinal Santos Medical Center. Several tests were conducted, revealing high white blood cell and platelet count and Anterolateral Wall Ischemia. After four months of treatment, Dr. Lim diagnosed Davantes with "Myocardial Infarction, Coronary Artery Disease, Hypertension" and declared him unfit to work. Davantes also consulted his physician of choice, Dr. Antonio C. Pascual of the Philippine Heart Center, who likewise declared him unfit to work. For their part, C.F. Sharp referred Davantes to Marine Medical Services for further evaluation, which noted that he had chest pain upon waking up on June 26, 2017, had been previously diagnosed with hypertension by a private doctor in Marikina in 2010, and was a cigarette smoker who occasionally drank alcohol. The company-designated physician gave Davantes a final disability grading of Grade 7 for moderate residual or disorder, as stated in a letter dated December 4, 2017 issued by Melissa Co-Sia, M.D. and addressed to Dr. Lim — though there was nothing on record showing that Davantes received a copy of this assessment.

On March 14, 2018, Davantes received a compensation of USD 20,900.00 pursuant to a settlement agreement in a previous complaint docketed as NLRC-NCR Case No. 03-04582-18, which was dismissed with prejudice upon motion of both parties. Davantes executed a Release of All Rights, Pagpapaubaya sa Lahat ng Karapatan, and Affidavit of Claimant, all dated March 14, 2018. However, Davantes claimed that the amount of USD 20,900.00 was grossly inappropriate compared to the USD 102,308.00 he believed he was entitled to under the CBA. On March 7, 2019, Davantes filed a new complaint for total and permanent disability benefits, damages, and attorney's fees. C.F. Sharp moved to dismiss on the ground of res judicata and argued that Davantes was not entitled to CBA benefits because the CBA required the disability to be caused by an accident, which Davantes failed to allege and prove. C.F. Sharp also claimed that Davantes had concealed a pre-existing illness by not declaring his hypertension during the PEME.

• No Proof of Concealment: Petitioner maintained that there was no proof of concealment on his part regarding any pre-existing illness or condition during the PEME.
• Entitlement to Disability Benefits: Petitioner argued that he was entitled to total and permanent disability benefits, asserting that the settlement amount of USD 20,900.00 he received was grossly disproportionate to the benefits he was lawfully owed.

• Res Judicata: Respondent argued that the later complaint should be dismissed on the ground of res judicata, given that a previous complaint for disability benefits had been dismissed with prejudice pursuant to a settlement agreement and execution of a Release of All Rights and Affidavit of Claimant.
• CBA Inapplicability: Respondent argued that Davantes was not entitled to disability benefits under the CBA because the CBA required the disability to be caused by an accident, which Davantes failed to allege and prove.
• Concealment of Pre-existing Illness: Respondent claimed that there was concealment on the part of Davantes when he did not declare during his PEME that he had a pre-existing illness or condition, specifically hypertension, which had been diagnosed by a private doctor in Marikina in 2010 and for which he was prescribed Clonidine.

• Validity of Quitclaim: Whether the quitclaim and release executed by Davantes in favor of respondents, pursuant to the settlement agreement in the previous complaint, is valid and bars the subsequent claim.
• Applicable Law/Contract: Whether the CBA or the 2010 POEA-SEC governs Davantes's entitlement to disability benefits.
• Total and Permanent Disability by Operation of Law: Whether Davantes's disability became total and permanent by operation of law due to respondents' failure to personally give him a final medical assessment within the 120- or 240-day period from repatriation.
• Knowing Concealment of Pre-existing Illness: Whether Davantes knowingly concealed his pre-existing hypertension during the PEME, thereby disqualifying him from claiming compensation and benefits under Section 20(E) of the 2010 POEA-SEC.

• Validity of Quitclaim: No. The quitclaim was invalid because the settlement amount of USD 20,900.00 was grossly disproportionate to the disability benefits Davantes should have received, failing the requirement that the consideration for a quitclaim be sufficient and reasonable.
• Applicable Law/Contract: The 2010 POEA-SEC governs. The CBA's schedule of payment of benefits refers only to permanent disability resulting from an accident or injury, and Davantes did not claim total and permanent disability benefits on that basis.
• Total and Permanent Disability by Operation of Law: Yes. Davantes's disability became total and permanent by operation of law because respondents failed to personally give him a final medical assessment within the 120- or 240-day period from repatriation, there being no proof that Davantes received a copy of the Grade 7 disability rating.
• Knowing Concealment of Pre-existing Illness: No. Davantes did not knowingly conceal his pre-existing hypertension, as the rigorous PEME C he underwent — required for seafarers 40 years old and above — should have detected the condition through standard tests, and Davantes did not exhibit bad faith or intent to deceive.

• Validity of Quitclaim: Quitclaims are generally frowned upon as contrary to public policy, though the Court has recognized legitimate waivers representing a voluntary and reasonable settlement of a worker's claim. For a deed of release, waiver, or quitclaim to be valid, three requirements must be met: (1) absence of fraud, deceit, or coercion; (2) sufficient and reasonable consideration; and (3) consistency with law, public order, public policy, morals, or good customs. Here, the settlement amount of USD 20,900.00 was grossly disproportionate to the disability benefits Davantes should have received, failing the second requisite. The Court quoted with approval the principle from Manansala vs. Marlow Navigation Phils., Inc. that as laypersons, seafarers cannot be expected to make completely accurate accounts of their state of health, and honest mistakes do not negate compensability.

• Applicable Law/Contract: The entitlement of seafarers to disability benefits is governed by both law and contract. By law, the material provisions are Articles 197 to 199 of the Labor Code in relation to Rule X, Section 2(a) of the Amended Rules on Employee Compensation. By contract, both the POEA-SEC and the CBA may cover the seafarer's employment. While a CBA covered Davantes's employment, the schedule of payment of benefits therein referred only to permanent disability as a result of an accident or injury. Since Davantes did not claim total and permanent disability benefits on that basis, the 2010 POEA-SEC applied. The POEA-SEC is deemed integrated with every agreement between the seafarer and his employer, and Davantes's 2017 employment contract was covered by the 2010 Amended Standard Terms and Conditions Governing the Overseas Employment of Filipino Seafarers On-Board Ocean-Going Ships.

• Total and Permanent Disability by Operation of Law: Under Section 20(A) of the 2010 POEA-SEC, a seafarer is entitled to compensation and benefits for work-related illness or injury suffered during the term of the contract. The Court quoted with approval the CA's finding that Davantes's disability became total and permanent because C.F. Sharp failed to personally give him a final medical assessment within the 120- or 240-day period from repatriation. The Grade 7 disability rating came from a letter dated December 4, 2017 issued by Melissa Co-Sia, M.D. addressed to Dr. Lim, and there was nothing on record showing that Davantes received a final medical assessment before the end of the 120- or 240-day period. Hence, by operation of law, Davantes was entitled to total and permanent disability benefits under the 2010 POEA-SEC, fixed at USD 60,000.00.

• Knowing Concealment of Pre-existing Illness: Section 20(E) of the 2010 POEA-SEC disqualifies a seafarer who knowingly conceals a pre-existing illness or condition from claiming compensation and benefits. An illness is pre-existing if, prior to processing the POEA-SEC, either (1) the advice of a medical doctor on treatment was given for such continuing illness or condition, or (2) the seafarer had been diagnosed and had knowledge of such illness but failed to disclose it during the PEME, and such cannot be diagnosed during such examination. However, to knowingly conceal, the act must be intentional. In Manansala, the Court found concealment where the seafarer maintained before the company-designated physician that he had no history of hypertension or diabetes but declared otherwise before his personal physician, and later admitted regularly taking maintenance medicine — coupled with an unsubstantiated claim that the examining physician failed to record his answers. In contrast, Deocariza showed no concealment where the pre-existing condition could have been detected in the 2D echogram conducted during the PEME, and Ranoa held that a seafarer's supposed admission of hypertension was insufficient to prove intent to deceive. Applied here, two circumstances negated knowing concealment: First, unlike the seafarer in Manansala, Davantes immediately admitted to the company-designated physician that he consulted a doctor in 2010 for hypertension and acknowledged that he did not take his maintenance medicine regularly. Second, the evidence presented by C.F. Sharp — the PEME form showing "NO" for high blood pressure, foreign doctors' notes, and the company-designated physician's interview notes — was insufficient to prove intent to deceive. Most importantly, Davantes was 50 years old at the time of the PEME, requiring him to undergo PEME C, which involved more rigorous testing including blood pressure monitoring, ECG, chest x-ray, and blood chemistry. Had Davantes been suffering from pre-existing hypertension, the condition could have been easily detected by these standard tests. A "fit for sea duty" recommendation when standardized procedures would reveal otherwise means the medical examiner failed to diligently screen the seafarer.

• Validity of Quitclaims in Labor Cases — A deed of release, waiver, or quitclaim pertaining to an existing right is valid only if: (1) there was no fraud, deceit, or coercion on the part of any party; (2) the consideration is sufficient and reasonable; and (3) the contract is not contrary to law, public order, public policy, morals, or good customs, or prejudicial to a third person with a right recognized by law. A quitclaim based on a settlement amount grossly disproportionate to the benefits lawfully due is invalid.

• Knowing Concealment of Pre-existing Illness (Seafarers) — Under Section 20(E) of the 2010 POEA-SEC, a seafarer who knowingly conceals a pre-existing illness is disqualified from claiming compensation and benefits. An illness is pre-existing if prior to processing the POEA-SEC: (1) medical advice on treatment was given for such continuing illness or condition; or (2) the seafarer had been diagnosed and has knowledge of such illness but failed to disclose it during the PEME, and such cannot be diagnosed during such examination. Concealment must be intentional — the seafarer must have proper knowledge of the pre-existing condition and intent to deceive the employer. Where the pre-existing condition could have been detected by the standard tests required under the applicable PEME category, concealment is not established, and a "fit for sea duty" recommendation under such circumstances indicates the medical examiner's failure to diligently screen the seafarer rather than the seafarer's deception.

• Total and Permanent Disability by Operation of Law (Seafarers) — A seafarer's disability becomes total and permanent by operation of law when the employer fails to personally give the seafarer a final medical assessment within the 120- or 240-day period from repatriation. The absence of proof that the seafarer received a copy of the disability rating within that period triggers this rule.

• PEME Categories Under DOH Administrative Order No. 2007-0025 — PEMEs for seafarers are categorized based on status and age: PEME A for new candidates, PEME B for serving seafarers below 40 years old, and PEME C for serving seafarers 40 years old and above. PEME C requires additional tests including Blood Uric Acid, ECG, Fasting Blood Sugar, Total cholesterol, and Triglyceride, reflecting a more rigorous screening standard for older seafarers.

• "As laypersons, seafarers cannot be expected to make completely accurate accounts of their state of health. Unaware of the nuances of medical conditions, they may, in good faith, make statements that turn out to be false. These honest mistakes do not negate compensability for disability arising from pre-existing illnesses shown to be aggravated by their working conditions. However, when a seafarer's proper knowledge of pre-existing conditions and intent to deceive an employer are established, compensability is negated." — This passage, quoted from Manansala vs. Marlow Navigation Phils., Inc., articulates the controlling standard for distinguishing honest mistakes from knowing concealment in seafarer disability claims.

• "A recommendation that a seafarer is 'fit for sea duty' when standardized procedures would reveal otherwise, can only mean that the medical examiner failed to diligently screen the seafarer." — This formulation establishes the principle that when a pre-existing condition is detectable through standard PEME procedures, the resulting "fit to work" finding reflects the examiner's failure rather than the seafarer's concealment, thereby negating disqualification under Section 20(E).

• "To knowingly conceal, it must be intentional." — This concise statement defines the requisite mental state for disqualification under Section 20(E) of the 2010 POEA-SEC, establishing that mere non-disclosure without intent to deceive is insufficient.

• Manansala vs. Marlow Navigation Phils., Inc., 817 Phil. 84 (2017) — Controlling precedent on knowing concealment. Distinguished from the present case: in Manansala, the seafarer exhibited bad faith by denying his medical history before the company-designated physician while admitting it to his personal physician, and by claiming the examining physician failed to record his answers. Davantes, by contrast, immediately admitted his hypertension history and did not exhibit similar bad faith.

• Deocariza vs. Fleet Management Services Phils., Inc., 836 Phil. 1087 (2018) — Cited as an example of when a pre-existing illness was not knowingly concealed, because the condition could have been detected through the 2D echogram conducted during the PEME. Applied by analogy to Davantes's case, where hypertension should have been detectable through PEME C standard tests.

• Ranoa vs. Anglo-Eastern Crew Management Phils., Inc., 867 Phil. 108 (2019) — Cited for the proposition that a seafarer's supposed admission of hypertension was insufficient to prove intent to deceive regarding a pre-existing illness.

• Career Philippines Shipmanagement, Inc. vs. Godinez, 819 Phil. 86 (2017) — Cited for the principle that to knowingly conceal under the POEA-SEC, the concealment must be intentional.

• Philsynergy Maritime, Inc. vs. Columbano Pagusan Gallano, Jr., 832 Phil. 922 (2018) — Cited in support of the proposition that standard PEME procedures should detect conditions such as hypertension.

• De Jesus vs. Inter-Orient Maritime Enterprises, Inc., G.R. No. 203478, June 23, 2021 — Cited for the principle that quitclaims are generally frowned upon as contrary to public policy, though legitimate waivers representing voluntary and reasonable settlements are recognized.

• Arlo Aluminum, Inc. vs. Piñon, Jr., 813 Phil. 188 (2017) — Cited as the source of the three-part test for validity of quitclaims, waivers, or deeds of release.

• Section 20(A), 2010 POEA-SEC — Provides that a seafarer is entitled to compensation and benefits for work-related illness or injury suffered during the term of the contract, including medical treatment expenses, sickness allowance, and disability benefits. Applied to establish Davantes's entitlement to disability benefits.

• Section 20(E), 2010 POEA-SEC — Disqualifies a seafarer who knowingly conceals a pre-existing illness or condition from claiming any compensation and benefits. The Court applied this provision but found that the element of knowing concealment was absent.

• 2010 POEA-SEC, Definition of Terms, Item No. 11(a) and (b) — Defines a pre-existing illness as one where, prior to processing the POEA-SEC, either medical advice on treatment was given for such continuing condition, or the seafarer had been diagnosed and has knowledge of such illness but failed to disclose it during the PEME, and such cannot be diagnosed during such examination. Applied to analyze whether Davantes's hypertension constituted a pre-existing illness that was knowingly concealed.

• Articles 197–199, Labor Code, in relation to Rule X, Section 2(a), Amended Rules on Employee Compensation — The material statutory provisions governing seafarers' entitlement to disability benefits. Cited as the legal framework within which both the POEA-SEC and CBA operate.

• Article 2208, New Civil Code — Allows recovery of attorney's fees in actions to recover wages of laborers and actions for indemnity under employer's liability laws. Applied to award attorney's fees equivalent to 10% of the total monetary award.

• DOH Administrative Order No. 2007-0025 — Articulates guidelines on PEMEs for seafarers, identifying minimum test requirements categorized into PEME A (new candidates), PEME B (serving seafarers below 40), and PEME C (serving seafarers 40 and above). Applied to determine that Davantes, being 50 years old, was subject to the more rigorous PEME C, which should have detected his hypertension.

Caguioa (Chairperson), Inting, Dimaampao, and Singh, JJ., concurred.