Hisanza vs. Bright Maritime Corporation

A seafarer is deemed totally and permanently disabled by operation of law when the company-designated physician fails to issue a final and definitive assessment of the seafarer's medical condition within the 240-day extended treatment period, and instead relies on an interim assessment to prematurely cease medical treatment.

Petitioner Adan De Guzman Hisanza is a seafarer recruited by respondent Bright Maritime Corporation (Bright) to work on vessels of its principal, respondent Navios Shipmanagement, Inc. (Navios). The other respondents are corporate directors or officers of Bright or Navios. The employment relationship between Filipino oceangoing seafarers and their employers is governed by the Labor Code, the Amended Rules on Employee Compensation, and Republic Act No. 8042, pursuant to which the Philippine Overseas Employment Administration issues the POEA-Standard Employment Contract (POEA-SEC) governing the employment of overseas Filipino seafarers.

On December 7, 2015, Adan De Guzman Hisanza slipped and fell while working aboard a ship, suffering a slipped intervertebral disc and a narrowing lumbar vertebra duct. He was repatriated on February 5, 2016, treated, and given a final diagnosis of low back pain secondary to mild disc bulge, improved. After being certified fit for seafaring duty on September 14, 2016, Bright rehired Hisanza as an able-bodied seaman aboard the M/V Navios Etoile on November 10, 2016, for a nine-month period under the POEA-SEC.

On May 24, 2017, Hisanza felt severe back pain while working and was repatriated on May 29, 2017. He was hospitalized and underwent physical therapy and regular consultation from June to December 2017. On December 5, 2017, the 190th day of treatment, Bright's company clinic issued a medical report titled "10th Progress Report," giving an "interim disability grade of 11" for slight rigidity or one-third loss of motion or lifting power in the trunk. The report recommended continuing medication and physical therapy. Deeming this a final assessment, Bright informed Hisanza that it would no longer shoulder further treatments.

Dissatisfied, Hisanza consulted Dr. Venancio Garduce, an orthopedic specialist. An MRI scan revealed various spinal conditions, and Dr. Garduce certified that Hisanza had a disability rating of three and was unfit for seafaring work. On July 19, 2018, Hisanza filed a complaint before the NLRC seeking permanent disability benefits, sickness allowance, damages, and attorney's fees. The labor tribunals and the Court of Appeals favored the company physician's assessment, awarding benefits corresponding to disability grade 11, prompting Hisanza to elevate the matter to the Supreme Court.

• Validity of the December 2017 Assessment: Petitioner argued that the company physician's December 2017 report was invalid as it was merely an interim assessment, not definitive, and was never properly communicated to him.
• Third-Doctor Referral: Petitioner maintained that a third-doctor referral is not mandatory under the POEA-SEC and that the lack thereof was not fatal to his claim, especially since Bright made it impossible by not attending mandatory conferences.
• Entitlement to Total and Permanent Disability Benefits: Petitioner asserted that he should be deemed permanently disabled and entitled to total and permanent disability benefits despite his doctor's Grade 3 rating, because his condition rendered him permanently unfit for seafaring work.
• Damages: Petitioner argued that respondents withheld the full amount of his disability benefits in bad faith, entitling him to moral and exemplary damages.

• Failure to Dispute Company Physician's Assessment: Respondents countered that the claim should be dismissed for failure to properly dispute the company physician's assessment and for lack of a third-doctor referral as required by Section 20(A)(3) of the POEA-SEC.
• Work-Relation: Respondents argued that the injury is not compensable as there is no proof it was work-related.
• Prevailing Weight of Company Physician's Assessment: Respondents maintained that the company physician's disability rating must prevail over Dr. Garduce's, as it was based on months of medical treatment and observation, and was issued within the 240-day extended treatment period.
• Damages: Respondents denied bad faith or malice and argued they were entitled to PHP 100,000.00 in actual damages, claiming the complaint was baseless, exorbitant, and malicious.

• Validity of the Medical Assessment: Whether the company physician's December 2017 assessment constitutes a valid final and definitive assessment under the POEA-SEC.
• Total and Permanent Disability: Whether the seafarer is entitled to total and permanent disability benefits by operation of law due to the employer's failure to issue a valid final assessment within the reglementary treatment period.
• Third-Doctor Referral: Whether the lack of a third-doctor referral precludes the seafarer's claim for total and permanent disability benefits.
• Damages and Attorney's Fees: Whether the seafarer is entitled to moral and exemplary damages and attorney's fees.

• Validity of the Medical Assessment: No. The December 2017 assessment was merely an interim rating, not a final and definitive assessment, as it still required further treatment and was issued before the expiry of the 240-day treatment period.
• Total and Permanent Disability: Yes. The seafarer is deemed totally and permanently disabled by operation of law because the employer failed to issue a valid final assessment within the reglementary period and prematurely ceased medical treatment based on an interim report.
• Third-Doctor Referral: The issue is moot. Since the seafarer is considered permanently and totally disabled by operation of law due to the employer's failure to issue a valid final assessment, the issue regarding the lack of a third-doctor referral was rendered moot.
• Damages and Attorney's Fees: No for moral and exemplary damages; Yes for attorney's fees. There was no bad faith or malicious conduct to justify moral and exemplary damages, but attorney's fees were properly awarded because lawful benefits were unjustifiably withheld, compelling the employee to litigate.

• Validity of the Medical Assessment: Under Section 20.A.2. of the POEA-SEC, the employer is required to declare either the seafarer's fitness to work or the degree of their disability. This declaration must be a final, conclusive, and definite medical assessment that clearly states whether the seafarer is fit to work or the exact disability rating, without any further condition or treatment. Here, the company physician's December 2017 report was titled "10th Progress Report," issued on the 190th day of treatment, and explicitly described the Grade 11 disability rating as an "interim" rating. It recommended continuing medication and physical therapy, indicating that it was neither final nor definitive.
• Total and Permanent Disability: Because the assessment was merely interim and the employer unilaterally declared it final to justify the premature stoppage of treatment, there was no final and definitive assessment upon the lapse of the 240-day extended treatment period. Failure to make a definitive assessment within the reglementary treatment period gives rise to a conclusive presumption that the seafarer is totally and permanently disabled. The NLRC committed grave abuse of discretion in denying the motion for reconsideration without addressing this threshold issue, and the CA committed reversible error in affirming it. The belated pleading of this issue before the NLRC was not fatal, as labor proceedings are administrative in nature and not strictly bound by technical rules of procedure.
• Third-Doctor Referral: As the seafarer is considered permanently and totally disabled ipso jure by virtue of the employer's failure to issue a valid final assessment, the necessity of a third-doctor referral to settle conflicting assessments was rendered moot.
• Damages and Attorney's Fees: The award of attorney's fees was sustained because in labor proceedings, the unjustified withholding of lawful wages or benefits compels the employee to litigate, regardless of malice or bad faith. However, moral and exemplary damages were denied because there was no recorded indication of bad faith or malicious conduct on the part of the respondents.

• Total and Permanent Disability by Operation of Law — Failure of the company-designated physician to make a definitive assessment within the 120-day or extended 240-day reglementary treatment period gives rise to a conclusive presumption that the seafarer is totally and permanently disabled. In this case, the employer's reliance on an interim assessment to prematurely stop treatment meant no final assessment was issued, triggering the presumption.
• Requisites of a Final Medical Assessment — A valid final assessment must be final, conclusive, and definite. It must clearly state whether the seafarer is fit to work or the exact disability rating, whether the illness is work-related, and must not require any further condition or treatment. It should be issued after the company-designated physician has exhausted all possible treatment options within the periods allowed by law. The assessment cannot be incomplete, doubtful, tentative, or provisional.

• "Failure to make a definitive assessment within the reglementary treatment period gives rise to a conclusive presumption that the seafarer is totally and pe1manently disabled." — This establishes the legal consequence of an employer's failure to issue a valid final assessment within the prescribed period.
• "The assessment must have sufficient basis; it cannot be incomplete, doubtful, tentative, or provisional." — This defines the standard required for a company-designated physician's assessment to be considered valid and binding under the POEA-SEC.
• "There being no final and definitive assessment of Hisanza's condition and seafaring fitness upon the lapse of the 240-day extended treatment period, he should be deemed totally and permanently disabled by operation of law and accordingly entitled to the appropriate disability compensation." — This articulates the ratio decidendi connecting the facts (interim assessment, premature cessation of treatment) to the conclusion (total and permanent disability by operation of law).

• Reyes vs. Magsaysay Mitsui OSK Marine, Inc. — Followed. The Court reiterated this line of cases disregarding similarly tentative assessments and awarding seafarers permanent disability benefits by operation of law.
• Jebsens Maritime, Inc. vs. Mirasol — Followed. Cited for the rule that the company-designated physician's assessment must be a final, conclusive, and definite medical assessment.
• Salas vs. Transmed Manila Corp. — Followed. Cited for the proposition that a final assessment declaring a seafarer cleared of an illness is not considered a definitive assessment, and that failure to make a definitive assessment gives rise to a conclusive presumption of total and permanent disability.

• Section 20.A.2., POEA-SEC — Requires the employer, through its designated physician, to assess the seafarer's medical condition after undergoing treatment. The assessment must establish the degree of disability or fitness to work.
• Section 20.A.3., POEA-SEC — Provides the procedure for contesting the company-designated physician's assessment, including referral to a third doctor.
• Section 32, POEA-SEC — Contains the schedule of disability grading, where impediment grade 1 constitutes total and permanent disability, with an award of USD 60,000.00.
• Article 227, Labor Code — Relaxes the strict application of the rules on evidence in labor cases, allowing the NLRC and Labor Arbiters to exercise all just and reasonable means to establish the facts.

Caguioa (Chairperson), Dimaampao, and Singh, JJ., concurred. Inting, J., on official business.