More Maritime Agencies, Inc. vs. NLRC

A quitclaim executed by a seafarer for a grossly inadequate consideration is a nullity and cannot bar a claim for disability benefits; compensability does not depend on whether the ailment was pre-existing, but on whether the disease or injury is work-related or was aggravated by the employment, and even if not work-related, benefits are due if the disease occurred during the effectivity of the POEA Standard Employment Contract.

Sergio F. Homicillada was employed as an oiler on board MV Rhine under an overseas employment contract with More Maritime Agencies, Inc., the local agent of Ocean Bulk Maritime, a Greek corporation; Alpha Insurance & Surety Co., Inc. acted as surety. The employment was governed by the POEA Standard Employment Contract for Filipino seamen, including Appendix I-A on disability allowances and POEA Memorandum Circular No. 5, which adjusted the disability basis. The dispute concerns entitlement to disability and medical benefits for a back injury allegedly sustained or aggravated aboard the vessel.

On 17 January 1994, Sergio F. Homicillada entered into an overseas employment contract with More Maritime Agencies, Inc. (More Maritime), then acting as local agent of its principal Ocean Bulk Maritime, a foreign corporation organized under the laws of Greece. The contract stipulated that Homicillada would be employed as an oiler on board the vessel MV Rhine with a basic monthly salary of US$287.00 plus an allowance of US$76.00 per month, open overtime, and vacation pay for a period of nine months. On 5 February 1994, pursuant to the contract, Homicillada boarded MV Rhine at Port Sete, France.

On 18 March 1994, while MV Rhine was anchored at a port in Brazil, Homicillada was directed to open and clean the main engine as well as the first and second cylinders of the air trunk. To do so, he had to enter a manhole, accessible only in a crouching position, and carry a weighty 20-liter canister to collect the carbon, mud, and oil deposit inside the cylinders and bring them out for disposal. After working for four consecutive days, he began experiencing pain in his left leg that transcended upward to his waist and lower back; his left foot swelled. He informed his Chief Engineer, who insisted that he continue working and gave him only a “salonpas” plaster. On 29 March 1994 his condition worsened; he told the ship Captain, who had him examined by the ship doctor. The doctor certified that Homicillada was not fit for work for five days, but the Captain still required him to work and gave him no rest. After the vessel sailed out of Brazil, the pain intensified and became unbearable.

Upon his return to France, Homicillada had himself medically examined again. On 27 April 1994 he was repatriated to the Philippines, where he underwent a series of physical examinations at the Physician’s Diagnostic Service Center, the same clinic that had cleared him for work before deployment. Initial examination indicated that his limping and lower back pain were probably due to a slipped-disc; this was later confirmed in a Medical Evaluation Certificate dated 4 May 1994. A CT-scan of his lower back revealed “Degeneration Osteo Arthropathy, lumbar spine, with Disc Bulge,” or simply a slipped-disc. The diagnostic center recommended laminectomy and dissection on his lower back. Upon learning that the surgery would cost approximately P40,000.00, More Maritime disregarded the recommendation and proposed a less costly pelvic traction treatment, which did not improve his condition.

On 6 December 1994 Homicillada filed a complaint with the POEA against petitioners for disability and medical benefits as well as payment of his two months basic salary, which petitioners had withheld. Petitioners answered that he was not entitled because his illness was pre-existing, concealed from them, unrelated to his employment, or otherwise baseless. The quitclaim was a “Receipt and Release” dated 16 August 1994, purportedly signed by Homicillada in favor of More Maritime while the case was pending in the POEA. In it, Homicillada supposedly acknowledged receipt of P15,750.00 “in complete and final settlement of (his) wages, bonuses, overtime pay, leave pay, allotments and all other entitlements as well as sickness wages, reimbursement of medical expenses, medicines and other benefits due (him) . . . accruing from (his) services and employment on the vessel MV Bulk Rhine . . . .” and declared that he had no other claims against the vessel, Master, Owners, Operators, and Agents and discharged and released them from any other liability. Petitioners maintained that they attached this quitclaim to their position paper with motion to dismiss, received by the POEA on 10 April 1995.

The POEA found that the contention that Homicillada’s sickness was pre-existing and concealed was untenable because he had been required to undergo medical examination and was declared fit to work before signing the contract. It found that his regular job as an oiler required him to enter the manhole to clean the engine, carrying containers in which mud and waste oil were placed and then carried out, and that this resulted in the diagnosed disc herniation. The NLRC found that even if the quitclaim existed, Homicillada had not been afforded the proper medical treatment per physician’s advice because only pelvic traction was approved despite the recommended laminectomy and dissection, and the 23 June 1994 medical certificate indicated no improvement and partial permanent disability absent the advised surgery.

• Grave Abuse of Discretion / Quitclaim: Petitioners alleged that the NLRC acted with grave abuse of discretion in completely ignoring a “Receipt and Release” dated 16 August 1994 purportedly signed by Homicillada in favor of More Maritime while the case was pending in the POEA; they maintained that it was attached to their position paper with motion to dismiss received by the POEA on 10 April 1995.
• Work-Connected Illness: Petitioners asserted that Homicillada was not entitled to disability benefits because his sickness was not work-connected and was already in existence prior to his deployment abroad.
• Quitclaim / Release: Petitioners argued that the quitclaim was made in consideration of post-repatriation medical treatment at the expense of the maritime agency, and that Homicillada thereby released and absolved them from any liability.
• Chronic Low Back Pain: Petitioners averred that Homicillada’s illness was diagnosed as “chronic low back pain” in the medical report of Dr. Mario Ver of the St. Luke’s Orthopedic Institute; citing Black’s Law Dictionary, they submitted that “chronic” meant long duration and supported their position that the illness was not work-related but already pre-existing long before his overseas employment.

• Amount of Benefits: Respondent Homicillada insisted that he was entitled to more than the amount decreed by the POEA.
• Validity of Quitclaim / Medical Treatment: Respondent NLRC, in its assailed decision, observed that even granting the existence of the quitclaim, it could not free petitioners from liability because Homicillada was not afforded the proper medical treatment per physician’s advice; only pelvic traction was approved despite the recommended laminectomy and dissection, and the June 23, 1994 medical certificate showed no improvement and partial permanent disability absent the advised surgery.
• Work-Relatedness / Pre-existing Illness: Respondent NLRC found that the contention that the sickness was pre-existing and concealed was untenable because Homicillada was medically examined and declared fit to work before signing the contract; his job as an oiler cleaning the engine through the manhole caused disc herniation; and even if the sickness were not work-related, he was entitled to disability benefits because the disease occurred during the effectivity of the contract and the POEA Standard Contract does not qualify whether the sickness is work-related or not.

• Grave Abuse of Discretion / Quitclaim: Whether the NLRC committed grave abuse of discretion in disregarding the “Receipt and Release” dated 16 August 1994 and in affirming liability despite the quitclaim.
• Validity of Quitclaim: Whether the quitclaim executed by Homicillada for P15,750.00, referred to by the Court as P15,570.00, is valid and binding so as to bar his claim for disability and medical benefits.
• Work-Relatedness / Pre-existing Illness: Whether Homicillada’s slipped-disc or chronic low back pain is compensable notwithstanding its alleged pre-existing or chronic nature.
• Disability Award: Whether the NLRC correctly increased the disability award to US$7,465.00 based on POEA Memorandum Circular No. 5.

• Grave Abuse of Discretion / Quitclaim: No. The petition failed to show grave abuse of discretion; the NLRC’s decision and resolution are affirmed. Even if the quitclaim existed, it cannot bar the claim.
• Validity of Quitclaim: No. The Receipt and Release is a complete nullity because the consideration was grossly inadequate and unconscionable, and Homicillada was not afforded the recommended medical treatment.
• Work-Relatedness / Pre-existing Illness: Yes, compensable. Compensability does not depend on whether the ailment was pre-existing; it is enough that the disease or injury is work-related or was aggravated by the employment. Even if not work-related, benefits are due if the disease occurred during the effectivity of the POEA Standard Contract.
• Disability Award: Yes. The increased award of US$7,465.00 under POEA Memorandum Circular No. 5 is affirmed.

• Grave Abuse of Discretion / Quitclaim: The threshold question whether the quitclaim was actually filed and formed part of the records was largely a question of fact, which the Court declined to dwell on in a special civil action for certiorari. Even granting its existence, the NLRC correctly observed that the quitclaim could not free petitioners from liability because Homicillada was not afforded the proper medical treatment per physician’s advice. The records showed that petitioners approved only pelvic traction although the Medical Evaluation Certificate dated May 4, 1994 advised laminectomy and dissection of the disc herniation; the June 23, 1994 medical certificate indicated no improvement and that Homicillada would still suffer partial permanent disability absent the advised surgery. The only visible help extended was diagnostic in nature, answering for the CT-scan of the lumbo-sacral area in the amount of P3,800.00. This was not an amount to justify a waiver of the claim. Thus, no grave abuse of discretion attended the NLRC’s decision and resolution.

• Validity of Quitclaim: The Court applied the rule that the law does not consider valid any agreement to receive less compensation than what a worker is entitled to recover, nor does it prevent the worker from demanding benefits to which he is entitled. Quitclaims executed by employees are commonly frowned upon as contrary to public policy and ineffective to bar claims for the full measure of the worker’s legal rights, considering the economic disadvantage of the employee and the inevitable pressure of financial necessity. The requisites for a valid quitclaim are: (a) no fraud or deceit on the part of any party; (b) the consideration is credible and reasonable; and (c) 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. Although some requisites were satisfied, the quitclaim was not a fairly reasonable settlement. The Court found the consideration grossly inadequate—the receipt stated P15,750.00, while the Court referred to a measly P15,570.00—and the financial terms unconscionable. It therefore struck down the “Receipt and Release” dated August 16, 1994 as a complete nullity.

• Work-Relatedness / Pre-existing Illness: Petitioners’ reliance on Black’s Law Dictionary definition of “chronic” was misplaced. The definition did not state a definite span of time to qualify the duration of the illness as chronic, and the NLRC observed that the period of more than five months from the time Homicillada started working for petitioners until the finding of “chronic low back pain” on July 15, 1994 could be considered long enough to describe the ailment as chronic, since it could have traced its inception to the date of his actual employment. Even assuming that the ailment was contracted prior to employment, this did not exculpate petitioners. Compensability does not depend on whether the injury or disease was pre-existing at the time of employment; it depends on whether the disease or injury is work-related or aggravated the condition. It is safe to presume that the arduous nature of Homicillada’s employment at least contributed to the aggravation of his injury. An employee need not be in perfect health at the time of injury; every workman brings infirmities to employment, and while the employer is not the insurer of the employee’s health, he takes the employee as he finds him and assumes the risk of a weakened condition being aggravated. If the injury is the proximate cause of the disability, the previous physical condition is unimportant. The POEA’s findings, supported by substantial evidence, showed that Homicillada was medically examined and declared fit to work before signing the contract, so petitioners could not claim concealment; his regular job as an oiler required him to enter the manhole to clean the engine and carry containers of mud and waste oil, which resulted in the diagnosed disc herniation. Moreover, even if the sickness were not work-related, he was entitled to disability benefits because the disease occurred during the effectivity of the contract and the POEA-approved Standard Contract for seamen does not qualify whether the sickness is work-related or not.

• Disability Award: The NLRC increased the disability award to US$7,465.00 based on POEA Memorandum Circular No. 5, which took effect on March 20, 1994 and upgraded the basis for disability allowance to US$50,000.00. The Court found no grave abuse of discretion in the NLRC’s modification and affirmed the award. The injury sustained by Homicillada was compensable, having resulted from the rigors of carrying heavy canisters in a crouching position that logically strained his lower back and led to his slipped-disc. The petition therefore failed to show any ground to reverse the NLRC’s decision and resolution.

• Quitclaims in Labor Cases — A quitclaim is not valid if the consideration is grossly inadequate or unconscionable; the law does not consider valid any agreement to receive less compensation than what a worker is entitled to recover. Requisites: (a) no fraud or deceit; (b) consideration credible and reasonable; (c) not contrary to law, public order, public policy, morals, or good customs, or prejudicial to a third person with a right recognized by law. Applied: the Receipt and Release for P15,750.00, referred to by the Court as P15,570.00, was a nullity because Homicillada was shortchanged and not given the recommended surgery.
• Compensability of Pre-existing or Chronic Illness — Compensability does not depend on whether the injury or disease was pre-existing at the time of employment; it depends on whether the disease or injury is work-related or aggravated the condition. The employer takes the employee as he finds him and assumes the risk of a weakened condition being aggravated. Applied: Homicillada’s slipped-disc was compensable because his work as an oiler aggravated or caused it; even if pre-existing, it did not exculpate petitioners.
• Substantial Evidence in Labor Proceedings — Findings of the POEA and NLRC supported by substantial evidence are respected; certiorari does not lie absent grave abuse of discretion. Applied: the POEA found the pre-existing/concealed defense untenable because Homicillada was declared fit to work before deployment and his job caused disc herniation; the Court affirmed.
• POEA Standard Employment Contract for Seafarers — Under the POEA-approved Standard Contract for seamen, disability benefits are due if the disease occurred during the effectivity of the contract; the contract does not qualify whether the sickness is work-related or not. Applied: even if Homicillada’s sickness were not work-related, benefits were still due because it occurred during the contract.

• “The law does not consider as valid any agreement to receive less compensation than what a worker is entitled to recover nor prevent him from demanding benefits to which he is entitled. Quitclaims executed by the employees are thus commonly frowned upon as contrary to public policy and ineffective to bar claims for the full measure of the worker’s legal rights, considering the economic disadvantage of the employee and the inevitable pressure upon him by financial necessity.” — This passage states the Court’s core doctrine on quitclaims in labor cases and explains why the Receipt and Release could not bar Homicillada’s disability claim.
• “But even assuming that the ailment of Homicillada was contracted prior to his employment with the MV Rhine, this fact would not exculpate petitioners from liability. Compensability of an ailment does not depend on whatever the injury or disease was pre-existing at the time of the employment but rather if the disease or injury is work-related or aggravated his condition.” — This is the ratio on pre-existing illness: it rejects the employer’s defense that a pre-existing or chronic condition defeats compensability.
• “The injury sustained by Homicillada is compensable the same having resulted from the rigors of carrying heavy canisters in a crouching position which logically strained his lower back that lead to his slipped-disc.” — This is the Court’s ultimate factual and legal conclusion on compensability, tying the injury to the nature of his work as an oiler.
• “The financial terms were so unconscionable that we have no hesitance to strike down the “Receipt and Release” dated 16 August 1994 as a complete nullity.” — This passage supplies the specific holding that the quitclaim was void, not merely unenforceable, because of the unconscionable consideration.

• American Home Assurance Co. vs. NLRC, G.R. No. 120043, 24 July 1996, 259 SCRA 280, 293 — The Court cited this as controlling authority for the rule that the law does not consider valid any agreement to receive less compensation than what a worker is entitled to recover, and that quitclaims are commonly frowned upon as contrary to public policy and ineffective to bar claims for the full measure of the worker’s legal rights.
• Periquet vs. NLRC, G.R. No. 91298, 22 June 1990, 186 SCRA 724, 730 — Cited in the decision’s footnote as authority for the requisites of a valid quitclaim: no fraud or deceit, credible and reasonable consideration, and not contrary to law, public order, public policy, morals, or good customs, or prejudicial to a third person with a right recognized by law.

• Appendix I-A, Standard Employment of All Filipino Seamen on Board Ocean-Going Vessels — Basis for the POEA’s initial award of US$1,642.30, computed as 14.93% of US$11,000.00, at the exchange rate prevailing during actual payment.
• POEA Memorandum Circular No. 5 (effective 20 March 1994) — Upgraded the basis for disability allowance to US$50,000.00; the NLRC relied on it to increase Homicillada’s award to US$7,465.00, which the Supreme Court affirmed.
• Standard Contract for Seamen approved by the POEA — The Court noted that it does not qualify whether the sickness is work-related or not; thus, even if Homicillada’s sickness were not work-related, he was entitled to disability benefits because the disease occurred during the effectivity of the contract.

Puno, Mendoza, and Quisumbing, JJ., concurred. Buena, J., was on leave.