PAL Maritime Corporation vs. Dalisay

A seafarer who knowingly conceals a pre-existing illness or condition in the PEME is disqualified from claiming any compensation and benefits under Section 20(E) of the 2010 POEA-SEC, including sickness allowance; attorney's fees may not be awarded where the employer's denial of the claim is justified.

PAL Maritime Corporation is a local manning agency that hired Darwin D. Dalisay as an able seaman on behalf of its foreign principal Norwest Management Co. (Pte) Ltd. Singapore, with Sonrisa N. David also impleaded. The employment was governed by the 2010 Amended Standard Terms and Conditions Governing the Overseas Employment of Filipino Seafarers On-Board Ocean-Going Ships, or the 2010 POEA-SEC, which is deemed integrated in every seafarer's contract and provides compensation and benefits for work-related illness or injury. Section 20(E) of the same contract disqualifies a seafarer who knowingly conceals a pre-existing illness or condition in the pre-employment medical examination from any compensation and benefits and makes such misrepresentation a just cause for termination. Dalisay had previously obtained disability benefits from another employer, Phil Transmarine Carriers, Inc., in 2008.

In 2012, Darwin Dalisay applied for shipboard employment with PAL Maritime Corporation, which directed him to undergo a pre-employment medical examination in its accredited clinic. During the examination, Darwin declared that he had no history of any ailment other than a "Varicocoelectomy" operation in 2003. He was declared fit to work and hired as an able seaman on behalf of PAL Maritime's foreign principal Norwest Management Corporation (PTE) LTD. Singapore. On November 28, 2012, Darwin was deployed aboard the vessel M/V Ornella.

While on board, Darwin requested medical attention after experiencing sharp and intense pain on his lower back while lifting heavy provisions. He was referred to a hospital in Vietnam for magnetic resonance imaging, and was detected to be suffering from "degeneration of spur lumbar verbae/increase of liver enzymes." On December 10, 2012, Darwin was repatriated to the Philippines, and PAL Maritime's company-designated physician diagnosed him with "low back pain secondary to Disc Protusion L4-L5 and L5-S1." Darwin underwent physical therapy from December 13, 2012 to February 28, 2013.

On March 8, 2013, PAL Maritime discovered that Darwin previously filed a claim for permanent and total disability benefits for his low back pain against his former employer Phil Transmarine Carriers, Inc. and was awarded in 2008 the amount of US$60,000.00 or P3,127,278.00. As such, PAL Maritime discontinued Darwin's medical treatment because of malicious concealment of a pre-existing illness. This prompted Darwin to seek medical attention from other physicians, namely, Dr. Gloria Coronel and Dr. Manuel Fidel Magtira, who both declared him unfit to work. Dr. Magtira was the same physician who diagnosed Darwin as permanently unfit to work in the case filed against Phil Transmarine.

Aggrieved, Darwin filed a complaint against PAL Maritime and Norwest Management for permanent and total disability benefits, sickness allowance, damages and attorney's fees before the Labor Arbiter, arguing that his illness is work-related and work-aggravated. PAL Maritime countered that Darwin's fraudulent concealment of a previous ailment disqualified him from claiming any benefits. In reply, Darwin denied any willful concealment, and argued that he is not expected to know the classification of his illness during the PEME.

The Labor Arbiter found that Darwin concealed his past ailment on three occasions: (1) the October 16, 2010 PEME, where he did not disclose "Back Injury: Joint Pain/Arthritis/Rheumatism" but merely marked the column "Operations" under past medical history and admitted having undergone "Varicocoelectomy (bilateral)," which is unrelated to his low back pain; (2) the November 19, 2012 PEME, where he again failed to disclose his previous ailment and answered "No" to the question of "Rheumatism, joint or back trouble" under medical history; and (3) the post-employment medical examination, where he denied his past history of lower back pain. The Labor Arbiter also observed that the medical report issued by Dr. Magtira was an exact reproduction of the report used in Darwin's complaint against Phil Transmarine.

On appeal, the NLRC reversed the Labor Arbiter, holding that Darwin's failure to disclose his previous ailment was due to his "honest belief" that he was already healed and that his current ailment was work-related. The Court of Appeals, however, found that Darwin knowingly concealed a pre-existing illness and was disqualified from claiming permanent disability benefits. It nevertheless retained the award of sickness allowance and attorney's fees because Darwin passed the PEME, was declared fit to work, and his work aboard M/V Ornella for less than two weeks contributed "even in a small degree" to his illness. The Court of Appeals noted that Darwin ticked "NO" on the medical history of "Rheumatism, joint or back trouble" in his PEME form, did not deny the existence and genuineness of the decision of Labor Arbiter Guerrero and the Release and Quitclaim in favor of his former employer in exchange for US$60,000.00, and denied before the company-designated physician any history of the same signs and symptoms during his post-employment examination. It also noted that in 2007, while on board the CSCL Hamburg vessel, Darwin experienced the same sharp and intense pain at the lower back and was diagnosed with minimal degenerative changes in the L4-L5 vertebral bodies, and that Dr. Magtira was the same physician who examined him in both cases. The Court of Appeals held that the PEME is not sufficiently exhaustive to excuse his non-disclosure and is not exploratory but merely a summary examination of the seafarer's physiological condition.

• PAL Maritime — Section 20(E) Disqualification: PAL Maritime contended that the language of Section 20(E) of the 2010 POEA-SEC disqualifies a seafarer from claiming "any" compensation and benefits due to concealment of a pre-existing illness, and therefore the Court of Appeals erred in retaining the award of sickness allowance.
• PAL Maritime — Attorney's Fees: PAL Maritime argued that the award of attorney's fees is improper absent bad faith.
• Darwin Dalisay — No Material Concealment: Darwin insisted that he did not commit material concealment, claiming that his past ailment was already healed because he was able to work for six different vessels even after he was declared permanently unfit to work.
• Darwin Dalisay — Work-Relatedness and PEME Knowledge: Darwin argued that his illness is work-related and work-aggravated, and that he is not expected to know the classification of his illness during the PEME. He also assailed the denial of his claim for disability benefits on the ground of deliberate concealment.

• PAL Maritime — Fraudulent Concealment: As respondent in G.R. No. 218170, PAL Maritime countered that Darwin's fraudulent concealment of a previous ailment disqualified him from claiming any benefits.
• Darwin Dalisay — Denial of Willful Concealment: As respondent in G.R. No. 218115, Darwin denied any willful concealment and argued that he is not expected to know the classification of his illness during the PEME.
• Darwin Dalisay — Work-Related Illness: Darwin maintained that his illness is work-related and work-aggravated.

• Sickness Allowance: Whether a seafarer who knowingly conceals a pre-existing illness in the PEME is disqualified from claiming sickness allowance under Section 20(E) of the 2010 POEA-SEC.
• Attorney's Fees: Whether attorney's fees may be awarded to a seafarer who concealed a pre-existing illness and whose claim for sickness allowance was denied by the employer.

• Sickness Allowance: No. A seafarer guilty of fraudulent concealment in the PEME is disqualified from claiming "any" compensation and benefits under Section 20(E) of the 2010 POEA-SEC, which includes sickness allowance.
• Attorney's Fees: No. Attorney's fees may only be awarded upon proof of bad faith; in labor cases, withholding need not be coupled with bad faith, but PAL Maritime was justified in denying the claim and discontinuing treatment upon discovering the concealment.

• Sickness Allowance: The POEA-SEC is deemed integrated in every agreement between a seafarer and his employer. Darwin's 2012 employment contract was covered by the 2010 POEA-SEC. Section 20(A) entitles a seafarer to compensation and benefits for work-related illness or injury, including medical treatment, sickness allowance, and disability benefits. Section 20(E), however, explicitly provides that a seafarer who knowingly conceals a pre-existing illness or condition in the PEME shall be liable for misrepresentation and disqualified from any compensation and benefits; it is also a just cause for termination. An illness is pre-existing if, prior to the processing of the POEA contract, (a) the advice of a medical doctor on treatment was given for such continuing illness or condition, or (b) the seafarer had been diagnosed and has knowledge of such illness or condition but failed to disclose it during the PEME and such cannot be diagnosed during such examination. The phrase "knowingly conceals" is not defined in the 2010 POEA-SEC, but jurisprudence requires bad faith and intent to deceive. In Manansala vs. Marlow Navigation Phils., Inc., knowing concealment involves bad faith; the falsity or non-disclosure must be for a malicious purpose or coupled with intent to deceive and to profit from deception. Career Philippines Shipmanagement, Inc. vs. Godinez held that knowing concealment must be intentional. Leoncio vs. MST Maritime Services (Phils.), Inc. strictly construed "illness or condition" as not including medical procedures. Deocariza vs. Fleet Management Services Phils., Inc. and Ranoa vs. Anglo-Eastern Crew Management Phils., Inc. placed the burden on the employer to prove concealment and intent to deceive. Here, the Court in G.R. No. 218170 affirmed with finality the Court of Appeals' findings that Darwin knowingly concealed his pre-existing illness affecting his spine and was disqualified from claiming disability benefits; these facts and conclusions are immutable. The Court of Appeals' reasoning that Darwin should still receive sickness allowance despite his misrepresentation because he passed the PEME and was allowed to work contradicts Section 20(E). The phrase "disqualified from any compensation and benefits" is without qualifications and must be interpreted to include all kinds of benefits, including sickness allowance. A cardinal rule of statutory construction is that if a statute is clear and free from ambiguity, it must be given its literal meaning and applied without any interpretation; verba legis non est recedendum. Liberal construction in favor of labor is inapplicable because there is nothing to interpret. Vetyard Terminals & Shipping Services, Inc. vs. Suarez and Status Maritime Corp. vs. Spouses Delalamon reversed Court of Appeals decisions granting disability compensation and sickness allowance after determining that the seafarers were guilty of fraudulent concealment of pre-existing illnesses. A PEME is not exploratory but merely determines whether one is fit for sea service and does not state the real state of health of an applicant; the "fit to work" declaration cannot be conclusive proof that Darwin was free from any ailment prior to deployment. Passing the PEME cannot excuse his willful concealment nor preclude PAL Maritime from rejecting his claims. Thus, Darwin is disqualified from all benefits, including sickness allowance.
• Attorney's Fees: Attorney's fees may only be awarded upon proof of bad faith. In labor cases, however, the established rule is that the withholding of wages or benefits need not be coupled with bad faith; it is enough that wages or benefits were not paid without justification. Here, PAL Maritime was justified in denying the claim for sickness allowance and discontinuing medical treatment when it discovered that Darwin concealed his pre-existing illness. To award attorney's fees despite the seafarer's malicious concealment would be tantamount to rewarding his fraudulent conduct. It would be unfair to permit Darwin to profit from his own wrongdoing and penalize PAL Maritime for resisting a baseless claim. It would also amount to unjust enrichment because Darwin had been previously paid disability benefits. The constitutional policy to provide full protection to labor is not meant to be a sword to oppress employers; justice is for the deserving and must be dispensed in light of established facts, applicable law, and existing jurisprudence. The Court's commitment to the cause of labor is not a lopsided undertaking and does not prevent sustaining the employer when it is in the right. Thus, Darwin is not entitled to attorney's fees.

• Section 20(E) of the 2010 POEA-SEC — Fraudulent Concealment Disqualification — A seafarer who knowingly conceals a pre-existing illness or condition in the PEME is liable for misrepresentation and disqualified from any compensation and benefits; the concealment is also a just cause for termination. The disqualification is unqualified and includes sickness allowance. The Court applied it to Darwin, whose concealment of a pre-existing spinal condition had been affirmed with finality, thereby barring his claim for sickness allowance.
• Pre-existing Illness under the 2010 POEA-SEC — An illness is pre-existing if, prior to the processing of the POEA contract, (a) a medical doctor advised treatment for such continuing illness or condition, or (b) the seafarer had been diagnosed and had knowledge of such illness or condition but failed to disclose it during the PEME and such cannot be diagnosed during such examination. The Court cited this definition in interpreting Section 20(E).
• Knowingly Conceals — Bad Faith and Intent to Deceive — Jurisprudence requires that knowing concealment involve bad faith; the falsity or non-disclosure must be for a malicious purpose or coupled with intent to deceive and to profit from deception, and must be intentional. The employer bears the burden of proving concealment and intent. The Court noted that Darwin's concealment had been finally established in G.R. No. 218170.
• Verba Legis Non Est Recedendum — If a statute is clear and free from ambiguity, it must be given its literal meaning and applied without any interpretation. The Court applied this to the phrase "disqualified from any compensation and benefits" in Section 20(E), holding that it includes sickness allowance and that liberal construction in favor of labor is inapplicable because there is nothing to interpret.
• PEME Is Not Exploratory — A PEME is not exploratory and merely determines whether an applicant is fit for sea service; it does not state the real state of health of an applicant. A "fit to work" declaration is not conclusive proof that the seafarer was free from any ailment prior to deployment and cannot excuse willful concealment. The Court used this to reject the Court of Appeals' reliance on Darwin's passing the PEME.
• Attorney's Fees in Labor Cases — Attorney's fees may only be awarded upon proof of bad faith; in labor cases, the withholding of wages or benefits need not be coupled with bad faith, and it is enough that wages or benefits were not paid without justification. The Court denied attorney's fees because PAL Maritime's denial of the claim was justified by Darwin's concealment.
• Full Protection to Labor Is Not a Sword to Oppress Employers — The constitutional policy to provide full protection to labor is not meant to be a sword to oppress employers; justice is for the deserving and must be dispensed in light of established facts, applicable law, and existing jurisprudence. The Court invoked this principle to sustain the employer's position.

• "A seafarer who is guilty of fraudulent concealment in the PEME is disqualified from claiming “any” compensation and benefits which include sickness allowance." — This is the Court's core holding, stating the ratio decidendi that Section 20(E)'s disqualification covers sickness allowance.
• "Foremost, the phrase “disqualified from any compensation and benefits” in Section 20(E) of the POEA-SEC is without qualifications and must be interpreted to include all kinds of benefits including sickness allowance. A cardinal rule of statutory construction is that if a statute is clear and free from ambiguity, it must be given its literal meaning and applied without any interpretation. The maxim is verba legis non est recedendum or from the words of a statute there should be no departure." — This passage articulates the literal-interpretation rationale for including sickness allowance within the disqualification.
• "Here, PAL Maritime is justified in denying the claim for sickness allowance and discontinuing medical treatment when it discovered that Darwin concealed his pre-existing illness. To award attorney's fees despite the seafarer's malicious concealment would be tantamount to rewarding his fraudulent conduct." — This passage explains why attorney's fees were denied.
• "The Court's commitment to the cause of labor is not a lopsided undertaking. It cannot and does not prevent us from sustaining the employer when it is in the right." — This passage states the Court's view on labor protection and employer rights.

• Manansala vs. Marlow Navigation Phils., Inc., 817 Phil. 84 (2017) — Cited for the rule that knowing concealment involves bad faith; the falsity or non-disclosure must be for a malicious purpose or coupled with intent to deceive and to profit from deception.
• Career Philippines Shipmanagement, Inc. vs. Godinez, 819 Phil. 86 (2017) — Cited for the rule that knowing concealment must be intentional.
• Leoncio vs. MST Maritime Services (Phils.), Inc., 822 Phil. 494 (2017) — Cited for strictly construing "illness or condition" as not including medical procedures.
• Deocariza vs. Fleet Management Services Phils., Inc., 836 Phil. 1087 (2018) — Cited for placing on the employer the burden of proving concealment of a pre-existing illness.
• Ranoa vs. Anglo-Eastern Crew Management Phils., Inc., G.R. No. 225756, November 28, 2019 — Cited for requiring the employer to prove intent to deceive.
• Vetyard Terminals & Shipping Services, Inc. vs. Suarez, 728 Phil. 527 (2014) — Cited as precedent where the Court reversed Court of Appeals awards of disability compensation and sickness allowance after finding fraudulent concealment.
• Status Maritime Corp. vs. Spouses Delalamon, 740 Phil. 175 (2014) — Cited for the rule that fraudulent misrepresentation unconditionally bars the right to receive any disability compensation or illness benefit, rendering work-relatedness irrelevant.
• Quizora vs. Denholm Crew Management (Phils.), Inc., 676 Phil. 313 (2011) — Cited for the rule that a PEME is not exploratory and a "fit to work" declaration is not conclusive proof of absence of ailment.
• Alva vs. High Capacity Security Force, Inc., 820 Phil. 677 (2017) — Cited for the rule that in labor cases, the withholding of wages or benefits need not be coupled with bad faith; it is enough that they were not paid without justification.
• Panganiban vs. Tara Trade Shipmanagement, Inc., 647 Phil. 675 (2010) — Cited for the principle that the constitutional policy of full protection to labor is not meant to oppress employers.
• CF Sharp Crew Management, Inc. vs. Legal Heirs of the Late Godofredo Repiso, 780 Phil. 645 (2016) — Cited for the rule that the POEA-SEC is deemed integrated with every agreement between a seafarer and his employer.
• Bolos vs. Bolos, 648 Phil. 630 (2010) — Cited for the rule that if a statute is clear and free from ambiguity, it must be given its literal meaning.

• Section 20(A), 2010 POEA-SEC — Entitles a seafarer to compensation and benefits for work-related injury or illness during the term of the contract, including medical treatment, sickness allowance, and disability benefits. The Court cited it to describe the benefits that would ordinarily be available but held that Section 20(E) disqualification controls.
• Section 20(E), 2010 POEA-SEC — Provides that a seafarer who knowingly conceals a pre-existing illness or condition in the PEME shall be liable for misrepresentation and disqualified from any compensation and benefits, and that such concealment is a just cause for termination. Applied to disqualify Darwin from sickness allowance and to justify denial of attorney's fees.
• Definition of Terms, Item No. 11(a) and (b), 2010 POEA-SEC — Defines when an illness is considered pre-existing: (a) advice of a medical doctor on treatment was given for such continuing illness or condition, or (b) the seafarer had been diagnosed and has knowledge of such illness or condition but failed to disclose it during the PEME and such cannot be diagnosed during such examination. Cited in interpreting Section 20(E).
• Section 32, 2010 POEA-SEC — Provides the schedule of benefits for permanent total or partial disability. Mentioned in Section 20(A)(6) regarding computation of disability benefits.
• Rule 45, Rules of Court — Governs petitions for review on certiorari to the Supreme Court. The petitions in G.R. Nos. 218115 and 218170 were filed under this Rule.
• POEA Memorandum Circular No. 10, Series of 2010 — The issuance dated October 26, 2010, which contains the 2010 POEA-SEC. The Court noted that Darwin's 2012 employment contract was covered by this circular.

Perlas-Bernabe, S.A.J. (Chairperson), Gesmundo, Lazaro-Javier, and J. Lopez, JJ., concurred.