THIRD DIVISION

[ G.R. No. 227655. April 27, 2022 ]

SKANFIL MARITIME SERVICES, INC., AND/OR CROWN SHIPMANAGEMENT, INC., AND/OR

JOSE MARIO C. BUNAG, PETITIONERS, VS. ALMARIO M. CENTENO, RESPONDENT.

DECISION

LOPEZ, M., J.:

The Court resolves the petition by certiorari under Rule 45 of the Rules of Court, where Skanfil
Maritime Services, Inc., (Skanfil), Crown Shipmanagement, Inc., and Jose Mario C.
Bunag,** question the Court of Appeals' (CA) Decision1 dated July 27, 2016, and Resolution2 dated
October 14, 2016, in CA-G.R. SP No. 144697. The assailed CA issuances awarded permanent
disability benefits and damages3 in favor of Almario M. Centeno (Almario).

In March 2013, Skanfil, on behalf of its foreign principal Crown Shipmanagement, Inc., hired
Almario as a mess person on board M/V "DIMI" POS TOPAS. On September 26, 2013, Almario fell
from a seven-step ladder while performing the job. Almario lost consciousness and profusely bled at
the back of the head. The crew administered first aid and brought Almario to a hospital in Japan.
Thereat, Almario underwent an x-ray and a computed tomography scan. Almario was diagnosed
with a blunt head injury, blunt back injury, lacerated scalp wound, and brain concussion. On October
2, 2013, Almario was repatriated to the Philippines.4

Skanfil referred Almario to the company-designated physicians, Dr. Hiyasmine Mangubat (Dr.
Mangubat), Dr. Karen Frances Hao-Quan (Dr. Hao-Quan), Dr. Robert D. Lim, and Dr. Edwin Agsoay
of the Marine Medical Services. The physicians assessed Almario's injury as "S/P Suturing of
Lacerated Wound on the Scalp, Fracture S3; Mild L3 - L4 Disc Bulge." Almario was also referred to,
and treated by Dr. William Chuasuan, Jr. (Dr. Chuasuan), an orthopedic surgeon, and Dr. Wilson G.
Sumpio (Dr. Sumpio), a neurosurgeon. During the periodic medical evaluations, Dr. Hao-Quan
observed Almario's recurring pain in the lower hip area. The company doctor recommended that
Almario continue with the rehabilitation and medications. Almario was also advised to return for
another test and re-evaluation later.5 Meantime, Dr. Hao-Quan issued an interim assessment of
Grade 8 - loss of 2/3 lifting power of the trunk.6 After weeks of treatment and rehabilitation, Dr.
Chuasuan cleared Almario orthopedic-wise, and subsequently, by Dr. Sumpio from a neurosurgery
standpoint. On February 7, 2014, Almario returned to the company designated physician, where Dr.
Hao-Quan finally observed Almario's "functional trunk and hips range motion." The company doctor
also noted that Almario has no further subjective complaints. On even date, Almario signed a
Certificate of Fitness for Work, stating that Almario was "fit for duty."7 Dr. Hao-Quan also signed the
certificate as a witness.8

Unconvinced, Almario consulted Dr. Manuel Fidel M. Magtira (Dr. Magtira) from the Department
of Orthopedic Surgery and Traumatology at the Armed Forces of the Philippines Medical Center. Dr.
Magtira declared that Almario lost pre-injury capacity and is permanently unfit to resume sea duties.
On July 14, 2014, Almario filed a complaint against Skanfil for permanent disability benefits.9

Decision of the Labor Arbiter

On July 31, 2015, the Labor Arbiter (LA) dismissed Almario's complaint for lack of merit. The LA
noted that Almario's claim is premature. Almario failed to observe the mandatory third doctor
appointment rule, given the conflicting findings of the company-designated physicians and Almario's
physician of choice. The LA explained that Dr. Magtira's medical report could not be considered as
an accurate assessment of Almario's illness since Almario was only examined once on June 16,
2014, or almost eight months after Almario's repatriation, and was unsupported by diagnostic tests
and procedures.10 The LA found the results of the medical examinations conducted by the
company-designated physicians more credible and plausible. The LA noted that the company-
designated physicians properly conducted Almario's medical examinations and had personal
knowledge of the medical condition since they closely monitored and checked Almario's progress,
thus:

WHEREFORE, premises considered, the instant complaint against the respondents is

hereby DISMISSED for lack of merit.

SO ORDERED.11 (Emphases supplied.)

Ruling of the NLRC

On appeal, the National Labor Relations Commission (NLRC) in its Decision12 dated November
16, 2015 in NLRC NCR Case No. (M) 07-08710-14 and NLRC LAC No. (OFW-M) 09-000786-15
affirmed the LA's findings. The NLRC stressed that the company-designated physicians were more
qualified to assess Almario's medical condition and fitness to work since they possess personal
knowledge of Almario's actual condition. Also, the company-designated physicians thoroughly
examined and treated Almario from the time of the repatriation until Almario was cleared by both the
neurosurgeon and the orthopedic surgeon. As opposed to Dr. Magtira, the company-designated
physicians were better positioned to give a more accurate prognosis of Almario's injury.13 The
NLRC also ruled that Almario's claim of compensability under the Collective Bargaining Agreement
(CBA) must be rejected. The CBA titled "ITF and Bremer Bereederungsgesellschaft mbH & Co. KG,"
which Almario submitted before the LA, does not indicate that it applied to the crew of M/V "DIMI"
POS TOPAS.14 Almario sought reconsideration but was denied.

Findings of the CA

Almario elevated the case to the CA, insisting that the NLRC acted with grave abuse of
discretion in affirming the LA's decision based on doubtful, vague, and highly questionable
assessments of the company-designated physicians. Almario averred that one of the company-
designated physicians, Dr. Ramon Antonio Sarmiento (Dr. Sarmiento), a rehabilitation medicine
specialist, declared that Almario was unfit to work and was advised to continue the therapy even
after three months of initial physical therapy.15

On July 27, 2016, the CA reversed the findings of the NLRC and the LA. The CA gave credence
to Almario's claim that Dr. Sarmiento was a company-designated physician. Dr. Sarmiento issued an
"unfit to work" certification eight days after Dr. Hao-Quan issued the 10th and Final Report. Based
on Dr. Sarmiento's recommendations, Almario should continue the physical therapy
sessions.16 Consequently, there were no final and definitive assessments from the company-
designated physicians.

Further, Dr. Sarmiento's assessment should prevail since it was the more recent declaration.
The medical assessment of a third doctor was unnecessary because there were no inconsistencies
between the findings of Dr. Sarmiento as a company-designated physician and Dr. Magtira as
Almario's chosen physician. Almario's disability should be considered total and permanent because
the company-designated physicians did not issue a definitive assessment within the prescribed
period. The CA awarded permanent total disability benefits based on the CBA, moral and exemplary
damages, and attorney's fees:

ACCORDINGLY, the petition is GRANTED and the Decision dated November 16, 2015 and
Resolution dated December 28, 2015, NULLIFIED. Private respondents Skanfil Maritime Services,
Inc., CROWN SHIPMANAGEMENT[,] INC., and JOSH MARIO BUNAG are ordered to jointly and
solidarily pay petitioner:

1. US$125,000.00, as permanent disability benefits;

2. [₱]30,000.00, as moral damages;

3. [₱]150.000.00, as exemplary damages; and

4. 10% of the total judgment award, as attorney's fees.

SO ORDERED.17 (Emphases in the original.)

Unsuccessful at a reconsideration, Skanfil elevated the case to the Court. Skanfil claims that Dr.
Sarmiento is not a company-designated physician. Thus, the CA erred in reversing the factual
findings of the NLRC and the LA based on the medical certification issued by Dr. Sarmiento. Further,
the company-designated physicians, Dr. Hao-Quan and Dr. Lim, did not refer Almario to Dr.
Sarmiento.18 The CA also erred in awarding disability benefits under an alleged CBA because
Skanfil was not a party to the alleged CBA. The CBA was between ITF and Bremer
Bereederungsgesellschaft mbH & Co. KG. Besides, Almario failed to prove that the CBA applies in
the case.19

In a comment,20 Almario insists that the company-designated physician never declared a "fit to
work" assessment. The 10th and Final Report was vague on whether Almario could resume the work
as a seafarer.21 Almario's clearance from the orthopedic's standpoint is unclear whether Almario
can resume the duties as a mess person which entails strenuous work.22 Almario maintains that
even after the report was issued, Dr. Sarmiento found him unfit to work and was advised to continue
the physical therapy after three months of initial physical therapy. Since there was no definite
assessment of Almario's fitness to work from the company-designated physicians, Almario is
deemed totally and permanently disabled. The CA correctly ruled that there is no need to refer the
case to a third doctor because there were no inconsistencies with the findings of Dr. Sarmiento and
Dr. Magtira. Moreover, the Certificate of Fitness for Work is a quitclaim and should not be
considered binding. Almario, as a seafarer, is in no position to agree or certify on medical matters.23

In its reply,24 Skanfil countered that it was able to prove that Dr. Sarmiento is not a company-
designated physician. Skanfil asserts that the 10th and Final Report issued by Dr. Hao-Quan is a
final and definitive assessment of Almario's fitness. The neurosurgeon and the orthopedic surgeon
who rendered medical services for Almario's specific illness/injury are expected to keep within their
bounds, and to the illness that was referred to them for treatment.

ISSUES

The issues may be summarized as follows:

1) Whether Almario is entitled to permanent total disability benefits, moral and exemplary damages,
and attorney's fees; and
2) Whether the CBA provision awarding a higher amount of disability benefits is applicable

RULING

Prefatorily, the Court stresses that the CA may review NLRC decisions only through a special
civil action for certiorari under Rule 65 of the Rules of Court on the ground of grave abuse of
discretion amounting to lack, or excess of jurisdiction. The review is limited to whether the NLRC
acted arbitrarily, whimsically, or capriciously, and does not entail looking into the correctness of the
judgment on the merits. Necessarily, when the case is elevated to the Court through a petition for
review on certiorari under Rule 45, the contentious issue would be a question of law whether the
NLRC acted with grave abuse of discretion in rendering its judgment.25 In essence, the Court is
tasked to determine whether the CA correctly found grave abuse of discretion when the NLRC ruled
that Almario was not entitled to the claim for permanent disability benefits.

The Court finds the petition partly meritorious.

The company - designated

physicians failed to issue a
valid medical assessment
within 120 days from
Almario's repatriation.
Consequently, Almario''s
disability is considered
permanent and total.

The seafarer's entitlement to disability benefits is governed by the law, the parties' contracts, and
the medical findings.26 Under Section 20 (A) of the 2010 Philippine Overseas Employment
Administration-Standard Employment Contract (2010 POEA-SEC), the employer must compensate
the seafarer for work-related injuries and illnesses subject to conditions. The seafarer must timely
report to the company-designated physician upon repatriation. In contrast, the company-designated
physician must determine whether the seafarer is fit to work, or the degree of disability has been
evaluated. The 2010 POEA-SEC also provides the conflict resolution mechanism if the seafarer
disagrees with the findings of the company-designated physicians:

Section 20. COMPENSATION AND BENEFITS

A. COMPENSATION AND BENEFITS FOR INJURY OR ILLNESS

The liabilities of the employer when the seafarer suffers work-related injury or
illness during the term of his contract are as follows:

xxxx

3. In addition to the above obligation of the employer to provide medical

attention, the seafarer shall also receive sickness allowance from his employer in an
amount equivalent to his basic wage computed from the time he signed off until he is
declared fit to work or the degree of disability has been assessed by the company-
designated physician. The period within which the seafarer shall be entitled to his
sickness allowance shall be made on a regular basis, but not less than once a
month.
 xxxx

For this purpose, the seafarer shall submit himself to a post-employment

medical examination by a company-designated physician within three working days
upon his return except when he is physically incapacitated to do so, in which case, a
written notice to the agency within the same period is deemed as compliance. In the
course of the treatment, the seafarer shall also report regularly to the company-
designated physician specifically on the dates as prescribed by the company-
designated physician and agreed to by the seafarer. Failure of the seafarer to
comply with the mandatory reporting requirement shall result in his forfeiture of the
right to claim the above benefits.

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.

xxxx

6. In case of permanent total or partial disability of the seafarer caused by either

injury or illness the seafarer shall be compensated in accordance with the schedule
of benefits enumerated in Section 32 of his Contract. Computation of his benefits
arising from an illness or disease shall be governed by the rates and the rules of
compensation applicable at the time the illness or disease was contracted.

xxxx

In Elburg Shipmanagement Phil., Inc. v. Quioge, Jr.,27 the Court summarized the rules on the
prescribed period for the company-designated physician to issue a final medical assessment and the
consequence for failure to observe these periods:

1. The company-designated physician must issue a final medical assessment on the seafarer’s disability
grading within a period of 120 days from the time the seafarer reported to him;

2. If the company-designated physician fails to give his assessment within the period of 120 days,
without any justifiable reason, then the seafarer’s disability becomes permanent and total;

3. If the company-designated physician fails to give his assessment within the period of 120 days with a
sufficient justification (e.g., seafarer required further medical treatment or seafarer was
uncooperative), then the period of diagnosis and treatment shall be extended to 240 days. The
employer has the burden to prove that the company-designated physician has sufficient justification
to extend the period; and

4. If the company-designated physician still fails to give his assessment within the extended period of
240 days, then the seafarer’s disability becomes permanent and total, regardless of any
justification.28

In Pastrana v. Bahia Shipping Services,29 the Court clarified that the 120 days must be
reckoned "from the date of the seafarer's repatriation."30

In Razonable v. Maersk-Filipinas Crewing, Inc.,31 the Court reiterated that the medical
assessment must be final, conclusive, and definite. The assessment must clearly state whether the
seafarer is fit to work, or the exact disability rating, or whether such illness is work-related and
without any further condition or treatment. It should no longer require any further action on the part of
the company-designated physician, and it is issued by the company-designated physician after he or
she has exhausted all possible treatment options within the periods allowed by law.32 In Ampo-on v.
Reinier Pacific International Shipping, Inc.,33 the Court held that a medical assessment that is not
complete and definite must be ignored. The seafarer has nothing to contest in the absence of a final
and valid medical assessment. The conflict resolution mechanism of referring the findings of the
company-designated physician to the seafarer's physician of choice is unnecessary.34

Here, Almario was medically repatriated on October 2, 2013, and submitted for post-medical
examination by the company-designated physicians. Dr. Hao-Quan and Dr. Lim initially examined
Almario,35 and referred him to other specialists to address the specific concerns. Almario was
referred to Dr. Sumpio (neurosurgeon), and Dr. Chuasuan (orthopedic surgeon), because Almario
sustained head and back injuries.36 The specialists treated Almario, prescribed medications, and
assisted in the rehabilitation. Following the cases of Elburg and Pastrana, the company-designated
physicians must issue a final and valid medical assessment within 120 days reckoned from October
2, 2013, or the date when Almario was repatriated. The company-designated physicians had until
January 30, 2014, to issue the assessment unless there was a justifiable reason to extend the
period. Otherwise, Almario's disability must be deemed permanent and total.

The 10th and Final Report was issued on February 7, 2014, or eight days beyond the prescribed
period. However, the company-designated physicians failed to justify why the assessment must be
issued beyond 120 days. Senior Associate Justice Estela Perlas-Bernabe and Associate Justice
Marvic M.V.F. Leonen aptly observed that the company-designated physicians failed to explain in
detail the progress of Almario's treatment and approximate recovery period warranting further
medical treatment beyond the 120-day prescribed period. Thus, the 10th and Final Report beyond
120 days is unjustified. Following Elburg, Almario's disability is deemed permanent and total upon
the lapse of 120 days. Article 198 (c) (1) of the Labor Code becomes operative:37

Article 198. Permanent Total Disability. x x x

xxxx

(c) The following disabilities shall be deemed total and permanent:

(1) Temporary total disability lasting continuously for more than one hundred
twenty days, except as otherwise provided for in the Rules;

Moreover, the 10th and Final Report is not final and valid medical assessment. It did not
categorically state that Almario is fit to work. The report states:

This is a follow-up report on [Mess person] Almario M. Centeno who was initially seen here at
Marine Medical Services on October 8, 2013[,] and was diagnosed to have S/P Suturing of
Lacerated Wound on the Scalp; Fracture, 3rd Sacrum; Mild L3 - L4 Disc Bulge.

He was previously cleared by the Neurosurgeon.

He was seen by the Orthopedic Surgeon today.

Patient has no subjective complaints at present.

 There is note of functional trunk and hips range of motion.

The specialist opines that patient is now cleared orthopedic wise effective as of February 7,
2014.

He was advised proper back mechanics to prevent/minimize recurrence of his back pain.

Enclosed are the comments of the specialists.

Final Diagnosis – S/P Suturing of Lacerated Wound on the Scalp.

Fracture, 3rd Sacrum

Mild L3 - L4 Disc Bulge

Very Truly Yours,

(Sgd.)

Karen Frances Hao-Quan, M.D.

Asst. Medical Coordinator38

10th and Final Report

As can be gleaned from the report, the company-designated physician did not categorically state
that Almario was fit to work after the treatment. Instead, it contains advice for "proper back
mechanics to prevent/minimize recurrence of his back pain" which suggests that Almario's back pain
was not fully resolved. Generic statements on Almario's condition, such as "[Almario] was previously
cleared" and "patient is now cleared orthopedic wise," did not make the assessment definitive.

In Lemoncito v. BSM Crew Service Centre Philippines, Inc.,39 a medical assessment stating that
the "petitioner's blood pressure is adequately controlled with medications," and "patient is now
cleared cardiac wise," is considered too generic and equivocal on whether the seafarer has a clean
bill of health. A medical assessment that does not reflect the true extent of the seafarer's sickness or
injury and their capacity to resume work is incomplete and indefinite.40 This type of assessment
must be ignored and set aside.41

Moreover, the Certificate of Fitness for Work is not conclusive on Almario's state of health. The
certificate was executed by Almario, a seafarer who has no expertise in the medical field. The
certificate stating that Almario is "fit for duty" should have been executed by the company-
designated physician. Dr. Hao-Quan's signature on the certificate was in capacity as a witness, and
not as a doctor. The certificate is reproduced as follows:

CERTIFICATE OF FITNESS FOR WORK

I, Almario M. Centeno, for myself and my heirs, do hereby release Skanfil Maritime Svs., Inc. of
all actions, claims, demands, etc., in connection with being released on this date as fit for duty.
 In recognizing this Certificate of Fitness for Work, I hold x x x Skanfil Maritime Svs., Inc. free
from all liabilities as consequence thereof.

Finally, I hereby declare that this Certificate of Fitness for Work may be pleaded in bar [of] any
proceedings of the law that may be taken by any government agency, and I do promise to defend
the right of x x x Skanfil Maritime Svs., Inc. x x x in connection with this Certificate of Fitness for
Work.

Witness my hand this 7th day of February 2014 in the City of Manila, Philippines.

(Sgd.)

Almario M. Centeno

Name of Vessel: Pos Topas

Nature of Illness or Injury:

S/P Suturing of Lacerated Wound on Scalp;

Fracture, 3rd Sacrum; Mild L3 - L4 Disc Bulge

Date of Fit to Work: February 7, 2014

(Sgd.)

Witness: Karen Frances Hao-Quan, M.D, Marine Medical Services

[Ako], Almario M. Centeno, [ay nagsasaad na ang bahagi ng salaysay naito ay aking nabasa at
ang nasabi ay naipaliwanag sa akin sa salitang aking naintindihan. Ito pa rin ay katunayan na ang
aking pagsangayon sa nasabi ay aking sarili at kusang kagustuhan, at hindi bunga ng anumang
pangako, pagkukunwari o pagpilit ng sinumang may kinalaman sa mga nasasaad na usapin].

[Katunayan, aking nilagdaan ang pagpapahayag nitong ika-7 ng Pebrero 2014 sa] Manila.

(Sgd.)

Almario M. Centeno42

Verily, the 10th and Final Report and the Certificate of Fitness for Work are not final and valid
assessments. They are incomplete and not definitive of Almario's state of health and capacity to
resume work. Most importantly, they were issued beyond the prescribed period. Consequently,
Almario's disability is considered permanent and total. Almario was not even required to refer the
company-designated physician's findings to his chosen physician because there is no medical
assessment to contest. Thus, it is unnecessary to discuss whether Dr. Sarmiento was among the
company-designated physicians, and talk about the value of Dr. Sarmiento's medical findings.

The amount of disability

benefits based on the CBA
is applicable.
 The CA found that the CBA provisions are applicable:

As for petitioner's coverage under the CBA between "ITF and Bremer Bereederungsgesellschaft
mbH & Co. KG[,]" the same is undisputed. The Occurrence Report dated September 27, 2013
pertaining to petitioner's injury on board was written, signed, and submitted by Capt. M. Martynenko
of M/V POS TOPAS using the header, "BBG-Bereederungsgesellschaft mbH & Co. KG[,]" the party
representing private respondents in their CBA with the [seafarer] concerned, including petitioner.43 x
x x. (Citation omitted.)

xxxx

Skanfil argues that it is not a party to the CBA, and is not bound by its provisions. The CBA is
between ITF and Bremer Bereederungsgesellschaft mbH & Co. KG. The Court is unconvinced. The
CA categorically found that Skanfil and Crown Shipmanagement, Inc. are represented by Bremer
Bereederungsgesellschaft mbH & Co. KG in the CBA with the seafarers, but Skanfil did not deny this
finding. Skanfil did not address the CA's observation that the captain of M/V POS TOPAS used the
header of BBG-Bereederungsgesellschaft mbH & Co. KG, and whether the captain merely erred in
using the header. The use of the header belies Skinfil's claim that the CBA does not bind it.

The awards for moral and

exemplary damages should
be deleted, but the
attorney's fees should be
retained.

In Chan v. Magsaysay Corporation,44 the Court explained the nature of moral and exemplary
damages:

Moral damages are awarded as compensation for actual injury suffered and not as a penalty.
The award is proper when the employer's action was attended by bad faith or fraud, oppressive lo
labor, or done in a manner contrary to morals, good customs, or public policy. Bad faith is not simply
bad judgment or negligence. It imports a dishonest purpose or some moral obliquity and conscious
doing of wrong. It means a breach of a known duty through some motive or interest or ill will that
partakes of the nature of fraud.
1a⍵⍴h!1

Exemplary damages, on the other hand are imposed not to enrich one party or impoverish
another but to serve as a deterrent against or as a negative incentive to curb socially deleterious
actions, and may only be awarded in addition to the moral, temperate, liquidated or compensatory
damages. In contracts and quasi-contracts, the court may award exemplary damages if the
defendant acted in a wanton, fraudulent, reckless, oppressive, or malevolent manner.45 (Citations
omitted.)

Here, the CA awarded moral damages because of the alleged refusal of Skanfil to pay the
disability benefits despite Dr. Sarmiento's certification that Almario is unfit for work. However, it is
insufficient to conclude whether Skanfil's actions are tainted with bad faith that would partake the
nature of fraud. Here, Skanfil never evaded its liability of providing medical attention. Almario was
referred to a neurosurgeon and an orthopedic surgeon to address his medical condition. What is
clear here is a difference of opinion on the status of Almario's medical condition and Skanfil's failure
to issue a timely and valid medical assessment. In the absence of substantial evidence showing
malice or bad faith in refusing the seafarer's claim for disability benefits, moral and exemplary
damages should not be awarded.46
 However, the award of attorney's fees is proper. Article 2208 (8) of the Civil Code provides that
attorney's fees may be recovered "[i]n actions for indemnity under workmen's compensation and
employer's liability laws."47

Following Nacar v. Gallery Frames,48 a legal interest of (6%) per annum is imposed on the total
monetary awards until complete payment.

FOR THESE REASONS, the petition is DENIED. The Court of Appeals’ Decision dated July 27,
2016, and Resolution dated October 14, 2016, in CA – G.R. SP No. 144697 are AFFIRMED WITH
MODIFICATION. Skanfil Maritime Services, Inc., Crown Shipmanagement, Inc., and Jose Mario C.
Bunag are jointly and solidarily liable to pay Almario M. Centeno the following amounts:

1. US$125,000.00 as permanent total disability benefits; and

2. 10% of the total judgment award as attorney's fees

The awards for moral and exemplary damages are DELETED. The total monetary awards shall
earn legal interest at (6%) per annum from the finality of this Decision until complete payment.

SO ORDERED.

Leonen (Chairperson), Perlas-Bernabe,* S.A.J., Lopez, and Kho, Jr., JJ., concur.