In a significant ruling, the Supreme Court has clarified that employers are not liable for disability compensation if a seafarer’s illness pre-existed their employment contract. This decision emphasizes the importance of determining when an illness was contracted to establish liability under the POEA Standard Employment Contract. The court underscored that disability benefits are contingent upon proof that the illness or injury occurred during the term of the employment, offering vital protection for maritime employers against claims arising from pre-existing conditions.

Seafarer’s Ailment: Did It Arise at Sea or Before Embarkation?

The case of NYK-FIL Ship Management Inc. v. National Labor Relations Commission and Lauro A. Hernandez centered on Lauro Hernandez, a boatswain hired by NYK-FIL Ship Management. Shortly after beginning his employment, Hernandez experienced severe health issues, eventually diagnosed as septic arthritis and avascular necrosis. He sought disability benefits, arguing his condition arose during his employment. The company, however, contended that Hernandez’s illness was pre-existing, thereby negating their liability. The core legal question was whether Hernandez’s disability stemmed from an illness contracted during his employment, making the company liable under the POEA Standard Employment Contract.

The Supreme Court meticulously examined the timeline of Hernandez’s symptoms and medical evaluations. Critical to the court’s decision was the fact that Hernandez reported experiencing symptoms, specifically fever and pain, as early as January 17, 1999, nine days before boarding the vessel. This timeline directly contradicted Hernandez’s claim that his condition arose during his employment aboard the S.S. LNG FLORA. The Court emphasized that under the POEA Seafarers Contract, employers are liable for disability benefits only when the seafarer suffers injury or illness during the term of their contract.

The Court referred to Section 20 (B) of the POEA Seafarers Contract, which outlines the liabilities of the employer when a seafarer suffers injury or illness during the term of his contract. This section clearly states that:

SECTION 20. COMPENSATION AND BENEFITS
x x x x
B. COMPENSATION AND BENEFITS FOR INJURY OR ILLNESS:

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

1. The employer shall continue to pay the seafarer his wages during the time he is on board the vessel;
2. If the injury or illness requires medical and/or dental treatment in a foreign port, the employer shall be liable for the full cost of such medical, serious dental, surgical and hospital treatment as well as board and lodging until the seafarer is declared fit to work or to be repatriated.

However, if after repatriation, the seafarer still requires medical attention arising from said injury or illness, he shall be so provided at cost to the employer until such time he is declared fit or the degree of his disability has been established by the company-designated physician.

3. Upon sign-off from the vessel for medical treatment, the seafarer is entitled to sickness allowance equivalent to his basic wage until he is declared fit to work or the degree of permanent disability has been assessed by the company-designated physician, but in no case shall this period exceed one hundred twenty (120) days.
   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. Failure of the seafarer to comply with the mandatory reporting requirement shall result in his forfeiture of the right to claim the above benefits.
4. Upon sign-off of the seafarer from the vessel for medical treatment, the employer shall bear the full cost of repatriation in the event that the seafarer is declared (1) fit for repatriation; or (2) fit to work but the employer is unable to find employment for the seafarer on board his former vessel or another vessel of the employer despite earnest efforts.
5. In case of permanent total or partial disability of the seafarer during the term of employment caused by either injury or illness the seafarer shall be compensated in accordance with the schedule of benefits enumerated in Section 30 of his Contract, Computation of his benefits arising from an illness or disease shall be governed by the rates and the rules of compensation application at the illness or disease was contracted.

The Court highlighted the importance of proving that the illness was either acquired or contracted during the term of the employment contract. Because Hernandez’s symptoms predated his employment, he failed to meet this requirement. Further, the Court addressed the argument that Hernandez’s pre-employment medical examination (PEME) cleared him as fit to work, implying his illness developed during employment. The Court stated that while a PEME is necessary, it is not a definitive assessment of a seafarer’s overall health.

The Court reasoned that PEMEs are not always exploratory and may not reveal underlying conditions. In Hernandez’s case, his condition was only diagnosed after extensive medical procedures, including an MRI. This underscored that a clean bill of health from a PEME does not automatically imply that any subsequent illness was contracted during employment. The Court cited Sealanes Marine Services, Inc., v. NLRC, emphasizing that an employer is not liable for death compensation if the seafarer’s death was due to an illness not contracted during employment. The same principle applies to disability claims: pre-existing illnesses are not compensable.

The Supreme Court contrasted the seafarer’s claim with the medical findings, emphasizing that septic arthritis is typically caused by bacterial, viral, or fungal infections, and avascular necrosis is often linked to conditions causing circulatory impairment, such as prolonged glucocorticoid use or excessive alcohol intake. These conditions typically do not arise suddenly within a few weeks of employment. The Court also took note of the findings of the company-designated physician, which initially suggested a partial disability grading but ultimately did not change the fact that the underlying condition was present before the commencement of Hernandez’s employment.

The decision emphasizes the contractual nature of a seafarer’s employment, which is governed by the specific terms agreed upon in the employment contract. As a result, claims for compensation must align with the terms stipulated in the contract and relevant POEA regulations. By determining that Hernandez’s illness pre-existed his employment, the Court reinforced the principle that employers are only liable for illnesses or injuries that occur during the term of the contract, providing a significant degree of protection against claims for pre-existing conditions.

The implication of this ruling is that maritime employers must take reasonable measures to assess the health of potential employees, but they are not insurers against pre-existing conditions that manifest during employment. Seafarers, on the other hand, have a responsibility to be truthful about their health history and to seek medical attention promptly if they experience any symptoms that may indicate a pre-existing condition. This case serves as a reminder of the importance of clear contractual terms and accurate medical assessments in the maritime industry.

FAQs

What was the key issue in this case?	The central issue was whether a maritime employer is liable for disability benefits when a seafarer’s illness pre-existed their employment contract, based on the POEA Standard Employment Contract.
What is the POEA Seafarers Contract?	The POEA Seafarers Contract is the “Revised Standard Employment Terms and Conditions Governing the Employment of Filipino Seafarers On Board Ocean-going Vessels”, which outlines the minimum requirements for overseas employment of Filipino seafarers.
What does the POEA Seafarers Contract say about liabilities for injury or illness?	Section 20(B) of the POEA Seafarers Contract states that employers are liable for disability benefits only when the seafarer suffers injury or illness during the term of their contract.
What was the basis for the Supreme Court’s decision?	The Court based its decision on the fact that Hernandez’s symptoms of fever and pain predated his employment, indicating his illness was not contracted during his service aboard the vessel.
Is a Pre-Employment Medical Examination (PEME) a guarantee of a seafarer’s health?	No, a PEME is not a definitive assessment of a seafarer’s overall health; it may not reveal underlying conditions and does not guarantee that any subsequent illness was contracted during employment.
What is septic arthritis and avascular necrosis?	Septic arthritis is a serious infection of the joints, while avascular necrosis is a condition where there is circulatory impairment of an area of the bone, leading to its eventual death.
Can an employer be liable for a seafarer’s death due to a pre-existing illness?	No, citing Sealanes Marine Services, Inc., v. NLRC, the Court affirmed that an employer is not liable for death compensation if the seafarer’s death was due to an illness not contracted during employment.
What responsibility does a seafarer have regarding their health history?	Seafarers have a responsibility to be truthful about their health history and to seek medical attention promptly if they experience any symptoms that may indicate a pre-existing condition.

In conclusion, the Supreme Court’s decision in NYK-FIL Ship Management Inc. v. NLRC provides critical guidance on the scope of employer liability in seafarer disability claims. By emphasizing that employers are not responsible for pre-existing conditions, the ruling protects maritime employers from unwarranted claims while reinforcing the importance of accurate health assessments and clear contractual terms.

For inquiries regarding the application of this ruling to specific circumstances, please contact ASG Law through contact or via email at frontdesk@asglawpartners.com.

Disclaimer: This analysis is provided for informational purposes only and does not constitute legal advice. For specific legal guidance tailored to your situation, please consult with a qualified attorney.
Source: NYK-FIL SHIP MANAGEMENT INC. vs. NLRC, G.R. NO. 161104, September 27, 2006