FACTS:

Petitioner Richie P. Chan worked as a fireman on board Costa Voyager-D/E through Magsaysay Maritime Corporation, on behalf of CSCS International N/V. In April 2013, Chan slipped and injured his right knee during a boat drill. He sought treatment and was advised to rest. In May 2013, his condition worsened, with swelling and difficulty walking and sleeping. He was brought to a hospital in Turkey and repatriated on May 13, 2013.

Upon his return, Chan was diagnosed with gouty arthritis with meniscal tear in his right knee and was advised to undergo surgery. On July 11, 2013, the company-designated physician determined his Disability Grade 10. However, his condition did not improve even after surgery. An independent medical expert declared him unfit for sea duty due to his persistent pain, swelling, and limited movement.

Chan sought total permanent disability benefits from respondents, but they refused to provide them. Respondents argued that Chan failed to follow the procedure for contesting the findings of the company-designated physician, and any additional medical documents submitted by Chan were considered afterthoughts. They also claimed that Chan's delayed treatment should be attributed to him, as he requested more time to decide on surgery. Lastly, they argued that respondent Ms. Doris Ho should not be included as a party respondent due to the lack of an employer-employee relationship.

The labor arbiter ruled in favor of Chan, finding him entitled to permanent total disability benefits based on the POEA Contract. The NLRC affirmed the decision with modification, granting attorney's fees to Chan. The Court of Appeals later reduced the disability rating to Grade 10 and denied Chan's motion for reconsideration. Chan appealed to the Supreme Court, asserting that he was not required to avail of the conflict resolution procedure under the POEA-SEC since he was not provided a copy of the company-designated physician's final assessment. He also argued that the final assessment did not comply with the law and jurisprudence. The Supreme Court held that it could only review questions of law, not facts, and should review the findings of the Court of Appeals to determine which was more aligned with the evidentiary facts. The employment of seafarers is governed by the contracts they sign, as long as they do not contravene the law or public policy. The procedure for disability claims of seafarers is outlined in Section 20(A) of the POEA-SEC.

This case revolves around the interpretation and application of the terms and conditions of the seafarer's employment contract. The contract specifies that the employer must continue paying the seafarer's wages while on board the ship and cover the full cost of medical treatment in a foreign port until the seafarer is fit to work or repatriated. The employer is also responsible for providing medical attention after repatriation until the seafarer is declared fit or the degree of disability is determined by the company-designated physician. The seafarer is entitled to a sickness allowance from the employer equivalent to his basic wage from the time of signing off until declared fit or assessed by the company-designated physician. The entitlement to the sickness allowance should not exceed 120 days, and payment should be made at least once a month. The seafarer must undergo a post-employment medical examination by the company-designated physician within three working days of returning, unless physically incapable, in which case a written notice must be given. The seafarer must also regularly report to the company-designated physician on specified dates. Failure to comply with these requirements leads to the forfeiture of the right to claim benefits. In case of disagreement between the seafarer's doctor and the company-designated physician's assessment, a third doctor may be agreed upon, and their decision is final and binding on both parties.

ISSUES:

1. Whether the medical assessment issued by the company-designated physician is complete, final, and definite.

2. Whether the disability grading of Grade 10 issued by the company-designated physician is valid and timely.

3. Whether the disability benefits awarded to the seafarer are commensurate with the prolonged effects of the injuries suffered.

4. Whether the medical assessment declaring the seafarer's disability at Grade 10 is complete, final, and definitive.

5. Whether the medical assessment was timely and properly issued.

6. Whether respondents are estopped from claiming that the complainant was duly informed of his disability grading.

7. Whether the mandatory third-doctor referral is applicable.

8. Whether the complainant is entitled to moral and exemplary damages.

9. Whether the complainant is entitled to attorney's fees.

10. Whether or not the seafarer is entitled to total and permanent disability benefits.

11. Whether or not the seafarer is entitled to the award of monetary benefits.

RULING:

1. The medical assessment issued by the company-designated physician is not complete, final, and definite as it did not show how the disability assessment was arrived at.

2. The disability grading of Grade 10 issued by the company-designated physician is not valid and timely. Before the disability gradings may be considered, they should be properly established and contained in a valid and timely medical report of the company-designated physician.

3. The disability benefits awarded to the seafarer may not be commensurate with the prolonged effects of the injuries suffered due to the lack of a final and definite disability assessment.

4. The Court held that the medical assessment declaring the seafarer's disability at Grade 10 is not complete, final, and definitive. It did not show how the partial permanent disability assessment was arrived at and only stated the grade of disability without further details. The declaration of disability in the medical assessment, without more, cannot be considered complete, final, and definitive.

5. The Court ruled that the medical assessment was not timely and properly issued. The assessment was submitted beyond the 120-day period required by law. Even though the seafarer requested for more time to decide whether to undergo surgery, this does not excuse the delay in issuing the assessment. The fact that the assessment was not relayed or made known to the seafarer within the extended 240-day period is fatal to the employer's defense.

6. Respondents are estopped from claiming that the complainant was duly informed of his disability grading.

7. The mandatory third-doctor referral is not applicable in this case.

8. The complainant is not entitled to moral and exemplary damages.

9. The complainant is entitled to attorney's fees.

10. The seafarer is entitled to total and permanent disability benefits. The Court declared that the 120-day or 240-day period for assessing the existence of a permanent disability is only a presumption, and it does not automatically bar a seafarer from claiming total and permanent disability benefits. In this case, the seafarer presented evidence to prove the existence of a permanent disability beyond the 240-day period. Therefore, he is entitled to the said benefits.

11. The seafarer is entitled to the award of monetary benefits. The Court granted the seafarer's petition and reversed the decision of the Court of Appeals. The decision of the National Labor Relations Commission (NLRC) imposing legal interest of six percent (6%) per annum on the total monetary award from the finality of their decision until fully paid was reinstated with modification.

PRINCIPLES:

• The medical assessment or report of the company-designated physician must be complete and definite for the purpose of ascertaining the degree of the seafarer's disability benefits.

• A final medical assessment of the company-designated physician is necessary to truly reflect the extent of the sickness or injuries of the seafarer and his or her capacity to resume work.

• The abdication of the company-designated physician's obligation to provide a definite disability declaration may transform temporary total disability to permanent total disability, regardless of the disability grade.

• A declaration of disability in a medical assessment must be complete, final, and definitive. It should show how the disability assessment was arrived at and not simply state the grade of disability.

• The medical assessment for a seafarer's disability must be issued within the 120/240-day window. Failure to issue the assessment within the prescribed period may result in the disability being considered permanent and total.

• The employer has the burden of proving that there is a justifiable reason for extending the period for issuing the medical assessment. If no sufficient justification is provided, the seafarer's disability may be considered permanent and total.

• The failure to relay or make known the medical assessment to the seafarer within the prescribed period is fatal to the employer's defense.

• An act, declaration, or omission of a party can be used as evidence against him/her.

• The mandatory third-doctor referral is applicable only when there is a valid, final, and definite medical assessment from the company-designated physician.

• Moral damages are awarded when the employer's action was attended by bad faith or fraud, oppressive to labor, or done in a manner contrary to morals, good customs, or public policy.

• Exemplary damages may be awarded if the defendant acted in a wanton, fraudulent, reckless, oppressive, or malevolent manner.

• Attorney's fees may be awarded to the prevailing party as compensation for the expenses incurred in the litigation.

• A seafarer is entitled to total and permanent disability benefits if he is unable to perform his job for more than 120 days or 240 days if further medical attention is required, regardless of whether or not he loses the use of any part of his body.

• The 120-day or 240-day period for assessing the existence of a permanent disability is only a presumption and does not automatically bar a seafarer from claiming total and permanent disability benefits.

• The imposition of legal interest of six percent (6%) per annum on the total monetary award is proper until fully paid.