G.R. No. 161934 - Varorient Shipping Co., Inc. vs. Flores

On April 7, 1997, petitioners Varorient Shipping Co., Inc. and Aria Maritime Co., Ltd. employed respondent Gil A. Flores as Chief Officer aboard M/V Aria under a POEA‑approved contract for a twelve‑month period.
The contract stipulated a total fixed monthly salary of US$2,100.00 (comprising a basic salary of US$1,200.00, overtime pay of US$600.00, and a US$200.00 allowance), with additional benefits such as vacation leave.

Respondent was deployed on April 16, 1997, aboard the vessel in Bangkok, Thailand.
While on board, he experienced shooting pain in his lower extremities, particularly the right foot, which led to his referral to the Centre Medical de Ngodi in Douala, Cameroon, for a three‑day treatment.
The treating physician there diagnosed the condition as “sciatic neuralgia” and administered drips, injections, and acupuncture before declaring respondent unfit for work and recommending repatriation.

Respondent was repatriated to the Philippines on June 21, 1997, after which he reported for further evaluation.
He was seen by the company physician, who referred him to a specialist neurologist at Makati Medical Center.
On June 30, 1997, a CT scan revealed a large disc herniation at the L5‑S1 level with secondary right nerve root compression and edema, along with a smaller disc protrusion at L4‑L5.
The neurologist recommended a confinement of at least two weeks for physical therapy and medications, with possible surgical decompression if the condition did not improve.

On July 29, 1997, respondent, via his counsel, sent a letter to petitioners alleging gross bad faith in refusing continued medical support as recommended by their company doctors.
He claimed that because of such refusal, he was forced to seek and finance his own medical treatment and demanded that petitioners cover his treatment expenses and pay the sickness wages owed.

In November 1997, respondent underwent hemilaminectomy and foraminotomy for his disc herniation as certified by Dr. Copernico J. Villaruel, Jr. at the Philippine General Hospital, who then declared him fit to work.
An evaluation by the Employees Compensation Commission (ECC) later confirmed his condition and recommended entitlement to daily income benefits for lost wages (up to a maximum of 120 days) and reimbursement of hospital and immediate medical expenses.

A breach of the employment contract, noting his injuries sustained during the performance of his duties;
Petitioners’ failure to provide for his medical treatment and the consequent need for him to incur expenses out-of-pocket;
His entitlement to sickness wages (originally amounting to US$4,800.00), disability benefits under POEA guidelines, and various damages (compensatory, moral, exemplary), notwithstanding his eventual withdrawal of the disability claim pending recurrence.

In his Position Paper, respondent sought reimbursement for medical expenses, as well as claims for sickness wages, and other forms of monetary relief, while petitioners countered by asserting that respondent had already received US$1,010.00 as full settlement (substantiated by the Receipt and Quitclaim) and alleged that cash advances had been given to offset the alleged claim.

On September 7, 1998, the Acting Executive Labor Arbiter dismissed respondent’s complaint for permanent and total disability benefits, sickness wages, and other claims, finding that petitioners had substantially complied with the contractual obligations.
The Labor Arbiter upheld the validity of the Receipt and Quitclaim, ruling that respondent had already been reimbursed a part of his claims and that further recovery would constitute double recovery.
Subsequently, on May 25, 1999, the NLRC reversed the labor arbiter’s decision by holding that petitioners had not discharged their obligation to provide continuous medical treatment as required under the Standard Employment Contract, thus entitling respondent to:

Sickness wages for the maximum period of 120 days (originally US$4,800.00 less the recovered US$1,010.00, resulting in a net award of US$3,790.00);
Reimbursement of medical and surgical expenses.

Additional motions for reconsideration by both parties were subsequently denied by the NLRC in resolutions dated June 30, 1999 (respondent’s) and August 18, 1999 (petitioners’).

Petitioners appealed the NLRC Decision alleging that respondent’s receipt of US$1,010.00 via the Receipt and Quitclaim and additional cash advances should offset or bar further recovery.
The CA, however, affirmed the NLRC decision with modification on February 28, 2003, ordering petitioners to pay:

The balance of sickness wages amounting to US$3,790.00 (or its peso equivalent at the time of payment);
Reimbursement of medical and surgical expenses totalling P15,373.26.

The CA noted that the cash vouchers submitted by petitioners were not clearly tied to expenditures by respondent and had not been sufficiently raised in their pleadings to affect the award.

Respondent questioned the validity and authenticity of the Receipt and Quitclaim executed on June 25, 1997—a document purportedly releasing petitioners from further liability—which he claimed was executed under duress and possibly forged.
Petitioners, on the other hand, argued that the Quitclaim evidenced full settlement of his claims, thereby justifying any offsets against the sickness wages.

The case was contextualized under the provisions of the Standard Employment Contract and Department Order No. 4, series of 2000, which mandate:

The continued payment of wages while a seafarer receives treatment;
Employer liability for medical and hospital expenses incurred abroad and upon repatriation up to a maximum period of 120 days;
The prohibition against unjust enrichment or double recovery by a seafarer.

Whether respondent is entitled to the full amount of sickness wages (net US$3,790.00) notwithstanding the alleged receipt of US$1,010.00 based on the Receipt and Quitclaim.
Whether the cash advances presented by petitioners (US$1,000.00 and US$2,290.00) can validly be offset against the claim for sickness wages.
Whether petitioners satisfied their contractual obligation to provide continuous medical treatment, especially in light of the company physician’s recommendation for a two‑week confinement and physical therapy.
Whether the Receipt and Quitclaim executed by respondent constitutes a valid and binding waiver of his rights, particularly if it was procured under conditions lacking voluntariness and free will.
Whether respondent’s additional claims for compensatory, moral, and exemplary damages have merit given the compensatory nature of the sickness wages provided under the Standard Employment Contract.
How the applicable provisions of the Standard Employment Contract and the related Department Order influence the determination of entitlements in cases of work-related injury or illness.