CASE DIGEST: Alpha Ship Management vs. Calo (G.R. No. 192034; January 13, 2014)

ALPHA SHIP MANAGEMENT CORPORATION/JUNEL M. CHAN and/or CHUO-KAIUN COMPANY, LIMITED, Petitioners, v. ELEOSIS V. CALO, Respondent.
G.R. No. 192034; January 13, 2014

FACTS: Respondent Eleosis V. Calo worked for petitioners, Alpha Ship Management Corporation, Junel M. Chan and their foreign principal, Chuo-Kaiun Company Limited (CKCL), since 1998 under seven employment contracts. On February 17, 2004, respondent was once more hired by petitioners as Chief Cook on board CKCLs vessel, MV Iris. Respondent commenced his duties as Chief Cook aboard MV Iris on March 5, 2004.

On July 13, 2004, while MV Iris was A in Shanghai, China, respondent suffered back pain on the lower part of his lumbar region and urinated with solid particles. On checkup, the doctor found him suffering from urinary tract infection and renal colic, and was given antibiotics. When respondents condition did not improve, he consulted another doctor in Chile sometime in August 2004, and was found to have kidney problems and urinary tract infection but was declared fit for work on a light duty basis.

On September 19, 2004, respondent suffered an attack of severe pain in his loin area below the ribs radiating to his groin. At the Honmoku Hospital in Yokohama, Japan, respondent was diagnosed with suspected renal and/or ureter calculus. He was declared unfit for work and advised to be sent home and undergo further detailed examination and treatment.

Respondent was thus repatriated on October 12, 2004 and was referred by petitioners to Dr. Nicomedes G. Cruz (Dr. Cruz), the company-designated physician.

On October 20, 2004, Dr. Cruz examined respondent, and thereafter, in his Medical Report, Dr. Cruz wrote: The patient was seen today in our clinic. The IVP x-ray showed mild prostate enlargement with signs suggestive of cystitis. He was seen by our urologist and repeat urinalysis was requested.

Respondent was examined once more on November 10, 2004. He returned to Dr. Cruz for check- up on November 17, 2004, December 15, 2004, and January 5, 2005.

Further Medical Reports indicate that respondent returned to Dr. Cruz for additional check-ups on January 12 and 17, 2005; February 7, 14 and 18, 2005; March 4, 9 and 30, 2005; April 4, 20 and 27, 2005; May 11 and 18, 2005; June 8, 20 and 27, 2005; July 18, 25 and 27, 2005; August 3, 22 and 31, 2005; September 14, 2005; and October 5 and 14, 2005.

Meanwhile, on July 28, 2005, respondent who felt that his condition has not improved consulted another specialist in internal medicine, Dr. Efren R. Vicaldo (Dr. Vicaldo), who diagnosed him with Hypertension INephrolithiasis.

Respondent underwent surgery for his nephrolithiasis on August 31, 2005. On September 12, 2005, respondent took an x-ray examination which found Degenerative Osseous Changes of the Lumbar Vertebrae in his body.

Respondent filed a claim for disability benefits with petitioners, but the claim was denied.

Thus, on October 18, 2005, respondent filed against the petitioners a Complaint for the recovery of total permanent disability benefits, illness allowance, reimbursement of medical expenses, damages and attorneys fees.

On March 30, 2007, the Labor Arbiter issued his Decision which made the petitioners liable.

The Labor Arbiter held that respondent suffered permanent disability as a result of his inability to work despite undergoing treatment and medication by the company-designated physician for more than 120 days, or from October 15, 2004 through July 18, 2006; the company-designated physicians July 18, 2006 fit to work declaration was irrelevant and belated as it was made long after the expiration of the continuous 120- day period during which respondent was unable to work, which thus entitles the latter to permanent total disability benefits under the law.

The Labor Arbiter cited United Philippine Lines, Inc. and/or Holland America Line, Inc. v. Beseril, which held: The law does not require that the illness should be incurable. What is important is that he was unable to perform his customary work for more than 120 days which constitutes permanent total disability. An award of a total and permanent disability benefit would be germane to the purpose of the benefit, which is to help the employee in making ends meet at the time when he is unable to work.

Petitioners appealed to the NLRC. On March 31, 2008, the NLRC rendered its Decision granting petitioners appeal and reversing the Labor Arbiters March 30, 2007 Decision.

Essentially, the NLRC held that for purposes of claiming disability benefits under the POEA Standard Employment Contract, it is the company-designated physician, Dr. Cruz and not respondents physician Dr.Vicaldo who should make the corresponding proclamation or finding that respondent suffered permanent total or partial disability. Thus, Dr. Cruzs July 18, 2006 Medical Report declaring respondent as fit to work prevails over Dr. Vicaldos July 28, 2005 Medical Certificate declaring respondent unfit to resume work as seaman in any capacity.The NLRC added that while the July 18, 2006 certification of fitness was issued more than one year following respondents disembarkation, its belated issuance is not sufficient to establish petitioners liability for disability compensation, especially where respondent was to blame for his failure to report to Dr. Cruz and continue treatment. The NLRC was referring to respondents failure to return for further treatment by Dr. Cruz, as directed, after October 14, 2005. It held that as a result, respondents Complaint was prematurely filed since his treatment was still ongoing at the time of its filing, and that he is guilty of unjustified abandonment of treatment.

In a Petition for Certiorari filed with the CA, respondent sought a reversal of the Decision of the NLRC, arguing that the latter committed grave abuse of discretion and gross error in upholding Dr. Cruzs July 18, 2006 Medical Report; in disregarding the 120-day rule which entitles the employee to permanent disability benefits in the event of continuous inability to perform his work for more than 120 days; and in ordering the dismissal of his Complaint.

The CA set aside the NLRC decision. The CA held that the company-designated physicians findings are not conclusive and binding on the issue of the employees state of health, disability, or fitness to resume work.

The CA found incredible Dr. Cruzs findings in his July 18, 2006 Medical Report, which it held were self-serving and hearsay as they were based on the opinion of an unnamed urologist, whose opinion was not backed by the appropriate separate medical certificate.

The CA added that the NLRC gravely erred in not considering that respondent had already been under medical treatment and incapacitated to work for more than 120 days, or even 240 days which is the maximum allowable period of treatment pursuant to Rule X, Section 2 of the Amended Rules on Employees Compensation and the pronouncement in Vergara v. Hammonia Maritime Services, Inc. which held that if the 120-day period elapsed and no declaration of disability or fitness is made because the employee required further medical treatment, then treatment should continue up to a maximum of 240 days, subject to the right of the employer to declare within this period that a permanent partial or total disability already exists; a temporary total disability only becomes permanent when so declared by the company-designated physician within the period allowed, or upon expiration of the maximum 240- day medical treatment period in case of absence of a declaration of fitness or permanent disability. The CA held that herein respondent was repatriated on October 12, 2004, and his last medical examination was conducted on October 14, 2005; clearly, more than 240 days have elapsed without respondent having been declared either fit to work or permanently disabled. He was declared fit to work only on July 18, 2006, or long after his labor Complaint was filed and almost two years from his repatriation; respondent is thus deemed permanently disabled.

Finally, the CA declared that respondents permanent disability was total, considering that both his personal physician Dr. Vicaldo and the company-designated physician Dr. Cruz declared him unfit to work as seaman in any capacity and is not expected to land a gainful employment given his medical background, and that there was persistence of the left kidney stone located inside the diverticulum and it is impossible to pass out the stone thru his urine. It held that for total disability to exist, it is not required that the employee be absolutely disabled or totally paralyzed; it is merely necessary that the injury or illness be such that the employee cannot pursue his/her usual work and earn therefrom. And to be permanent, a total disability should last continuously for more than 120 days or 240 days, per the Vergara ruling.

Petitioners filed a Motion for Reconsideration, but the CA denied the same in its April 26, 2010 Resolution.Hence, the present Petition.

ISSUES: [1] Is respondent entitled to disability benefits under the POEA Standard Employment Contract for Seafarers despite the fact that he was declared fit to work?

[2] Is respondent entitled to attorneys fees?

HELD: Article 192(c)(1) of the Labor Code provides that: (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; xxx.

The 120-day period may be extended up to 240 days, under Rule X, Section 2 of the Amended Rules on Employees Compensation and pursuant to the pronouncement in Vergara v. Hammonia Maritime Services, Inc. stating that a temporary total disability becomes permanent when so declared by the company-designated physician within the period allowed, or upon expiration of the maximum 240-day medical treatment period in case of absence of a declaration of fitness or permanent disability.

It is settled that the above provisions of the Labor Code and the Amended Rules on Employees Compensation on disabilities apply to seafarers; the POEA Standard Employment Contract, which respondent holds, is not the sole basis for determining their rights in the event of work-related injury, illness or death. It may likewise be true that under respondents POEA Standard Employment Contract, only those injuries or disabilities that are classified as Grade 1 are considered total and permanent. However, the Court has made it clear, inKestrel Shipping Co., Inc. v. Munar , that if those injuries or disabilities with a disability grading from 2 to 14, hence, partial and permanent, would incapacitate a seafarer from performing his usual sea duties for a period of more than 120 or 240 days, depending on the need for further medical treatment, then he is, under legal contemplation, totally or permanently disabled. In other words, an impediment should be characterized as partial and permanent not only under the Schedule of Disabilities found in Section 32 of the POEA-SEC but should be so under the relevant provisions of the Labor Code and the Amended Rules on Employees Compensation (AREC) implementing Title II, Book IV of the Labor Code. That while the seafarer is partially injured or disabled, he is not precluded from earning doing [sic] the same work he had before his injury or disability or that he is accustomed or trained to do. Otherwise, if his illness or injury prevents him from engaging in gainful employment for more than 120 or 240 days, as the case may be, he shall be deemed totally and permanently disabled.

Moreover, the company-designated physician is expected to arrive at a definite assessment of the seafarers fitness to work or permanent disability within the period of 120 or 240 days. That should he fail to do so and the seafarers medical condition remains unresolved, the seafarer shall be deemed totally or permanently disabled.

Consequently, if after the lapse of the stated periods, the seafarer is still incapacitated to perform his usual sea duties and the company-designated physician had not yet declared him fit to work or permanently disabled, whether total or permanent, the conclusive presumption that the latter is totally and permanently disabled arises.

Thus, from the above, it can be said that an employees disability becomes permanent and total when so declared by the company-designated physician, or, in case of absence of such a declaration either of fitness or permanent total disability, upon the lapse of the 120 or 240-day treatment period, while the employees disability continues and he is unable to engage in gainful employment during such period, and the company-designated physician fails to arrive at a definite assessment of the employees fitness or disability. This is true regardless of whether the employee loses the use of any part of his body.

Respondent was repatriated on October 12, 2004 and underwent treatment by the company- designated physician, Dr. Cruz, until October 14, 2005, or for a continuous period of over one year or for more than the statutory 120-day or even 240-day period. During said treatment period, Dr. Cruz did not arrive at a definite assessment of respondents fitness or disability; thus, respondents medical condition remained unresolved. It was only on July 18, 2006 that respondent was declared fit to work by Dr. Cruz. Such declaration, however, became irrelevant, for by then, respondent had been under medical treatment and unable to engage in gainful employment for more than 240 days. Pursuant to the doctrine in Kestrel, the conclusive presumption that the respondent is totally and permanently disabled thus arose. The CA is therefore correct in declaring that respondent suffered permanent total disability.

In the same manner, the issue of which among the two diagnoses or opinions should prevail that of Dr. Cruz or Dr. Vicaldo is rendered irrelevant in view of the lapse of the said 240-day period. As far as the parties are concerned, respondents medical treatment and disability continued for more than 240 days without any finding or diagnosis by the company-designated physician that he was fit to resume work. Thus, consonant with law and jurisprudence, respondent is entitled to a declaration of permanent total disability, as well as the corresponding benefit attached thereto in the amount of US$60,000.00.

The Court likewise notes the CAs finding that while respondent was given an Impediment Grade 10 (20.15%) by his physician, he was nevertheless deemed unfit to work as seaman in any capacity and not expected to land gainful employment given his medical background. Moreover, it has been found that surgical intervention may be required to remove respondents nephrolithiasis; if not, he is prone to develop ascending urinary tract infection. It must be remembered that in August 2004, while respondent was still on ship duty, he was diagnosed with urinary tract infection by a company-approved physician and declared fit to work, but only on a light duty basis; and when the same infection recurred with his kidney stones, he was declared unfit to work by the physician at Honmoku Hospital in Japan. If respondents nephrolithiasis is not cured, certainly he cannot be expected to return to work under his condition.

With respect to attorneys fees, it is clear that respondent was compelled to litigate due to petitioners failure to satisfy his valid claim. Where an employee is forced to litigate and incur expenses to protect his rights and interest, he is entitled to an award of attorneys fees equivalent to ten percent (10%) of the total award at the time of actual payment.

Lastly, while the Labor Arbiters March 30, 2007 Decision is correct and should be reinstated, a modification thereof is in order, in that the awards therein should be paid in no other form than in Philippine pesos.