TSM SHIPPING PHILS., INC., NORDEN DENMARK AND ALFONSO DEL CASTILLO, PETITIONERS, VS. NATIONAL LABOR RELATIONS COMMISSION (FOURTH DIVISION) AND ISIDRITO C. BORGONOS, RESPONDENTS.

TSM Shipping versus Borgonos

The Case

This is a petition for certiorari filed by TSM Shipping Philippines, Incorporated, Norden Denmark, and Alfonso Del Castillo against the National Labor Relations Commission, Fourth Division, and the seafarer Isidrito C. Borgonos. The petitioners ask the Supreme Court to set aside the Commission's ruling that awarded the seafarer full permanent total disability benefits. The case matters because it gathers into one decision the rules every maritime labor practitioner must know: which contract governs a seafarer's disability claim, how total and permanent disability is measured, and when attorney's fees may be awarded even without proof of bad faith.

Procedural History

Borgonos filed a complaint with the Labor Arbiter for permanent disability compensation, sickness wages, reimbursement of transportation expenses, moral and exemplary damages, and attorney's fees. The Labor Arbiter rendered a decision holding the petitioners jointly and severally liable for disability compensation of twenty two thousand five hundred dollars, sickness wages of six thousand seven hundred twenty dollars, and attorney's fees of two thousand nine hundred twenty two dollars, for a total of thirty two thousand one hundred forty two dollars, or its Philippine peso equivalent at the time of actual payment.

Both sides appealed to the National Labor Relations Commission. Borgonos sought total permanent disability compensation of one hundred forty eight thousand five hundred dollars, while the petitioners sought to delete the awards for sickness allowance and attorney's fees. The Commission modified the Labor Arbiter's decision, ordering the petitioners to pay sixty thousand dollars as permanent total disability benefit plus ten percent as attorney's fees, and setting aside the sickness allowance. The petitioners' motion for reconsideration was denied, so they elevated the matter to the Supreme Court by petition for certiorari, with a prayer for a temporary restraining order and a writ of preliminary injunction, which the Court denied.

Facts

TSM Shipping, acting for its principal Norden Denmark, hired Borgonos as Master of the vessel Nord Seoul under a six month contract at a basic salary of two thousand two hundred forty dollars, exclusive of overtime and other benefits. Each time he was deployed, he underwent the rigorous pre-employment medical examination and was always found fit for sea duty.

In the first week of February 2011, while performing his duties, he experienced severe chest pain, difficulty in breathing, numbness, and dizziness. He was treated at a clinic at the port of Mexico and required to continue working, which aggravated his condition. He was later referred to a hospital in Rizhao, China, where he was found to have hypertension, an enlarged left aorta, and diabetes. When the vessel reached Taiwan on April 8, 2011, he was repatriated and arrived in Manila the next day. He was sent to the company-designated physician. His cranial CT scan showed microvascular ischemic changes and mild cerebral atrophy, and his echocardiogram and Doppler study revealed concentric left ventricular hypertrophy with preserved left ventricle systolic function.

On October 20, 2011, Borgonos consulted an independent physician, Doctor Manuel C. Jacinto, Junior, who found the same heart and brain abnormalities and assessed him as physically unfit to return to work, total and permanent. The company-designated physician, on the other hand, gave him a Grade 7 disability rating, described as moderate residuals or disorder of the intra-thoracic organ. The petitioners invoked a foreign maritime officers' agreement under which illness-based disability earns only fifteen percent of one hundred fifty thousand dollars, or twenty two thousand five hundred dollars. Borgonos invoked the collective bargaining agreement between the Associated Marine Officers and Seamen's Union of the Philippines and the International Transport Workers' Federation, which he said entitled him to one hundred forty eight thousand five hundred dollars.

Issues

• Whether or not the National Labor Relations Commission gravely abused its discretion in awarding full disability compensation in favor of the private respondent.
• Whether or not the Commission committed serious and reversible error in applying the Philippine Overseas Employment Administration Standard Employment Contract instead of the collective bargaining agreement in awarding disability compensation.
• Whether or not the Commission committed serious and reversible error in sustaining the award of attorney's fees in favor of the private respondent.

Applicable Provisions

Article 192 of the Labor Code provides:

Article 192. Permanent total disability. 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.

This provision supplies the legal test the Court uses: a disability lasting continuously beyond one hundred twenty days is deemed total and permanent.

Section 2, paragraph b, Rule VII of the Amended Rules on Employees Compensation provides:

Disability. A disability is total and permanent if as a result of the injury or sickness the employee is unable to perform any gainful occupation for a continuous period exceeding 120 days, except as otherwise provided for in Rule X of these Rules.

This rule ties total and permanent disability to the inability to perform any gainful occupation, not to the medical label attached to the injury.

Ruling

On the first issue, the Court held that the Commission did not gravely abuse its discretion. The petitioners never denied that the disability was work-related and caused by illness. The Court found the company-designated physician's Grade 7 rating vague and general, and inconsistent with the seafarer's symptoms, while Doctor Jacinto's diagnosis was more specific, pointing to heart abnormalities and explaining the fatigue and general body malaise. The Court noted that Borgonos was repatriated in April 2011 and that even after the lapse of the one hundred twenty day and two hundred forty day periods, he remained unable to perform his usual sea duties. The company-designated physician's final assessment never declared him fit to return to work. The Court stressed that disability is not measured by its medical significance but by the loss of earning capacity, and that permanent total disability does not require absolute helplessness.

On the second issue, the Court rejected the foreign maritime officers' agreement because it was an agreement between the Singapore Maritime Officers' Union and a Singapore company, and Borgonos was not a member of that union but of the Associated Marine Officers and Seamen's Union of the Philippines. His claim was therefore governed by Section 32 of the Standard Employment Contract, and the Court affirmed the maximum compensation of sixty thousand dollars.

On the third issue, the Court held that attorney's fees were proper. It ruled that in actions for indemnity under the employer's liability laws, or where an employee was forced to litigate to protect his rights, a maximum of ten percent of the total monetary award by way of attorney's fees is justified. There need not be any showing that the employer acted maliciously or in bad faith; it is enough that the lawful indemnity was not paid and the employee was forced to file a complaint.

Doctrine

A seafarer's disability claim is governed by the Standard Employment Contract where the foreign agreement invoked is not shown to bind him, as when he is not a member of the union that concluded it. Total and permanent disability is a legal conclusion measured by the loss of earning capacity, not by the medical grade assigned. A disability rated partial and permanent, if it incapacitates the seafarer from performing his usual sea duties beyond one hundred twenty or two hundred forty days, is under legal contemplation total and permanent. The company-designated physician's assessment deserves weight, but it must be consistent with the seafarer's actual condition and must declare him fit to work; a vague rating that understates the disability will not prevail over a more specific diagnosis. Finally, attorney's fees may be awarded without proof of bad faith where the lawful indemnity was withheld and the employee was compelled to litigate.

Disposition

The petition was dismissed, and the Commission's decision and resolution were affirmed, leaving the petitioners liable for sixty thousand dollars as permanent total disability benefit plus ten percent attorney's fees.

Remember This

The one line to memorize: disability is compensated not for the injury but for the incapacity to work, so a seafarer unfit to resume his sea duties beyond the statutory period is totally and permanently disabled regardless of his medical grade. Examiners use this case on the conflict between the collective bargaining agreement, the foreign maritime agreement, and the Standard Employment Contract, and on the award of attorney's fees without proof of bad faith.