PAL MARITIME CORPORATION AND/OR MANX OCEAN CREWING LIMITED AND/OR MR. MANUEL B. BAYOT, PETITIONERS, VS. NATIONAL LABOR RELATIONS COMMISSION AND REYNALDO M. ZARAGOSA, RESPONDENTS.

PAL Maritime versus Zaragosa

The Case

This is a petition for certiorari under Rule 65 brought by PAL Maritime Corporation, its foreign principal Manx Ocean Crewing Limited, and its Vice President and General Manager Manuel Bayot against the National Labor Relations Commission and the seafarer Reynaldo Zaragosa. The petitioners ask the Supreme Court to overturn the Commission's affirmance of a Labor Arbiter's award of total disability benefits and attorney's fees to Zaragosa, a Chief Cook who lost part of his left thumb in an accident on board ship. The case matters because it gathers into one decision the working rules on seafarers' disability claims: that what is compensated is not the injury but the incapacity to work, that a fit to work certification issued after the one hundred twenty day period cannot defeat the claim, and that the seafarer need not go through the third physician procedure when the company physician has made no assessment at all.

Procedural History

Zaragosa filed a complaint for disability benefits, illness allowance, reimbursement of transportation and medical expenses, damages and attorney's fees before the Labor Arbiter. After mandatory conciliation failed and the parties exchanged position papers, replies and rejoinder, the Labor Arbiter rendered a decision ordering the petitioners jointly and severally to pay total disability benefits of one hundred twenty five thousand dollars, plus ten percent attorney's fees. Both sides appealed to the National Labor Relations Commission. The Commission dismissed the petitioners' appeal for lack of merit and affirmed the Labor Arbiter. Both motions for reconsideration were denied. The petitioners then came to the Supreme Court by petition for certiorari under Rule 65, alleging grave abuse of discretion.

Facts

Reynaldo Zaragosa was hired by PAL Maritime Corporation, on behalf of Manx Ocean Crewing Limited, as Chief Cook under a POEA approved contract of employment dated November 27, 2009, for eight months at a basic monthly salary of 774 dollars. An overriding collective bargaining agreement, the Total Crew Cost Fleet Agreement, governed his employment. After being declared fit to work, he boarded the vessel M/V Manarias.

On March 9, 2010, at around eight o'clock in the morning, while the vessel was anchored at Port Koper, Slovenia, and was swaying and rolling due to waves from inclement weather, Zaragosa accidentally chopped off his left thumb while chopping half frozen meat. He was taken to a hospital where the thumb was amputated, and he was repatriated on March 12, 2010. The company-designated physician, Dr. Nicomedes Cruz, diagnosed an amputated distal phalanx of the first digit of the left hand. Zaragosa underwent surgery and physiotherapy, but he continued to suffer limited flexibility, difficulty in grasping objects, and pain and numbness in the amputated finger.

Because the company physician had not come up with an evaluation and assessment of his disability, Zaragosa consulted Dr. Manuel Fidel Magtira on July 24, 2010, who assessed his disability as partial and permanent with Grade 10 impediment, categorized as loss of grasping power for large objects between fingers and palm of one hand, and declared him permanently unfit for further sea duty. When Zaragosa returned to Dr. Cruz on August 5, 2010, the company physician declared him fit to work, yet at the same time issued a disability grading of one half of Grade 10, equivalent to loss of one half of the thumb. For that loss, Zaragosa was offered ten thousand dollars under the collective bargaining agreement, computed at eight percent of one hundred twenty five thousand dollars. He rejected the offer and claimed total disability benefits of two hundred fifty thousand dollars, then filed his complaint.

Issues

• Whether or not it was error for the Labor Arbiter and the National Labor Relations Commission to disregard the fit to work declaration of the company-designated physician.
• Whether or not the award of attorney's fees was proper.

Applicable Provisions

Section 20 B, paragraph 6 of the POEA Standard Employment Contract, as quoted in the decision, provides:

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.

This is the provision that fixes the one hundred twenty day period, and the Court holds that the company physician's fit to work certification, issued beyond that period, cannot defeat the claim.

Section 20 B, paragraph 3 of the same contract, also quoted in the decision, provides:

If a doctor appointed by the seafarer disagrees with the assessment, a third doctor may be agreed jointly between the Employer and the seafarer. The third doctor's decision shall be final and binding on both parties.

This is the third physician procedure the petitioners say Zaragosa should have followed, and the Court holds it inapplicable because there was no company assessment to contest.

Ruling

On the first issue, the Court held that the petition lacks merit, because certiorari under Rule 65 prospers only if grave abuse of discretion is alleged and proved, and the petitioners failed to discharge that burden. The Court reaffirmed that in disability compensation, it is not the injury which is compensated, but the incapacity to work resulting in the impairment of one's earning capacity. Permanent total disability does not mean absolute helplessness; it means disablement from earning wages in the same kind of work the employee was trained for or accustomed to perform. Zaragosa was a cook who had to cut, chop, arrange and peel food, and with his grasping power reduced he could no longer perform his usual job. The company physician's certification showed only that he could do activities of daily living, not that he could return to work as a cook.

The Court also held that the fit to work certification came too late. The one hundred twenty day period may be extended to two hundred forty days only if the seafarer requires further medical attention, and no such showing was made. Since Zaragosa became entitled to total and permanent disability benefits upon the expiration of the one hundred twenty day period without any declaration from the company physician, it was by operation of law that a conclusive presumption of total and permanent disability arose. For that reason, there was no legal compulsion for him to observe the third physician procedure, because absent a certification from the company physician, the seafarer had nothing to contest.

On the second issue, the Court held that while gross and evident bad faith in refusing the demand was not shown, attorney's fees were still proper as a matter of law, because where an employee is forced to litigate and incur expenses to protect his right and interest, he is entitled to an award of attorney's fees.

Doctrine

First, in disability compensation the injury is not what is compensated; what is compensated is the incapacity to work resulting in the impairment of earning capacity, and permanent total disability means disablement from earning wages in the same or similar work, not absolute helplessness.

Second, under Section 20 B, paragraph 6 of the POEA Standard Employment Contract, if the company-designated physician fails to declare the seafarer fit to work or to assess his disability within one hundred twenty days, the law itself conclusively characterizes the disability as total and permanent, and a fit to work certification issued after that period cannot defeat the claim.

Third, the third physician procedure under Section 20 B, paragraph 3 presupposes that the company physician has made an assessment of fitness or disability within the one hundred twenty or two hundred forty day periods; absent such an assessment, the seafarer has nothing to contest and need not resort to it.

Fourth, attorney's fees may be awarded where an employee is forced to litigate and incur expenses to protect his rights, even without a finding of bad faith.

Disposition

The petition was denied, and the decision and resolution of the National Labor Relations Commission were affirmed, so Zaragosa kept his award of total disability benefits of one hundred twenty five thousand dollars plus ten percent attorney's fees.

Remember This

Memorize the line that it is not the injury which is compensated but the incapacity to work resulting in the impairment of earning capacity, and that the lapse of one hundred twenty days without a company assessment creates a conclusive presumption of total and permanent disability. Examiners use this case in seafarers' claims to test the fit to work certification issued beyond the statutory period and the inapplicability of the third physician rule when no company assessment exists.