SECOND DIVISION

[ G.R. NO. 162419, July 10, 2007 ]

PAUL V. SANTIAGO, PETITIONER, VS. CF SHARP CREW
MANAGEMENT, INC., RESPONDENT.

DECISION

TINGA, J.:

At the heart of this case involving a contract between a seafarer, on one hand, and the
manning agent and the foreign principal, on the other, is this erstwhile unsettled legal
quandary: whether the seafarer, who was prevented from leaving the port of Manila and
refused deployment without valid reason but whose POEA-approved employment
contract provides that the employer-employee relationship shall commence only upon the
seafarer's actual departure from the port in the point of hire, is entitled to relief?

This treats of the petition for review filed by Paul V. Santiago (petitioner) assailing the
Decision and Resolution of the Court of Appeals dated 16 October 2003 and 19 February
2004, respectively, in CA-G.R. SP No. 68404.[1]

Petitioner had been working as a seafarer for Smith Bell Management, Inc. (respondent)
for about five (5) years.[2] On 3 February 1998, petitioner signed a new contract of
employment with respondent, with the duration of nine (9) months. He was assured of a
monthly salary of US$515.00, overtime pay and other benefits. The following day or on 4
February 1998, the contract was approved by the Philippine Overseas Employment
Administration (POEA). Petitioner was to be deployed on board the "MSV Seaspread"
which was scheduled to leave the port of Manila for Canada on 13 February 1998.

A week before the scheduled date of departure, Capt. Pacifico Fernandez, respondent's
Vice President, sent a facsimile message to the captain of "MSV Seaspread," which
reads:
I received a phone call today from the wife of Paul Santiago in Masbate asking me not to
send her husband to MSV Seaspread anymore. Other callers who did not reveal their
identity gave me some feedbacks that Paul Santiago this time if allowed to depart will
jump ship in Canada like his brother Christopher Santiago, O/S who jumped ship from
the C.S. Nexus in Kita-kyushu, Japan last December, 1997.

We do not want this to happen again and have the vessel penalized like the C.S. Nexus in
Japan.
Forewarned is forearmed like his brother when his brother when he was applying he
behaved like a Saint but in his heart he was a serpent. If you agree with me then we will
send his replacement.

Kindly advise.[3]
To this message the captain of "MSV Seaspread" replied:
Many thanks for your advice concerning P. Santiago, A/B. Please cancel plans for him to
return to Seaspread.[4]
On 9 February 1998, petitioner was thus told that he would not be leaving for Canada
anymore, but he was reassured that he might be considered for deployment at some future
date.

Petitioner filed a complaint for illegal dismissal, damages, and attorney's fees against
respondent and its foreign principal, Cable and Wireless (Marine) Ltd.[5] The case was
raffled to Labor Arbiter Teresita Castillon-Lora, who ruled that the employment contract
remained valid but had not commenced since petitioner was not deployed. According to
her, respondent violated the rules and regulations governing overseas employment when
it did not deploy petitioner, causing petitioner to suffer actual damages representing lost
salary income for nine (9) months and fixed overtime fee, all amounting to US$7, 209.00.

The labor arbiter held respondent liable. The dispositive portion of her Decision dated 29
January 1999 reads:
WHEREFORE, premises considered, respondent is hereby Ordered to pay complainant
actual damages in the amount of US$7,209.00 plus 10% attorney's fees, payable in
Philippine peso at the rate of exchange prevailing at the time of payment.

All the other claims are hereby DISMISSED for lack of merit.

SO ORDERED.[6]
On appeal by respondent, the National Labor Relations Commission (NLRC) ruled that
there is no employer-employee relationship between petitioner and respondent because
under the Standard Terms and Conditions Governing the Employment of Filipino
Seafarers on Board Ocean Going Vessels (POEA Standard Contract), the employment
contract shall commence upon actual departure of the seafarer from the airport or seaport
at the point of hire and with a POEA-approved contract. In the absence of an employer-
employee relationship between the parties, the claims for illegal dismissal, actual
damages, and attorney's fees should be dismissed.[7] On the other hand, the NLRC found
respondent's decision not to deploy petitioner to be a valid exercise of its management
prerogative.[8] The NLRC disposed of the appeal in this wise:
WHEREFORE, in the light of the foregoing, the assailed Decision dated January 29,
1999 is hereby AFFIRMED in so far as other claims are concerned and with
MODIFICATION by VACATING the award of actual damages and attorney's fees as
well as excluding Pacifico Fernandez as party respondent.

SO ORDERED.[9]
Petitioner moved for the reconsideration of the NLRC's Decision but his motion was
denied for lack of merit.[10] He elevated the case to the Court of Appeals through a
petition for certiorari.

In its Decision[11] dated 16 October 2003, the Court of Appeals noted that there is an
ambiguity in the NLRC's Decision when it affirmed with modification the labor arbiter's
Decision, because by the very modification introduced by the Commission (vacating the
award of actual damages and attorney's fees), there is nothing more left in the labor
arbiter's Decision to affirm.[12]

According to the appellate court, petitioner is not entitled to actual damages because
damages are not recoverable by a worker who was not deployed by his agency within the
period prescribed in the POEA Rules.[13] It agreed with the NLRC's finding that
petitioner's non-deployment was a valid exercise of respondent's management
prerogative.[14] It added that since petitioner had not departed from the Port of Manila, no
employer-employee relationship between the parties arose and any claim for damages
against the so-called employer could have no leg to stand on.[15]

Petitioner's subsequent motion for reconsideration was denied on 19 February 2004.[16]

The present petition is anchored on two grounds, to wit:

A. The Honorable Court of Appeals committed a serious error of law when it

ignored [S]ection 10 of Republic Act [R.A.] No. 8042 otherwise known as
the Migrant Worker's Act of 1995 as well as Section 29 of the Standard
Terms and Conditions Governing the Employment of Filipino Seafarers
On-Board Ocean-Going Vessels (which is deemed incorporated under the
petitioner's POEA approved Employment Contract) that the claims or
disputes of the Overseas Filipino Worker by virtue of a contract fall within
the jurisdiction of the Labor Arbiter of the NLRC.

B. The Honorable Court of Appeals committed a serious error when it

disregarded the required quantum of proof in labor cases, which is
substantial evidence, thus a total departure from established jurisprudence
on the matter.[17]

Petitioner maintains that respondent violated the Migrant Workers Act and the POEA
Rules when it failed to deploy him within thirty (30) calendar days without a valid
reason. In doing so, it had unilaterally and arbitrarily prevented the consummation of the
POEA- approved contract. Since it prevented his deployment without valid basis, said
deployment being a condition to the consummation of the POEA contract, the
contract is deemed consummated, and therefore he should be awarded actual damages,
consisting of the stipulated salary and fixed overtime pay.[18] Petitioner adds that since the
contract is deemed consummated, he should be considered an employee for all intents
and purposes, and thus the labor arbiter and/or the NLRC has jurisdiction to take
cognizance of his claims.[19]

Petitioner additionally claims that he should be considered a regular employee, having

worked for five (5) years on board the same vessel owned by the same principal and
manned by the same local agent. He argues that respondent's act of not deploying him
was a scheme designed to prevent him from attaining the status of a regular employee. [20]

Petitioner submits that respondent had no valid and sufficient cause to abandon the
employment contract, as it merely relied upon alleged phone calls from his wife and other
unnamed callers in arriving at the conclusion that he would jump ship like his brother. He
points out that his wife had executed an affidavit[21] strongly denying having called
respondent, and that the other alleged callers did not even disclose their identities to
respondent.[22] Thus, it was error for the Court of Appeals to adopt the unfounded
conclusion of the NLRC, as the same was not based on substantial evidence. [23]

On the other hand, respondent argues that the Labor Arbiter has no jurisdiction to award
petitioner's monetary claims. His employment with respondent did not commence
because his deployment was withheld for a valid reason. Consequently, the labor arbiter
and/or the NLRC cannot entertain adjudication of petitioner's case much less award
damages to him. The controversy involves a breach of contractual obligations and as such
is cognizable by civil courts.[24] On another matter, respondent claims that the second
issue posed by petitioner involves a recalibration of facts which is outside the jurisdiction
of this Court.[25]

There is some merit in the petition.

There is no question that the parties entered into an employment contract on 3 February
1998, whereby petitioner was contracted by respondent to render services on board
"MSV Seaspread" for the consideration of US$515.00 per month for nine (9) months,
plus overtime pay. However, respondent failed to deploy petitioner from the port of
Manila to Canada. Considering that petitioner was not able to depart from the airport or
seaport in the point of hire, the employment contract did not commence, and no
employer-employee relationship was created between the parties.[26]

However, a distinction must be made between the perfection of the employment

contract and the commencement of the employer-employee relationship. The
perfection of the contract, which in this case coincided with the date of execution thereof,
occurred when petitioner and respondent agreed on the object and the cause, as well as
the rest of the terms and conditions therein. The commencement of the employer-
employee relationship, as earlier discussed, would have taken place had petitioner been
actually deployed from the point of hire. Thus, even before the start of any employer-
employee relationship, contemporaneous with the perfection of the employment contract
was the birth of certain rights and obligations, the breach of which may give rise to a
cause of action against the erring party. Thus, if the reverse had happened, that is the
seafarer failed or refused to be deployed as agreed upon, he would be liable for damages.

Moreover, while the POEA Standard Contract must be recognized and respected, neither
the manning agent nor the employer can simply prevent a seafarer from being deployed
without a valid reason.

Respondent's act of preventing petitioner from departing the port of Manila and boarding
"MSV Seaspread" constitutes a breach of contract, giving rise to petitioner's cause of
action. Respondent unilaterally and unreasonably reneged on its obligation to deploy
petitioner and must therefore answer for the actual damages he suffered.

We take exception to the Court of Appeals' conclusion that damages are not recoverable
by a worker who was not deployed by his agency. The fact that the POEA Rules [27] are
silent as to the payment of damages to the affected seafarer does not mean that the
seafarer is precluded from claiming the same. The sanctions provided for non-
deployment do not end with the suspension or cancellation of license or fine and the
return of all documents at no cost to the worker. They do not forfend a seafarer from
instituting an action for damages against the employer or agency which has failed to
deploy him.

The POEA Rules only provide sanctions which the POEA can impose on erring agencies.
It does not provide for damages and money claims recoverable by aggrieved employees
because it is not the POEA, but the NLRC, which has jurisdiction over such matters.

Despite the absence of an employer-employee relationship between petitioner and

respondent, the Court rules that the NLRC has jurisdiction over petitioner's complaint.
The jurisdiction of labor arbiters is not limited to claims arising from employer-employee
relationships. Section 10 of R.A. No. 8042 (Migrant Workers Act), provides that:
Sec. 10. Money Claims. — Notwithstanding any provision of law to the contrary, the
Labor Arbiters of the National Labor Relations Commission (NLRC) shall have the
original and exclusive jurisdiction to hear and decide, within ninety (90) calendar days
after the filing of the complaint, the claims arising out of an employer-employee
relationship or by virtue of any law or contract involving Filipino workers for
overseas deployment including claims for actual, moral, exemplary and other forms
of damages. x x x [Emphasis supplied]
Since the present petition involves the employment contract entered into by petitioner for
overseas employment, his claims are cognizable by the labor arbiters of the NLRC.

Article 2199 of the Civil Code provides that one is entitled to an adequate compensation
only for such pecuniary loss suffered by him as he has duly proved. Respondent is thus
liable to pay petitioner actual damages in the form of the loss of nine (9) months' worth of
salary as provided in the contract. He is not, however, entitled to overtime pay. While the
contract indicated a fixed overtime pay, it is not a guarantee that he would receive said
amount regardless of whether or not he rendered overtime work. Even though petitioner
was "prevented without valid reason from rendering regular much less overtime
service,"[28] the fact remains that there is no certainty that petitioner will perform overtime
work had he been allowed to board the vessel. The amount of US$286.00 stipulated in
the contract will be paid only if and when the employee rendered overtime work. This has
been the tenor of our rulings in the case of Stolt-Nielsen Marine Services (Phils.), Inc. v.
National Labor Relations Commission[29] where we discussed the matter in this light:
The contract provision means that the fixed overtime pay of 30% would be the basis for
computing the overtime pay if and when overtime work would be rendered. Simply
stated, the rendition of overtime work and the submission of sufficient proof that said
work was actually performed are conditions to be satisfied before a seaman could be
entitled to overtime pay which should be computed on the basis of 30% of the basic
monthly salary. In short, the contract provision guarantees the right to overtime pay but
the entitlement to such benefit must first be established. Realistically speaking, a seaman,
by the very nature of his job, stays on board a ship or vessel beyond the regular eight-
hour work schedule. For the employer to give him overtime pay for the extra hours when
he might be sleeping or attending to his personal chores or even just lulling away his time
would be extremely unfair and unreasonable.[30]
The Court also holds that petitioner is entitled to attorney's fees in the concept of
damages and expenses of litigation. Attorney's fees are recoverable when the defendant's
act or omission has compelled the plaintiff to incur expenses to protect his interest. [31] We
note that respondent's basis for not deploying petitioner is the belief that he will jump
ship just like his brother, a mere suspicion that is based on alleged phone calls of several
persons whose identities were not even confirmed. Time and again, this Court has upheld
management prerogatives so long as they are exercised in good faith for the advancement
of the employer's interest and not for the purpose of defeating or circumventing the rights
of the employees under special laws or under valid agreements.[32] Respondent's failure to
deploy petitioner is unfounded and unreasonable, forcing petitioner to institute the suit
below. The award of attorney's fees is thus warranted.

However, moral damages cannot be awarded in this case. While respondent's failure to
deploy petitioner seems baseless and unreasonable, we cannot qualify such action as
being tainted with bad faith, or done deliberately to defeat petitioner's rights, as to justify
the award of moral damages. At most, respondent was being overzealous in protecting its
interest when it became too hasty in making its conclusion that petitioner will jump ship
like his brother.

We likewise do not see respondent's failure to deploy petitioner as an act designed to

prevent the latter from attaining the status of a regular employee. Even if petitioner was
able to depart the port of Manila, he still cannot be considered a regular employee,
regardless of his previous contracts of employment with respondent. In Millares v.
National Labor Relations Commission,[33] the Court ruled that seafarers are considered
contractual employees and cannot be considered as regular employees under the Labor
Code. Their employment is governed by the contracts they sign every time they are
rehired and their employment is terminated when the contract expires. The exigencies of
their work necessitates that they be employed on a contractual basis. [34]

WHEREFORE, petition is GRANTED IN PART. The Decision dated 16 October 2003

and the Resolution dated 19 February 2004 of the Court of Appeals are REVERSED and
SET ASIDE. The Decision of Labor Arbiter Teresita D. Castillon-Lora dated 29 January
1999 is REINSTATED with the MODIFICATION that respondent CF Sharp Crew
Management, Inc. is ordered to pay actual or compensatory damages in the amount of
US$4,635.00 representing salary for nine (9) months as stated in the contract, and
attorney's fees at the reasonable rate of 10% of the recoverable amount.
 THIRD DIVISION
[ G.R. No. 165935, February 08, 2012 ]
BRIGHT MARITIME CORPORATION (BMC)/DESIREE P. TENORIO,
PETITIONERS, VS. RICARDO B. FANTONIAL, RESPONDENT.

DECISION

PERALTA, J.:

This is a petition for review on certiorari[1] of the Decision of the Court of Appeals in
CA-G.R. SP No. 67571, dated October 25, 2004, reversing and setting aside the Decision
of the National Labor Relations Commission (NLRC), and reinstating the Decision of the
Labor Arbiter finding that respondent Ricardo B. Fantonial was illegally dismissed, but
the Court of Appeals  modified the award of damages.

The facts are as follows:

On January 15, 2000, a Contract of Employment[2] was executed by petitioner Bright

Maritime Corporation (BMC), a manning agent, and its president, petitioner Desiree P.
Tenorio, for and in behalf of their principal, Ranger Marine S.A., and respondent Ricardo
B. Fantonial, which contract was verified and approved by the Philippine Overseas
Employment Administration (POEA) on January 17, 2000. The employment contract
provided that respondent shall be employed as boatswain of the foreign vessel M/V AUK
for one year, with a basic monthly salary of  US$450, plus an allowance of US$220. The
contract also provided for a 90 hours per month of overtime with pay and a vacation
leave with pay of US$45 per month.

Respondent was made to undergo a medical examination at the Christian Medical Clinic,
which was petitioner's accredited medical clinic. Respondent was issued a Medical
Certificate[3] dated January 17, 2000, which certificate had the phrase "FIT TO WORK"
stamped on its lower and upper portion.

At about 3:30 p.m. of January 17, 2000, respondent, after having undergone the pre-
departure orientation seminar and being equipped with the necessary requirements and
documents for travel, went to the Ninoy Aquino International Airport upon instruction of
petitioners.  Petitioners told respondent that he would be departing on that day, and that a
liaison officer would be delivering his plane ticket to him. At about 4:00 p.m., petitioners'
liaison officer met respondent at the airport and told him that he could not leave on that
day due to some defects in his medical certificate. The liaison officer instructed
respondent to return to the Christian Medical Clinic.

Respondent went back to the Christian Medical Clinic the next day, and he was told by
the examining physician, Dr. Lyn dela Cruz-De Leon, that there was nothing wrong or
irregular with his medical certificate.

Respondent went to petitioners' office for an explanation, but he was merely told to wait
for their call, as he was being lined-up for a flight to the ship's next port of call. However,
respondent never got a call from petitioners.

On May 16, 2000, respondent filed a complaint against petitioners for illegal dismissal,
payment of salaries for the unexpired portion of the employment contract and for the
award of moral, exemplary, and actual damages as well as attorney's fees before the
Regional Arbitration Branch No. 7 of the NLRC in Cebu City.[4]

In their Position Paper,[5] petitioners stated that to comply with the standard requirements
that only those who meet the standards of medical fitness have to be sent on board the
vessel, respondent was referred to their accredited medical clinic, the Christian Medical
Clinic, for pre-employment medical examination on January 17, 2000, the same day
when respondent was supposed to fly to Germany to join the vessel. Unfortunately,
respondent was not declared fit to work on January 17, 2000 due to some medical
problems.

Petitioners submitted the Affidavit[6] of Dr. Lyn dela Cruz-De Leon, stating that the said
doctor examined respondent on January 17, 2000; that physical and laboratory results
were all within normal limits except for the finding, after chest x-ray, of Borderline Heart
Size, and that respondent was positive to Hepatitis B on screening; that respondent
underwent ECG to check if he had any heart problem, and the result showed left axis
deviation. Dr. De Leon stated that she requested for a Hepatitis profile, which was done
on January 18, 2000; that on January 20, 2000, the result of the Hepatitis profile showed
non-infectious Hepatitis B. Further, Dr. De Leon stated that respondent was declared fit
to work only on January 21, 2000; however, the date of the Medical Certificate was
January 17, 2000, which was the date when she started to examine the patient per
standard operating procedure.

Petitioners argued that since respondent was declared fit to work only on January 21,
2000, he could not join the vessel anymore as it had left the port in Germany. 
Respondent was advised to wait for the next vacancy for boatswain, but he failed to
report to petitioners' office, and he gave them an incorrect telephone number. During the
mandatory conference/conciliation stage of this case, petitioners offered respondent to
join one of their vessels, but he refused.
Petitioners further argued that they cannot be held liable for illegal dismissal as the
contract of employment had not yet commenced based on Section 2 of the Standard
Terms and Conditions Governing the Employment of Filipino Seafarers on Board Ocean-
Going Vessels (POEA Memorandum Circular No. 055-96), which states:

SEC 2. COMMENCEMENT/DURATION OF CONTRACT

A. The employment contract between the employer and the seafarer shall
commence upon actual departure of the seafarer from the airport or seaport
in the point of hire and with a POEA approved contract.  It shall be
effective until the seafarer's date of arrival at the point of hire upon
termination of his employment pursuant to Section 18 of this Contract.

Petitioners asserted that since respondent was not yet declared fit to work on January 17,
2000, he was not able to leave on the scheduled date of his flight to Germany to join the
vessel. With his non-departure, the employment contract was not commenced; hence,
there is no illegal dismissal to speak of.  Petitioners prayed for the dismissal of the
complaint.

On September 25, 2000, Labor Arbiter Ernesto F. Carreon rendered a Decision[7] in favor
of respondent.  The pertinent portion of the decision reads:

Unarguably, the complainant and respondents have already executed a contract of

employment which was duly approved by the POEA. There is nothing left for the validity
and enforceability of the contract except compliance with what are agreed upon therein
and to all their consequences. Under the contract of employment, the respondents are
under obligation to employ the complainant on board M/V AUK for twelve months with
a monthly salary of 450 US$ and 220 US$ allowance. The respondents failed to present
plausible reason why they have to desist from complying with their obligation under the
contract. The allegation of the respondents that the complainant was unfit to work is
ludicrous. Firstly, the respondents' accredited medical clinic had issued a medical
certificate showing that the complainant was fit to work. Secondly, if the complainant
was not fit to work, a contract of employment would not have been executed and
approved by the POEA.

We are not also swayed by the argument of the respondents that since the complainant
did not actually depart from Manila his contract of employment can be withdrawn
because he has not yet commenced his employment. The commencement of the
employment is not one of those requirements in order to make the contract of
employment consummated and enforceable between the parties, but only as a gauge for
the payment of salary. In this case, while it is true that the complainant is not yet entitled
to the payment of wages because then his employment has not yet commenced,
nevertheless, the same did not relieve the respondents from fulfilling their obligation by
unilaterally revoking the contract as the same amounted to pre-termination of the contract
without just or authorized cause perforce, we rule to be constitutive of illegal dismissal.

Anent our finding of illegal dismissal, we condemn the respondent corporation to pay the
complainant three (3) months salary and the refund of his placement fee, including
documentation and other actual expenses, which we fixed at one month pay.

The granted claims are computed as follows:

US$670 x 4 months                                            US$ 2,680.00    

WHEREFORE, premises considered, judgment is hereby rendered ordering the

respondent Bright Maritime Corporation to pay the complainant Ricardo Fantonial the
peso equivalent at the time of actual payment of US$ 2,680.00.

The other claims and the case against respondent Desiree P. Tenorio are dismissed for
lack of merit.[8]

Petitioners appealed the decision of the Labor Arbiter to the NLRC.

On May 31, 2001, the NLRC, Fourth Division, rendered a Decision[9] reversing the
decision of the Labor Arbiter. The dispositive portion of the NLRC decision reads:

WHEREFORE, premises considered, the decision of Labor Arbiter Ernesto F. Carreon,

dated 25 September 2000, is SET ASIDE and a new one is entered DISMISSING the
complaint of the complainant for lack of merit.

SO ORDERED.[10]

The NLRC held that the  affidavit of  Dr. Lyn dela Cruz-De Leon proved that respondent
was declared fit to work only on January 21, 2000, when the vessel was no longer at the
port of Germany. Hence, respondent's failure to depart on January 17, 2000 to join the
vessel M/V AUK in Germany was due to respondent's health. The NLRC stated that as a
recruitment agency, petitioner BMC has to protect its name and goodwill, so that it must
ensure that an applicant for employment abroad is both technically equipped and
physically fit because a labor contract affects public interest.

Moreover, the NLRC stated that the Labor Arbiter's decision ordering petitioners to
refund respondent's placement fee and other actual expenses, which was fixed at one
month pay in the amount of US$670.00, does not have any bases in law, because in the
deployment of seafarers, the manning agency does not ask the applicant for a placement
fee.  Hence, respondent is not entitled to the said amount.

Respondent filed a motion for reconsideration of the NLRC decision, which motion was
denied in a Resolution[11] dated July 23, 2001.

Respondent filed a petition for certiorari before the Court of Appeals, alleging that the
NLRC committed grave abuse of discretion in rendering the Decision dated May 31,
2001and the Resolution dated July 23, 2001.

On March 12, 2002, respondent's counsel filed a Manifestation with Motion for
Substitution of Parties due to the death of respondent on November 15, 2001, which
motion was granted by the Court of Appeals.

On October 25, 2004, the Court of Appeals rendered a Decision, the dispositive portion
of which reads:

WHEREFORE, in view of the foregoing premises, judgment is hereby rendered by us

REVERSING and SETTING ASIDE the May 31, 2001 Decision and the July 23, 2001
Resolution of the NLRC, Fourth Division, and REINSTATING the September 25, 2000
Decision of the Labor Arbiter with the modification that the placement fee and other
expenses equivalent to one (1) month salary is deleted and that the private respondent
Bright Maritime Corporation must also pay the amounts of P30,000.00 and P10,000.00 as
moral and exemplary damages, respectively, to the petitioner.[12]

The Court of Appeals held that the NLRC, Fourth Division, acted with grave abuse of
discretion in reversing the decision of the Labor Arbiter who found that respondent was
illegally dismissed.  It agreed with the Labor Arbiter that the unilateral revocation of the
employment contract by petitioners amounted to pre-termination of the said contract
without just or authorized cause.

The Court of Appeals held that the contract of employment between petitioners and
respondent had already been perfected and even approved by the POEA. There was no
valid and justifiable reason for petitioners to withhold the departure of respondent on
January 17, 2000.  It found petitioners' argument that respondent was not fit to work on
the said date as preposterous, since the medical certificate issued by petitioners'
accredited medical clinic showed that respondent was already fit to work on the said date.
The Court of Appeals stated, thus:

Private respondent's contention, which was contained in the affidavit of Dr. Lyn dela
Cruz-De Leon, that the Hepatitis profile was done only on January 18, 2000 and was
concluded on January 20, 2000, is of dubious merit. For how could the said examining
doctor place in the medical certificate dated January 17, 2000 the words "CLASS-B
NON-Infectious Hepatitis" (Rollo, p. 17) if she had not conducted the hepatitis profile?
Would the private respondent have us believe that its accredited physician would
fabricate medical findings?

It is obvious, therefore, that the petitioner had been fit to work on January 17, 2000 and
he should have been able to leave for Germany to meet with the vessel M/V AUK, had it
not been for the unilateral act by private respondent of preventing him from leaving. The
private respondent was merely grasping at straws in attacking the medical condition of
the petitioner just so it can justify its act in preventing petitioner from leaving for abroad.
[13]

The Court of Appeals held that petitioners' act of preventing respondent from leaving for
Germany was tainted with bad faith, and that petitioners were also liable to respondent
for moral and exemplary damages.

Thereafter, petitioners filed this petition raising the following issues:

WHETHER OR NOT THE HONORABLE APPELLATE COURT COMMITTED A

SERIOUS ERROR AND GRAVE ABUSE OF DISCRETION WHEN IT HELD THE
PETITIONERS LIABLE FOR ILLEGALLY TERMINATING THE PRIVATE
RESPONDENT FROM HIS EMPLOYMENT.

II

WHETHER OR NOT THE HONORABLE APPELLATE COURT COMMITTED

SERIOUS ERROR AND GRAVE ABUSE OF DISCRETION IN SETTING ASIDE
THE OVERWHELMING EVIDENCE SHOWING THAT THE PRIVATE
RESPONDENT FAILED TO COMPLY WITH THE REQUIREMENTS SET BY THE
POEA RULES REGARDING FITNESS FOR WORK.

III

WHETHER OR NOT THE HONORABLE APPELLATE COURT SERIOUSLY

ERRED AND COMMITTED GRAVE ABUSE OF DISCRETION WHEN IT
AWARDED MONETARY BENEFITS TO THE PRIVATE RESPONDENT DESPITE
THE PROVISION OF THE POEA [STANDARD EMPLOYMENT CONTRACT]  TO
THE CONTRARY.

IV

WHETHER OR NOT THE HONORABLE APPELLATE COURT COMMITTED 

SERIOUS ERROR WITH REGARD TO ITS FINDINGS OF FACTS, WHICH, IF NOT
CORRECTED, WOULD CERTAINLY CAUSE GRAVE OR IRREPARABLE
DAMAGE OR INJURY TO THE PETITIONERS. [14]

The general rule that petitions for review only allow the review of errors of law by this
Court is not ironclad.[15] Where the issue is shrouded by a conflict of factual perceptions
by the lower court or the lower administrative body, such as the NLRC in this case, this
Court is constrained to review the factual findings of the Court of Appeals. [16]

Petitioners contend that the Court of Appeals erred in doubting the Affidavit of Dr. Lyn
dela Cruz-De Leon, which affidavit stated that the Hepatitis profile of respondent was
done only on January 18, 2000 and was concluded on January 20, 2000. Petitioners stated
that they had no intention to fabricate or mislead the appellate court and the Labor
Arbiter, but they had to explain the circumstances that transpired in the conduct of the
medical examination.  Petitioners reiterated that the medical examination was conducted
on January 17, 2000 and the result was released on January 20, 2000. As explained by Dr.
Lyn dela Cruz-De Leon, the date "January 17, 2000" was written on the medical
examination certificate because it was the day when respondent was referred and initially
examined by her. The medical examination certificate was dated January 17, 2000 not for
any reason, but in accordance with a generally accepted medical practice, which was not
controverted by respondent.

Petitioners assert that respondent's failure to join the vessel on January 17, 2000 should
not be attributed to it for it was a direct consequence of the delay in the release of the
medical report. Respondent was not yet declared fit to work at the time when he was
supposed to be deployed on January 17, 2000, as instructed by petitioners' principal.
Respondent's fitness to work is a condition sine qua non for purposes of deploying an
overseas contract worker. Since respondent failed to qualify on the date designated by the
principal for his deployment, petitioners had to find a qualified replacement considering
the nature of the shipping business where delay in the departure of the vessel is
synonymous to demurrage/damages on the part of the principal and on the vessel's
charterer.  Without a clean bill of health, the contract of employment cannot be
considered to have been perfected as it is wanting of an important requisite.

Based on the foregoing argument of petitioners, the first issue to be resolved is whether
petitioners' reason for preventing respondent from leaving Manila and joining the vessel
M/V AUK in Germany on January 17, 2000 is valid.

The Court rules in the negative.

The Court has carefully reviewed the records of the case, and agrees with the Court of
Appeals that respondent's Medical Certificate[17] dated January 17, 2000, stamped with
the words "FIT TO WORK," proves that respondent was medically fit to leave Manila on
January 17, 2000 to join the vessel M/V AUK in Germany. The Affidavit of Dr. Lyn dela
Cruz-De Leon that respondent was declared fit to work only on January 21, 2000 cannot
overcome the evidence in the  Medical Certificate dated January 17, 2000, which already
stated  that respondent had "Class-B Non-Infectious Hepatitis-B," and that he was fit to
work. The explanation given by Dr. Lyn dela Cruz-De Leon in her affidavit that the
Medical Certificate was dated January 17, 2000, since it carries the date when they
started to examine the patient per standard operating procedure, does not persuade as it
goes against logic and the chronological recording of medical procedures. The Medical
Certificate submitted as documentary evidence[18] is proof of its contents, including the
date thereof which states that respondent was already declared fit to work on January 17,
2000, the date of his scheduled deployment.

Next, petitioners contend that respondent's employment contract was not  perfected
pursuant to the POEA Standard Employment Contract, which provides:

SEC 2. COMMENCEMENT/DURATION OF CONTRACT

A. The employment contract between the employer and the seafarer shall

commence upon actual departure of the seafarer from the airport or
seaport in the point of hire and with a POEA approved contract.  It
shall be effective until the seafarer's date of arrival at the point of hire upon
termination of his employment pursuant to Section 18 of this Contract.[19]

Petitioners argue that, as ruled by the NLRC, since respondent did not actually depart
from the Ninoy Aquino International Airport in Manila, no employer-employee
relationship existed between respondent and petitioners' principal, Ranger Marine S.A.,
hence, there is no illegal dismissal to speak of, so that the award of damages must be set
aside.

Petitioners assert that they did not conceal any information from respondent related to his
contract of employment, from his initial application until the release of the result of his
medical examination. They even tried to communicate with respondent for another
shipboard assignment even after his failed deployment, which ruled out bad faith.  They
pray that respondent's complaint be dismissed for lack of merit.

Petitioners' argument is partly meritorious.

An employment contract, like any other contract, is perfected at the moment (1) the
parties come to agree upon its terms; and (2) concur in the essential elements thereof: (a)
consent of the contracting parties, (b) object certain which is the subject matter of the
contract, and (c) cause of the obligation.[20] The object of the contract was the rendition of
service by respondent on board the vessel for which service he would be paid the salary
agreed upon.
Hence, in this case, the employment contract was perfected on January 15,
2000 when it was signed by the parties, respondent and petitioners, who entered into the
contract in behalf of their principal, Ranger Marine S.A., thereby signifying their consent
to the terms and conditions of employment embodied in the contract, and the contract
was approved by the POEA on January 17, 2000. However, the employment contract
did not commence, since petitioners did not allow respondent to leave on January 17,
2000 to embark the vessel M/V AUK in Germany on the ground that he was not yet
declared fit to work on the day of departure, although his Medical Certificate dated
January 17, 2000 proved that  respondent was fit to work.

In Santiago v. CF Sharp Crew Management, Inc.,[21] the Court held that the employment
contract did not commence when the petitioner therein, a hired seaman, was not able to
depart from the airport or seaport in the point of hire; thus, no employer-employee
relationship was created between the parties.

Nevertheless, even before the start of any employer-employee relationship,

contemporaneous with the perfection of the employment contract was the birth of certain
rights and obligations, the breach of which may give rise to a cause of action against the
erring party.[22]  If the reverse happened, that is, the seafarer failed or refused to be
deployed as agreed upon, he would be liable for damages.[23]

The Court agrees with the NLRC that a recruitment agency, like petitioner BMC, must
ensure that an applicant for employment abroad is technically equipped and physically fit
because a labor contract affects public interest. Nevertheless, in this case, petitioners
failed to prove with substantial evidence that they had a valid ground to prevent
respondent from leaving on the scheduled date of his deployment. While the POEA
Standard Contract must be recognized and respected, neither the manning agent nor the
employer can simply prevent a seafarer from being deployed without a valid reason. [24]

Petitioners' act of preventing respondent from leaving and complying with his contract of
employment constitutes breach of contract for which petitioner BMC is liable for actual
damages to respondent for the loss of one-year salary as provided in the contract.[25] The
monthly salary stipulated in the contract is US$670, inclusive of allowance.

The Court upholds the award of moral damages in the amount of P30,000.00, as the
Court of  Appeals correctly found petitioners' act was tainted with bad faith,
[26]
 considering that respondent's Medical Certificate stated that he was fit to work on the
day of his scheduled departure, yet he was not allowed to leave allegedly for medical
reasons.

Further, the Court agrees with the Court of Appeals that petitioner BMC is liable to
respondent for exemplary damages,[27] which are imposed by way of example or
correction for the public good in view of petitioner's act of preventing respondent from
being deployed on the ground that he was not yet declared fit to work on the date of his
departure, despite evidence to the contrary.  Such act, if tolerated, would prejudice the
employment opportunities of our seafarers who are qualified to be deployed, but
prevented to do so by a manning agency for unjustified reasons. Exemplary damages are
imposed not to enrich one party or impoverish another, but to serve as a deterrent against
or as a negative incentive to curb socially deleterious actions.[28] In this case, petitioner
should be held liable to respondent for exemplary damages in the amount of P50,000.00,
[29]
 following the recent case of Claudio S. Yap v. Thenamaris Ship's Management, et
al.,[30] instead of P10,000.00

The Court also holds that respondent is entitled to attorney's fees in the concept of
damages and expenses of litigation.[31] Attorney's fees are recoverable when the
defendant's act or omission has compelled the plaintiff to incur expenses to protect his
interest.[32]  Petitioners' failure to deploy respondent based on an unjustified ground forced
respondent to file this case, warranting the award of attorney's fees equivalent to ten
percent (10%) of the recoverable amount.[33]

WHEREFORE, the petition is DENIED.  The Decision of the Court of Appeals in CA-
G.R. SP No. 67571, dated October 25, 2004, is AFFIRMED with modification. 
Petitioner Bright Maritime Corporation is hereby ORDERED to pay respondent Ricardo
B. Fantonial actual damages in the amount of the peso equivalent of US$8,040.00,
representing his salary for one year under the contract; moral damages in the amount
Thirty Thousand Pesos (P30,000.00); exemplary damages that is increased from Ten
Thousand Pesos (P10,000.00) to Fifty Thousand Pesos (P50,000.00), and attorney's fees
equivalent to ten percent (10%) of the recoverable amount.
 SECOND DIVISION
[ G.R. No. 179469, February 15, 2012 ]
C.F. SHARP & CO. INC. AND JOHN J. ROCHA, PETITIONERS, VS.
PIONEER INSURANCE & SURETY CORPORATION, WILFREDO C.
AGUSTIN AND HERNANDO G. MINIMO, RESPONDENTS.

DECISION

PEREZ, J.:

Whether a local private employment agency may be held liable for breach of contract for
failure to deploy a seafarer, is the bone of contention in this case.

Assailed in this petition for review are the Decision[1] dated 30 October 2003 and the 29
August 2007 Resolution of the Court of Appeals in CA-G.R. CV No. 53336 finding
petitioners C.F. Sharp Co. Inc. (C.F. Sharp) and John J. Rocha (Rocha) liable for
damages.

Responding to a newspaper advertisement of a job opening for sandblasters and painters

in Libya, respondents Wilfredo C. Agustin and Hernando G. Minimo applied with C.F.
Sharp sometime in August 1990. After passing the interview, they were required to
submit their passports, seaman’s book, National Bureau of Investigation clearance,
employment certificates, certificates of seminars attended, and results of medical
examination. Upon submission of the requirements, a Contract of Employment was
executed between respondents and C.F. Sharp. Thereafter, respondents were required to
attend various seminars, open a bank account with the corresponding allotment slips, and
attend a pre-departure orientation. They were then advised to prepare for immediate
deployment and to report to C.F. Sharp to ascertain the schedule of their deployment.

After a month, respondents were yet to be deployed prompting them to request for the
release of the documents they had submitted to C.F. Sharp. C.F. Sharp allegedly refused
to surrender the documents which led to the filing of a complaint by respondents before
the Philippine Overseas Employment Administration (POEA) on 21 January 1991.

On 30 October 1991, POEA issued an Order finding C.F. Sharp guilty of violation of
Article 34(k) of the Labor Code, which makes it unlawful for any entity “to withhold or
deny travel documents from applicant workers before departure for monetary or financial
considerations other than those authorized under this Code and its implementing rules
and regulations.” Consequently, C.F. Sharp’s license was suspended until the return of
the disputed documents to respondents. POEA likewise declared that it has no
jurisdiction to adjudicate the monetary claims of respondents.

On 10 March 1995, respondents filed a Complaint for breach of contract and damages
against C.F. Sharp and its surety, Pioneer Insurance and Surety Corporation (Pioneer
Insurance), before the Regional Trial Court (RTC) of Pasay City. Respondents claimed
that C.F. Sharp falsely assured them of deployment and that its refusal to release the
disputed documents on the ground that they were already bound by reason of the Contract
of Employment, denied respondents of employment opportunities abroad and a
guaranteed income. Respondents also prayed for damages. Pioneer Insurance filed a cross
claim against C.F. Sharp and John J. Rocha, the executive vice-president of C.F. Sharp,
based on an Indemnity Agreement which substantially provides that the duo shall jointly
and severally indemnify Pioneer Insurance for damages, losses, and costs which the latter
may incur as surety. The RTC rendered judgment on 27 June 1996 favoring respondents,
to wit:

WHEREFORE, plaintiffs’ causes of action having been proved with a preponderance of

evidence, judgment is hereby ordered as follows:

a. Declaring the non-deployment of plaintiffs and the refusal to release

documents as breach of contract;
b. By way of compensatory damages, awarding $450 per month and $439
overtime per month, which should have been received by plaintiffs from
other employers, making a joint and solidary obligation on the part of the
two defendants – C.F. Sharp and Pioneer for the period covered by the
employment contracts;
c. Ordering each defendant to pay each plaintiff P50,000.00 as moral damages
and another P50,000.00 each as exemplary damages;
d. Ordering defendants to share in the payment to plaintiffs of P50,000.00
attorney’s fees;
e. Defendants to pay litigation expenses and costs of suit.[2]

The trial court ruled that there was a violation of the contract when C.F. Sharp failed to
deploy and release the papers and documents of respondents, hence, they are entitled to
damages. The trial court likewise upheld the cause of action of respondents against
Pioneer Insurance, the former being the actual beneficiaries of the surety bond.

On appeal, C.F. Sharp and Rocha raise a jurisdictional issue — that the RTC has no
jurisdiction over the instant case pursuant to Section 4(a) of Executive Order No. 797
which vests upon the POEA the jurisdiction over all cases, including money claims,
arising out of or by virtue of any contract involving workers for overseas employment.
C.F. Sharp and Rocha refuted the findings of the trial court and maintained that the
perfection and effectivity of the Contract of Employment depend upon the actual
deployment of respondents.

The Court of Appeals upheld the jurisdiction of the trial court by ruling that petitioners
are now estopped from raising such question because they have actively participated in
the proceedings before the trial court. The Court of Appeals further held that since there
is no perfected employment contract between the parties, it is the RTC and not the
POEA, whose jurisdiction pertains only to claims arising from contracts involving
Filipino seamen, which has jurisdiction over the instant case.

Despite the finding that no contract was perfected between the parties, the Court of
Appeals adjudged C.F. Sharp and Rocha liable for damages, to wit:

WHEREFORE, the Appeal of C.F. Sharp Co Inc. and John J. Rocha is PARTIALLY
GRANTED only insofar as We declare that there is no breach of contract because no
contract of employment was perfected. However, We find appellants C.F. Sharp Co. Inc.
and John J. Rocha liable to plaintiff-appellees for damages pursuant to Article 21 of the
Civil Code and award each plaintiff-appellees temperate damages amounting to
P100,000.00, and moral damages in the increased amount of P100,000.00. The award of
exemplary damages and attorney’s fees amounting to P50,000.00, respectively, is hereby
affirmed.[3]

The Court of Appeals limited the liability of Pioneer Insurance to the amount of
P150,000.00 pursuant to the Contract of Suretyship between C.F. Sharp and Pioneer
Insurance.

Rocha filed the instant petition on the submission that there is no basis to hold him liable
for damages under Article 21 of the Civil Code because C.F. Sharp has signified its
intention to return the documents and had in fact informed respondents that they may, at
any time of the business day, withdraw their documents. Further, respondents failed to
establish the basis for which they are entitled to moral damages. Rocha refuted the award
of exemplary damages because the act of requiring respondents to sign a quitclaim prior
to the release of their documents could not be considered bad faith. Rocha also questions
the award of temperate damages on the ground that the act of withholding respondents’
documents could not be considered “chronic and continuing.”[4]

Right off, insofar as Pioneer Insurance is concerned, the petition should be dismissed
against it because the ruling of the Court of Appeals limited its liability to P150,000.00
was not assailed by Rocha, hence the same has now attained finality.

Before us, respondents maintain that they are entitled to damages under Article 21 of the
Civil Code for C.F. Sharp’s unjustified refusal to release the documents to them and for
requiring them to sign a quitclaim which would effectively bar them from seeking redress
against petitioners. Respondents justify the award of other damages as they suffered
pecuniary losses attributable to petitioner’s malice and bad faith.

In his Reply, Rocha introduced a new argument, i.e., that he should not be held jointly
liable with C.F. Sharp considering that the company has a separate personality. Rocha
argues that there is no showing in the Complaint that he had participated in the malicious
act complained. He adds that his liability only stems from the Indemnity Agreement with
Pioneer Insurance and does not extend to respondents.

Records disclose that Rocha was first impleaded in the case by Pioneer Insurance.
Pioneer Insurance, as surety, was sued by respondents together with C.F. Sharp. Pioneer
Insurance in turn filed a third party complaint against Rocha on the basis of an Indemnity
Agreement whereby he bound himself to indemnify and hold harmless Pioneer Insurance
from and against any and all damages which the latter may incur in consequence of
having become a surety.[5] The third party complaint partakes the nature of a cross-claim.

C.F. Sharp, as defendant-appellant and Rocha, as third-party defendant-appellant, filed

only one brief before the Court of Appeals essentially questioning the declaration of the
trial court that non-deployment is tantamount to breach of contract and the award of
damages. The Court of Appeals found them both liable for damages. Both C.F. Sharp and
Rocha sought recourse before this Court via a Motion for Extension of Time (To File a
Petition for Review) on 19 September 2007.[6] In the Petition for Review, however, C.F.
Sharp was noticeably dropped as petitioner. Rocha maintains essentially the same
argument that he and C.F. Sharp were wrongfully adjudged liable for damages.

It was only in its Reply dated 25 March 2008 that Rocha, through a new representation,
suddenly forwarded the argument that he should not be held liable as an officer of C.F.
Sharp. It is too late in the day for Rocha to change his theory. It is doctrinal that defenses
not pleaded in the answer may not be raised for the first time on appeal. A party cannot,
on appeal, change fundamentally the nature of the issue in the case. When a party
deliberately adopts a certain theory and the case is decided upon that theory in the court
below, he will not be permitted to change the same on appeal, because to permit him to
do so would be unfair to the adverse party.[7] More so in this case, where Rocha
introduced a new theory at the Reply stage. Disingenuousness may even be indicated by
the sudden exclusion of the name of C.F. Sharp from the main petition even as Rocha
posited arguments not just for himself and also in behalf of C.F. Sharp.

The core issue pertains to damages.

The bases of the lower courts’ award of damages differ. In upholding the perfection of
contract between respondents and C.F. Sharp, the trial court stated that the unjustified
failure to deploy and subsequently release the documents of respondents entitled them to
compensatory damages, among others. Differently, the appellate court found that no
contract was perfected between the parties that will give rise to a breach of contract.
Thus, the appellate court deleted the award of actual damages. However, it adjudged
other damages against C.F. Sharp for its unlawful withholding of documents from
respondents.

We sustain the trial court’s ruling.

On the issue of whether respondents are entitled to relief for failure to deploy them, the
RTC ruled in this wise:

The contract of employment entered into by the plaintiffs and the defendant C.F. Sharp is
an actionable document, the same contract having the essential requisites for its validity.
It is worthy to note that there are three stages of a contract: (1) preparation, conception, or
generation which is the period of negotiation and bargaining ending at the moment of
agreement of the parties. (2) Perfection or birth of the contract, which is the moment
when the parties come to agree on the terms of the contract. (3) Consummation or death,
which is the fulfillment or performance of the terms agreed upon in the contract.

Hence, it is imperative to know the stage reached by the contract entered into by the
plaintiffs and C.F. sharp. Based on the testimonies of the witnesses presented in this
Court, there was already a perfected contract between plaintiffs and defendant C.F.
Sharp. Under Article 1315 of the New Civil Code of the Philippines, it states that:

xxxx

Thus, when plaintiffs signed the contract of employment with C.F. Sharp (as agent of the
principal WB Slough) consequently, the latter is under obligation to deploy the plaintiffs,
which is the natural effect and consequence of the contract agreed by them. [8]

We agree.

As correctly ruled at the trial, contracts undergo three distinct stages, to wit: negotiation;
perfection or birth; and consummation. Negotiation begins from the time the prospective
contracting parties manifest their interest in the contract and ends at the moment of
agreement of the parties. Perfection or birth of the contract takes place when the parties
agree upon the essential elements of the contract. Consummation occurs when the parties
fulfill or perform the terms agreed upon in the contract, culminating in the
extinguishment thereof.[9]

Under Article 1315 of the Civil Code, a contract is perfected by mere consent and from
that moment the parties are bound not only to the fulfillment of what has been expressly
stipulated but also to all the consequences which, according to their nature, may be in
keeping with good faith, usage and law.[10]

An employment contract, like any other contract, is perfected at the moment (1) the
parties come to agree upon its terms; and (2) concur in the essential elements thereof: (a)
consent of the contracting parties, (b) object certain which is the subject matter of the
contract and (c) cause of the obligation.[11]

We have scoured through the Contract of Employment and we hold that it is a perfected
contract of employment. We reproduce below the terms of the Contract of Employment
for easy reference:

WITNESSETH

That the Seafarer shall be employed on board under the following terms and conditions:
1.1 Duration of Contract: 3 month/s
1.2 Position: SANDBLASTER/PAINTER
1.3 Basic Monthly Salary:  $450.00 per month
1.4 Living Allowances:  $0.00 per month
1.5 Hours of Work: 48 per week
1.6 Overtime Rate: $439.00 per month
1.7 Vacation Leave with Pay: 30.00 day/s per month on board
The terms and conditions of the Revised Employment Contract for seafarers governing
the employment of all Filipino seafarers approved by the POEA/DOLE on July 14, 1989
under Memorandum Circular No. 41 series of 1989 and amending circulars relative
thereto shall be strictly and faithfully observed.

Any alterations or changes, in any part of this Contract shall be evaluated, verified,
processed and approved by the Philippine Overseas Employment Administration
(POEA). Upon approval, the same shall be deemed an integral part of the Standard
Employment Contract (SEC) for seafarers.

All claims, complaints or controversies relative to the implementation and interpretation

of this overseas employment contract shall be exclusively resolved through the
established Grievance Machinery in the Revised Employment Contract for seafarers, the
adjudication procedures of the Philippine Overseas Employment Administration and the
Philippine Courts of Justice, in that order.

Violations of the terms and conditions of this Contract with its approved addendum shall
warrant the imposition of appropriate disciplinary or administrative sanctions against the
erring party.

The Employee hereby certifies that he had received, read or has had explained to him and
fully understood this contract as well as the POEA revised Employment Contract of 1989
and the Collective Bargaining Agreement (CBA) and/or company terms and conditions
of employment covering this vessel and that he is fully aware of and has head or has had
explained to him the terms and conditions including those in the POEA Employment
Contract, the CBA and this contract which constitute his entire agreement with the
employer.

The Employee also confirms that no verbal or other written promises other than the terms
and conditions of this Contract as well as the POEA Revised Employment Contract, the
CBA and/or company terms and conditions had been given to the Employee. Therefore,
the Employee cannot claim any additional benefits or wages of any kind except those
which have been provided in this Contract Agreement.[12]

By the contract, C.F. Sharp, on behalf of its principal, International Shipping

Management, Inc., hired respondents as Sandblaster/Painter for a 3-month contract, with
a basic monthly salary of US$450.00. Thus, the object of the contract is the service to be
rendered by respondents on board the vessel while the cause of the contract is the
monthly compensation they expect to receive. These terms were embodied in the
Contract of Employment which was executed by the parties. The agreement upon the
terms of the contract was manifested by the consent freely given by both parties through
their signatures in the contract. Neither parties disavow the consent they both voluntarily
gave. Thus, there is a perfected contract of employment.

The Court of Appeals agreed with the submission of C.F. Sharp that the perfection and
effectivity of the Contract of Employment depend upon the actual deployment of
respondents. It based its conclusion that there was no perfected contract based on the
following rationale:

The commencement of the employer-employee relationship between plaintiffs-appellees

and the foreign employer, as correctly represented by C.F. Sharp requires that conditions
under Sec. D be met. The Contract of Employment was duly “Verified and approved by
the POEA.” Regrettably, We have painfully scrutinized the Records and find no evidence
that plaintiffs-appellees were cleared for travel and departure to their port of embarkation
overseas by government authorities. Consequently, non-fulfillment of this condition
negates the commencement and existence of employer-employee relationship between
the plaintiffs-appellees and C.F. Sharp. Accordingly, no contract between them was
perfected that will give rise to plaintiffs-appellees’ right of action. There can be no breach
of contract when in the first place, there is no effective contract to speak of. For the same
reason, and finding that the award of actual damages has no basis, the same is hereby
deleted.[13]

The Court of Appeals erred.

The commencement of an employer-employee relationship must be treated separately
from the perfection of an employment contract. Santiago v. CF Sharp Crew
Management, Inc.,[14] which was promulgated on 10 July 2007, is an instructive precedent
on this point. In said case, petitioner was hired by respondent on board “MSV Seaspread”
for US$515.00 per month for nine (9) months, plus overtime pay. Respondent failed to
deploy petitioner from the port of Manila to Canada.  We made a distinction between the
perfection of the employment contract and the commencement of the employer-employee
relationship, thus:

The perfection of the contract, which in this case coincided with the date of execution
thereof, occurred when petitioner and respondent agreed on the object and the cause, as
well as the rest of the terms and conditions therein. The commencement of the employer-
employee relationship, as earlier discussed, would have taken place had petitioner been
actually deployed from the point of hire. Thus, even before the start of any employer-
employee relationship, contemporaneous with the perfection of the employment contract
was the birth of certain rights and obligations, the breach of which may give rise to a
cause of action against the erring party.[15]

Despite the fact that the employer-employee relationship has not commenced due to the
failure to deploy respondents in this case, respondents are entitled to rights arising from
the perfected Contract of Employment, such as the right to demand performance by C.F.
Sharp of its obligation under the contract.

The right to demand performance was a categorical pronouncement in Santiago which

ruled that failure to deploy constitutes breach of contract, thereby entitling the seafarer to
damages:

Respondent’s act of preventing petitioner from departing the port of Manila and boarding
“MSV Seaspread”  constitutes a breach of contract, giving rise to petitioner’s cause of
action. Respondent unilaterally and unreasonably reneged on its obligation to deploy
petitioner and must therefore answer for the actual damages he suffered.

We take exception to the Court of Appeals’ conclusion that damages are not recoverable
by a worker who was not deployed by his agency. The fact that the POEA Rules are
silent as to the payment of damages to the affected seafarer does not mean that the
seafarer is precluded from claiming the same. The sanctions provided for non-
deployment do not end with the suspension or cancellation of license or fine and the
return of all documents at no cost to the worker. They do not forfend a seafarer from
instituting an action for damages against the employer or agency which has failed to
deploy him.[16]

The appellate court could not be faulted for its failure to adhere to Santiago considering
that the Court of Appeals Decision was promulgated way back in 2003
while Santiago was decided in 2007. We now reiterate Santiago and, accordingly, decide
the case at hand.

We respect the lower courts’ findings that C.F. Sharp unjustifiably refused to return the
documents submitted by respondent. The finding was that C.F. Sharp would only release
the documents if respondent would sign a quitclaim. On this point, the trial court was
affirmed by the Court of Appeals. As a consequence, the award by the trial court of moral
damages must likewise be affirmed.

Moral damages may be recovered under Article 2219 of the Civil Code in relation to
Article 21. The pertinent provisions read:

Art. 2219. Moral damages may be recovered in the following and analogous cases:

xxxx

(10) Acts and actions referred to in Articles 21, 26, 27, 28, 29, 30, 32, 34, and 35.

xxxx

Art. 21. Any person who wilfully causes loss or injury to another in a manner that is
contrary to morals, good customs or public policy shall compensate the latter for the
damage.

We agree with the appellate court that C.F. Sharp committed an actionable wrong when it
unreasonably withheld documents, thus preventing respondents from seeking lucrative
employment elsewhere. That C.F. Sharp arbitrarily imposed a condition that the
documents would only be released upon signing of a quitclaim is tantamount to bad faith
because it effectively deprived respondents of resort to legal remedies.

Furthermore, we affirm the award of exemplary damages and attorney’s fees. Exemplary
damages may be awarded when a wrongful act is accompanied by bad faith or when the
defendant acted in a wanton, fraudulent, reckless, oppressive, or malevolent manner
which would justify an award of exemplary damages under Article 2232 of the Civil
Code. Since the award of exemplary damages is proper in this case, attorney’s fees and
cost of the suit may also be recovered as provided under Article 2208 of the Civil Code.
[17]

WHEREFORE, the petition is DENIED. The Decision dated 27 June 1996 of the
Regional Trial Court of Pasay City is REINSTATED. Accordingly, the Decision dated
30 October 2003 of the Court of Appeals is MODIFIED.
 FIRST DIVISION
[ G.R. No. 210634, January 14, 2015 ]
NORIEL R. MONTIERRO, PETITIONER, VS. RICKMERS MARINE
AGENCY PHILS., INC., RESPONDENT.

DECISION

SERENO, C.J.:

Before this Court is a Petition for Review on certiorari[1] seeking to nullify the Decision
dated 8 August 2013[2] and the Resolution dated 6 January 2014[3] issued by the Court of
Appeals (CA) in CA-G.R. SP No. 126618.

Facts

On 26 February 2010, respondent Rickmers Marine Agency Phils., Inc. (Rickmers), on

behalf of its foreign principal, Global Management Limited, hired petitioner Noriel
Montierro as Ordinary Seaman with a basic monthly salary of USD420. He was assigned
to work on board the vessel M/V CSAV Maresias.[4]

Sometime in May 2010, while on board the vessel and going down from a crane ladder,
Montierro lost his balance and twisted his legs, thus injuring his right knee.[5] Thereafter,
on 31 May 2010, he was examined in Livorno, Spain by Dr. Roberto Santini, who
recommended surgical treatment at home and found him unfit for duty.[6] Thus, on 2
June 2010, Montierro was repatriated to the Philippines for further medical treatment. [7]

On 4 June 2010, two days after his repatriation, Montierro reported to Dr. Natalio G.
Alegre II, the company-designated physician. He underwent a magnetic resonance
imaging (MRI) scan of his right knee. The MRI showed he had “meniscal tear, posterior
horn of the medical meniscus, and minimal joint fluid.” Upon the recommendation of
Dr. Alegre, Montiero underwent arthroscopic partial medical meniscectomy of his right
knee on 29 July 2010 at St. Luke’s Medical Center.[8]

On 20 August 2010, Montierro had his second check-up with Dr. Alegre, who noted that
the former’s surgical wounds had healed, but that there was still pain and limitation of
motion on his right knee on gaits and squats. The doctor advised him to undergo
rehabilitation medicine and continue physical therapy.[9]

On 3 September 2010, the 91st day of Montierro’s treatment, Dr. Alegre issued

an interim disability grade of 10 for “stretching leg of ligaments of a knee resulting in
instability of the joint.” He advised Montierro to continue with the latter’s physical
therapy and oral medications.[10]

Montierro further underwent sessions of treatment and evaluation between 17

September 2010 and 28 December 2010.[11]

On 3 January 2011, the 213th day of Montierro’s treatment, Dr. Alegre issued a final

assessment as follows:
Subjective Complaints:
    Cannot flex the knee to 100%
    No swelling noted
    Limited range of motion of right knee

Assessment:
    Medial Meniscal Tear, Knee Right
    S/P Arthroscopic Meniscectomy

Plan:
    Disability Grade of 10 is given
    based on section 32 of the POEA
    contract. Lower Extremities #20,
    stretching leg of the ligaments of
    a knee resulting in instability
    of the joint. x x x[12]
Meanwhile, on 3 December 2010, one month before Dr. Alegre’s issuance of the final
disability grading, Montierro filed with the labor arbiter a complaint for recovery of
permanent disability compensation in the amount of USD89,000, USD2,100 as sickness
allowance, plus moral and exemplary damages and attorney’s fees. [13] To support his
claim for total permanent disability benefits, Montierro relied on a Medical Certificate
dated 3 December 2010 issued by his physician of choice, Dr. Manuel C. Jacinto,
recommending total permanent disability grading, and explaining the former’s medical
condition as follows:
Patient’s condition started at work when he accidentally fell from a ladder causing his
(R) knee to be twisted. Patient’s symptoms of pain and limited flexion of (R) knee
persisted, thus he was assessed to be physically unfit to go back to work. [14]
LA AND NLRC RULINGS

In a Decision dated 29 June 2011, the LA held that Montierro was entitled to
permanent total disability benefits under the Philippine Overseas Employment Agency
Standard Employment Contract (POEA-SEC). The LA relied on the 120-day rule
introduced by the 2005 case Crystal Shipping, Inc. v. Natividad.[15] The rule equates the
inability of the seafarer to perform work for more than 120 days to permanent total
disability, which entitles a seafarer to full disability benefits. [16] The LA also awarded one-
month sickness allowance and attorney’s fees.

On 26 October 2011, Rickmers elevated the case to the National Labor Relations
Commission (NLRC),[17] which affirmed the Decision of the LA on 5 June 2012. Rickmers
filed a Motion for Reconsideration, which the NLRC denied.[18] This denial prompted
Rickmers to file a Rule 65 Petition with the CA.[19]

CA Ruling

On 8 August 2013, the CA rendered a Decision partially granting the Petition. It affirmed
the NLRC ruling insofar as the latter awarded Montierro one-month sickness allowance.
[20]
 The CA held, however, that he was entitled merely to “Grade 10”
permanent partial disability benefits.[21] It also dropped the award of attorney’s fees
granted to him earlier.[22]

In its Decision downgrading the claim of Montierro to “Grade 10”

permanent partial disability benefits only, the CA ruled that his disability could not be
deemed total and permanent under the 240-day rule established by the 2008
case Vergara v. Hammonia Maritime Services, Inc. [23] Vergara extends the period to 240
days when, within the first 120-day period (reckoned from the first day of treatment), a
final assessment cannot be made because the seafarer requires further medical
attention, provided a declaration has been made to this effect.[24]
The CA pointed out that only 215 days had lapsed from the time of Montierro’s medical
repatriation on 2 June 2010 until 3 January 2011, when the company-designated
physician issued a “Grade 10” final disability assessment. It justified the extension of the
period to 240 days on the ground that Dr. Alegre issued an interim disability grade of
“10” on 3 September 2010, the 91st day of Montierro’s treatment, which was within the
initial 120-day period.

Further, the CA upheld the jurisprudential rule that, in case of conflict, it is the
recommendation issued by the company-designated physician that prevails over the
recommendation of the claimant’s physician of choice.

On the deletion of the award of attorney’s fees, the CA reasoned that there was no
sufficient showing of bad faith in Rickmer’s persistence in the case other than an
erroneous conviction of the righteousness of its cause based on the recommendation of
the company-designated physician.

RULE 45 PETITION

Hence, Montierro filed a Rule 45 Petition with this Court. He contends in the main that
he is entitled to full disability benefits. To support this thesis, he raises two arguments.

First, Montierro insists that the 120-day rule laid down in the 2005 case Crystal Shipping,
and not the 240-day rule introduced by the 2008 case Vergara, applies to this case.
Montierro cites the more recent cases Wallem Maritime Services, Inc., v. Tanawan,
[25]
 Maersk Filipinas Crewing, Inc. v. Mesina,[26] and Valenzona v. Fair Shipping Corp.,[27] all
of which applied the Crystal Shipping doctrine despite the fact that they were
promulgated after Vergara.

Second, he claims that the medical assessment of his personal physician, to the effect
that the former’s disability is permanent and total, should be accorded more weight
than that issued by the company-designated physician. [28]

Montierro also raises in his petition the issue of attorney’s fees, which he believes he is
entitled to as he was compelled to litigate.

ISSUES

The issues to be resolved are the following: (1) whether it is the 120-day rule or the 240-
day rule that should apply to this case; (2) whether it is the opinion of the company
doctor or of the personal doctor of the seafarer that should prevail; and (3) whether
Montierro is entitled to attorney’s fees.

OUR RULING

120 day rule vs. 240 day rule

The Court has already delineated the effectivity of the Crystal

Shipping and Vergara rulings in the 2013 case Kestrel Shipping Co. Inc. v. Munar,[29] by
explaining as follows:
Nonetheless, Vergara was promulgated on October 6, 2008, or more than two (2) years
from the time Munar filed his complaint and observance of the principle of prospectivity
dictates that Vergara should not operate to strip Munar of his cause of action for total
and permanent disability that had already accrued as a result of his continued inability
to perform his customary work and the failure of the company-designated physician to
issue a final assessment.
Thus, based on Kestrel, if the maritime compensation complaint was filed prior to 6
October 2008, the 120-day rule applies; if, on the other hand, the complaint was filed
from 6 October 2008 onwards, the 240-day rule applies.

In this case, Montierro filed his Complaint on 3 December 2010, which was after the
promulgation of Vergara on 6 October 2008. Hence, it is the 240-day rule that applies to
this case, and not the 120-day rule.

Montierro cannot rely on the cases that he cited, a survey of which reveals that all of
them involved Complaints filed before 6 October 2008. Wallem Maritime
Services[30] involved a Complaint for disability benefits filed on 26 November 1998.
In Maersk Filipinas Crewing,[31] while the Decision did not mention the date the
Complaint was filed, the LA’s Decision was rendered on 14 April 2008. Lastly,
in Valenzona,[32] the Complaint was filed sometime before 31 January 2003. It thus
comes as no surprise that the cases Montierro banks on followed the 120-day rule.

Applying the 240-day rule to this case, we arrive at the same conclusion reached by the
CA. Montierro’s treatment by the company doctor began on 4 June 2010. It ended on 3
January 2011, when the company doctor issued a “Grade 10” final disability assessment.
Counting the days from 4 June 2010 to 3 January 2011, the assessment by the company
doctor was made on the 213th day, well within the 240-day period. The extension of the
period to 240 days is justified by the fact that Dr. Alegre issued an interim disability
grade of “10” on 3 September 2010, the 91st day of Montierro’s treatment, which was
within the 120-day period.

Thus, the CA correctly ruled that Montierro’s condition cannot be deemed a permanent
total disability.

Company doctor vs. personal doctor

Vergara also definitively settled the question how a conflict between two disability
assessments — the assessment of the company-designated physician and that of the
seafarer’s chosen physician — should be resolved.[33] In that case, the Court held that
there is a procedure to be followed regarding the determination of liability for work-
related death, illness or injury in the case of overseas Filipino seafarers. The procedure
is spelled out in the 2000 POEA-SEC, the execution of which is a sine qua
non requirement in deployments for overseas work. [34]

The procedure is as follows: when a seafarer sustains a work-related illness or injury

while on board the vessel, his fitness for work shall be determined by the company-
designated physician. The physician has 120 days, or 240 days, if validly extended, to
make the assessment. If the physician appointed by the seafarer disagrees with the
assessment of the company-designated physician, the opinion of a third doctor may be
agreed jointly between the employer and the seafarer, whose decision shall be final and
binding on them.[35]

Vergara ruled that the procedure in the 2000 POEA-SEC must be strictly followed;
otherwise, if not availed of or followed strictly by the seafarer, the assessment of the
company-designated physician stands.[36]

In this case, Montierro and Rickmers are covered by the provisions of the same 2000
POEA-SEC. It is the law between them. Hence, they are bound by the mechanism for
determining liability for a disability benefits claim. Montierro, however, preempted the
procedure when he filed on 3 December 2010 a Complaint for permanent disability
benefits based on his chosen physician’s assessment, which was made one
month before the company-designated doctor issued the final disability grading on 3
January 2011, the 213th day of Montierro’s treatment.
Hence, for failure of Montierro to observe the procedure provided by the POEA-SEC, the
assessment of the company doctor should prevail.

Moreover, Rickmers exerted real efforts to provide Montierro with medical assistance.

The company-designated physician monitored Montierro’s case from beginning to end.
Upon the former’s recommendation, Montierro even underwent arthroscopic partial
medical meniscectomy of his right knee. The company-doctor likewise gave him physical
therapy. Lastly, he issued his certification on the basis of the medical records available
and the results obtained.

Further, a juxtaposition of the two conflicting assessments reveals that the certification
of Montierro’s doctor of choice pales in comparison with that of the company-
designated physician. Fitting is the following discussion of the CA:
To contest the company-designated physician's disability assessment of “Grade 10”,
Montierro relied on the total permanent disability assessment of his physician of choice.
In contrast to his physician's assessment embodied in a one-page medical certificate
dated December 3, 2010 which did not even indicate any test or procedure that may
have been performed or conducted when he examined and determined Montierro's
disability, however, the company-designated physician's finding is entitled to greater
weight and respect because it was arrived at after Montierro was regularly examined in
coordination with other doctors, prescribed with medications, and given physical
therapy and rehabilitation sessions from June 4, 2010 until January 3, 2011. In the face
of these well-defined facts, We find it only reasonable, if not logical, to give credence to
the company physician's finding rather than that of Montierro's physician of choice.

Having extensive personal knowledge of the seafarer's actual medical condition, and
having closely, meticulously and regularly monitored and treated his injury for an
extended period, the company-designated physician is certainly in a better position to
give a more accurate evaluation of Montierro's health condition. The disability grading
given by him should therefore be given more weight than the assessment of Montierro's
physician of choice.[37]
Attorney’s fees

On the premise that there was no showing of bad faith on the part of the employer,
forcing Montierro to litigate, the CA dropped the award of attorney’s fees. We arrive at
the same conclusion by using another route.
Indeed, the general rule is that attorney's fees may not be awarded where there is no
sufficient showing of bad faith in a party's persistence in a case other than an erroneous
conviction of the righteousness of one’s cause. [38] The rule, however, takes a turn when
it comes to labor cases.

The established rule in labor law is that the withholding of wages need not be coupled
with malice or bad faith to warrant the grant of attorney’s fees under Article 111 of the
Labor Code.[39] All that is required is that lawful wages be not paid without justification,
thus compelling the employee to litigate.[40]

The CA thus relied on a wrong consideration in resolving the issue of attorney’s fees. Be
that as it may, Montierro is not entitled to attorney’s fees, even if we apply the correct
rule to this case.

Montierro, as earlier mentioned, jumped the gun when he filed his complaint one
month before the company-designated doctor issued the final disability grading. Hence,
there was no unlawful withholding of benefits to speak of. Precisely because Montierro
was still under treatment and awaiting the final assessment of the company-designated
physician, the former’s act was premature.

WHEREFORE, premises considered, the Petition is DENIED. The CA Decision dated 8

August 2013 and Resolution dated 6 January 2014 are AFFIRMED in toto.
 SECOND DIVISION
[ G.R. No. 172933, October 06, 2008 ]
JESUS E. VERGARA, PETITIONER, VS. HAMMONIA MARITIME
SERVICES, INC. AND ATLANTIC MARINE LTD., RESPONDENTS.

DECISION

BRION, J.:

Seaman Jesus E. Vergara (petitioner) comes to us through this Petition for Review
on Certiorari[1] with the plea that we set aside - for being contrary to law and
jurisprudence - the Decision[2] promulgated on March 14, 2005 and the
Resolution[3] promulgated on June 7, 2005 by the Court of Appeals (CA), both issued in
C.A.-G.R. SP No. 85347 entitled Jesus E. Vergara v. National Labor Relations
Commission, et al.

THE FACTUAL BACKGROUND

On April 4, 2000, petitioner was hired by respondent Hammonia Maritime Services, Inc.
(Hammonia) for its foreign principal, respondent Atlantic Marine Ltd., (Atlantic Marine).
He was assigned to work on board the vessel British Valour under contract for nine
months, with a basic monthly salary of US$ 642.00.

The petitioner was a member of the Associated Marine Officers' and Seaman's Union of
the Philippines (AMOSUP). AMOSUP had a collective bargaining agreement (CBA) with
Atlantic Marine, represented in this case by Hammonia.

The petitioner left the Philippines on April 15, 2000 to rendezvous with his ship and to
carry out therein his work as a pumpman. In August 2000, while attending to a defective
hydraulic valve, he felt he was losing his vision. He complained to the Ship Captain that
he was seeing black dots and hairy figures floating in front of his right eye. His condition
developed into a gradual visual loss. The ship's medical log entered his condition as
"internal bleeding in the eye" or "glaucoma."[4] He was given eye drops to treat his
condition.

The petitioner went on furlough in Port Galveston, Texas and consulted a physician who
diagnosed him to be suffering from "vitreal hemorrhage with small defined area of retinal
traction. Differential diagnosis includes incomplete vitreal detachment ruptured macro
aneurism and valsulva retinopathy."[5] He was advised to see an ophthalmologist when he
returned home to the Philippines.

He was sent home on September 5, 2000 for medical treatment. The company-designated
physician, Dr. Robert D. Lim of the Marine Medical Services of the Metropolitan
Hospital, confirmed the correctness of the diagnosis at Port Galveston, Texas. Dr. Lim
then referred the petitioner to an ophthalmologist at the Chinese General Hospital who
subjected the petitioner's eye to focal laser treatment on November 13, 2000; vitrectomy
with fluid gas exchange on December 7, 2000; and a second session of focal laser
treatment on January 13, 2001.

On January 31, 2001, the ophthalmologist pronounced the petitioner fit to resume his
seafaring duties per the report of Dr. Robert D. Lim, Medical Coordinator.[6] The
petitioner then executed a "certificate of fitness for work" in the presence of Dr. Lim.
[7]
 Claiming that he continued to experience gradual visual loss despite the treatment, he
sought a second opinion from another ophthalmologist, Dr. Patrick Rey R. Echiverri, who
was not a company-designated physician. Dr. Echiverri gave the opinion that the
petitioner was not fit to work as a pumpman because the job could precipitate the
resurgence of his former condition.

On March 20, 2001, the petitioner submitted himself to another examination, this time by
Dr. Efren R. Vicaldo, a physician who was not also designated by the company. Dr.
Vicaldo opined that although the petitioner was fit to work, he had a Grade X (20.15%)
disability which he considered as permanent partial disability.

Armed with these two separate diagnoses, the petitioner demanded from his employer
payment of disability and sickness benefits, pursuant to the Philippine Overseas
Employment Administration Standard Employment Contract Governing the Employment
of all Filipino Seamen on Board Ocean-going Vessels (POEA Standard Employment
Contract), and the existing CBA in the company. The company did not heed his demand,
prompting the petitioner to file a complaint for disability benefits, sickness allowance,
damages and attorney's fees, docketed as NLRC NCR OFW Case No. (M) 01-050809-00.

On January 14, 2003, Labor Arbiter Madjayran H. Ajan rendered a decision in the
petitioner's favor.[8] The Arbiter ordered Hammonia and Atlantic Marine to pay the
petitioner, jointly and severally, sickness allowance of US$ 2,568.00 and disability
benefits of US$ 60,000.00 under the CBA, and 10% of the monetary award in attorney's
fees.

The respondents appealed to the National Labor Relations Commission (NLRC) which
rendered a decision on March 19, 2004 reversing the Labor Arbiter's ruling.[9] It
dismissed the complaint on the ground that the petitioner had been declared fit to resume
sea duty and was not entitled to any disability benefit. By resolution, the NLRC denied
the petitioner's motion for reconsideration.[10]
The petitioner thereafter sought relief from the CA via a petition for certiorari under Rule
65 of the Rules of Court. The CA dismissed the petition in a Decision promulgated on
March 14, 2005,[11] and likewise denied the petitioner's motion for reconsideration.
[12]
 Hence, the present petition.

THE PETITION

The petitioner contends that the CA erred in denying him disability benefits contrary to
existing jurisprudence, particularly the ruling of this Court in Crystal Shipping Inc., A/S
Stein Line Bergen v. Deo P. Natividad,[13] and, in strictly interpreting the POEA Standard
Employment Contract and the CBA between the parties on the matter of who determines
a seafarer's disability.

The petitioner particularly questions the CA decision for giving credit to the certification
by the company-designated physician, Dr. Robert Lim, that declared him fit to work.
[14]
 On the assumption that he was indeed fit to work, he submits that he should have been
declared to be under permanent total disability because the fit-to-work declaration was
made more than 120 days after he suffered his disability.

The petitioner laments that the CA accorded much weight to the company-designated
physician's declaration that he was fit to work.[15] He considers this a strict and parochial
interpretation of the POEA Standard Employment Contract and the CBA. While these
documents provide that it is the company doctor who must certify a seafarer as
permanently unfit for further sea service, this literal interpretation, to the petitioner, is
absurd and contrary to public policy; its effect is to deny and deprive the ailing seaman of
his basic right to seek immediate attention from any competent physician. He invokes in
this regard our ruling in German Marine Agencies, Inc. et al., v. National Labor
Relations Commission.[16]

In a different vein, the petitioner impugns the pronouncement of Dr. Robert Lim, the
company-designated physician, that he was fit to resume sea duties as of January 31,
2001 since Dr. Lim did not personally operate on and attend to him when he was treated;
he had been under the care of an ophthalmologist since September 6, 2000. The petitioner
points out that there is nothing in the record to substantiate the correctness of Dr. Lim's
certification; neither did the attending eye specialist issue any medical certification,
progress report, diagnosis or prognosis on his eye condition that could be the basis of Dr.
Lim's certification. The petitioner stresses that Dr. Lim's certification was not based on
his first hand findings as it was
issued in his capacity as the "Medical Coordinator" of the Metropolitan Hospital. [17] He
also points out that Dr. Lim is not an eye specialist.

To the petitioner, it is the competence of the attending physician and not the circumstance
of his being company-designated that should be the key consideration in determining the
true status of the health of the patient/seaman. He seeks to rebut Dr. Lim's certification
through the opinion of his private ophthalmologist, Dr. Patrick Rey R. Echiverri that "he
would not advise him to do heavy work; he would not also be able to perform tasks that
require very detailed binocular vision as the right eye's visual acuity could only be
corrected to 20/30 and near vision to J3 at best."[18] The petitioner likewise relies on the
assessment and evaluation of Dr. Efren R. Vicaldo that he suffers from partial permanent
disability with a Grade X (20.15%) impediment and is now "unfit to work as a
seaman."[19]

The petitioner disputes the respondent companies' claim that he is no longer disabled
after his visual acuity had been restored to 20/20; it is fallacious because it views
disability more in its medical sense rather than on its effect on the earning capacity of the
seaman. Citing supporting jurisprudence, the petitioner posits that in disability
compensation, it is the inability to work resulting in the impairment of one's earning
capacity that is compensated, not the injury itself. He maintains that even if his visual
acuity is now 20/20 as alleged by the company-designated physician, he can nevertheless
no longer perform his customary work as pumpman on board an ocean-going vessel since
the job involves a lot of strain that could again cause his vitreous hemorrhage. This
limitation impairs his earning capacity so that he should be legally deemed to have
suffered permanent total disability from a work-related injury. In this regard, the
petitioner cites as
well his union's CBA[20] whose paragraph 20.1.5 provides that:
20.1.5 Permanent Medical Unfitness - A seafarer whose disability is assessed at 50% or
more under the POEA Employment Contract shall, for the purpose of this paragraph is
regarded as permanently unfit for further sea service in any capacity and entitled to 100%
compensation, i.e., US$ 80,000 for officers and US$ 60,000 for ratings. Furthermore, any
seafarer assessed at less than 50% disability under the Contract but certified as
permanently unfit for further sea services in any capacity by the company doctor, shall
also be entitled to 100% compensation.
Finally, the petitioner contends that because there is doubt as to the accuracy of the
medical opinion of the company-designated physician, the doubt should be resolved in
his favor, citing Sy v. Court of Appeals,[21] as well as Article 4 of the Labor Code.[22]

THE CASE FOR RESPONDENTS

In a memorandum[23] filed on December 20, 2007, respondents Hammonia and Atlantic

Marine entreat this Court to dismiss the petition under the following arguments:

1. The provisions of the POEA Standard Employment Contract and the CBA
between the parties clearly provide that the assessment of the company-designated
physician should be accorded respect.
 2. There are no legal or factual bases for the petitioner's claim of total and permanent
disability benefits as he was declared "fit to work."

3. The petitioner's reliance on the Crystal Shipping v. Natividad[24]case is misplaced.

4. The petitioner is not entitled to attorney's fees.

The respondents anchor their case on their compliance with the law and the existing CBA
as applied to the petitioner's circumstances.

They point out that upon the petitioner's repatriation, he was immediately referred to an
ophthalmologist who scheduled him for observation and regular monitoring preparatory
to possible vitrectomy. He was prescribed medication in the meantime.

On November 13, 2000, the petitioner underwent laser treatment of the right eye, which
he tolerated well. His vitrectomy, scheduled on November 22, 2000, was deferred
because he was noted to have accentuated bronchovascular marking on his chest x-ray,
and mild chronic obstructive pulmonary disease as revealed by his pulmonary function
test. He was given medication for his condition and was advised to stop smoking.

The petitioner was cleared for surgery on November 29, 2000. He underwent vitrectomy
with fluid gas exchange and focal laser treatment of his affected eye on December 7,
2000. He tolerated the procedure well. His condition stabilized and he was discharged for
management as an outpatient on December 9, 2000.

On December 13, 2000, the petitioner's vision was 20/40 (r) and 20/20 (l) with correction
and slight congestion observed in his right eye. His vision improved to 20/25 (r) and
20/20 (l) by December 20, 2000 although a substantial lesion was observed and contained
by laser markings. This remained constant and by January 11, 2001, no sign of vitreous
hemorrhage was noted on fundoscopy.

On January 13, 2001, petitioner underwent his second session of laser treatment and he
again tolerated the procedure well. By January 31, 2001, his visual acuity was improved
to 20/20 for both eyes, with correction. He was prescribed eyeglasses and was found fit to
resume his sea duties. The petitioner executed a certificate of fitness for work under oath,
witnessed by Dr. Robert Lim, the company-designated physician who had declared the
petitioner fit to work based on the opinion of the handling eye specialist.[25]

The respondents anchor their objection to the grant of disability benefits on Dr. Lim's
certification. They dispute the petitioner's contention that the medical certifications and
assessments by the petitioner's private physicians - Dr. Echiverri and Dr. Vicaldo - should
prevail.
The respondents object particularly to the petitioner's claim that Dr. Lim's assessment is
not authoritative because "Dr. Lim does not appear to be an eye specialist." [26] They point
out that the issue of Dr. Lim's qualifications and competence was never raised at any
level of the arbitration proceedings, and, therefore, should not be entertained at this stage
of review. They submit that if the petitioner truly believed that the company-designated
physician was incompetent, he should have raised the matter at the earliest possible
opportunity, or at the time he accepted Dr. Lim's assessment. On the contrary, they point
out that the petitioner concurred with the assessment of the company-designated
physician by executing a certificate of fitness to work.[27]

The respondents likewise question the petitioner's reliance on Art. 20.1.5 of the CBA for
his claim that he is entitled to 100% disability compensation since his doctors, Echiverri
and Vicaldo, declared him unfit to work as a seaman although his disability was
determined to be only at Grade X (20.15%), a partial permanent disability. They contend
that the petitioner's position is contrary to what the cited provision provides as the
CBA[28] specifically requires a "company doctor" to certify a seafarer as permanently
unfit for service in any capacity.

The respondents bewail the petitioner's attempt to have this Court find him permanently
disabled because he "was under the medication and care of the company-designated
physician for over four (4) months or more than 120 days." They cite Section 20 B of
petitioner's POEA Standard Employment Contract whose relevant portion states: [29]
3. Upon sign-off from 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 his
permanent disability has been assessed by the company-designated physician, but in no
case shall this period exceed one hundred twenty (120) days.

xxx

In case of permanent total or partial disability of the seafarer caused by either injury or
illness the seafarer shall be compensated in accordance with the schedule of benefits
enumerated in Section 30 of his Contract.
The respondents then point out that Section 30 provides a schedule of disability for
injuries, disease or illness contracted. Any item in the schedule classified under Grade I
constitutes total and permanent disability entitled to a disability allowance equivalent to
US$60,000 (US$50,000 x 120%). They consider reliance on this Court's ruling in Crystal
Shipping v. Natividad;[30] Government Service Insurance System v. Cadiz;[31] and Ijares v.
Court of Appeals,[32] to be misplaced with respect to the advocated conversion of the
petitioner's medical condition from temporary to permanent disability.

The respondents stress that in the present case, the petitioner had been accorded the
necessary medical treatment, including laser treatment by company-designated
physicians, that restored his visual acuity to 20/20. He was declared fit to work upon his
return to the full possession of all his physical and mental faculties and after he was
cleared of all impediments. They contend as well that all that the petitioner could present
in support of his claim for total permanent disability was the Grade X disability
assessment issued by his private physician, Dr. Vicaldo, that he is "now unfit to work as
seaman." They point out that Dr. Vicaldo himself is not an "eye specialist."

Finally, the respondents insist that neither factual nor legal basis exists for petitioner's
claim of Grade I total and permanent disability benefits. Factually, the petitioner was
declared fit to work by the company-designated physician. Legally, only blindness or
total and permanent loss of vision of both eyes is considered a Grade I disability under
the terms of the POEA Standard Employment Contract. Under its Section 30 on the
portion on "Eyes," only total and permanent loss of vision of both eyes can be considered
as Grade I disability, not the petitioner's claimed impairment of vision in the right eye.

THE COURT'S RULING

We find no merit in the petition.
The Governing Law and Rules.

Entitlement to disability benefits by seamen on overseas work is a matter governed, not

only by medical findings but, by law and by contract. The material statutory provisions
are Articles 191 to 193 under Chapter VI (Disability Benefits) of the Labor Code, in
relation with Rule X of the Rules and Regulations Implementing Book IV of the Labor
Code. By contract, Department Order No. 4, series of 2000 of the Department of Labor
and Employment (the POEA Standard Employment Contract) and the parties' CBA bind
the seaman and his employer to each other.

By way of background, the Department of Labor and Employment (DOLE), through the
POEA, has simplified the determination of liability for work-related death, illness or
injury in the case of Filipino seamen working
on foreign ocean-going vessels.[33] Every seaman and the vessel owner (directly or
represented by a local manning agency) are required to execute the POEA Standard
Employment Contract as a condition sine qua non prior to the deployment for overseas
work. The POEA Standard Employment Contract is supplemented by the CBA between
the owner of the vessel and the covered seamen.

A notable feature of the POEA Standard Employment Contract is Section 31 - its

provision on the Applicable Law. It provides:
Any unresolved dispute, claim or grievance arising out of or in connection with this
Contract, including the annexes shall be governed by the laws of the Republic of the
Philippines, international conventions, treaties and convenants where the Philippines is a
signatory.
Through this provision, the DOLE skirted any possible issue regarding the law that
should govern the terms and conditions of employment of Filipino seamen working in
ocean-going vessels that have no significant Philippine presence and that hardly see
Philippine waters. Thus, with the POEA Standard Employment Contract, there is no
doubt that in case of any unresolved dispute, claim or grievance arising out of or in
connection with the contract, Philippine laws shall apply.

In real terms, this means that the shipowner - an employer operating outside Philippine
jurisdiction - does not subject itself to Philippine laws, except to the extent that it
concedes the coverage and application of these laws under the POEA Standard
Employment Contract. On the matter of disability, the employer is not subject to
Philippine jurisdiction in terms of being compelled to contribute to the State Insurance
Fund that, under the Labor Code, Philippine employers are obliged to support. (This
Fund, administered by the Employees' Compensation Commission, is the source of work-
related compensation payments for work-related deaths, injuries, and illnesses.) Instead,
the POEA Standard Employment Contract provides its own system of disability
compensation that approximates (and even exceeds) the benefits provided under
Philippine law.[34] The standard terms agreed upon, as above pointed out, are intended to
be read and understood in accordance with Philippine laws, particularly, Articles 191 to
193 of the Labor Code and the applicable implementing rules and regulations in case of
any dispute, claim or grievance.

In this respect and in the context of the present case, Article 192(c)(1) of the Labor Code
provides that:
x x x 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 in the Rules;

xxx
The rule referred to - Rule X, Section 2 of the Rules and Regulations implementing Book
IV of the Labor Code - states:
Period of entitlement. - (a) The income benefit shall be paid beginning on the first day of
such disability. If caused by an injury or sickness it shall not be paid longer than 120
consecutive days except where such injury or sickness still requires medical attendance
beyond 120 days but not to exceed 240 days from onset of disability in which
case benefit for temporary total disability shall be paid. However, the System may
declare the total and permanent status at anytime after 120 days of continuous temporary
total disability as may be warranted by the degree of actual loss or impairment of
physical or mental functions as determined by the System. [Underscoring ours]
These provisions are to be read hand in hand with the POEA Standard Employment
Contract whose Section 20 (3) states:
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.
As these provisions operate, the seafarer, upon sign-off from his vessel, must report to the
company-designated physician within three (3) days from arrival for diagnosis and
treatment.[35] For the duration of the treatment but in no case to exceed 120 days, the
seaman is on temporary total disability as he is totally unable to work.[36] He receives his
basic wage during this period[37] until he is declared fit to work or his temporary disability
is acknowledged by the company to be permanent, either partially or totally, as his
condition is defined under the POEA Standard Employment Contract and by applicable
Philippine laws.[38] If the 120 days initial period is exceeded and no such declaration is
made because the seafarer requires further medical attention, then the temporary total
disability period may be extended 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.[39] The seaman may of course also be declared fit to work at any time such
declaration is justified by his medical condition.

Thus, upon petitioner's return to the country for medical treatment, both he and the
respondent company acted correctly in accordance with the terms of the POEA Standard
Employment Contract and the CBA; he reported to the company-designated doctor for
treatment and the latter properly referred him to an ophthalmologist at the Chinese
General Hospital. No dispute existed on the medical treatment the petitioner received, to
the point that the petitioner executed a "certificate of fitness for work" based on the
assessment/certification by the company-designated physician.

Problems only arose when despite the certification, the petitioner sought second and third
opinions from his own doctors, one of whom opined that he could no longer resume work
as a pumpman while the other recognized a Grade X (20.15%) partial permanent
disability. Based on these opinions, the petitioner demanded that he be paid disability and
sickness benefits; when the company refused, the demand metamorphosed into an actual
case before the NLRC Arbitration Branch.

As we outlined above, a temporary total disability only becomes permanent when so

declared by the company physician within the periods he is allowed to do so, or upon the
expiration of the maximum 240-day medical treatment period without a declaration of
either fitness to work or the existence of a permanent disability. In the present case, while
the initial 120-day treatment or temporary total disability period was exceeded, the
company-designated doctor duly made a declaration well within the extended 240-day
period that the petitioner was fit to work. Viewed from this perspective, both the NLRC
and CA were legally correct when they refused to recognize any disability because the
petitioner had already been declared fit to resume his duties. In the absence of any
disability after his temporary total disability was addressed, any further discussion of
permanent partial and total disability, their existence, distinctions and consequences,
becomes a surplusage that serves no useful purpose.
A twist that directly led to the filing of this case is the issue of whose medical
pronouncement should be followed given that the company-designated physician had
declared the petitioner fit for work with a certification of fitness duly executed by the
latter, while the petitioner's physicians gave qualified opinions on his medical situation.

The POEA Standard Employment Contract and the CBA clearly provide that when
a seafarer sustains a work-related illness or injury while on board the vessel, his
fitness or unfitness for work shall be determined by the company-designated
physician. If the physician appointed by the seafarer disagrees with the company-
designated physician's assessment, the opinion of a third doctor may be agreed
jointly between the employer and the seafarer to be the decision final and binding
on them.[40]

Thus, while petitioner had the right to seek a second and even a third opinion, the
final determination of whose decision must prevail must be done in accordance with
an agreed procedure. Unfortunately, the petitioner did not avail of this procedure;
hence, we have no option but to declare that the company-designated doctor's
certification is the final determination that must prevail. We do so mindful that the
company had exerted real effort to provide the petitioner with medical assistance, such
that the petitioner finally ended with a 20/20 vision. The company-designated physician,
too, monitored the petitioner's case from the beginning and we cannot simply throw out
his certification, as the petitioner suggested, because he has no expertise in
ophthalmology. Under the facts of this case, it was the company-designated doctor who
referred the petitioner's case to the proper medical specialist whose medical results are
not essentially disputed; who monitored the petitioner's case during its progress; and who
issued his certification on the basis of the medical records available and the results
obtained. This led the NLRC in its own ruling to note that:
x x x more weight should be given to the assessment of degree of disability made by the
company doctors because they were the ones who attended and treated petitioner Vergara
for a period of almost five (5) months from the time of his repatriation to the Philippines
on September 5, 2000 to the time of his declaration as fit to resume sea duties on January
31, 2001, and they were privy to petitioner Vergara's case from the very beginning, which
enabled the company-designated doctors to acquire a detailed knowledge and familiarity
with petitioner Vergara's medical condition which thus enabled them to reach a more
accurate evaluation of the degree of any disability which petitioner Vergara might have
sustained. These are not mere company doctors. These doctors are independent medical
practitioners who passed the rigorous requirements of the employer and are more likely
to protect the interest of the employer against fraud.

Moreover, as between those who had actually attended to petitioner Vergara throughout
the duration of his illness and those who had merely examined him later upon his
recovery for the purpose of determining disability benefits, the former must prevail.
We note, too, as the respondent company aptly observed, that the petitioner never raised
the issue of the company-designated doctor's competence at any level of the arbitration
proceedings, only at this level of review. On the contrary, the petitioner accepted his
assessment of fitness and in fact issued a certification to this effect. Under these
circumstances, we find the NLRC and the CA's conclusions on the petitioner's fitness to
work, based on the assessment/certification by the company-designated physician, to be
legally and factually in order.

As a last point, the petitioner has repeatedly invoked our ruling in Crystal Shipping, Inc.
v. Natividad,[41] apparently for its statement that the respondent in the case "was unable to
perform his customary work for more than 120 days which constitutes permanent total
disability." This declaration of a permanent total disability after the initial 120 days of
temporary total disability cannot, however, be simply lifted and applied as a general rule
for all cases in all contexts. The specific context of the application should be considered,
as we must do in the application of all rulings and even of the law and of the
implementing regulations.

Crystal Shipping was a case where the seafarer was completely unable to work for three
years and was undisputably unfit for sea duty "due to respondent's need for regular
medical check-up and treatment which would not be available if he were at sea." [42] While
the case was not clear on how the initial 120-day and subsequent temporary total
disability period operated, what appears clear is that the disability went beyond 240
days without any declaration that the seafarer was fit to resume work. Under the
circumstances, a ruling of permanent and total disability was called for, fully in
accordance with the operation of the period for entitlement that we described
above. Viewed from this perspective, the petitioner cannot cite the Crystal
Shipping ruling as basis for his claim for permanent total disability.

Additionally and to reiterate what we pointed out above regarding the governing rules
that affect the disability of Filipino seafarers in ocean-going vessels, the POEA Standard
Employment Contract provides its own Schedule of Disability or Impediment for Injuries
Suffered and Diseases Including Occupational Diseases or Illness Contracted (Section
32); Disability Allowances (a subpart of Section 32); and its own guidelines on
Occupational Diseases (Section 32-A) which cannot be disregarded in considering
disability compensation and benefits. All these - read in relation with applicable
Philippine laws and rules - should also be taken into account in considering and
citing Crystal Shipping and its related line of cases as authorities.

In light of the above conclusions, we see no need to discuss the petitioner's other
submissions that the lack of disability has rendered moot, particularly the existence of
doubt that the petitioner insists should be resolved in his favor.

WHEREFORE, premises considered, we DENY the petition for lack of merit.

 SECOND DIVISION
[ G.R. No. 202113, June 06, 2018 ]
RICKY B. TULABING, PETITIONER, VS. MST MARINE SERVICES
(PHILS.), INC., TSM INTERNATIONAL LTD., AND/OR CAPT. ALFONSO R.
DEL CASTILLO, RESPONDENTS.

[G.R. No. 202120]

MST MARINE SERVICES (PHILS.), INC., TSM INTERNATIONAL LTD.,

AND/OR CAPT. ALFONSO R. DEL CASTILLO, PETITIONERS, VS. RICKY
B. TULABING, RESPONDENT.

DECISION

REYES, JR., J:

Consolidated in this case are the petitions for review on certiorari under Rule 45 of the
Rules of Court filed: (1) by Ricky B. Tulabing (Tulabing) against MST Marine Services
(Phils.), Inc. (MST), TSM International Ltd. (TSM), and/or Capt. Alfonso R. Del Castillo
(MST, et al.) in G.R. No. 202113; and (2) MST, et al. against Tulabing in G.R. No.
202120. The petitions seek to assail the Decision[1] dated September 12, 2011 and
Resolution[2] dated May 23, 2012 of the Court of Appeals (CA) in CA-G.R. SP No.
117319.

The Antecedent Facts

MST is a Philippine-registered manning agency engaged in the recruitment of seafarers

for its foreign principal, TSM, a Norwegian shipping company.[3]

Tulabing is a seafarer formerly under the employ of TSM. His employment was covered
by the Norwegian International Ship Register collective bargaining agreement (NIS-
CBA), between the Norwegian Shipowners' Association (NSA), on the one hand, and the
Associate Marine Officers' and Seamen's Union of the Philippines (AMOSUP) and the
Norwegian Seafarer's Union (NSU), on the other.[4]

On August 23, 2007, MST, in behalf of TSM, employed Tulabing as GP2 Wiper for the
vessel M/T Champion. Covered by a Philippine Overseas Employment Administration
(POEA)-approved Contract of Employment, Tulabing's employment was for a period of
nine months with a basic monthly salary of US$454.00.[5]

On September 13, 2007, Tulabing embarked on his voyage on board M/T Champion and
commenced the performance of his duties pursuant to his Contract.[6]

Sometime in January 2008, while engaged in the performance of his duties, he felt a
sudden crack on his back which was followed by a severe pain and numbness of the left
side of his body. He was referred to a physician in Brazil for medical evaluation and was
given medicine. Initially, the medicine accorded Tulabing some relief from the pain but
eventually his condition aggravated and radiated to his left shoulder and upper
extremities.[7]

Subsequently, Tulabing complained of chest pain, hence, he was referred by the vessel
master to Dr. J.J. Voorsluis (Dr. Voorsluis) of the Medical Centre for Seamen in
Amsterdam, Netherlands for medical examination. Dr. Voorsluis diagnosed him of
cervical neuralgia and prescribed him oral medication therefor. He was declared unfit to
work for four days with the recommendation that should his medical condition fail to
improve, he should be repatriated back to the Philippines.[8] On June 13, 2008, Tulabing
was repatriated back to the Philippines.[9]

On June 17, 2008, Tulabing reported to Dr. Nicomedes Cruz (Dr. Cruz), the company-
designated physician for medical evaluation. Dr. Cruz confirmed Dr. Voorsluis' diagnosis
of Tulabing's cervical neuralgia and noted the persistence of his upper back pain which
continued to radiate to his left shoulder and upper left extremities. Dr. Cruz issued a
Medical Report, ordering an x-ray of Tulabing's cervical spine and his refenal to an
orthopedic surgeon for specialized examination, and directing him to return for further
evaluation.[10]

On June 26, 2008, Dr. Cruz, following the orthopedic surgeon's evaluation of Tulabing's
condition, issued a second Medical Report with the following diagnosis and
directives, viz.:

The patient was seen by our orthopedic surgeon and noted the result of the cervical spine
x-ray-

Cervical spondylosis C4C5 and C5C6 and Reversal of cervical lordosis. He recommends
MRI of the cervical spine and advised referral to rehabilitation medicine for physical
therapy.

DIAGNOSIS:
Cervical spondylosis C4C5 and C5C6
Reversal of cervical lordosis
MEDICATION:
Moxen
Trevoca

Advised to come back on July 03, 2008[11]

The result of Tulabing's Magnetic Resonance Imaging (MRI) indicated the following
findings, viz.

MULTI-LEVEL DISC DESSICATION WITH MILD REVERSAL OF THE NORMAL

LORDOSIS BROAD-BASED DISCS PROTRUSIONS FROM C3-C4 CUADAD TO
C5-C6 CAUSING MINIMAL THECAL SAC INDENTATION AND BILATERAL
NEURAL FORMINAL COMPROMISE.[12]

Tulabing underwent physical rehabilitation from October to December of 2008 under the
medical attention of specialist Dr. Reynaldo Matias (Dr. Matias). Dr. Matias, who
regularly submitted to Dr. Cruz his evaluations of Tulabing's condition, suggested that on
the basis thereof Dr. Cruz give Tulabing a disability grading.[13]

On November 14, 2008, Dr. Cruz assessed Tulabing's condition as Grade 10

disability, viz.:[14]

Disability grading under the POEA schedule of disabilities is grade 10 - moderate

stiffness or two thirds (2/3) loss of motion of the neck.

Tulabing, however, did not agree. He demanded from MST the payment of maximum
disability compensation in the amount of US$70,000.00 pursuant to Article 12 of the
NIS-CBA which provides:[15]

ARTICLE 12

If a seafarer due to no fault of his own, suffers an occupational injury or an occupational

disease while serving on board or while traveling to or from the vessel or Company's
business or due to marine peril, and as a result his ability to work is permanently reduced.
partially or totally, the Company shall pay him disability compensation which including
the amounts stipulated by the POEA's rules and regulations shall be maximum:

Radio Officers
Chief Stewards, Electricians
Electro Technician USD$90,000.00
Ratings USD$70,000.00
MST denied Tulabing's claim and instead offered him compensation in the amount of
US$14,105.00. Tulabing refused the offer, insisting that his disability was permanent and
total, hence, his entitlement to full compensation. In an attempt at an amicable settlement,
the parties initially submitted the dispute to the AMOSUP pursuant to the grievance
procedure specified in the NIS-CBA but no settlement was obtained thereat.[16]

On July 20, 2009, Tulabing filed with the National Labor Relations Commission (NLRC)
a complaint against MST for payment of permanent total disability benefits of
US$70,000.00 pursuant to the NIS-CBA, reimbursement of medical expenses, and
payment of moral and exemplary damages as well as attorney's fees. Tulabing claimed
that his disability was of such nature that no amount of medication or therapy can restore
him to his former physical condition and enable him to resume his customary work and
that based on the medical findings, the severity of his disability rendered remote and
uncertain the possibility of his future employment for overseas work.[17]

MST denied liability on the ground that under the provisions of his employment contract
and the NIS-CBA, a seafarer is only entitled to claim maximum disability compensation
of US$70,000.00 if the company-designated physician declares him to be suffering from
Grade 1 disability. They likewise denied liability for damages and attorney's fees,
contending good faith and full compliance with their contractual obligations, viz.: (1) that
Tulabing received full monetary provision for his medical expenses prior and subsequent
to his repatriation; and (2) that Tulabing was offered a just disability settlement in the
amount of US$14,105.00 as sanctioned by the POEA-SEC and the NIS-CBA.[18]

On December 29, 2009, Labor Arbiter (LA) Catalino R. Laderas rendered a

Decision[19] in favor of MST, ordering the latter to pay Tulabing the amount of
US$14,105.00 and attorney's fees equivalent to 10% of the amount adjudged.

Unsatisfied with the LA's award of disability compensation, Tulabing appealed to the
NLRC, asserting his entitlement to the full permanent total disability compensation of
$70,000.00.[20]

During the pendency of his appeal, Tulabing consulted orthopedic surgeon Dr. Alan
Leonardo Raymundo (Dr. Raymundo) of the Philippine Orthopedic Institute, Makati
City. In a Medical Report dated June 15, 2010, Dr. Raymundo diagnosed Tulabing of
cervical neuropraxia and declared him unfit for resumption of duty, viz.:

On physical examination, the patient can ambulate well without any support. Manual
motor testing shows a 4/5 muscle power involving the area of the deltoids as well as all
the muscle compartments of the upper and lower extremities on the left side. He has
sensory deficits affecting the left side of the face and the entire left side of the body as
well as the upper and lower extremities on the left. There is hypereflexia of the deep
tendon reflexes. There is also noted atrophy of all the muscles on the left upper and left
lower extremities.

DIAGNOSIS: CERVICAL NEUROPRAXIA

RECOMMENDATIONS:

With the present condition of the patient he is not fit to return to his previous work duty.
[21]

On August 16, 2010, the NLRC rendered its Decision, setting aside the LA's
decision, viz.:

WHEREFORE, premises considered. the Decision dated 29 December 2009 is hereby

SET ASIDE and a NEW ONE entered declaring the disability of [Tulabing] to be
permanent total thereby ordering respondents jointly and severally liable to pay
[Tulabing) the amount of SEVENTY THOUSAND ($70,000.00) US DOLLARS or its
peso equivalent at the time of actual payment representing his disability benefits, plus
10% attorney's fees.

All other claims are dismissed for lack of merit.

SO ORDERED.[22]

On September 21, 2010, MST moved for reconsideration but the same was denied by the
NLRC. Undeterred, MST filed a petition for certiorari in the CA imputing grave abuse
of discretion on the NLRC in awarding full disability benefits and attorney's fees to
Tulabing.

On September 12, 2011, the CA rendered a Decision[23] affirming the earlier decision of

the NLRC but modified the award of attorney's fees, viz.:

WHEREFORE, the petition for certiorari is PARTLY GRANTED. The August 16,

2010 Decision of public respondent NLRC is AFFIRMED with
MODIFICATION, reducing the award of attorney's fees to US$1,000.00.

SO ORDERED.[24]
Both parties filed their respective motions for reconsideration but the same were denied
by the CA in its Resolution[25] dated May 23, 2012.

Hence, these consolidated petitions.

The Issues[26]

Tulabing seeks partial reversion of the assailed CA decision, specifically as to the amount
of attorney's fees. He posits that the CA erred when it ruled that he is entitled only to
US$1,000.00 attorney's fees instead of the US$7,000.00 previously awarded by the
NLRC.

On the other hand, MST, et al. put forth the following grounds:

1. The CA committed serious reversible error of law in refusing to give

weight and credence to the final assessment of the company-designated
physician that Tulabing's disability is grade 10, in complete disregard of the
ruling of the Court in Magsaysay Maritime Corp., et al. v. NLRC
(2nd Division), et al.[27] and Vergara v. Hammonia Maritime Services, Inc.[28]

2. The CA committed serious reversible error of law in granting permanent

disability benefits on the ground that Tulabing was unable to perform work
for more than 120 days, in complete disregard of the ruling of the Court
in Magsaysay Maritime[29] that this period is subject to the right of the
employer to declare within 120 to 240 days the seafarer's final disability.

3. The CA committed serious reversible error for faulting MST, et al. in not
re-deploying Tulabing, notwithstanding the employer's exercise of
management prerogative as recognized in the case of Rural Bank of
Cantilan v. Julve.[30]

4. The CA committed serious reversible error of law in awarding attorney's

fees notwithstanding the lack of factual, legal and equitable bases as
required in the case of Briones v. Macabagdal.[31]

Ruling of the Court

The petition of MST, et al. is impressed with merit.

The pivotal issue that must be resolved in MST, et al.'s petition for review is whether or
not Tulabing is entitled to the award of full disability benefits of US$70,000.00, as
previously held by the NLRC and affirmed by the CA. The issue raised by Tulabing in
his petition, as to the amount of attorney's fees awarded, shall be discussed after the Court
has ruled on the main issue.

In a long line of cases,[32] the Court has repeatedly ruled that a disability may be
temporary or permanent, it may be partial or total. Permanent disability is defined as the
inability of a worker to perform his job for more than 120 days (or 240 days, as the case
may be), regardless of whether or not he loses the use of any part of his body. Total
disability, meanwhile, means the disablement of an employee to earn wages in same kind
of work of similar nature that he was trained for, or accustomed to perform, or any kind
of work which a person of his mentality and attainments could do.

Article 192(c)(1)[33] of the Labor Code expressly provides that temporary total disability
shall be deemed permanent and total if it lasts continuously for more than 120
days except as otherwise provided in the Rules. In the recent case of TSM Shipping
Phils., Inc., and/or DAMPSKIBSSELSKABET NORDEN A/S and/or Capt. Castillo v.
Louie Patiño,[34] the Court clarified that the "Rule" referred to in this Labor Code
provision is Section 2, Rule X of the Amended Rules on Employees' Compensation
Implementing Title II, Book IV of the Labor Code, which states:

Sec. 2. Period of Entitlement - (a) The income benefit shall be paid beginning on the
FIRST Day of such disability. If caused by an injury or sickness it shall not be paid
longer than 120 consecutive days except where such injury or sickness still requires
medical attendance beyond 120 days but not to exceed 240 days from onset of
disability in which case benefit for temporary total disability shall be paid. However, the
System may declare the total and permanent status at any time after 120 days of
continuous temporary total disability as may be warranted by the degree of actual loss or
impairment of physical or mental functions as determined by the System. (Underlining
and emphasis Ours)

Thus, by correlating and harmonizing the provisions of Article 192(c)(1) of the Labor
Code and Section 2, Rule X of the Amended Rules on Employees' Compensation, the
prevailing rule as it now stands is that the 120-day initial period may be extended for the
purpose of determining the seafarer's grade of disability. In recently decided
cases[35] involving claims for disability benefits, the Court ruled that the company-
designated physician must arrive at and issue a definite assessment of the seafarer's
fitness to work or permanent disability within the period of 120 days. If the company-
designated physician fails to give his assessment within the 120-day period but there is
sufficient justification for the delay (e.g. the seafarer's condition required further medical
treatment or on-going rehabilitation), the 120-day period shall be extended to 240 days. If
the company-designated physician still fails to give a final assessment within the
extended period and the seafarer's medical condition remains unresolved after the lapse of
said period, the seafarer's disability shall be deemed permanent and total.

A perusal of the records reveals that from the period of June 17, 2008 up until the time
the company-designated physician gave a final disability grading, Tulabing never
consulted with another physician. Stated otherwise, the only assessment or grading that
existed at that time was the grading given by Dr. Cruz, the company-designated
physician. Since the disability grading was given by Dr. Cruz on November 14, 2008, or
only 150 days after Tulabing's first medical evaluation from repatriation, it was well
within the 240-day period.

Dr. Cruz's second medical report issued on June 26, 2008 which referred Tulabing to
undergo physical rehabilitation, justified the extension of the 120-day period to an
additional 31 days. That he was not able to give a disability grading during the 120-day
period notwithstanding the fact that evaluations were made, only bolsters the conclusion
that he was thorough in his assessment. It was not mere unjustified delay on his part since
he referred Tulabing to undergo physical rehabilitation under the care of Dr. Matias who
in turn submitted reports to him for further evaluation. That being said, it is not for this
Court to question the evaluation and recommendations made by Dr. Cruz especially when
it involves matters clearly falling within his field of expertise. Being the company-
designated physician who observed, studied and evaluated Tulabing's medical condition
from the time the latter was repatriated back to the Philippines up until the time he was
undergoing physical rehabilitation, Dr. Cruz's assessment stands in the absence of
evidence to the contrary.

The only instance when the assessment of a company-designated physician may be

challenged is when the seafarer likewise consulted with his personal physician who
issued a different assessment. The conflicting assessments shall be settled by referring the
matter to a neutral third-party physician, whose assessment shall be final and binding.
Section 20(B)(3) of the 2000 POEA-Standard Terms and Conditions Governing the
Overseas Employment of Filipino Seafarers On-board Ocean-going Ships (SEC)
[36]
 provides:

SECTION 20. COMPENSATION AND BENEFITS

B. COMPENSATION AND BENEFITS FOR INJURY OR ILLNESS

The liabilities of the employer when the seafarer suffers work-related injury or illness
during the term of his contract are as follows:

xxxx

3. 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.

For this purpose, the seafarer shall submit himself to a post-employment medical
examination by a company-designated physician within three working days upon his
return, except when he is physically incapacitated to do so, in which case a written notice
to the agency within the same period is deemed as compliance.

Failure of the seafarer to comply with the mandatory reporting requirement shall result in
his forfeiture of the right to claim the above benefits.

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.

It bears emphasizing that Tulabing only sought a second opinion and consulted Dr.
Raymundo when the LA decided against his claim of full disability benefits. In fact, his
appeal was already pending with the NLRC when such consultation was made. This
move on Tulabing's part appears to be nothing but a mere afterthought given the length of
time that has already passed since Dr. Cruz's final assessment. Dr. Raymundo issued the
Medical Report only on June 15, 2010 or almost two years (728 days) from the date of
Tulabing's first medical evaluation after his repatriation to the Philippines. Moreover,
even if the Court were to consider the irrationally late assessment issued by Dr.
Raymundo, the assessment of Dr. Cruz must still prevail for failure of the parties to refer
the matter to a third-party physician, as required by the Rules[37] and jurisprudence.

In the case of Crew and Ship Management International, Inc. v. Soria,[38] the Court
explained that the employment of seafarers, including claims for death and disability
benefits, is governed by the contracts they sign every time they are hired or rehired, and
as long as the stipulations therein are not contrary to law, morals, public order or public
policy, they have the force of law between the parties.[39]

There is no question that Tulabing's disability was due to an injury he sustained while
engaged in the performance of his work as MST's employee. Under the provisions of the
parties' NIS-CBA, the maximum disability compensation that may be paid to an
employee is US$70,000.00. Award of this maximum amount, however, presupposes a
disability grading of "1" or permanent and total disability. In the case at bench, the
company-designated physician gave Tulabing a final and definite assessment of Grade 10
disability only.

Although the Court has always been vigilant in ensuring that the rights of seafarers are
protected, it is likewise keen in upholding labor laws. The entitlement of an overseas
seafarer to disability benefits is governed by (1) the law, (2) the employment contract,
and (3) the medical findings of the company-designated physician.

In sum, the Court holds that the appellate court clearly erred when it awarded full
disability benefits of US$70,000.00 to Tulabing, in clear disregard of labor laws and
settled jurisprudence on the matter.

Anent the issue raised by Tulabing, he avers that the CA erred when it modified the
amount of attorney's fees previously awarded by the NLRC. The NLRC awarded him
attorney's fees equivalent to 10% of US$70,000.00. The CA thereafter reduced it to
US$1,000.00. Considering that Tulabing was forced to litigate and incur expenses to
protect his right and interest, the Court finds it proper and reasonable to award him
attorney's fees equivalent to 10% of the monetary award or US$1,410.50.

WHEREFORE, premises considered, the Decision dated September 12, 2011 of the

Court of Appeals in CA-G.R. SP No. 117319 is hereby REVERSED and SET
ASIDE. The Decision dated December 29, 2009 of the Labor Arbiter is REINSTATED.

MST Marine Services (Phils.), Inc., TSM International Ltd. and/or Capt. Alfonso R. Del
Castillo are ordered to pay, jointly and severally, Ricky B. Tulabing his disability
compensation in the amount of US$14,105.00 plus attorney's fees equivalent to ten
percent (10%) of the judgment award.
 SECOND DIVISION
[ G.R. No. 186180, March 22, 2010 ]
MAGSAYSAY MARITIME CORPORATION AND/OR CRUISE SHIPS
CATERING AND SERVICES INTERNATIONAL N.V., PETITIONERS, VS.
NATIONAL LABOR RELATIONS COMMISSION (SECOND DIVISION)
AND ROMMEL B. CEDOL, RESPONDENTS.

DECISION

BRION, J.:

We review in this petition for review on certiorari[1] the December 15, 2008

decision[2] and January 28, 2009 resolution[3] of the Court of Appeals (CA) in CA-G.R. SP.
No. 105625 that affirmed the April 30, 2008 and July 31, 2008 resolutions of the
National Labor Relations Commission (NLRC). The NLRC resolutions affirmed the Labor
Arbiter's decision granting respondent Rommel M. Cedol (respondent) disability benefits
and attorney's fees in the amounts of US$60,000.00 and US$6,000.00, respectively.

ANTECEDENT FACTS

On July 14, 2004, the respondent entered into a seven-month contract of employment
with petitioner Magsaysay Maritime Corporation (Magsaysay Maritime) for its foreign
principal, Cruise Ships Catering and Services International N.V. (Cruise Ships); he was
employed as an assistant housekeeping manager on board the vessel Costa
Mediterranea with a basic monthly salary of US$482.00. The respondent submitted
himself to the required Pre-Employment Medical Examination (PEME), and was
pronounced fit to work. He boarded the vessel Costa Mediterranea on July 19, 2004.

Prior to the execution of this employment contract, the respondent had previously
worked as housekeeping cleaner and assistant housekeeping manager on board the
petitioners' other vessels from 2000 to 2004.[4]

In November 2004, the respondent felt pain in his lower right quadrant. He was brought
to and conferred at the Andreas Constantinou Medical Center in Cyprus for
consultation. On January 18, 2005, he underwent a procedure called exploratory
laparotomy which revealed a massive tumor in the terminal ileum and in the ascending
colon near the hepatic flexture. On the same day, the respondent underwent a surgical
procedure called right hemicolectomy with end to end ilectransverse anastomosis.[5] The
Histopathology Report showed the following findings:

CONCLUSION

The appearances are consistent with a malignant lymphoid infiltration of the ileum and
the mesenteric lymph nodes.

The appearances are consistent [with] the interstinal lymphoma of small and large sized
lymphoid cells.

x x x x[6]

The respondent was discharged from the hospital and repatriated to the Philippines on
February 1, 2005.

Upon repatriation, the respondent was placed under the medical care and supervision
of the company-designated physician, Dr. Susannah Ong-Salvador (Dr. Ong-Salvador). In
Dr. Ong-Salvador's Initial Medical Report[7] dated February 10, 2005, she found the
respondent to be suffering from lymphoma, and declared his illness to be non-work
related.

On April 14, 2005, the respondent was brought to the Chinese General Hospital, where
he underwent a surgical procedure called excision biopsy.[8] Dr. Ong-Salvador's Medical
Progress Report found the respondent's recurrent lymphoma to be in complete
remission, and declared him "fit to resume sea duties" after undergoing six (6) sessions
of chemotherapy.[9]

On June 16, 2006, the respondent filed before the Labor Arbiter a complaint for total
and permanent disability benefits, reimbursement of medical and hospital expenses,
damages, and attorney's fees[10] against the petitioners. He claims that he contracted his
illness while working on board the petitioners' vessel.

The Labor Arbiter's Decision

Labor Arbiter Marita V. Padolina (LA Padolina) ruled in respondent's favor. She found
the respondent permanently and totally disabled and awarded him disability
compensation of US$60,000.00 or its peso equivalent; and US$6,000.00 attorney's fees.

LA Padolina ruled the respondent's illness to be work-related, hence compensable. She

held that the respondent's illness was aggravated by his work, as he had always passed
the company's physical examinations since 2000. She explained that the respondent's
work need not be the main cause of his illness; it is enough that his employment had
contributed even in a small degree to the development of the disease.

LA Padolina likewise held that each person has his own physical tolerance. That it was
only the respondent who had contracted lymphoma among the petitioners' workers did
not remove the fact that his illness was aggravated by his employment. She also ruled
that the respondent was not fit to work as a seafarer because he had undergone
chemotherapy.[11]

The labor arbiter likewise awarded attorney's fees in respondent's favor, as he was
forced to litigate to protect his rights.

The NLRC Ruling

The NLRC affirmed the labor arbiter's decision in toto in its resolution dated April 30,
2008.[12] The NLRC held that the respondent is not fit to work as a seafarer because he is
suffering from recurrent lymphoma - a sickness that required him undergo
chemotherapy. The NLRC explained that the respondent is in a state of permanent total
disability because he can no longer earn wages in the same kind of work, or work of
similar nature that he was trained for or accustomed to perform, or any kind of work
which a person of his mentality and attainment could do.

The NLRC ruled that there was a reasonable connection between the nature of the
respondent's work as assistant housekeeping manager and the development of his
illness. The NLRC explained that the respondent had passed every PEME before signing
the six employment contracts with the petitioner from 2000 to 2005, and was declared
"fit to work" each time. It was only after the respondent was exposed to an extreme
working environment in the petitioners' vessel that he developed his sickness. At any
rate, the law merely requires a reasonable work connection, and not a direct causal
connection for a disability to be compensable.
The petitioners moved to reconsider this resolution, but the NLRC denied their motion
in its resolution of July 31, 2008.[13]

The CA Decision

The petitioners filed a petition for certiorari with prayer for the issuance of a writ of
preliminary injunction and/or temporary restraining order [14] before the CA, docketed
as CA-G.R. SP. No. 105625. The CA, in its decision[15] of December 15, 2008, denied the
petition for lack of merit.

The CA held that under the provisions of the POEA Standard Employment Contract
(POEA-SEC), it is enough that the work has contributed, even in a small degree, to the
development of the worker's disease. The CA further held that the Courts are not bound
by the assessment of the company-designated physician. According to the CA, Dr. Ong-
Salvador's pronouncement that the respondent is "fit to resume sea duties" was
inconsistent with the fact that the respondent had previously undergone chemotherapy,
and needed to undergo periodic check-ups.

The CA affirmed the award of attorney's fees because Article 2208 of the Civil Code
allows the recovery of attorney's fees in actions for indemnity under the workman's
compensation and employer liability laws.

The petitioners moved to reconsider this decision, but the CA denied their motion in its
resolution of January 28, 2009.[16]

The Petition

In the present petition, the petitioners argue that the CA erred in holding the petitioners
liable for US$60,000.00 in total and permanent disability benefits despite the company-
designated physician's finding that the respondent's illness was not work-related. They
assert that under the 2000 POEA-SEC, only work-related injury or illness is compensable.
They likewise maintain that the company-designated physician's finding that the
respondent's illness was not work-related should be given credence. Aside from the fact
that lymphoma is not listed as an occupational disease under Section 32-A of the POEA-
SEC, the respondent's work could not have exposed him to carcinogenic fumes or
chemicals that cause cancer because his duties merely involved housekeeping and
cleaning.
 The Respondent's Position

In his Comment,[17] the respondent claims that the company-designated physician had

no factual basis in ruling that his illness was not work-related. He posits that the
opinions of company-designated physicians should not be taken as gospel truth because
of their non-independent nature. Finally, he claims that his illness could have only been
acquired on board since he passed the company's PEME.

THE COURT'S RULING

We find the petition meritorious.

The petitioners essentially claim that the evidence on record does not support the
findings of the labor tribunals and the CA that the respondent's illness was work-related.
This argument clearly involves a factual inquiry whose determination is not a function of
this Court. We emphasize, however, that we are reviewing in this Rule 45 petition the
decision of the CA on a Rule 65 petition filed by the petitioners with that court. In so
doing, we review the legal correctness of the CA decision from the prism of whether it
correctly determined the presence or absence of grave abuse of discretion in the NLRC
decision before it.

In this task, the Court is allowed, in exceptional cases, to delve into and resolve factual
issues when insufficient or insubstantial evidence to support the findings of the tribunal
or court below is alleged, or when too much is concluded, inferred or deduced from the
bare and incomplete facts submitted by the parties, to the point of grave abuse of
discretion.[18] The present case constitutes one of these exceptional cases.

The Rule on Disability Benefits

Entitlement of seamen on overseas work to disability benefits is a matter governed, not

only by medical findings, but by law and by contract. The material statutory provisions
are Articles 191 to 193 under Chapter VI (Disability Benefits) of the Labor Code, in
relation with Rule X of the Rules and Regulations Implementing Book IV of the Labor
Code. By contract, the POEA-SEC, as provided under Department Order No. 4, series of
2000 of the Department of Labor and Employment, and the parties' Collective
Bargaining Agreement (CBA) bind the seaman and his employer to each other.[19]

Section 20 (B), paragraph 3 of the 2000 POEA-SEC[20] reads:

Section 20-B. Compensation and Benefits for Injury or Illness.

The liabilities of the employer when the seafarer suffers work-related injury or

illness during the term of his contract are as follows:

xxxx

6. In case of permanent total or partial disability of the seafarer caused by either injury
or illness the seafarer shall be compensated in accordance with the schedule of benefits
enumerated in Section 32 of this Contract. Computation of his benefits arising from an
illness or disease shall be governed by the rates and the rules of compensation
applicable at the time the illness or disease was contracted. [Emphasis supplied.]

For disability to be compensable under Section 20 (B) of the 2000 POEA-SEC, two
elements must concur: (1) the injury or illness must be work-related; and (2) the work-
related injury or illness must have existed during the term of the seafarer's employment
contract.[21] In other words, to be entitled to compensation and benefits under this
provision, it is not sufficient to establish that the seafarer's illness or injury has rendered
him permanently or partially disabled; it must also be shown that there is a causal
connection between the seafarer's illness or injury and the work for which he had been
contracted.[22]

The 2000 POEA-SEC defines "work-related injury" as "injury(ies) resulting in disability or

death arising out of and in the course of employment" and "work-related illness" as
"any sickness resulting to disability or death as a result of an occupational disease listed
under Section 32-A of this contract with the conditions set therein satisfied."

Under Section 20 (B), paragraphs (2) and (3) of the 2000 POEA-SEC, it is the company-
designated physician who is entrusted with the task of assessing the seaman's disability,
thus:

Section 20-B. Compensation and Benefits for Injury or Illness.

The liabilities of the employer when the seafarer suffers work-related injury or illness
during the term of his contract are as follows:

xxxx
However, if after repatriation, the seafarer still requires medical attention arising from
said injury or illness, he shall be so provided at cost to the employer until such time he
is declared fit or the degree of his disability has been established by the company-
designated physician.

3. 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.

For this purpose, the seafarer shall submit himself to a post-employment medical
examination by a company-designated physician within three working days upon his
return except when he is physically incapacitated to do so, in which case, a written
notice to the agency within the same period is deemed as compliance. Failure of the
seafarer to comply with the mandatory reporting requirement shall result in his
forfeiture of the right to claim the above benefits.

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.

x x x x [Emphasis supplied.]

Thus, the seafarer, upon sign-off from his vessel, must report to the company-
designated physician within three (3) days from arrival for diagnosis and treatment. For
the duration of the treatment but in no case to exceed 120 days, the seaman is on
temporary total disability  as he is totally unable to work. He receives his basic wage
during this period until he is declared fit to work or his temporary disability is
acknowledged by the company to be permanent, either partially or totally, as his
condition is defined under the POEA-SEC and by applicable Philippine laws. If the 120-
day initial period is exceeded and no such declaration is made because the seafarer
requires further medical attention, then the temporary total disability period may be
extended up to a maximum of 240 days,[23] subject to the right of the employer to
declare within this period that a permanent partial or total disability already exists. The
seaman may of course also be declared fit to work at any time such declaration is
justified by his medical condition.[24]
In the case before us, there is no dispute that the respondent reported to the company-
designated physician for treatment immediately upon repatriation. Problems arose
when he was diagnosed with lymphoma, and the company-designated physician ruled
this illness to be non-work-related.

Lymphoma is a cancer that begins in the lymphocites of the immune system and
presents as a solid tumor of lymphoid cells. Like other cancers, lymphoma occurs when
lymphocytes are in a state of uncontrolled cell growth and multiplication. It is treatable
with chemotherapy, and, in some cases, radiotherapy and/or bone marrow
transplantation, and can be curable, depending on the histology, type, and stage of the
disease. These malignant cells often originate in lymph nodes, presenting as an
enlargement of the node (a tumor).[25]

Lymphoma is neither listed as a disability under Section 32 (Schedule of Disability or

Impediment for Injuries Suffered and Diseases Including Occupational Diseases or Illness
Contracted) of the 2000 POEA-SEC nor listed as an occupational disease under Section
32-A thereof. Nonetheless, Section 20 (B), paragraph (4) provides that "those illnesses
not listed in Section 32 of this Contract are disputably presumed as work-related." The
burden is therefore placed upon the respondent to present substantial evidence, or
such relevant evidence which a reasonable mind might accept as adequate to justify a
conclusion that there is a causal connection between the nature of his employment and
his illness, or that the risk of contracting the illness was increased by his working
conditions. This, the respondent failed to do. In fact, a careful review of the records
shows that the respondent did not, by way of a contrary medical finding, assail the
diagnosis arrived at by the company-designated physician. For clarity and precision, we
reproduce the pertinent parts of Dr. Ong-Salvador's Initial Medical Report dated
February 10, 2005, thus:

WORKING IMPRESSION: To Consider Lymphoma

Status post Right hemilectomy with anastomosis with end to end ileotransverse
anastomosis with extensive removal of the mesenteries

Lymphoma is the cancer of the lymph nodes. It has 2 types: Hodgkins and Non-hodgkins
lymphoma. Etiology of this condition may arise from genetic predisposition (family
history of cancer), cytogenetic abnormalities, viral infection or exposure to highly
carcinogenic fumes.
By history, the patient has not been exposed to any carcinogenic fumes nor did he
contact any viral infection such as Epstein Barr virus in his workplace nor was there a
family history of cancer. His condition may be brought about by cytogenetic
abnormalities. Hence, his condition is non-work related.

x x x x[26] [Emphasis supplied.]

While it is true that medical reports issued by the company-designated physicians do

not bind the courts, our examination of Dr. Ong-Salvador's Initial Medical Report leads
us to agree with her findings. Dr. Ong-Salvador was able to sufficiently explain her basis
in concluding that the respondent's illness was not work-related: she found the
respondent not to have been exposed to any carcinogenic fumes, or to any viral
infection in his workplace. Her findings were arrived at after the respondent was made
to undergo a physical, neurological and laboratory examination, taking into
consideration his (respondent's) past medical history, family history, and social history.
In addition, the respondent was evaluated by a specialist, a surgeon and an oncologist.
The series of tests and evaluations show that Dr. Ong-Salvador's findings were not
arrived at arbitrarily; neither were they biased in the company's favor.

The respondent, on the other hand, did not adduce proof to show a reasonable
connection between his work as an assistant housekeeping manager and his lymphoma.
There was no showing how the demands and nature of his job vis-à-vis the ship's
working conditions increased the risk of contracting lymphoma. The non-work
relatedness of the respondent's illness is reinforced by the fact that under the
Implementing Rules and Regulations of the Labor Code (ECC Rules), lymphoma is
considered occupational only when contracted by operating room personnel due to
exposure to anesthetics. The records do not show that the respondent's work as an
assistant housekeeping manager exposed him to anesthetics.

In short, the evidence on record is totally bare of essential facts on how the respondent
contracted or developed lymphoma and how and why his working conditions increased
the risk of contracting this illness. In the absence of substantial evidence, we cannot just
presume that respondent's job caused his illness or aggravated any pre-existing
condition he might have had.

The fact that respondent passed the company's PEME is of no moment. We have ruled
that in the past the PEME is not exploratory in nature. It was not intended to be a totally
in-depth and thorough examination of an applicant's medical condition. The PEME
merely determines whether one is "fit to work" at sea or "fit for sea service," it does not
state the real state of health of an applicant. [27] In short, the "fit to work" declaration in
the respondent's PEME cannot be a conclusive proof to show that he was free from any
ailment prior to his deployment. Thus we held in NYK-FIL Ship Management, Inc. v.
NLRC:[28]

While a PEME may reveal enough for the petitioner (vessel) to decide whether a
seafarer is fit for overseas employment, it may not be relied upon to inform petitioners
of a seafarer's true state of health. The PEME could not have divulged respondent's
illness considering that the examinations were not exploratory.

The respondent was declared fit to resume sea duties

Another factor that further militates against the respondent's claim for permanent and
total disability benefits is Dr. Ong-Salvador's Medical Progress Report declaring him to
be "fit to resume sea duties." The relevant portions of this report are hereunder
reproduced:

MEDICAL PROGRESS REPORT

xxxx

CT Scan of the abdomen

- Comparison is made with the previous examination dated November 29, 2005
- The previously noted irregular soft tissue module inferior to the pancreatic is no longer
evident
- There is no gross lymph node enlargement
- Fatty changes in the liver and gallstones are again demonstrated
- The rest of the findings are stationary
- Impression: Further disease regression since November 2005.

Our Oncologist examined the patient today who opines that patient has responded well
after undergoing 6 sessions of chemotherapy. His present state of remission is
supported by further disease regression in his latest CT Scan of the abdomen. Blood
chemistry result of his createnine and lactate dehydrogenase levels are within normal
limits. Check-up from year to year was suggested to evaluate periodically his health
condition. Since Mr. Cedol is noted asymptomatic he is therefore cleared from Oncology
standpoint.

After thorough evaluation by our specialists, Mr. Cedol is now deemed fit to resume sea
duties.

FINAL DIAGNOSIS: Recurrent Lymphoma, in complete remission. [29]

As previously discussed, it is the company-designated physician who is entrusted with
the task of assessing the seaman's disability. Since Dr. Ong-Salvador deemed the
respondent as fit to resume sea duties, then such declaration should be given credence,
considering the amount of time and effort she gave to monitoring and treating the
respondent's condition.[30] It bears emphasizing that the respondent has been under the
care and supervision of Dr. Ong-Salvador since his repatriation in February 2005 and no
contrary medical evidence exists on record disputing Dr. Ong-Salvador's medical
conclusions. The extensive medical attention she has given the respondent undeniably
enabled her to acquire familiarity and detailed knowledge of the latter's medical
condition. We cannot help but note that the Medical Progress Report was replete with
details justifying its "fit to work" conclusion. In addition, the respondent did not contest
the findings contained in this Medical Progress Report; neither did he seek the opinion
of other doctors.

We emphasize that the constitutional policy to provide full protection to labor is not
meant to be a sword to oppress employers. The commitment of this Court to the cause
of labor does not prevent us from sustaining the employer when it is in the right. [31] We
should always be mindful that justice is in every case for the deserving, to be dispensed
with in the light of established facts, the applicable law, and existing jurisprudence. [32]

In sum, we hold that the respondent is not entitled to total and permanent disability
benefits for his failure to refute the company-designated physician's findings that: (1)
his illness was not work-related; and (2) he was fit to resume sea duties. The CA thus
erred in not finding grave abuse of discretion on the part of the NLRC when the latter
affirmed the labor arbiter's decision to grant permanent and total disability benefits to
the respondent despite insufficient evidence to justify this grant.

WHEREFORE, in view of all the foregoing, the instant petition is GRANTED. The assailed
decision of the Court of Appeals in CA-G.R. SP. No. 105625 is REVERSED and SET ASIDE.
Accordingly, the respondent's complaint before the Labor Arbiter is DISMISSED.
 FIRST DIVISION

CRYSTAL SHIPPING, INC., and/or A/S G.R. No. 154798

STEIN LINE BERGEN,
 
Petitioners,
Present:
 
Davide Jr., C.J.,
 
(Chairman),
 
Quisumbing,
- versus -
Ynares-Santiago,

Carpio, and

Azcuna, JJ.

 
DEO P. NATIVIDAD, Promulgated:

Respondent.  

October 20, 2005

x- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -x

DECISION

QUISUMBING, J.:

For review on certiorari are the Resolutions [1] dated July 2, 2002 and August 15,
2002 of the Court of Appeals in CA-G.R. SP No. 71293 which denied petitioners'
motion for extension of time to file a petition for certiorari and their motion for
reconsideration, respectively.

Petitioner A/S Stein Line Bergen, through its local manning agent, petitioner Crystal
Shipping, Inc., employed respondent Deo P. Natividad as Chief Mate of M/V
Steinfighter for a period of ten months. [2] Within the contract period, respondent
complained of coughing and hoarseness and was brought to shore for examination.
He was diagnosed with 'swelling neck and lymphatic glands right side in neck',
declared unfit for duty, and advised to see an ear-nose-throat specialist. [3] He
was repatriated to Manila on August 18, 1998.

Shortly after his arrival, respondent was referred to ClinicoMed Inc., the company-
designated clinic, for check-up and later thoroughly examined at the Manila Doctors
Hospital. He was diagnosed with 'papillary carcinoma, metastatic to lymphoid tissue
consistent with thyroid primary and 'reactive hyperplasis, lymph node. On
September 11, 1998, he underwent a total thyroidectomy with radial neck
dissection. After the operation, respondent developed chest complications and
pleural effusion, and had to undergo a thoracenthesis operation. On the basis of all
these, his attending physician diagnosed him permanently disabled with a grade 9
impediment, with grade 1 as the most serious. [4]

A second opinion by Marine Medical Services and Metropolitan Hospital attending

physician, Dr. Robert D. Lim, likewise concurred that respondent was disabled with
a grade 9 impediment. [5] Under the care of Dr. Lim, respondent underwent
various treatments, one of which was the radioactive iodine therapy at the
Philippine General Hospital. While his treatment with Dr. Lim was ongoing,
respondent sought the opinion of Dr. Efren R. Vicaldo, who opined that he was
totally and permanently disabled for labor with a grade 1 impediment. [6] On
February 22, 1999, respondent underwent a whole body scan which revealed no
trace of radio iodine on his body to indicate metastasis or residual thyroid tissue.
The attending physician, Dr. Wilson D. Lim, confirmed the earlier assessments of
disability with a grade 9 impediment. [7]

All expenses incurred in respondent's examination and treatments were shouldered

by the petitioners. Respondent was also paid the allowable illness allowances,
commensurate to a grade 9 impediment.

On June 25, 1999, petitioners offered US$13,060 as disability benefits which

respondent rejected. Respondent claimed that he deserves to be paid US$60,000
for a grade 1 impediment. Failing to reach an agreement, respondent filed, with the
Regional Arbitration Branch (RAB), a complaint for disability benefits, illness
allowance, damages and attorney's fees.
The Labor Arbiter ruled for respondent and ordered petitioners to pay respondent
US$60,000 as disability benefits, P100,000 as moral damages, and ten percent of
the total monetary award as attorney's fees.

On appeal, the National Labor Relations Commission (NLRC) initially reversed the
ruling of the RAB on the ground that findings of the company-designated doctors
were binding, as stipulated in the Philippine Overseas Employment Agency (POEA)
Standard Employment Contract. [8] However, upon respondent's motion for
reconsideration, citing jurisprudence that findings of company-designated doctors
are self-serving, the NLRC affirmed the ruling of the RAB with respect only to the
award of disability benefits.

Petitioners seasonably filed a motion for extension of time to file their petition for
certiorari with the Court of Appeals. On July 2, 2002, the appellate court denied the
motion on the ground that pressure of work is not a compelling reason for the grant
of an extension.

In view of the foregoing, petitioner's motion for extension is DENIED and the instant
case is DISMISSED.

SO ORDERED. [9]

Prior to the receipt of the appellate court's denial, petitioners filed the
petition. It was noted without action in view of the July 2, 2002
Resolution. [10] Subsequently, petitioners moved for reconsideration of
the resolution, but it was denied. [11]

Hence, this appeal by certiorari ascribing error to the Court of Appeals,

I.        WHEN IT DENIED PETITIONERS' MOTION FOR EXTENSION OF TIME TO FILE THEIR PETITION
FOR CERTIORARI UNDER RULE 65, FAILING TO GIVE DUE CONSIDERATION TO THE
ALLEGATIONS OF PETITIONERS THEREIN;

II.    
' WHEN IT MERELY NOTED PETITIONERS' PETITION FOR CERTIORARI UNDER RULE 65
WITHOUT PERUSING THE ALLEGATIONS THEREIN AND THE ARGUMENTS IN SUPPORT THEREOF
WHICH, UNDER THE CIRCUMSTANCES, IS CLEARLY INIQUITOUS AND UNJUST. [12]

Here, we are asked to resolve the procedural issue of whether the Court of
Appeals erred when it denied petitioners' motion for extension of time to
file a petition; and the substantive issue of the proper disability benefits
that respondent is entitled to.
Anent the procedural issue, petitioners contend that the appellate court
erroneously applied the ruling in Velasco v. Ortiz, [13] because the factual
circumstances therein were different from the present case. In Velasco,
the parties sought for the admission of their appeal that was filed beyond
the reglementary period. In the present case, however, petitioners filed
their motion for extension of time within the reglementary period. They
maintain that they have a valid and compelling reason in asking the
appellate court for extension. Moreover, petitioners posit that technical
rules of procedure should give way to substantive justice.

On the other hand, respondent argues that there should be more than a
mere claim of 'extreme pressure of work to justify an extension of time to
file a petition for certiorari. He calls attention to the fact that petitioners
never moved for the reconsideration of the NLRC decision, which is a
prerequisite for the filing of a petition for certiorari. Likewise, respondent
counters petitioners' plea for liberality by indicating their failure to file a
motion for reconsideration of the NLRC decision.

Jurisprudence abounds on the subject that a motion for reconsideration is

a prerequisite for the filing of a special civil action for certiorari. [14] A
literal interpretation of this prerequisite would require a motion for
reconsideration of the NLRC decision, which granted a previous motion for
reconsideration and reversed a prior decision. After all, the second decision
is considered as entirely new.

We cannot fault the appellate court for faithfully complying with the rules
of procedure which it has been mandated to observe. [15] Save for the
most persuasive of reasons, strict compliance is enjoined to facilitate the
orderly administration of justice. [16]

Indeed, on several occasions, we relaxed the rigid application of the rules

of procedure to afford the parties opportunity to fully ventilate the merits
of their cases. This is in line with the time-honored principle that cases
should be decided only after giving all parties the chance to argue their
causes and defenses. Technicality and procedural imperfection should thus
not serve as basis of decisions. [17]
The reason for requiring a motion for reconsideration is to make sure that
administrative remedies have been exhausted before a case is appealed to
a higher court. It allows the adjudicator a second opportunity to review the
case, to grapple with the issues therein, and to decide anew a question
previously raised. [18] It is presumed that an administrative agency, if
afforded an opportunity to pass upon a matter, will decide the same
correctly, or correct any previous error committed in its forum. [19]

With the first motion for reconsideration which the NLRC granted, there is
no need for the parties to file another motion for reconsideration before
bringing up the matter to the Court of Appeals. The NLRC was already
given the opportunity to pass upon and correct its mistakes. Moreover, it
would be absurd to ask the NLRC to keep on reversing itself.

Considering that property rights of both parties are involved here, we will
give due course to the instant petition. Remanding the case to the court a
quo will only frustrate speedy justice and, in any event, would be a futile
exercise, as in all probability the case would end up with this
Court. [20] Thus, we shall bring the present controversy to rest by
deciding on the appropriate disability benefits that respondent is entitled
to.

On the substantive issue, petitioners assert that the NLRC erred when it
said that findings of company-designated doctors are self-serving. They
point out that there were three doctors who came up with the same
findings. They argue that these findings were more credible than the
findings of respondent's doctor. In addition, petitioners claim that the
award of a grade 1 impediment/disability benefit was wrong considering
that respondent subsequently gained employment as chief mate of another
vessel.

In resolving the merits of the case, we find pertinent Section 30 of the

POEA Memorandum Circular No. 55, Series of 1996, [21] which provides
the schedule of disability or impediment for injuries suffered and illness
contracted. The particular illness of the respondent is not within those
enumerated. But, the same provision supplies us with the guideline that
any item in the schedule classified under grade 1 constitutes total and
permanent disability.

Permanent disability is the inability of a worker to perform his job for more
than 120 days, regardless of whether or not he loses the use of any part of
his body. [22] As gleaned from the records, respondent was unable to
work from August 18, 1998 to February 22, 1999, at the least, or more
than 120 days, due to his medical treatment. This clearly shows that his
disability was permanent.

Total disability, on the other hand, means the disablement of an employee

to earn wages in the same kind of work of similar nature that he was
trained for, or accustomed to perform, or any kind of work which a person
of his mentality and attainments could do. [23] It does not mean absolute
helplessness. In disability compensation, it is not the injury which is
compensated, but rather it is the incapacity to work resulting in the
impairment of one's earning capacity. [24]

Although the company-designated doctors and respondent's physician

differ in their assessments of the degree of respondent's disability, both
found that respondent was unfit for sea-duty due to respondent's need for
regular medical check-ups and treatment which would not be available if
he were at sea. There is no question in our mind that respondent's
disability was total.

Petitioners tried to contest the above findings by showing that respondent

was able to work again as a chief mate in March 2001. [25] Nonetheless,
this information does not alter the fact that as a result of his illness,
respondent was unable to work as a chief mate for almost three years. It is
of no consequence that respondent was cured after a couple of years. 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. [26] 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.
WHEREFORE, the petition is DENIED for lack of merit. The
Resolutions dated July 2, 2002 and August 15, 2002 of the Court of
Appeals in CA-G.R. SP No. 71293, as well as the Resolution dated April 9,
2002 of the National Labor Relations Commission in NLRC NCR CA No.
23333-2000 are AFFIRMED.
 SECOND DIVISION

[G.R. No. 123891. February 28, 2001.]

PHILIPPINE TRANSMARINE CARRIERS, INC., Petitioner, v. NATIONAL LABOR

RELATIONS COMMISSION, PHILIPPINE OVERSEAS EMPLOYMENT
ADMINISTRATION, and CARLOS NIETES, Respondents.

DECISION

QUISUMBING, J.:

This petition seeks to annul and set aside the decision dated September 25, 1995 of the
National Labor Relations Commission (NLRC) in NLRC-NCR Case No. 009101-95. Said
decision affirmed with modification the judgment dated March 16, 1995 of the
Philippine Overseas Employment Administration (POEA), ordering the herein petitioner
and Pioneer Insurance and Surety Corporation to pay private respondent jointly and
severally the sum of US$21,000 or its peso equivalent at the time of actual payment
and P34,114.00 as reimbursement for medical expenses plus 10% of the total award as
attorney’s fees in favor of the private Respondent. In its Resolution dated December
29, 1995, the NLRC also denied petitioner’s motion for reconsideration. chanrob1es virtua1 1aw 1ibrary

The facts in this case are as follows: chanrob1es virtual 1aw library

On January 23, 1993, private respondent, Carlos Nietes filed a complaint against
Philippine Transmarine Carriers Inc. (PTC) for payment of disability benefit, sickness
wages, refund of medical expenses and attorney’s fees. Pioneer Insurance and Surety
Corp. was impleaded as surety of respondent PTC.

Private respondent alleged that he was a licensed Captain and/or Master Mariner. For
the period March 1985 to May 17, 1990, he was employed by PTC. He last boarded M/V
MA. ROSARIO where he served as Master from April 11, 1990 to May 17, 1990. At that
time he was a member of good standing of the Associated Marine Officers and
Seamen’s Union of the Philippines (AMOSUP), an affiliate of the International Transport
Federation (ITF) of London. He paid his union dues, insurance premiums, etc., which
were checked-off from his salaries.

As Master on board, he received US$1,500.00 per month. From May 10, 1990 up to
May 17, 1990, the date he was repatriated, he was hospitalized at the Moji Hospital in
Moji, Japan, at the instance of the vessel’s owners. Upon his arrival in the Philippines,
he was instructed by PTC and AMOSUP to report to the Seamen’s Hospital, a hospital
owned and operated by AMOSUP. On May 19, 1990, Dr. George Matti of the Seamen’s
Hospital issued a medical certification that he was unfit for work and was instructed to
continue treatment/medication.

When he was refused admission at the Seamen’s Hospital, he was forced to secure
medical treatment at the Sto. Niño Medical Specialist and Emergency Clinic as an out-
patient. His attending physician was Dra. Geraldine B. Emperador. Her diagnosis
showed he was unfit to work as Master of the vessel.

On May 25, 1992, he referred his claims to Atty. Oscar Torres who repeatedly informed
PTC of the claim for benefits and refund. Sometime in July 1992, he was informed by
Atty. Torres that his claim was being handled by Atty. Augusto Arreza, Jr., PTC’s legal
consultant and that they had submitted all the required documents to Atty. Arreza,
including the carbon original of the Medical Certificate issued by Dr. Matti of the
Seamen’s Hospital which certificate states that he was not fit to work.

From November 1992 up to the filing of this petition, Atty. Torres allegedly had not
talked to Atty. Arreza. Being a member of AMOSUP from 1985 to 1990, until he was
declared unfit to work, petitioner claimed he was entitled to "permanent total disability"
benefit in the amount equivalent to 86% of the US$18,000.00, sickness wage benefit in
the sum of US$6,000.00 as per Section C, Subsection (c) of the POEA Standard Format,
plus ten percent (10%) of the total judgment award and attorney’s fee.

In his supplemental complaint, private respondent further asked for refund of medical
expenses incurred in the amount of P30,411.00 plus professional fee of P4,000.00 or a
total of P34,411.00. Receipts covering these payments were submitted as Annexes "I"
and "II."
cralaw virtua1aw library

On March 16, 1995, the POEA Adjudication Office issued its decision in favor of the
private Respondent. It held that

WHEREFORE, judgment is hereby rendered, ordering respondents Philippine

Transmarine Carriers Inc. and Pioneer Insurance and Surety Corp. to pay complainant
jointly and severally the sum of TWENTY ONE THOUSAND US DOLLARS (US$21,000.00)
or its peso equivalent at the time of actual payment and P34,114.00 representing
reimbursement of medical expenses plus ten percent (10%) thereof of the total award
by way of and/as attorney’s fees.

All other causes or actions are dismissed for lack of merit.

SO ORDERED.

Petitioner appealed said decision to the NLRC which affirmed it except for the award of
attorney’s fees which is deleted for lack of factual and legal basis. NLRC later denied
petitioner’s motion for reconsideration.

Petitioner now contends that the NLRC acted with grave abuse of discretion amounting
to lack or excess of jurisdiction in:
chanrob1es virtual 1aw library

. . .AWARDING DISABILITY BENEFIT TO PRIVATE RESPONDENT DESPITE THE ABSENCE

OF PROOF OF HIS PERMANENT DISABILITY AND THE DEGREE THEREOF. chanrob1es virtua1 1aw 1ibrary

B
. . .ARBITRARILY DISREGARDING THE WELL-ESTABLISHED FACT THAT THE ABSENCE
OF A DETERMINATION OF PRIVATE RESPONDENT’S PERMANENT DISABILITY AND THE
DEGREE THEREOF WAS DUE SOLELY TO HIS FAULT. chanrob1es virtua1 1aw 1ibrary

. . .AWARDING SICK WAGES TO PRIVATE RESPONDENT FOR THE FULL PERIOD OF 120
DAYS NOTWITHSTANDING THE ABSENCE OF A DECLARATION OF HIS UNFITNESS TO
WORK OR A DETERMINATION OF THE DEGREE OF HIS PERMANENT DISABILITY.

. . .GRANTING THE REIMBURSEMENTS OF PRIVATE RESPONDENT’S MEDICAL

EXPENSES DESPITE THE FACT THAT THE LATTER’S TREATMENT WAS DONE BY A
PHYSICIAN NOT DESIGNATED OR ACCREDITED BY PETITIONER IN VIOLATION OF THE
POEA STANDARD CONTRACT.

The main issue is whether the NLRC gravely abused its discretion in affirming with
modification, the judgment of the POEA Adjudication Office.

Petitioner admits that private respondent suffered illness which rendered him unfit for
work. However, it points out that private respondent did not submit proof of the extent
of his disability as required by Section C (4) [b] and [c] of the POEA Standard Contract
for Seamen. 1 Without this proof, petitioner argues that the NLRC gravely abused its
discretion when it affirmed the findings of the POEA.

Petitioner also contends that public respondents erred in awarding sick wages for 120
days in favor of the private respondent without evidence on record establishing the
extent of his disability, which is essential in determining the correct amount of disability
benefit. Further, petitioner avers private respondent’s claim for refund of the medical
expenses should have not been granted by the public respondents on the ground that
the physician who treated private respondent was not accredited in violation of the
POEA Standard Contract for Seamen.

Public respondents held that "in effect, the complainant has substantially complied with
the POEA Standard of Employment Contract for Seamen when he submitted himself to
the Seamen’s Hospital three days after his repatriation from Japan." 2 They also found
that private respondent had in fact substantially complied with the post-employment
requirements under paragraph 4 [b] and [c] of Section c, 3 of the POEA Standard
Employment Contract for Seamen. We note that private respondent submitted himself,
upon the instructions of the petitioner and AMOSUP, to the Seamen’s Hospital, which is
owned and operated by AMOSUP, for medical assistance under the care of Dr. George
Matti, a company accredited physician, three days after his May 17, 1990 repatriation
from Japan.

On record, private respondent was examined and diagnosed at the Seamen’s Hospital
and was found to be suffering from congestive heart failure and cardiomyopathy, so
that he was declared unfit to work by no less than a company accredited physician in
the person of Dr. George Matti. 4

Petitioner was well aware of the private respondent’s hospitalization at Moji, Japan, as
well as his repatriation on May 17, 1990. It was upon the advice of petitioner that he
was examined and diagnosed at the Seamen’s Hospital. There Dr. George Matti,
petitioner’s own accredited physician, declared him unfit to work. Petitioner could not
now feign ignorance of this information. Two licensed physicians examined and
diagnosed private respondent and both of them had issued similar findings, that private
respondent was afflicted with congestive heart failure and cardiomyopathy making him
unfit to work.

Strict rules of evidence are not applicable in claims for compensation. In NFD
International Manning Agents, Inc. v. NLRC, 269 SCRA 486, 494 (1997), we said: chanrob1es virtual 1aw library

Strict rules of evidence, it must be remembered, are not applicable in claims for
compensation and disability benefits. Private respondent having substantially
established the causative circumstances leading to his permanent total disability to
have transpired during his employment, we find the NLRC to have acted in the exercise
of its sound discretion in awarding permanent total disability benefits to
private Respondent. Probability and not the ultimate degree of certainty is the test of
proof in compensation proceedings.

Consistently the Court has ruled that "disability should not be understood more on its
medical significance but on the loss of earning capacity. Permanent total disability
means disablement of an employee to earn wages in the same kind of work, or work of
similar nature that [he] was trained for or accustomed to perform, or any kind of work
which a person of [his] mentality and attainment could do. It does not mean absolute
helplessness." 5 In disability compensation, we likewise held, it is not the injury which
is compensated, but rather it is the incapacity to work resulting in the impairment of
one’s earning capacity. 6

Finally, petitioner faults public respondent for allowing the reimbursements of private
respondent’s medical expenses despite the fact that the latter’s treatment was done by
a physician not designated or accredited by the petitioner in violation of the POEA
Standard Contract for Seamen. However, records of the case show that private
respondent had initially sought treatment at Seamen’s Hospital under the care of Dr.
George Matti, a company accredited physician. Only after he was refused admission
thereat was he compelled to seek medical assistance elsewhere. His life and health
being at stake, private respondent did not have the luxury to scout for a company-
accredited physician nor was it fair at this late stage for his employer to deny him such
refund for medical services that previously he was admittedly entitled to. chanrob1es virtua1 1aw 1ibrary

The POEA Standard Employment Contract for Seamen is designed primarily for the
protection and benefit of Filipino seamen in the pursuit of their employment on board
ocean-going vessels. Its provisions must, therefore, be construed and applied fairly,
reasonably and liberally in their favor. Only then can its beneficent provisions be fully
carried into effect. 7
WHEREFORE, the petition is DISMISSED. The assailed decision of public respondent
National Labor Relations Commission dated September 25, 1995 is AFFIRMED.
Petitioner and Pioneer Insurance and Surety Corporation are ordered to pay jointly and
severally the following amounts to private respondent Carlos Nietes: Twenty One
Thousand US Dollars (US$21,000.00) or its peso equivalent at the time of actual
payment, as disability benefits and P34,114.00 representing reimbursement of medical
expenses, plus the costs of suit.