COMPLAINT FOR PERMANENT AND TOTAL DISABILITY BENEFIT FILED BEFORE THE LAPSE OF THE JUSTIFIED 240-DAY EXTENSION PERIOD LACKS CAUSE OF ACTION

Complaint with the Labor Arbiter for total and permanent disability benefits during the validly extended period of 240 days of medical treatment lacks cause of action.

The SC held in the following case, as follows:

Mon C. Anuat vs. Pacific Ocean Manning, Inc./Trans Star Shipping Agency Corporation, Massoel Meridian Ltd. and/or Hernando S. Eusebio
G.R. No. 220898, July 23, 2018

Permanent and total disability; 240-day rule; Complaint filed before the expiration of the 240 days lacks cause of action; Attorney’s fees

Facts:

Respondent Pacific Ocean Manning, Inc. (Pacific) is licensed to engage in the recruitment and deployment of Filipino seafarers for vessels traveling through international waters. Petitioner Mon C. Anuat (Anuat) was hired by Pacific as an able seaman on board the vessel MN Satigny for a period of nine (9) months.

Pacific and Anuat entered into a Philippine Overseas Employment Administration (POEA) standard employment contract on the same date. Prior to his deployment as an able seaman, Anuat was subjected to a pre-employment medical examination by Pacific’s company-designated physician and was declared by the physician as “Fit for Sea Duty.” Anuat departed from the Philippines to join MN Satigny in Norfolk, United States.

Anuat had an accident during unloading operations in the port of Cabello, Venezuela. Anuat fell down the vessel’s deck while he was connecting the crane hook to the vessel’s grab which was located at a high position. Anuat suffered injuries on his neck, back and knee. Anuat was brought by an ambulance to a hospital in Venezuela where he was diagnosed to have sustained head injury, whiplash injury, and trauma in his left knee. Thus, Anuat was medically repatriated to the Philippines on 22 May 2011.

Upon Anuat’s arrival on 24 May 2011, he was referred to Dr. Nicomedes Cruz (Dr. Cruz), Pacific’s company-designated physician, at NGC Medical Specialist Clinic. Anuat’s MRI examination results showed that Anuat’s lumbosacral spine still suffered from “disc dessication and mild loss of height at LS-S 1 with associated annular tear/fissure.” Anuat’s MRI examination also showed that his left knee still suffered from an “[i]nferior surface tear involving the body and posterior horn of the medial meniscus.”

In a subsequent medical report, Dr. Cruz found that Anuat still suffered from a blunt traumatic injury in his back, muscular spasm of the cervical muscle, swelling and medial meniscus tear in his left knee. Dr. Cruz recommended that Anuat undergo surgery to repair his left knee and was advised to come back on 30 September 2011. However, Anuat did not return for his doctor’s visit on 30 September 2011.

Anuat claimed that after surgery and despite a month of physical therapy his condition did not improve and he continued to suffer pain in his left knee. Anuat claimed that due to his injuries he could no longer work as an able seaman. Hence, Anuat filed a Complaint with the Labor Arbiter for total and permanent disability benefits, reimbursement of medical expenses, sickness allowance, damages and attorney’s fees against Pacific.

LA Ruling:

The Labor Arbiter granted total and permanent disability benefits to Anuat.

The Labor Arbiter held that permanent disability refers to the inability of a worker to perform his job for more than 120 days, regardless of whether he loses the use of any part of his body. What determines entitlement to permanent disability is the inability to work for more than 120 days. The fact that Anuat was still undergoing physical rehabilitation and was not able to seek gainful employment after 120 days shows that he suffered a total and permanent disability.

The Labor Arbiter ruled that it does not matter whether the company designated-physician assessed Anuat to have suffered a “Grade 10” and “Grade 11” disability rating since it is undisputed that Anuat was unable to work for more than 120 days.

Anuat filed a Memorandum of Partial Appeal with the National Labor Relations Commission (NLRC). Anuat claimed that the CBA should apply in the determination of the amount of total and permanent disability and that attorney’s fees should likewise be awarded because he was compelled to litigate and incur expenses for litigation. For its part, Pacific filed its Memorandum of Appeal with the NLRC. But paid the appeal fee much later.

NLRC Ruling:

The NLRC granted Anuat’s Memorandum of Partial Appeal and modified the Labor Arbiter’s Decision.

The NLRC held that the CBA applies in the determination of Anuat’s total and permanent disability benefits. The NLRC held that both Pacific and Anuat acknowledged in their position papers and reply the existence of the CBA and its application to Anuat’s disability claim.

The NLRC ruled that total and permanent disability benefits shall be awarded to an employee if the temporary total disability lasts for more than 120 days. The 120-day period may only be extended to 240 days when there is a finding by the company-designated physician within 120 days that such injury or sickness still requires medical treatment beyond 120 days. The NLRC held that there was no declaration by Pacific’s company-designated physician within 120 days that Anuat’s injury required further medical treatment to justify another extension of 120 days, a total of 240 days.

The NLRC considered Pacific’s appeal filed as not perfected since Pacific paid the required appeal fees only more than 10 days beyond the reglementary period of appeal. The NLRC held that the rules provide that a notice of appeal filed without the required appeal fees does not stop the running of the period for perfecting an appeal.

Pacific filed a motion for reconsideration which was denied by the NLRC. Thereafter, Pacific filed a Petition for Certiorari with the Court of Appeals (CA).

CA Ruling:

The CA granted Pacific’s petition for certiorari.

The CA ruled that Anuat prematurely filed his claim for total and permanent disability benefits. The CA held that a seaman may pursue an action for total and permanent disability benefits if: (a) the company-designated physician failed to issue a declaration as to the employee’s fitness to engage in sea duty or disability even after the lapse of the 120-day period and there is no indication that further medical treatment would address his temporary total disability; hence, justify an extension of the period to 240 days; or (b) 240 days had lapsed without any certification being issued by the company-designated physician.

The CA held that Anuat’s cause of action for total and permanent disability had not yet accrued. The CA ruled that CF Sharp Crew Management, Inc. vs. Taok applies in the case at bar. The CA held that although 123 days had already lapsed from the day Anuat was medically repatriated to Anuat’s last medical examination by Pacific’s company-designated physician, the 120-day period may still be extended. The CA ruled that the extension of another 120 days is justified since Anuat was required by Pacific’s company-designated physician to have further treatment on 30 September 2011, but Anuat decided to file his disability claim instead on 26 October 2011.

Anuat filed a Motion for Reconsideration which the CA denied.

Issue/s:

Whether or not the complaint for permanent and total disability filed within 160 days of the extended treatment period has a cause of action

Whether or not the seafarer is entitled to the disability benefit under the CBA

Whether or not a person who had to litigate is automatically entitled to attorney’s fees

SC Ruling:

The SC affirmed the Decision of the CA and resolved to grant partial and· permanent disability benefits of “Grade 10” and “Grade 11” to Anuat in accordance with the CBA.

Citing Article 192 of the Labor Code, as amended, the SC held that temporary total disability lasting continuously for more than one hundred twenty days, except as otherwise provided for in the Rules, shall be deemed total and permanent. Further, the SC cited Section 1, Rule XI of the Amended Rules on Employee Compensation that temporary total disability lasting continuously for more than 120 days, except as otherwise provided in Rule X thereof, shall be considered permanent.

The Labor Code of the Philippines 2018 (re-numbered and updated)

The SC held that in Valenzona vs. Fair Shipping Corporation, permanent disability refers to the inability of a worker to perform his job for more than 120 days, regardless of whether he loses the use of any part of his body. What determines entitlement to permanent disability benefits is the inability to work for more than 120 days. On the other hand, in Remigio vs. NLRC, 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. In disability compensation, it is not the injury which is compensated, but rather the incapacity to work resulting in the impairment of one’s earning capacity. Thus, as a general rule, 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.

However, the Rules provide that the period of 120 days may be extended to 240 days when further medical treatment is required under Sections 2 and 3(1), Rule X of the Amended Rules on Employees’ Compensation. Citing Gomez vs. Crossworld Marine Services, Inc., the SC held that if the company-designated physician requires the employee to undergo further medical treatment beyond the initial 120 days, temporary total disability only becomes permanent if the 240 days lapse without a prior declaration on the part of the company-designated physician of the fitness of the employee to resume his or her duties or when the company-designated physician finds that permanent disability exists during the 240-day period.

In the present case, Pacific’s company-designated physician found that Anuat was still experiencing moderate pain on both the lumbosacral region and his left knee. The report also stated that Anuat’s physical therapy was still on-going. Pacific’s company-designated physician once again examined Anuat and issued a medical report recommending that Anuat undergo further surgery to medically repair the existing tear in his left knee. Lastly, Anuat was advised by the company-designated physician to come back on 30 September 2011.

Anuat no longer went back to Pacific’s company-designated physician on 30 September 2011. Instead, Anuat filed a claim against Pacific for total and permanent disability benefits on 26 October 2011 or 160 days from the onset of his work-connected injury.

Hence, the SC ruled that Anuat prematurely filed his total and permanent disability claim. When Anuat filed his disability claim he was still under medical treatment by Pacific’s company-designated physician. In fact, he was advised by Pacific’s company-designated physician to return on 30 September 2011 for a medical examination and he chose not to do so. Notably, the 240-day extended period of medical treatment provided by Sections 2 and 3(1), Rule X of the Amended Rules on Employees’ Compensation had not yet lapsed. Pacific was still addressing Anuat’s medical condition and the company-designated physician was still in the process of determining whether Anuat was permanently disabled or fit to resume his duties as an able seaman.

Following Gomez vs. Crossworld Marine Services, Inc. Anuat’s temporary total disability had not yet become permanent since the 240-day extended period for Anuat’s medical treatment had not yet lapsed when he filed his claim. Anuat had not acquired a cause of action for his total and permanent disability claim consistent with the holding in C.F Sharp Crew Management, Inc. vs. Taok.

Anuat filed his total and permanent disability claim 160 days from the onset of his work-connected injury, 80 days before the lapse of the 240-day period of extended medical treatment provided for by law. Since the 240 days have not lapsed from the onset of Anuat’s injury and since Pacific’s company-designated physician was still treating Anuat and was in the process of determining whether Anuat was permanently disabled or fit to resume his duties as an able seaman, the CA did not err in ruling that Anuat’s disability claim had not ripened into a cause of action for total and permanent disability.

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Following the obligatory effects of the CBA and Pacific’s admission that the company-designated physician issued a disability rating of “Grade 10” on Anuat’s injured left knee and “Grade 11” on Anuat’s injured back, Pacific is liable to Anuat for the applicable disability compensation equivalent to both “Grade 10” and “Grade 11” in the CBA. Consequently, Anuat is entitled to US$17,954.00 representing “Grade 10” disability compensation for Anuat’s left knee injury and US$13,303.00 representing “Grade 11” disability compensation for Anuat’s back injury. Consequently, Pacific is liable to Anuat for a total amount of US$31,257.00 as disability compensation.

The SC, citing Development Bank of the Philippines vs. Traverse Development Corp. held that a claim for attorney’s fees must be supported by evidence of bad faith. The mere fact that a party was compelled to litigate is insufficient to justify an award of attorney’s fees. The general rule is that attorney’s fees cannot be recovered as part of damages because of the policy that no premium should be placed on the right to litigate. They are not to be awarded every time a party wins a suit.