G.R. No. 255889 - Leonardo L. Justo vs. Technomar Crew Management Corp. and Technomar Shipping, Inc.

Case Summary (G.R. No. 255889)

Factual Background

Petitioner reported that during the first week of June 2018, while preparing food, he heard a loud metallic sound after a cargo hold fell directly above the galley where he was working. He claimed that the incident was followed by a high ringing sensation in his right ear, blurring of vision, and headache.

On June 14, 2018, petitioner was brought to a hospital in Sweden, where he was diagnosed with an infected external auditory canal and a perforated tympanic membrane on his right ear. He was advised to undergo surgery and to wear earplugs. On June 19, 2018, during another check-up in France, he again received the recommendation for surgery for the perforated right eardrum.

Petitioner was repatriated on July 22, 2018. Upon arrival on July 23, 2018, he reported to respondents and was examined at the NGC Hospital by Dr. Cruz. Dr. Cruz referred him to an ENT specialist, who advised pure tone audiometry, speech audiometry, and tympanometry. The pure tone audiometry result, released the next day, showed mild conductive hearing loss on the right ear and severe hearing loss on the left ear.

On August 1, 2018, petitioner underwent a CT scan of the temporal lobe at Manila Doctors Hospital, showing chronic right mastoiditis, chronic left tympanomastriditis with possible cholesteatoma formation versus granulation tissue, and a high riding right jugular bulb. During an August 3, 2018 follow-up, Dr. Cruz reported that petitioner’s left hearing acuity was severe but might improve with a hearing aid. It was also recommended that petitioner undergo tympanomastoid surgery on his right ear.

On August 17, 2018, petitioner underwent a right ear tympanoplasty. He was discharged on August 20, 2018, and thereafter attended follow-up check-ups. On November 7, 2018, Dr. Cruz issued a disability assessment of Grade 11 impediment one-half loss of the sense of hearing in one ear. On December 7, 2018, Dr. Cruz issued a final medical report that petitioner was “Fit to Resume Sea Duties,” with his hearing preserved. Petitioner was asked to sign the certificate of fitness to work, but he refused. He then consulted Dr. Reyno, who on January 14, 2019 declared petitioner totally and permanently disabled.

In the Disability Report, Dr. Reyno stated that while the perforation of petitioner’s right tympanic membrane preserved the remaining hearing on that ear, petitioner still complained of severe hearing loss on the left ear, with on-and-off pain aggravated by exposure to loud sounds. The report asserted that the profound hearing loss on petitioner’s left ear, together with moderate hearing loss on the right ear, constituted a total and permanent disability.

Petitioner, through counsel, wrote respondents on January 17, 1019 (as stated in the record) requesting a referral to a third doctor, attaching the Disability Report of Dr. Reyno. Despite receipt of the letter, petitioner claimed that respondents did not reply. He then filed a Notice to Arbitrate before the PVA to claim total and permanent disability benefits.

Proceedings Before the Panel of Voluntary Arbitrators

In the PVA proceedings, petitioner asserted entitlement to total and permanent disability benefits under Section 25.1 of the CBA, claiming the hearing disability resulted from an accident on board the vessel while he performed his job. He also sought moral damages and attorney’s fees due to respondents’ alleged bad faith, and he maintained that hearing was indispensable in his work and that his hearing disability rendered him incapable of resuming duties as a seafarer.

Respondents countered that petitioner was declared fit to work by the company doctor and that petitioner refused to sign the certificate of fitness to work. They also denied disregarding petitioner’s request for third-doctor referral. Respondents claimed they were willing to refer the conflicting findings and relied on the minutes of mandatory conferences showing that they submitted Proposed Guidelines for Third Doctor Referral, while petitioner was supposed to file a comment on June 19, 2019, with a planned submission of the third doctor’s findings on July 5, 2019. They further explained that on July 1, 2019 they coordinated with petitioner’s representatives about petitioner’s availability for consultation, but petitioner could not be reached due to a typhoon in his province.

On September 27, 2019, the PVA issued a Decision granting petitioner’s complaint. The PVA ruled that it could not be bound by the company doctor’s findings merely because there was no referral to a third doctor. It weighed the company doctor’s fit-to-work assessment against Dr. Reyno’s findings and found that petitioner’s exposure to loud noise caused loss of hearing related to and aggravated by his work as a seaman.

The PVA relied on the medical records showing that both ears were affected, and it treated the use of a hearing aid as palliative rather than curative, citing the ENT specialist’s advice. It reasoned that petitioner’s hearing loss had reached a critical stage akin to total deafness and concluded that petitioner was totally and permanently disabled. The PVA also awarded moral damages and exemplary damages in the amount of PHP 50,000.00 each, reasoning that respondents breached an obligation by failing to mention the hearing loss on petitioner’s left ear, allegedly preventing petitioner from claiming disability benefits. It awarded attorney’s fees equivalent to ten percent of the total judgment award.

Respondents filed a Motion for Reconsideration, but it was denied.

Review in the Court of Appeals

Respondents then filed a Petition for Review before the CA. On October 19, 2020, the CA reversed the PVA’s award and dismissed petitioner’s complaint. It ruled that petitioner failed to comply with the conflict resolution procedure under the CBA and the POEA-Standard Employment Contract (POEA-SEC) regarding third doctor referral. The CA held that, due to such noncompliance, the fit-to-work assessment by the company physician Dr. Cruz prevailed. The CA also deleted the moral damages and attorney’s fees.

The CA reasoned that while petitioner had sent a letter demanding third-doctor referral and respondents agreed to it, petitioner allegedly failed to present himself for consultation with the appointed third doctor. It emphasized that it was not enough to demand third-doctor referral; petitioner had to show up for consultation. It also found no evidence of bias by Dr. Cruz, noting that petitioner was subjected to lengthy evaluation and treatment, including surgery, and had been addressed to the extent of the concerns raised during consultations. The CA compared petitioner’s Disability Report with the medical reports issued by Dr. Cruz over months and concluded that the fit-to-work assessment deserved greater weight.

The CA additionally ordered petitioner to return the entire judgment award paid by respondents pursuant to a writ of execution issued on February 6, 2020, upon finality of the CA decision.

Petitioner moved for reconsideration, but it was denied, prompting the present Petition for Review.

The Parties’ Contentions Before the Court

Petitioner argued that the CA erred in reversing the PVA. He contended that the company doctor’s assessment should not be conclusive because it was allegedly biased due to the fact that the doctor’s services were paid for by the company. He maintained that the hearing disability, resulting from the accident on board the vessel, permanently and totally incapacitated him to work as a seafarer and entitled him to benefits under the CBA. He further asserted that he seasonably informed respondents of the findings of his personal doctor, and that respondents did not assent to his request for third-doctor referral.

Respondents, on the other hand, argued that petitioner’s claim rested on the mistaken notion that the disability of his left ear was work-related. They maintained that while petitioner was repatriated due to right ear perforation that was medically resolved, the left ear hearing loss was neither the cause nor related to the cause of repatriation. They also insisted that the non-referral to the third doctor was attributable to petitioner.

Jurisdiction and Applicable Standards in Review

The Court held that in labor cases, a Rule 45 review does not generally delve into factual issues or evaluation of evidence. However, it recognized an exception where the factual findings of the CA and the labor tribunals are conflicting. Because of the contrary findings of the CA and the PVA in this case, the Court proceeded to determine petitioner’s entitlement based on the record.

Legal Basis: Disability Benefits Under Contract, Law, and the POEA-SEC

The Court examined petitioner’s claim under Section 25.1 of the CBA, which covers a seafarer who suffers permanent disability as a result of an accident while in the employment of the Company, regardless of fault, including accidents while travelling to or from the ship, provided the disability does not arise from willful acts.

It emphasized that entitlement to disability benefits is governed not only by medical findings but also by contract and law. It identified the relevant contractual sources as: (a) the POEA-SEC, which is deemed incorporated into every seafarer’s contract; (b) the CBA if any; and (c) the employment agreement between the seafarer and the employer. It further noted that Labor Code provisions on disability apply with equal force to seafarers.

The Court applied the relevant 2010 POEA-SEC provision in Section 20(A), paragraph 3, which requires submission to post-employment medical examination by a company-designated physician within three working days upon return, and provides that if the seafarer’s doctor disagrees with the assessment, a third doctor may be jointly agreed by the employer and seafarer, with the third doctor’s decision final and binding.

The Court reiterated its controlling approach to third-doctor referrals: referral is gen

Case Syllabus (G.R. No. 255889)

The case arose from a Petition for Review on Certiorari questioning the Court of Appeals (CA) rulings that reversed an NCMB-Panel of Voluntary Arbitrators (PVA) decision awarding total and permanent disability benefits.
The controversy involved the proper medical procedure for resolving conflicting assessments under the POEA-Standard Employment Contract (POEA-SEC) third-doctor mechanism, and the effect of the seafarer’s and employer’s conduct during the referral process.
The Court proceeded with review despite Rule 45 limitations because the findings of fact of the CA and the labor tribunals conflicted.

Parties and Procedural Posture

Petitioner was Leonardo L. Justo, a seafarer employed by respondent Technomar Crew Management Corp. for the principal Technomar Shipping, Inc.
Respondent Teresita B. Malagio(k) was included among the respondents in the proceedings.
The PVA decision dated September 27, 2019 granted the seafarer’s complaint and awarded total and permanent disability benefits plus moral damages and attorney’s fees.
The CA decision dated October 19, 2020 reversed the PVA, dismissed the complaint, and ordered the seafarer to return the judgment award paid under a writ of execution.
The Court of Appeals denied reconsideration, prompting the present Petition for Review on Certiorari.
Pending CA resolution, respondents manifested that they had issued a check for USD 113,653.29 in full satisfaction of the judgment award without prejudice to the outcome of the petition.

Key Factual Allegations

Leonardo was hired on March 27, 2018 as cook for M/V New Yorker for nine months, with a basic monthly wage of USD 715.00.
Leonardo was covered by the Panhellenic Seamen's Federation-International Bargaining Forum Collective Bargaining Agreement (CBA) effective from the start of his employment.
He was declared fit to work on March 5, 2018.
In the first week of June 2018, Leonardo heard a loud metallic sound when a cargo hold fell above the galley where he was working.
He reported a high ringing in his right ear, with blurring of vision and headache, after the incident.
On June 14, 2018, he was diagnosed in Sweden with infected external auditory canal and perforated tympanic membrane on the right ear, and he was advised to undergo surgery and wear earplugs.
On June 19, 2018, after a check-up in France, he was similarly advised to undergo surgery for the perforated right eardrum.
On July 22, 2018, Leonardo was repatriated, and on July 23, 2018, he reported to respondents and was examined at NGC Hospital by the company doctor Dr. Nicomedes G. Cruz.
Dr. Cruz referred him to an ENT specialist and required tests including pure tone audiometry, speech audiometry, and tympanometry.
The pure tone audiometry result showed mild conductive hearing loss on the right ear and severe hearing loss on the left ear.
A CT scan performed on August 1, 2018 revealed chronic right mastoiditis, chronic left tympanomastriditis with possible cholesteatoma formation versus granulation tissue, and a high riding right jugular bulb.
On August 3, 2018, the company doctor reported that left hearing acuity was severe and “may improve with hearing aid,” and recommended surgery on the right ear.
On August 17, 2018, Leonardo underwent right ear tympanoplasty, and he was discharged on August 20, 2018.
On November 7, 2018, Dr. Cruz issued a disability assessment of Grade 11 impediment amounting to one-half loss of the sense of hearing in one ear.
On December 7, 2018, Dr. Cruz issued a final report stating “Fit to Resume Sea Duties” and that hearing had been preserved.
Leonardo refused to sign the certificate of fitness and consulted Dr. Danilo Q. Reyno, who on January 14, 2019 declared Leonardo totally and permanently disabled.
Leonardo’s Disability Report described severe hearing loss on the left ear, on-and-off pain aggravated by loud sounds, and it treated left-ear profound hearing loss as the basis for total and permanent disability.
Leonardo requested a third-doctor referral through counsel by letter dated January 17, 1019, and he filed a Notice to Arbitrate with the PVA due to the lack of settlement.
The PVA complaint sought total and permanent disability benefits and included claims for attorney’s fees and damages.

CBA and Medical-Conflict Procedure

Leonardo anchored his disability claim on Section 25.1 of the CBA, which granted compensation for permanent disability resulting from an accident “whilst in the employment of the Company,” excluding permanent disability due to wil[l]ful acts.
The Court emphasized that disability entitlement under the seafarer’s regime is governed by medical findings, contract, and law.
The relevant contracts were identified as: (a) the POEA-SEC (deemed incorporated in every seafarer’s employment contract), (b) the CBA, and (c) the employment agreement.
The Court held that Labor Code disability provisions apply to seafarers with equal force.
The Court quoted Section 20(A), paragraph 3 of the 2010 POEA-SEC, requiring a post-employment medical examination (PEME) within three working days and requiring regular reporting during treatment.
Under the POEA-SEC, if the doctor appointed by the seafarer disagreed with the company doctor’s assessment, a third doctor may be jointly agreed by the employer and seafarer, whose decision is final and binding.
The Court recognized that third-doctor referral is mandatory in resolving conflicts because the company-designated physician’s assessment prevails by default unless the seafarer effectively invokes the third-doctor process.
The Court relied on Bunayog v. Foscon Shipmanagement, Inc. for governing guidelines on third-doctor referral, including the requirements for a valid written request, employer burden to initiate referral after a valid demand, and the consequences of failure to secure the third doctor during mandatory conferences.
The Court also invoked Dionio v. Trans-Global Maritime Agency, Inc. to clarify that failure to refer conflicting findings does not ipso facto render the company doctor’s assessment conclusive if the assessment lacks scientific basis or is unsupported by medical records.
The Court identified an important operational distinction: a third-doctor mechanism may become unnecessary if the company doctor’s acts effectively convert temporary disability into permanent disability through a final conclusive assessment.

Proceedings Before the PVA

The PVA held that it could not simply accept the company doctor’s findings solely because no third doctor opinion had been secured.
The PVA treated the seafarer’s hearing loss as related to his work exposure and found that both ears were affected, with left-ear impairment more severe.
The PVA reasoned that the recommended hearing aid was palliative, not curative, and it did not cure hearing loss or enable reliable speech understanding.
The PVA considered the medical assessments to show that Leonardo’s condition had reached a critical stage akin to total deafness, making resumption of work as a seaman highly unlikely.
The PVA disregarded the company doctor’s contrary conclusion based on the inherent merits of the conflicting medical evidence.
The PVA awarded moral damages and exemplary damages in PHP 50,000.00 each, finding that respondents breached an obligation that prevented the seafarer from claiming disability benefits under prevailing law and jurisprudence.
The PVA awarded attorney’s fees equivalent to ten percent of the total judgment award because Leonardo had been forced to litigate to protect his rights.

Arguments on Appeal

Respondents argued to the CA that the PVA heavily relied on the seafarer’s doctor whose assessment allegedly resulted from only a single examination.
Respondents also argued that the non-referral to a third doctor was the seafarer’s fault, based on the seafarer’s failure to present himself for consultation.
Respondents maintained that the company ENT specialist cleared Leonardo on December 2, 2018 and issued a basis for “no disability” because the cause of repatriation had been addressed and corrected in the right e