Title
Splash Phils., Inc. vs. Ruizo
Case
G.R. No. 193628
Decision Date
Mar 19, 2014
Seafarer Ruizo claimed disability benefits under a CBA after kidney issues but failed to complete treatment with the company doctor. SC dismissed his claim, citing lack of CBA proof and medical noncompliance.
seafarer
disability benefits
employment contract

Case Summary (G.R. No. 193628)

Factual Background

Ruizo entered into a nine-month employment contract, as chief cook, with the agency for Taiyo’s vessel, M/V Harutamou. On or about December 13, 2005, while on duty onboard the vessel, Ruizo experienced pain in his lumbar region and groin. He was referred to the Karratha Medical Centre in Dampier, Australia, where he was diagnosed with a blocked right kidney. On December 21, 2005, Ruizo was repatriated to the Philippines due to the completion of his contract.

After repatriation, the agency referred Ruizo to the company-designated physician, Dr. Nicomedes Cruz, who diagnosed him with ureterolithiasis with hydronephrosis. Dr. Cruz prescribed medication and recommended the KUV/IVP, CT stonogram without contrast at the National Kidney Institute, which the petitioners shouldered. While Ruizo was still under Dr. Cruz’s supervision, he filed a complaint on the theory that his employment was covered by a collective bargaining agreement (CBA) concluded by his union, Associated Marine Officers and Seamens Union of the Philippines (AMOSUP), with the petitioners. He prayed for maximum disability benefits, asserting that he was unable to work for more than 120 days without a disability assessment from Dr. Cruz.

Because his condition had not improved, Dr. Cruz recommended further treatment involving extracorporeal shockwave lithotripsy (ESWL). Ruizo initially hesitated but eventually consented, and he underwent ESWL on January 19, 2007 at the petitioners’ expense. On February 5, 2007, he reported to the company doctor for follow-up. However, he did not return for an additional ESWL that the petitioners’ urologist believed was necessary, as there was a possibility of declaring the patient fit for work after treatment.

On May 7, 2007, without informing Dr. Cruz or the agency, Ruizo consulted Dr. Efren Vicaldo, an internist, who diagnosed bilateral nephrolithiasis and essential hypertension. Dr. Vicaldo assigned a disability rating of Impediment Grade VII (41.8%). Ruizo explained that he did not return to the company doctor because he was told that the doctor would already be forwarding his assessment to the petitioners.

Compulsory Arbitration Rulings

On June 29, 2007, the Labor Arbiter (LA) Ermita T. Abrasaldo-Cuyuca dismissed the complaint for lack of merit. The LA rejected Ruizo’s contention that his employment fell under the AMOSUP/IMEC TCCC CBA for 2004, holding that Ruizo presented only a one-page excerpt that did not bear the signatures of the parties and did not establish whether it applied to the crew of M/V Harutamou.

As to disability compensation, the LA held that the absence of a disability rating from the company-designated physician negated Ruizo’s claim. The LA treated the lack of a definitive disability assessment as a consequence of Ruizo’s voluntary act of not undergoing further medical treatment under the petitioners’ care. It also rejected Ruizo’s argument that inability to work beyond 120 days entitled him to permanent total disability benefits. In doing so, the LA relied on the Court’s ruling in Crystal Shipping, Inc. v. Natividad (as cited in the decision), which had declared that the duration of seafarers’ treatment and the period of incapacity did not govern entitlement to maximum disability benefits.

Ruizo appealed to the NLRC. On June 3, 2008, the NLRC denied the appeal for lack of merit. Ruizo’s motion for reconsideration was denied.

CA Decision

Ruizo then went to the CA via a petition for certiorari, alleging grave abuse of discretion by the NLRC. The CA granted the petition. It set aside the NLRC rulings and awarded Ruizo permanent total disability compensation under the CBA in the amount of US$100,000.00, as well as moral and exemplary damages of P10,000.00 each, and P10,000.00 in attorneys fees. The CA denied sick wages of US$2,386.50 because Ruizo raised that claim only for the first time on appeal.

On the question of CBA coverage, the CA gave weight to Ruizo’s testimony that company officers told him that he was being deployed to a vessel covered by a CBA, as a reward for his good performance as chief cook over several years. On disability, the CA treated the “120-day rule” as determinative. It sustained Ruizo’s position that he was entitled to permanent total disability compensation because he was unable to work as chief cook for more than 120 days. The CA denied the petitioners’ subsequent motion for reconsideration.

The Parties’ Contentions in the Supreme Court

The petitioners sought to set aside the CA decision, contending that the CA committed reversible error when it (one) ruled that Ruizo’s employment was covered by a verbal CBA, (two) held that inability to work for more than 120 days automatically entitled him to permanent total disability benefits, and (three) awarded moral and exemplary damages and attorneys fees.

They challenged the existence of any CBA applicable to Ruizo. They argued that no CBA had been reduced to writing for purposes of proof, and that even if a CBA existed, Ruizo allegedly failed to demonstrate that it applied to his employment. They also reiterated a position raised below that a certification issued by AMOSUP stated that M/V Harutamou was not covered by any collective bargaining agreement between AMOSUP and any foreign principal employer.

On disability benefits, the petitioners maintained that the 120-day and later 240-day rules were not iron-clad formulas applicable to all cases. They argued that the application of the 120-day rule had been clarified or modified in a Resolution in Crystal Shipping, and that the POEA-SEC measured disability primarily by gradings and not solely by elapsed days. They further argued that because Ruizo was a contractual employee covered by a POEA contract structure, his disability compensation was governed by the contract and not by the Labor Code. They added that Ruizo’s medical abandonment—by failing to continue treatment under the company-designated physician—foreclosed the basis for maximum disability compensation and the possibility of recovery.

Ruizo, through his comment, prayed for denial of the petition. He contended that the petition raised factual issues outside the scope of review. He insisted that because he was unable to work despite treatment for more than 120 days, the CA correctly declared him permanently unfit for sea duty and entitled him to full disability compensation under the CBA.

The Supreme Court’s Procedural Approach

The Court acknowledged that it was not a trier of facts. Still, it examined the factual record to determine whether the CA committed grave abuse of discretion when it reversed the NLRC’s appreciation of evidence. The labor tribunals had found that Ruizo abandoned his treatment with Dr. Cruz and, therefore, they denied benefits for lack of a company doctor’s disability assessment. The CA, in contrast, awarded permanent total disability compensation based on the 120-day framework and admitted the CA’s treatment of the unsigned one-page CBA excerpt as evidence, even though the LA and NLRC had considered it lacking in probative value.

The Merits: The 120-Day Rule and Its Proper Application

The Court held that the CA’s award was anchored on the “120-day rule” associated with Crystal Shipping. However, the Court stressed that this approach had already been clarified. It relied on Vergara v. Hammonia Maritime Services, Inc., which emphasized that the declaration of permanent total disability after the initial 120 days of temporary total disability could not be mechanically lifted and applied as a universal rule without regard to context. The specific context of application, including the employment contract executed in accordance with the POEA-SEC, the parties’ CBA if any, and Philippine rules governing maritime grievances, had to be considered.

The Court underscored the governing POEA-SEC mechanism. Under Section 20(B)3 of the POEA-SEC, the employer is liable only for the resulting disability assessed or evaluated by the company-designated physician. If the seafarer and the company-appointed physician disagree, the dispute must be referred to a third doctor jointly agreed upon by the employer and seafarer, whose decision is final and binding. The parties’ purported CBA, as discussed in the decision, contained an analogous provision in Article 20.1.4.2.

The Court further noted Section 20(B)6 of the POEA-SEC, which ties compensation to the schedule of benefits and the rates and rules applicable at the time the illness or disease was contracted. This provision, the Court reasoned, reinforced that the compensation system could not be reduced to the disputed “days” metric.

In the Court’s view, the CA awarded permanent total disability benefits to Ruizo except by relying on the 120-day rule, a rule that had been modified and could not operate as a cure-all irrespective of compliance with contractual duties and the POEA-SEC processes. The Court held that the CA, therefore, acted outside legal contemplation and committed grave abuse of discretion.

Whether the 120-Day Rule Remained Relevant in Ruizo’s Case

The Court explained that the POEA-SEC framework focused on the company-designated physician’s assessment during the medical treatment period. It stated that a temporary total disability becomes permanent only when the company physician so declares within the periods allowed or upon expiration of the maximum treatment period without a declaration of fitness or existence of permanent disability.

Although the 240-day maximum treatment period counted from Ruizo’s repatriation on December 21, 2005 had expired, the Court found that the parties effectively extended the treatment because it was obvious that Ruizo still needed treatment. Ruizo, after initial hesitation, agreed to the ESWL procedure on January 19, 2007. He was expected to return after February 5, 2007 to Dr. Cruz for a repeat ESWL but failed to do so. For these circumstances, the Court held that the basis

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