INC Shipmanagement, Inc. vs. Rosales

The company-designated physician's disability assessment prevails over a seafarer's private physician's contrary assessment unless the seafarer signifies disagreement and requests referral to a third doctor, whose decision is final and binding under Section 20(B)(3) of the POEA-SEC; failure to comply with this mandatory procedure renders the complaint premature and the company-designated physician's grading controlling.

INC Shipmanagement Incorporated, acting on behalf of its foreign principal Interorient Shipping Co., Ltd., hired Benjamin Rosales as Chief Cook aboard the vessel MIV Franklin Strait under a POEA-Standard Employment Contract (POEA-SEC) for a ten-month period, with a monthly salary of US$550.00. The dispute centers on the proper disability grading and benefits payable under the POEA-SEC when conflicting medical assessments are rendered by the company-designated physician and the seafarer's personally chosen physician, and on the procedural mechanism the POEA-SEC mandates for resolving such conflicts.

On October 12, 2005, INC Shipmanagement Incorporated, acting on behalf of its foreign principal Interorient Shipping Co., Ltd., hired Benjamin Rosales as Chief Cook aboard the vessel MIV Franklin Strait for a period of ten months under a POEA-Standard Employment Contract, with a monthly salary of US$550.00. His primary function was to prepare, cook, and process food for the ship's officers and crew, with responsibility for maintaining the general cleanliness of the working area.

Sometime in February 2006, while on board the vessel, Rosales experienced severe chest pain and breathing difficulties, coupled with numbness in his left arm. On February 13, 2006, a physician at Mount Sinai Medical Center in Miami, Florida, examined him. He underwent a coronary angiogram and an angioplasty in the left anterior artery of his heart, all provided by the company at its own expense. He was thereafter declared unfit to work and advised to continue treatment in the Philippines.

On February 20, 2006, after repatriation, Rosales was confined at the Manila Medical Center where the company-designated physician, Dr. Nicomedes G. Cruz, examined him and diagnosed acute myocardial infarction secondary to coronary artery disease, hypertension, and diabetes mellitus. On April 7, 2006, Rosales consulted Dr. Paterno Dizon, Jr., an interventional cardiologist at Cardinal Santos Medical Center, who certified coronary artery disease and severe stenosis. Consequently, Rosales underwent a Coronary Artery Bypass Graft Surgery at the Philippine Heart Center.

On October 10, 2006, Dr. Cruz issued a partial permanent disability assessment equivalent to Grade 7 (moderate residuals of disorder) under the POEA-SEC, taking into account the marked improvement of Rosales's condition. On November 9, 2006, Rosales sought a second opinion from Dr. Efren R. Vicaldo, a cardiologist at the Philippine Heart Center, who found him still suffering from hypertensive cardiovascular and coronary artery diseases, assessed him as unfit to work as a seaman in any capacity, considered his illness work-related, and gave him a permanent total disability rating of Grade 1 under the POEA-SEC. On the strength of Dr. Vicaldo's more favorable finding, Rosales claimed permanent total disability benefits from INC, but the company denied the claim. On December 7, 2006, without requesting referral to a third doctor, Rosales filed a complaint for disability benefits, illness allowance, reimbursement of medical expenses, damages, and attorney's fees before the Arbitration Branch of the NLRC.

• Disability Measured by Grading, Not Days: Petitioner argued that disability is measured in terms of gradings under the POEA-SEC, not by the number of days of actual inability to work, and that the CA erred in equating the lapse of 120 days with permanent total disability.
• Primacy of Company-Designated Physician: Petitioner maintained that in a conflict of findings between the company-designated physician and the seafarer's private physician, the company-designated physician's findings should prevail, as the POEA-SEC tasks the company-designated physician with assessing the fitness of the seafarer and giving the corresponding disability benefits rating.
• Disability Based on Gravity, Not Earning Capacity: Petitioner pointed out that the award of disability benefits is not dependent on the impairment of the seafarer's earning capacity but on the gravity of the injury sustained.

• Entitlement to Grade 1 Benefits: Respondent asserted that he is entitled to permanent total disability benefits under the POEA-SEC based on Dr. Vicaldo's Grade 1 disability rating, which was premised on the finding that his illness was acquired in the performance of his duties and rendered him unfit for sea duties.
• Incapacity Exceeding 120 Days: Respondent argued that he was incapacitated to work for more than 120 days, which under Article 192(c)(1) of the Labor Code renders the disability total and permanent.
• Questioning the Company-Designated Physician's Competency: Respondent questioned Dr. Cruz's competency, arguing that Dr. Cruz did not actually perform the medical procedures but relied on the report of Dr. Dizon, that Dr. Cruz is not a cardiologist but a general and cancer surgeon, and that Dr. Cruz could not render an impartial assessment as a company-designated physician.

• Disability Grading vs. Duration of Incapacity: Whether Rosales is entitled to full disability compensation benefits because he was unable to work for 120 days.
• Conflict of Medical Assessments: Whether the CA erred in finding grave abuse of discretion on the part of the NLRC in favoring the findings of Rosales's physician over that of the company-designated physician.

• Disability Grading vs. Duration of Incapacity: No. The extent of disability — whether total or partial — is determined by the disability grading the physician recognizes based on the seafarer's resulting incapacity to work, not by the number of days the seafarer was unable to work. The lapse of 120 days establishes permanent disability but does not automatically establish total disability.

• Conflict of Medical Assessments: Yes, the CA erred. The company-designated physician's assessment prevails absent compliance with the mandatory third-doctor referral provision of Section 20(B)(3) of the POEA-SEC. Rosales's failure to signify his intention to submit the conflicting assessments to a third doctor rendered his complaint premature.

• Disability Grading vs. Duration of Incapacity: Article 192(c)(1) of the Labor Code provides that temporary total disability lasting continuously for more than 120 days shall be deemed total and permanent, except as otherwise provided in the Rules. This provision must be read in relation with Rule X, Section 2 of the Implementing Rules of Book IV of the Labor Code and Section 20(B)(3) of the POEA-SEC. As explained in Vergara vs. Hammonia Maritime Services, Inc., the seafarer is on temporary total disability during the treatment period not exceeding 120 days, extendible to a maximum of 240 days if further medical attention is required. Permanent disability transpires when the inability to work continues beyond 120 days, regardless of whether the seafarer loses the use of any body part. However, total disability means the incapacity to earn wages in the same or similar kind of work the seafarer was trained for or accustomed to perform. The distinction is critical: while Rosales may be recognized as having permanent disability because he was out of work for more than 120 days, the extent of that disability — whether total or partial — is determined by the disability grading the physician recognizes based on the resulting incapacity to work and earn wages, not by counting treatment days. Confusing permanent and total disability would induce the unscrupulous to delay treatment beyond 120 days simply to avail of the more favorable permanent total disability award.

• Conflict of Medical Assessments: Section 20(B)(3) of the POEA-SEC provides that if a doctor appointed by the seafarer disagrees with the company-designated physician's assessment, a third doctor may be agreed jointly between the employer and the seafarer, and the third doctor's decision shall be final and binding on both parties. This referral to a third doctor is a mandatory procedure, a consequence of the rule that the company-designated physician's assessment should prevail. The company can insist on its disability rating even against a contrary opinion by another doctor, unless the seafarer expresses disagreement by requesting referral to a third doctor. Rosales signed the POEA-SEC and thereby bound himself to its conditions. After obtaining Dr. Vicaldo's Grade 1 assessment, Rosales immediately secured counsel and filed a complaint, without signifying any intent to submit the disputed assessment to a third doctor and without any explanation for the omission. As held in Bahia Shipping Services, Inc. vs. Constantino, upon notification that the seafarer disagrees with the company doctor's assessment based on a contrary assessment from the seafarer's own doctor, the seafarer must signify his intention to resolve the conflict by referral to a third doctor, and the company then carries the burden of initiating the process for the referral. The complaint was thus premature and should have been dismissed at the LA level. Even assuming arguendo that the complaint should be given due course, the company-designated physician's assessment should still prevail: Dr. Cruz thoroughly examined and treated Rosales from February 20, 2006 until October 10, 2006, whereas Dr. Vicaldo attended to Rosales only once, on November 9, 2006. The assessment of the company-designated physician is more credible for having been arrived at after months of medical attendance and diagnosis, compared with a one-day examination by a private physician.

• Third-Doctor Referral Doctrine — Under Section 20(B)(3) of the POEA-SEC, when a doctor appointed by the seafarer disagrees with the company-designated physician's assessment, a third doctor may be agreed jointly between the employer and the seafarer, and the third doctor's decision shall be final and binding on both parties. This referral is a mandatory procedure. The seafarer must signify his intention to resolve the conflict by referral to a third doctor; upon such notification, the company carries the burden of initiating the process for choosing the third doctor. Failure to comply renders the complaint premature and the company-designated physician's assessment prevailing. The Court applied this doctrine by dismissing Rosales's complaint because he immediately filed a complaint instead of requesting third-doctor referral.

• Primacy of the Company-Designated Physician's Assessment — The company-designated physician is tasked under the POEA-SEC to assess the fitness of the seafarer and to give the corresponding disability benefits rating. In a conflict between the company-designated physician and the seafarer's private physician, the company-designated physician's assessment prevails, unless a third doctor, sought by the parties, declares otherwise. The company-designated physician's assessment is more credible when it is based on months of medical attendance and diagnosis, compared with a private physician's one-day examination.

• Distinction Between Permanent and Total Disability — Permanent disability transpires when the inability to work continues beyond 120 days, regardless of whether the seafarer loses the use of any body part. Total disability means the incapacity of an employee to earn wages in the same or similar kind of work he was trained for or accustomed to perform, or in any kind of work a person of his mentality and attainments can do; it does not mean absolute helplessness. The extent of disability (whether total or partial) is determined by the disability grading the physician recognizes based on the resulting incapacity to work and earn wages — not by counting the number of days the seafarer was unable to work.

• 120-Day/240-Day Framework for Seafarer Disability — Upon sign-off, the seafarer must report to the company-designated physician within three days from arrival. For the duration of treatment, not exceeding 120 days, the seafarer is on temporary total disability and receives basic wage. If the 120-day initial period is exceeded and no declaration of fitness or permanent disability is made because further medical attention is required, the temporary total disability period may be extended up to a maximum of 240 days, subject to the employer's right to declare within this period that a permanent partial or total disability already exists. The seafarer may also be declared fit to work at any time if justified by his medical condition.

• "It is the doctor's findings that should prevail as he/she is equipped with the proper discernment, knowledge, experience and expertise on what constitutes total or partial disability. His declaration serves as the basis for the degree of disability that can range anywhere from Grade 1 to Grade 14." — This passage articulates the ratio decidendi that the extent of disability is a medical determination made by the physician through grading, not a mechanical counting of days, and is frequently cited in subsequent seafarer disability jurisprudence.

• "In the absence of a third doctor resolution of the conflicting assessments between Dr. Lim and Dr. Almeda, Dr. Lim's assessment of Constantino's health should stand." — Quoted from Bahia Shipping Services, Inc. vs. Constantino, this passage establishes the controlling rule that absent a third-doctor referral, the company-designated physician's assessment prevails, directly supporting the dismissal of Rosales's complaint.

• "Thus, as matters stand in the present case, the complaint was premature; it should have been dismissed as early as the LA's level since the fit-to-work certification and grading by the company-designated physician prevails unless a third party doctor, sought by the parties, declares otherwise." — This passage states the dispositive rationale: the complaint was premature for failure to exhaust the mandatory third-doctor referral provision, and the company-designated physician's grading is controlling absent such referral.

• Vergara vs. Hammonia Maritime Services, Inc., 588 Phil. 895 (2008) — Controlling precedent explaining the interplay of Article 192(c)(1) of the Labor Code, the Amended Rules on Employees' Compensation, and Section 20(B)(3) of the POEA-SEC, establishing the 120-day/240-day framework for seafarer temporary total disability.

• Philippine Hammonia Ship Agency, Inc. vs. Dumadag, G.R. No. 194362, June 26, 2013 — Controlling precedent holding that the third-doctor referral provision under Section 20(B)(3) of the POEA-SEC is mandatory, and that failure to comply warrants dismissal of the complaint. The Court followed this ruling and similarly dismissed the present complaint.

• Bahia Shipping Services, Inc. vs. Constantino, G.R. No. 180343, July 9, 2014 — Controlling precedent clarifying the procedure for conflict situations: the seafarer must signify his intention to resolve the conflict by referral to a third doctor, and upon notification, the company carries the burden of initiating the third-doctor process. The Court applied this framework to hold that Rosales's complaint was premature.

• Crystal Shipping, Inc. vs. Natividad, 510 Phil. 332 (2005) — Cited for the principle that in disability compensation, it is not the injury that is compensated but the incapacity to work resulting in the impairment of earning capacity.

• Ayungo vs. Beamko Ship Management Corp., G.R. No. 203161, February 26, 2014 — Followed precedent on the mandatory nature of the third-doctor referral provision.

• Santiago vs. Pacbasin Ship Management, Inc., G.R. No. 194677, April 18, 2012 — Followed precedent on the mandatory nature of the third-doctor referral provision.

• Andrada vs. Agemar Manning Agency, G.R. No. 194758, October 24, 2012 — Followed precedent on the mandatory nature of the third-doctor referral provision.

• Masangkay vs. Trans-Global Maritime Agency, Inc., G.R. No. 172800, October 17, 2008 — Followed precedent on the mandatory nature of the third-doctor referral provision.

• Article 192(c)(1), Labor Code — Provides that temporary total disability lasting continuously for more than 120 days shall be deemed total and permanent, except as otherwise provided in the Rules. The Court read this provision in relation with the Implementing Rules and the POEA-SEC to clarify that the 120-day lapse establishes permanent disability but does not automatically establish total disability, the extent of which is determined by the physician's grading.

• Rule X, Section 2, Rules and Regulations Implementing Book IV of the Labor Code (Amended Rules on Employees' Compensation Commission) — Provides that income benefits shall not be paid longer than 120 consecutive days except where the injury or sickness still requires medical attendance beyond 120 days but not exceeding 240 days. The System may declare total and permanent status at any time after 120 days as warranted by the degree of actual loss or impairment. The Court cited this to explain the 120-day/240-day framework governing seafarer temporary total disability.

• Section 20(B)(3), POEA-Standard Employment Contract — Provides that upon sign-off for medical treatment, the seafarer is entitled to sickness allowance equivalent to basic wage until declared fit to work or the degree of permanent disability is assessed by the company-designated physician, not exceeding 120 days. Also provides the third-doctor referral mechanism: if a doctor appointed by the seafarer disagrees with the assessment, a third doctor may be agreed jointly, whose decision shall be final and binding. The Court held this provision mandatory and dispositive of the case.

• Section 32, POEA-SEC — Provides that only injuries or disabilities classified as Grade 1 may be considered as total and permanent. The Court cited this to support the principle that the degree of disability is determined by the physician's grading under the POEA-SEC schedule, ranging from Grade 1 to Grade 14.

Antonio T. Carpio (Chairperson), Mariano C. Del Castillo, Jose Catral Mendoza, and Marvic M.V.F. Leonen concurred.