Torm Shipping Philippines, Inc. vs. Alacre

A seafarer's claim for disability benefits under the POEA-SEC is rendered moot where the CBA's offsetting provision applies and the amount already awarded under the Danish Industrial Injuries Act exceeds the maximum disability compensation payable under the POEA-SEC, resulting in no deficiency or additional obligation on the employer.

Respondent Pamfilo A. Alacre was hired by petitioner Torm Shipping Philippines, Inc. for its principal, Torm S/A, as a Fitter on board the vessel Torm Kristina under a six-month employment contract with a basic monthly salary of US$648.00. Prior to embarkation on March 12, 2012, respondent underwent a Pre-Employment Medical Examination and was declared fit to work. The parties' employment relationship was governed by both the POEA-SEC and a Collective Bargaining Agreement (CBA) which, on its face, covered the period February 1, 2008 to January 31, 2010, but contained a provision extending its effectivity absent a termination notice by either party.

Respondent Pamfilo A. Alacre was hired by petitioner Torm Shipping Philippines, Inc. for its principal, Torm S/A, as a Fitter on board the vessel Torm Kristina for a period of six months with a basic monthly salary of US$648.00. Prior to his embarkation on March 12, 2012, respondent underwent a Pre-Employment Medical Examination and was declared fit to work. Sometime in July 2012, while working on board the vessel, respondent felt pain on his right shoulder. He sought medical help and was diagnosed with "Right shoulder sprain, right hand joint sprain."

Respondent was repatriated to the Philippines on July 8, 2012 and referred to the company-designated physician, Dr. Amado Regino of the NGC Medical Specialist Clinic, Inc. (NGC Clinic), for post-employment medical examination. Thereafter, respondent underwent a series of treatments from July 10, 2012 up to October 24, 2012, as evidenced by Medical Reports issued by the NGC Clinic. On October 29, 2012, the NGC Clinic issued a Medical Report finding that respondent's interim disability grading was "Grade 10 — inability to raise arm more than halfway from horizontal to perpendicular." Respondent continued therapy due to persistent pain on his right shoulder as advised by the company-designated physician.

As there appeared to be no improvement in his condition, respondent decided to consult another doctor, Dr. Venancio P. Garduce, Jr., an Orthopedic Specialist at St. Luke's Medical Center and San Juan De Dios Hospital and a Professor in Orthopedics at the University of the Philippines-College of Medicine. Dr. Garduce concluded that it would be impossible for respondent to work as a seaman and recommended a Grade 3 disability grading. On February 13, 2013, respondent underwent surgery on his right shoulder. He was discharged on February 16, 2013, but was advised to continue his physical therapy.

As his condition failed to improve, respondent filed a Complaint before the Labor Arbiter on June 24, 2013 against the petitioners for recovery of permanent total disability benefits with claims for moral and exemplary damages and attorney's fees. Prior to filing the complaint, respondent had already interposed a claim for recovery before the Danish Shipowner Accident Insurance Association. The Labor Arbiter found merit in the complaint and awarded US$60,000.00 as permanent total disability benefits plus 10% attorney's fees, applying the POEA-SEC on the ground that the CBA had expired and that the company-designated physician failed to issue a final assessment within 120 days, rendering the disability total and permanent. The NLRC reversed, holding that the CBA remained effective and dismissing the complaint without prejudice to refiling after resolution of the claim pending before the Danish National Board of Industrial Injuries (NBII). The CA, in turn, annulled the NLRC ruling and reinstated the Labor Arbiter's Decision. Meanwhile, the NBII had rendered its Decision granting respondent 8% disability benefits in the amount of USD9,596.39 and loss of earning capacity equivalent to 75%, entitling respondent to a monthly compensation of DKK2,860.00 from January 28, 2015 until June 10, 2038, when respondent reaches 68 years old. Respondent had already received a total of DKK98,661.00 or USD14,566.78, representing disability benefits and back payment for loss of earning capacity.

• Prematurity of the Complaint: Petitioners argued that respondent had already interposed a claim for recovery before the Danish Shipowner Accident Insurance Association prior to filing the complaint before the Labor Arbiter on June 24, 2013, rendering the complaint premature.
• Failure to Comply with Treatment: Petitioners averred that on the 234th day or March 1, 2013, the company-designated physician advised respondent to continue further treatment, but respondent did not comply with the directive; thus, the CA should have limited the disability rating to the Grade 10 interim rating issued by the company-designated physician.
• Offsetting Under the CBA: Petitioners argued that the CBA provides for the offsetting of the amount a seafarer is entitled to receive under the Danish Industrial Injuries Act and the POEA-SEC. Since the amount awarded by the NBII and paid by petitioners had already exceeded the maximum disability benefit payable under the POEA-SEC (USD60,000.00), there was no longer any obligation on their part to compensate respondent.
• Improper Award of Attorney's Fees: Petitioners contended that the CA erred in affirming the Labor Arbiter's award of attorney's fees despite the lack of reasonable ground for such an award.
• Ambiguity in the Dispositive Portion: Petitioners argued that the CA failed to include in the dispositive portion of its Decision its ruling on off-setting, thereby leaving room for debate, dispute, and interpretation on the proper execution of the judgment.

• Loss of Earning Capacity: Respondent argued that disability should be judged not on its "medical significance but on the loss of earning capacity." Respondent averred that his condition clearly showed that he could no longer work as a seafarer, and as such, he was entitled to permanent and total disability benefits.

• Effectivity of the CBA: Whether the parties' Collective Bargaining Agreement remained effective and applicable in resolving the controversy despite its stated expiration date of January 31, 2010.
• Disability Grading and Entitlement: Whether respondent is entitled to permanent total disability benefits under the POEA-SEC given the circumstances of his medical treatment and the company-designated physician's failure to issue a final assessment.
• Effect of the NBII Award: Whether the NBII's award of disability benefits and loss of earning capacity, when offset against the maximum POEA-SEC benefit pursuant to the CBA, renders the complaint moot.
• Attorney's Fees: Whether the award of attorney's fees in favor of respondent was proper.

• Effectivity of the CBA: Yes. The CBA remained effective beyond January 31, 2010 because no termination notice was given by either party, as required under Article 21 of the CBA, and respondent never disputed the CBA's continued effectivity.
• Disability Grading and Entitlement: Rendered moot. The resolution of respondent's entitlement to benefits under the POEA-SEC was rendered academic because the NBII award, when offset against the maximum POEA-SEC benefit, resulted in no deficiency.
• Effect of the NBII Award: Yes, the complaint is moot. The total amount awarded by the Danish Authorities for loss of earning capacity (approximately USD121,601.43) significantly exceeded the maximum US$60,000.00 disability compensation under the POEA-SEC; with the CBA's offsetting provision, no additional obligation could be imposed on petitioners.
• Attorney's Fees: No. There was no basis for the award of attorney's fees because respondent was not forced to litigate, was not left without recourse, and was not maliciously withheld payment of benefits; his resort to Philippine jurisdiction was his personal decision, not attributable to bad faith or malice on the part of petitioners.

• Effectivity of the CBA: The CBA, on its face, covered only the period February 1, 2008 to January 31, 2010. However, Article 21 thereof expressly provided that the agreement shall be effective "further if notification of termination has not been given neither by the DSA nor by the AMOSUP within a 3 months' notice before the date of expiration." The records were bereft of evidence that such notification had been made. Respondent himself never refuted the existence or continued effectivity of the CBA — he even indicated "Danish CBA" as the name of the worker's union/federation in his complaint. This amounted to an admission by silence under Section 32, Rule 130 of the Rules of Court. Significantly, petitioners themselves did not dispute the CBA's effectivity; one of the errors they assigned was that the complaint was premature pending ruling under the Danish Industrial Injuries Act as mandated by the CBA, which was an implied recognition that the CBA remained effective. Having concluded that the CBA remained effective, its provisions on disability compensation — which were not contrary to law, the POEA-SEC, or public policy, and were in fact more favorable to respondent — had to be followed.

• Disability Grading and Entitlement: The CBA's Article 10 provides that when awarding compensations according to POEA Rules, any entitlements according to the Danish Industrial Injuries Act should be set off. This means any amount awarded under the Danish Industrial Injuries Act shall be subtracted from the compensation respondent is found entitled to under the POEA-SEC, and any deficiency would be the amount payable. A prior ruling under the Danish Industrial Injuries Act was therefore necessary to determine whether such a deficiency exists. The NBII had already rendered its Decision granting respondent 8% disability benefits (USD9,596.39) and loss of earning capacity equivalent to 75%, entitling him to a monthly compensation of DKK2,860.00 from January 28, 2015 until June 10, 2038. Computed in full, respondent's total compensation for loss of earning capacity amounted to DKK764,411.00 or approximately USD121,601.43. The maximum disability compensation under the POEA-SEC is US$60,000.00. Because the Danish award far exceeded this maximum, whether or not respondent was adjudged entitled to permanent total disability under the POEA-SEC, the result would be the same: no additional obligation would be imposed upon petitioners. The resolution of the issue was therefore moot, as a judgment thereon could not have any practical legal effect.

• Effect of the NBII Award: The NBII Decision, coupled with its partial execution in the form of payments already received by respondent, constituted presumptive evidence of the rights between the parties under Rule 39, Section 48 of the Rules of Court. Respondent did not dispute the NBII Decision or the fact that he had already received DKK98,661.00 or USD14,566.78 in payments. There being no genuine issue remaining except the execution of the NBII's disposition vis-à-vis the POEA-SEC provisions, and given that the Danish award exceeded the maximum POEA-SEC benefit, there was no practical relief the Court could grant. Dismissing the case on the ground of prematurity would serve no purpose, as the NBII had already ruled.

• Attorney's Fees: There was no basis for the award of attorney's fees. At the time respondent filed the complaint, his claim before the Danish Authorities was still pending. While he was not technically precluded from seeking relief simultaneously from both fora, respondent's resort to Philippine jurisdiction was his personal decision and was not attributable to bad faith or malice on the part of petitioners. It could not be said that respondent was forced to litigate, was left without any recourse, or was maliciously withheld payment of benefits. Each party was accordingly directed to bear its own costs of suit.

• Admission by Silence — Under Section 32, Rule 130 of the Rules of Court, an act or declaration made in the presence and within the hearing or observation of a party who does or says nothing when the act or declaration is such as naturally to call for action or comment, may be given evidence against such party. The Court applied this doctrine to find that respondent's failure to refute the CBA's continued effectivity — and his affirmative indication of "Danish CBA" in his complaint — constituted an admission that the CBA remained in full force and effect.

• CBA Automatic Extension Clause — A collective bargaining agreement may extend beyond its stated duration where it contains a provision requiring prior notice of termination, and no such notice has been given by either party. The Court held that Article 21 of the CBA, which provided for automatic extension absent a three-month termination notice, was clear and controlling, and the absence of any termination notice in the records meant the CBA's life extended beyond January 31, 2010.

• Mootness of Disability Claims Due to Offsetting — Where a CBA provides for the offsetting of foreign disability awards against POEA-SEC entitlements, and the foreign award already exceeds the maximum disability compensation payable under the POEA-SEC, the seafarer's claim for disability benefits under the POEA-SEC is rendered moot because no deficiency exists and no practical relief can be granted by the Court.

• Entitlement of Seafarers to Disability Benefits — The entitlement of seafarers to disability is governed by contract (the POEA-SEC and the parties' CBA) and by law (the Labor Code provisions on disability). A CBA's provisions on the award of disability should be followed where they are not contrary to law, the POEA-SEC, or public policy, and where they are more favorable to the seafarer.

• "Considering that this amount is significantly lesser than the amount already awarded by the Danish Authorities, the resolution of the issue of whether respondent is entitled to the same is already moot. Otherwise stated, with the offsetting provision under the CBA, whether the Court adjudge the respondent entitled to total and permanent liability under the POEA-SEC, the result would be the same, there is no additional obligation imposed upon petitioner." — This passage articulates the ratio decidendi: the mootness of the POEA-SEC claim arising from the CBA's offsetting provision and the NBII award exceeding the maximum POEA-SEC benefit.

• "There is no basis for the award of attorney's fees in favor of the respondent since it cannot be said that he was forced to litigate, was left without any recourse or was maliciously withheld of payment of benefits. At the time he filed the instant complaint, his claim before the Danish Authorities was still pending." — This passage defines the standard for awarding attorney's fees in seafarer disability cases, emphasizing that voluntary resort to a parallel forum does not justify such an award absent bad faith or malice on the employer's part.

• "It is clear from the above provision that the CBA's life extends beyond 31 January 2010 absent a notification of termination by either party. In this regard, records are bereft of evidence evincing that such notification had been made." — This passage, quoting the NLRC's reasoning adopted by the Court, establishes the application of the CBA's automatic extension clause and the evidentiary burden on the party asserting termination.

• Tagalog vs. Crossworld Marine Services, Inc., 761 Phil. 270 (2015) — Cited for the proposition that the entitlement of seafarers to disability is governed by contract (the POEA-SEC and the CBA) and by law (the Labor Code provisions on disability).
• Puyat vs. Zabarte, 405 Phil. 413 (2001) — Cited by analogy (cf.) in connection with the proposition that where a foreign judgment has been partially executed, no genuine issue remains except execution of its remaining disposition.
• Arlo Aluminum vs. Piñon, Jr., 813 Phil. 188 (2017) — Cited by analogy (cf.) regarding the comparison of amounts awarded and the determination of whether an additional obligation exists.
• Sales vs. Commission on Elections, 559 Phil. 593 (2007) — Cited for the doctrine of mootness: a court will not indulge in academic discussion of an issue where a judgment thereon cannot have any practical legal effect or cannot be enforced.
• NFD Int'l. Manning Agents, Inc./Barber Ship Mgmt. Ltd. vs. Illescas, 646 Phil. 244 (2010) — Cited for the principle that attorney's fees require a reasonable ground, such as the claimant being forced to litigate or being maliciously withheld payment of benefits.
• Tangga-an vs. Phil. Transmarine Carriers, Inc., 706 Phil. 339 (2013) — Cited for the principle that a seafarer's voluntary resort to a particular jurisdiction is a personal decision not attributable to bad faith or malice on the employer's part.

• Article 21, CBA (Duration of the Collective Bargaining Agreement) — Provided that the CBA "shall be effective as from February 1, 2008 until January 31, 2010 and further if notification of termination has not been given neither by the DSA nor by the AMOSUP within a 3 months' notice before the date of expiration." The Court applied this provision to hold that the CBA remained effective beyond January 31, 2010 because no termination notice was given.
• Article 10, CBA (Death and Disability Compensation) — Provided that "[w]hen meting out compensations according to POEA Rules, any entitlements according to the Danish Industrial Injuries Act should be set off." The Court applied this offsetting provision to conclude that the NBII award, exceeding the maximum POEA-SEC benefit, resulted in no deficiency and rendered the POEA-SEC claim moot.
• Section 32, Rule 130, Rules of Court (Admission by Silence) — Provides that an act or declaration made in the presence and within the hearing or observation of a party who does or says nothing when the act or declaration naturally calls for action or comment may be given evidence against such party. Applied to respondent's failure to refute the CBA's continued effectivity.
• Section 48, Rule 39, Rules of Court (Foreign Judgments) — Provides that a foreign judgment is presumptive evidence of the rights between the parties. Applied to the NBII Decision, which, coupled with partial execution, established respondent's entitlement to Danish disability benefits.
• POEA-SEC (Department Order No. 4, series of 2000) — The standard employment contract governing seafarers, which sets the maximum disability compensation at US$60,000.00 for permanent total disability. The Court held that this maximum was exceeded by the NBII award, rendering any claim thereunder moot under the CBA's offsetting provision.

Peralta, C.J. (Chairperson), Caguioa, Carandang, and Zalameda, JJ., concurred.