G.R. No. 162809; September 5, 2012
PACIFIC OCEAN MANNING, INC. and CELTIC PACIFIC SHIP MANAGEMENT CO., LTD., Petitioners, vs. BENJAMIN D. PENALES, Respondent.

FACTS

Respondent Benjamin Penales, an ordinary seaman, was hired by petitioners under a ten-month contract. While performing mooring operations in August 2000, a recoiling rope struck him, causing a fractured left humerus with radial nerve injury and other injuries. He was treated in India and subsequently repatriated to the Philippines, where he underwent further medical treatment from company-designated physicians until January 26, 2001. However, on October 2, 2000, while still undergoing treatment, Penales filed a complaint for disability benefits, claiming he remained weak and unable to work.
The Labor Arbiter awarded Penales partial disability benefits, equating his injury to a Grade 8 disability (33.59% of US$50,000). The NLRC set aside this decision and remanded the case for proper determination of his disability grade, finding that the Labor Arbiter had made a vague assessment without sufficient medical basis. The Court of Appeals reversed the NLRC, reinstating the Labor Arbiter’s award and additionally granting attorney’s fees, holding that the petitioners failed to prove Penales was fit to work within the 120-day treatment period.

ISSUE

Whether the Court of Appeals erred in awarding disability benefits and attorney’s fees to Penales based on the Labor Arbiter’s decision, and in not remanding the case for a proper determination of his disability grade.

RULING

The Supreme Court granted the petition, set aside the Court of Appeals’ decision, and ordered the remand of the case to the Labor Arbiter. The Court clarified the legal framework for determining total and permanent disability under the POEA Standard Employment Contract (SEC). It reiterated that a temporary total disability lasting continuously for more than 120 days may be considered total and permanent, but only if the seafaver remains unable to work and such condition is declared by the company-designated physician within the 120/240-day periods.
The Court found that Penales filed his complaint merely 58 days after his repatriation and while still under active treatment. The company-designated physician had not yet issued a final assessment on his fitness or disability grade. By not allowing the physician the 120/240-day periods to make a definitive evaluation, Penales prematurely claimed disability. Consequently, there was no factual basis for the Labor Arbiter’s specific Grade 8 assessment, making a remand necessary for a proper medical determination of his disability impediment grade at the time of his last treatment. Furthermore, attorney’s fees were unjustified as the petitioners had a valid reason for withholding payment pending a final medical assessment, and were not shown to have acted in bad faith.