G.R. No. 193628 . March 19, 2014.
SPLASH PHILIPPINES, INC., LORENZO ESTRADA, TAIYO SANGYO TRADING and MARINE SERVICE, LTD. (TST PANAMA S.A.) and MN HARUTAMOU, Petitioners, vs. RONULFO G. RUIZO, Respondent.

FACTS

Respondent Ronulfo Ruizo entered into a nine-month employment contract as chief cook with petitioner Splash Philippines, Inc., for its principal Taiyo Sangyo Trading and Marine Service, Ltd., for the vessel M/V Harutamou. On December 13, 2005, while on duty, Ruizo experienced pain in his lumbar region and groin. He was diagnosed in Australia with “Blocked Right Kidney by Stone.” He was repatriated on December 21, 2005, due to contract completion. The company-designated physician, Dr. Nicomedes Cruz, diagnosed him with ureterolithiasis with hydronephrosis and prescribed treatment. While under treatment, Ruizo filed a complaint for disability compensation, damages, and attorney’s fees, claiming coverage under a Collective Bargaining Agreement (CBA) between his union, AMOSUP, and the petitioners. He prayed for maximum disability benefits, alleging inability to work for more than 120 days without a disability assessment from Dr. Cruz. Dr. Cruz recommended extracorporeal shockwave lithotripsy (ESWL), which Ruizo underwent on January 19, 2007. He reported for a follow-up on February 5, 2007, but failed to return for further recommended ESWL. On May 7, 2007, without informing the company, Ruizo consulted Dr. Efren Vicaldo, who diagnosed him with bilateral nephrolithiasis and essential hypertension and gave a disability rating of Impediment Grade VII (41.8%). The Labor Arbiter dismissed the complaint, finding no sufficient proof of a CBA and ruling that the absence of a disability rating from the company doctor, due to Ruizo’s failure to complete treatment, negated his claim. The NLRC affirmed. The Court of Appeals reversed, awarding Ruizo permanent total disability compensation of US$100,000.00 under the CBA, moral and exemplary damages, and attorney’s fees, ruling that his inability to work for more than 120 days entitled him to benefits.

ISSUE

Whether the Court of Appeals erred in: (1) ruling that Ruizo’s employment was covered by a CBA; (2) holding that Ruizo’s inability to work for more than 120 days automatically entitled him to permanent total disability benefits; and (3) awarding moral and exemplary damages and attorney’s fees.

RULING

The Supreme Court granted the petition and reversed the Court of Appeals decision.
1. On the CBA Coverage: The Court found no competent evidence to prove the existence of a CBA covering Ruizo’s employment. The one-page excerpt presented by Ruizo was unsigned and did not indicate the parties or that it applied to M/V Harutamou. AMOSUP itself issued a certification that the vessel was not covered by any CBA between AMOSUP and any foreign principal employer. The CA’s reliance on Ruizo’s claim of a verbal CBA was erroneous.
2. On the 120-Day Rule and Disability Benefits: The Court clarified that the “120-day rule” from Crystal Shipping is not an iron-clad rule for automatically granting permanent total disability benefits. The degree of disability must be determined primarily by the provisions of the POEA-SEC, the parties’ CBA (if any), and relevant laws. Under the POEA-SEC, the company-designated physician has a period of up to 240 days to assess the seafarer’s disability. Ruizo abandoned his treatment on February 5, 2007, preventing the company doctor from making a final assessment. His unilateral consultation with his own doctor, Dr. Vicaldo, did not comply with the conflict-resolution procedure under the POEA-SEC, which requires a third-doctor referral in case of disagreement. By abandoning treatment, Ruizo forfeited his right to claim disability benefits under the contract. His inability to work for more than 120 days did not automatically constitute permanent total disability.
3. On the Award of Damages and Attorney’s Fees: The award of moral and exemplary damages and attorney’s fees was deleted. There was no evidence that the petitioners acted in a fraudulent, oppressive, or malevolent manner. The petitioners were merely enforcing their contractual rights under the POEA-SEC. Attorney’s fees are not recoverable in the absence of stipulation or where the defendant’s act or omission has not compelled the plaintiff to litigate.
The Supreme Court reinstated the Labor Arbiter’s decision dismissing the complaint for lack of merit.