Seafarer Disability Claims: Interest and Attorney's Fees in Maritime Disputes

The Supreme Court recently affirmed that seafarers who win disability claims are entitled to both legal interest and attorney's fees, even when the employer argues it has already paid the award. In Westminster Seafarer Management Philippines, Inc. v. Raz (G.R. No. 249344, April 5, 2022), the Court denied the employer's petition and upheld the Court of Appeals' ruling, providing clear guidance on how monetary awards in maritime disputes are treated.

The Case Background

Arnulfo C. Raz was hired as a Fitter for the vessel NOCC Kattegat under a nine-month contract. His duties included repairing and maintaining the vessel engine, welding, and lifting heavy equipment. While lifting a heavy cylinder head in May 2015, he suffered pain in his right shoulder that worsened over time. He was repatriated after being declared unfit to work.

The company-designated physician eventually assessed him with a Grade 9 disability—ankylosis of one shoulder—entitling him to US$25,313.00 under the Collective Bargaining Agreement. However, Raz consulted a second physician who declared him permanently unfit for sea duties. When the company failed to refer him to a third doctor as required, Raz filed a complaint for total permanent disability benefits.

The Dispute Over Interest and Attorney's Fees

The National Conciliation and Mediation Board initially awarded Raz US$129,212.00 in total permanent disability benefits plus moral damages and attorney's fees. On appeal, the Court of Appeals reduced the award to US$25,313.00 as Grade 9 disability benefit, but maintained the 10% attorney's fees and added 6% legal interest from finality of judgment until full satisfaction.

The employer argued that it had already paid the original award and should not be liable for interest. It also claimed attorney's fees were baseless absent bad faith on its part.

The Supreme Court's Ruling

The Supreme Court denied the employer's petition. On the issue of legal interest, the Court applied the rule from Nacar v. Gallery Frames (716 Phil. 267 [2013]): when a judgment awarding money becomes final and executory, legal interest at 6% per annum runs from finality until satisfaction, as this period is deemed a forbearance of credit.

Crucially, the employer's claim of prior payment was unsupported. The Court noted that under Section 4, Rule 45 of the Rules of Court, a petition must be accompanied by relevant documents. The employer failed to attach proof of payment, and the Court cannot base rulings on bare allegations. Without evidence, the Court saw no reason to modify the appellate court's imposition of interest.

On attorney's fees, the Court ruled that Raz was entitled to them because he was forced to litigate to protect his rights. Citing Article 2208(8) of the Civil Code, which allows attorney's fees in actions for indemnity under workmen's compensation and employer's liability laws, the Court affirmed the 10% award.

Practical Takeaways

• Legal interest applies automatically to final monetary judgments in seafarer disability cases at 6% per annum from finality until full payment.
• Proof matters: Employers claiming prior payment must present documentary evidence; bare allegations will not defeat an award.
• Attorney's fees are recoverable in maritime disability claims under Article 2208(8) of the Civil Code, typically at 10% of the monetary award.
• The disability grade determines the benefit: When a company-designated physician's assessment is not properly challenged through the required third-doctor referral process, that assessment may bind the parties.
• Rule 45 petitions require complete documentation; failure to attach supporting evidence can be fatal to the petition.

This article is general information and not legal advice. For your specific situation, consult a lawyer or ask ASG Legal AI.