29 Aug 2022 – SC reverses ruling: State insurance should pay claims, indemnity

Evelyn Macairan – The Philippine Star
August 29, 2022 | 12:00am

SC reverses ruling: State insurance should pay claims, indemnity

The SC issued a decision penned by Associate Justice Rodil Zalameda, saying that while Title II, Book IV of the Labor Code on Employees Compensation and State Insurance Fund has already superseded Article 1711 of the Civil Code, heirs of injured or deceased workers still have a choice of remedy between filing a compensation claim under the Labor Code or proceeding against the employer in an action for damages under the Civil Code.
Philstar.com / EC Toledo
MANILA, Philippines — The state insurance fund should provide compensation to work-related injuries and death claims of employees, according to the Supreme Court (SC), repealing a 2007 ruling that makes employers pay the indemnity.

In a statement released last Tuesday, the SC issued a decision penned by Associate Justice Rodil Zalameda, saying that while Title II, Book IV of the Labor Code on Employees Compensation and State Insurance Fund has already superseded Article 1711 of the Civil Code, heirs of injured or deceased workers still have a choice of remedy between filing a compensation claim under the Labor Code or proceeding against the employer in an action for damages under the Civil Code.

Thus, the SC declared Article 1711 of the Civil Code impliedly repealed by Title II, Book IV of the Labor Code of the Philippines.

In the same case, the SC abandoned its 2007 ruling in Candano Shipping Lines Inc. v. Sugata-on (Candano), which had allowed the awarding of indemnity for loss of future income based on Article 1711 of the Civil Code.

The SC, however, said the abandonment of the Candano ruling shall be applied prospectively.

In the guidelines issued on the application of the Candano ruling and the transition to its abandonment, the high court explained that for actions filed before Aug. 6, 2007, which is the finality of Candano, Article 1711 of the Civil Code shall be considered to have been impliedly repealed by Title II, Book IV of the Labor Code.

Thus, Article 1711 of the Civil Code cannot sustain any action for, or award of, indemnity.

Candano was not yet a binding precedent at the time these actions were filed.

In Candano’s absence, there is no legal basis to give effect to a repealed provision of the Civil Code.

For actions filed during the applicability of Candano, from its finality in 2007 until the finality of this decision, Article 1711 of the Civil Code shall be given effect based on the Candano ruling.

For actions filed after the finality of this decision, Article 1711 of the Civil Code shall not be given any effect since Article 1711 has been repealed by the Labor Code.

Thus, the SC said Article 1711 of the Civil Code could no longer be used against employers to claim indemnity for work-related injury or death.

The case stemmed from the 2012 complaint filed by respondent Jenny Rose Nedic who sought from petitioner Oceanmarine Resources Corp. claims representing the “lost future income” of Romeo Ellao, who is Nedic’s common-law partner and father of her minor son, according to the SC.

On Nov. 2, 2011, Ellao, who was working as a company driver for Oceanmarine, was shot dead by two unidentified motorcycle-riding assailants after he withdrew money from Oceanmarine’s banks. The assailants immediately took the bag with money in the vehicle and escaped.

Following Ellao’s death, Nedic’s counsel wrote a letter to Oceanmarine demanding damages by way of loss of future income, but Oceanmarine denied the claim.

This prompted Nedic to file before the Parañaque City Regional Trial Court (RTC) the present claim under Article 1711 of the Civil Code, which expressly holds owners of enterprises and other employers liable to pay compensation for the death of their employees if the death arose out of and in the course of employment even if it was accidental or entirely due to a fortuitous cause.

In its Sept. 22, 2014 decision, the RTC dismissed Nedic’s complaint for failure to establish the causal connection between Oceanmarine’s negligence and Ellao’s death.

The case was brought to the Court of Appeals (CA), which reversed the RTC’s ruling and awarded Nedic actual damages for loss of earning capacity.

Citing Candano, the CA held that the employer’s obligation for indemnity automatically attaches so long as the employee died or was injured in the course of employment.

Oceanmarine then filed a petition for review on certiorari before the SC.

Applying the aforesaid guidelines, the high court affirmed with modification the CA’s Dec. 19, 2017 decision and ordered Oceanmarine to pay the heirs of Ellao P1,410,000 as indemnity for loss of earning capacity, attorney’s fees and costs of the suit.

The SC, however, pointed out that Nedic erred in relying on Article 1711 of the Civil Code, which is now considered impliedly repealed by Title II, Book IV of the Labor Code. Her action under Article 1711 was considered meritorious and entitled to relief pursuant to Candano, which was the prevailing doctrine at the time that the action was filed and before the abandonment of such doctrine.