SC reverses its decision: public insurance should pay claims and indemnities

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Evelyn Macairan – The Filipino Star

August 29, 2022 | 00:00

MANILA, Philippines — The state insurance fund should provide compensation for workers’ injuries and deaths, according to the Supreme Court (SC), overturning a 2007 ruling requiring employers to pay compensation.

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

Thus, the SC declared Section 1711 of the Civil Code to be implicitly repealed by Title II, Book IV of the Labor Code of the Philippines.

In the same case, the CS abandoned its 2007 decision in Candano Shipping Lines Inc. v. Sugata-on (Candano), which had allowed the granting of compensation for loss of future income on the basis of article 1711 of the Civil Code.

The CS, however, said the abandonment of the Candano ruling will be applied prospectively.

In guidelines issued on the application of the Candano judgment and the transition to its abandonment, the High Court explained that for actions filed before August 6, 2007, which is the purpose of Candano, Section 1711 of the Civil Code must be considered to have been implicitly repealed by Title II, Book IV of the Labor Code.

Thus, article 1711 of the Civil Code cannot admit any action for damages or compensation.

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

In the absence of Candano, there is no legal basis to give effect to a repealed provision of the Civil Code.

For actions brought during the applicability of Candano, from its finality in 2007 until the finality of this decision, effect will be given to article 1711 of the Civil Code on the basis of the Candano judgment.

For actions brought after the finality of this decision, article 1711 of the civil code remains without effect, article 1711 having been repealed by the labor code.

Thus, the CS declared that article 1711 of the Civil Code could no longer be invoked against employers to claim compensation in the event of an accident at work or death.

The case arose out of a 2012 lawsuit filed by respondent Jenny Rose Nedic asking petitioner Oceanmarine Resources Corp. claims representing the “loss of future earnings” of Romeo Ellao, who is Nedic’s common-law partner and the father of her minor son, according to the SC.

On November 2, 2011, Ellao, who worked as a company driver for Oceanmarine, was shot dead by two unidentified motorcycle attackers after withdrawing money from Oceanmarine’s banks. The attackers immediately took the bag with money from the vehicle and fled.

After Ellao’s death, Nedic’s attorney wrote a letter to Oceanmarine asking for damages for lost future earnings, but Oceanmarine denied the claim.

This prompted Nedic to file in the Regional Court of First Instance (RTC) of the city of Parañaque the present claim under Article 1711 of the Civil Code, which expressly holds business owners and other employers responsible for the payment of compensation for the death of their employees if death occurred out of and in the course of employment, even if accidental or wholly due to fortuitous cause.

In its decision of September 22, 2014, the RTC dismissed Nedic’s claim for failure to establish the causal link between Oceanmarine’s negligence and Ellao’s death.

The case went to the Court of Appeal (CA), which overturned the RTC’s decision and awarded Nedic actual damages for loss of earning capacity.

Citing Candano, the CA ruled that the employer’s duty to indemnify automatically applies as long as the employee dies or is injured in the course of employment.

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

Applying the above guidelines, the High Court upheld with variation the CA’s decision of 19 December 2017 and ordered Oceanmarine to pay Ellao’s heirs P1,410,000 as compensation for loss of earning capacity, attorney and prosecution costs.

However, the CS pointed out that Nedic had erred in relying on Article 1711 of the Civil Code, now considered to be implicitly repealed by Title II, Book IV, of the Labor Code. His action under Section 1711 was held to be meritorious and entitled to relief pursuant to Candano, which was the prevailing doctrine at the time the action was filed and before that doctrine was abandoned.

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