The Supreme Court has reiterated its new jurisprudence governing the awarding of indemnity for loss of future income covering work-related injury and death claims based on the provision of the Labor Code on Employees Compensation and State Insurance Fund.
This came after the SC abandoned its previous ruling that allowed the payment of indemnity for loss of future income in connection with work-related injury and death claims based on a provision in the Civil Code.
In an en banc decision, the SC through Associate Justice Rodil Zalameda declared that Article 1711 of the Civil Code had already been superseded by Title II, Book IV of the Labor Code on Employees Compensation and State Insurance Fund.
The high court made the declaration in its ruling on the petition filed by Oceanmarine Resources Corporation seeking the reversal of the Court of Appeals decision that awarded loss of earning capacity to respondent Jenny Rose G. Nedic.
Nedic’s common-law partner and father of her minor son identified as Romeo Ellao was shot dead by two unidentified motorcycle-riding assailants after he withdrew money from Oceanmarine’s banks.
The assailants immediately took the bag of money in the vehicle and escaped.
But the high tribunal noted that heirs of injured or deceased workers still have the option of filing a compensation claim under the Labor Code or proceeding against the employer in an action for damages under the Civil Code as the abandonment of its 2007 ruling in Candano Shipping Lines, Inc. v. Sugata-on, also known as the Candano ruling, shall be applied prospectively.
Thus, the Court issued several guidelines on the abandonment of Candano ruling and the application of the Title II, Book IV of the Labor Code on Employees Compensation and State Insurance Fund, which include the following:
• For actions filed prior to August 6, 2007, which is the finality of Candano, Article 1711 of the Civil Code shall be considered to have been impliedly repealed by Title II, Book IV of the Labor Code.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 In Candano’s absence, there is no legal basis to give effect to a repealed provision of the Civil Code.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, i.e., from its finality on August 6, 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, Article 1711 of the Civil Code can no longer be used against employers to claim indemnity for work- related injury or death.
Court records showed that prior to the controversy, Nedic’s counsel wrote a letter to Oceanmarine demanding damages by way of loss of future income for Ellao’s death which was denied by the latter.
This prompted Nedic to file before the Parañaque City Regional Trial Court (RTC) a 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 September 22, 2014 ruling, the Paranaque RTC junked Nedic’s complaint for failure to establish the causal connection between Oceanmarine’s negligence and Ellao’s death.
However, the appellate court reversed the lower court’s decision and awarded Nedic actual damages for loss of earning capacity.
The appellate court cited the Candano ruling that upheld the employer’s obligation to indemnity an employee who was injured or died in the course of employment.
Feeling aggrieved, Oceanmarine elevated the case before the SC seeking the reinstatement of the lower court’s ruling.
Applying the said guidelines, the SC affirmed the December 19, 2017 CA decision with modification and ordered Oceanmarine to pay the heirs of Romeo ₱1,410,000 as indemnity for loss of earning capacity, attorney’s fees, and costs of the suit.
The high court held that while 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 she filed the complaint.
The SC emphasized that due to the absence of an express repeal of the provisions of the Civil Code on employees’ compensation and claims, confusion arose as to the effect of acceptance of benefits under the Workmen’s Compensation Act (now, the Labor Code) on the right to sue for additional amounts under the Civil Code.
However, based on its comparison of Article 1711 of the Civil Code and Title II, Book IV of the Labor Code, it determined that the latter law impliedly repealed the former since the Labor Code, as amended by Presidential Decree 626, covers the whole subject matter of compensation for work-related injury or death of an employee, providing the system for which an injured or deceased worker is compensated.
“Hence, the said Labor Code provisions were clearly intended as the controlling law for payment of compensation for all work- related injury or death, in effect substituting Article 1711 of the Civil Code,” the SC held.
The high court said further study revealed that Article 1711 of the Civil Code and Title II, Book IV of the Labor Code are “irreconcilably inconsistent.”
“The former law makes the employer directly liable for the payment of compensation for work-related injuries or death, which occurs through no fault of the employer, while the latter law has effectively shifted the liability for said injury or death to the State Insurance Fund,” it added.
The high court also clarified that a claim for compensation for work-related injury or death, regardless of the existence of negligence of the employer, is granted through the prevailing compensation act, which is now the Labor Code of the Philippines, particularly Title II, Book IV of the Labor Code on Employees Compensation and State Insurance Fund.
A claim for damages, on the other hand, is filed under the Civil Code—not the repealed provision under Article 1711, but the Civil Code’s provisions on torts where the causal relationship between the act and negligence of the employer and the injury or death of the worker should be established.
