The Supreme Court (SC) has ruled that cases involving claims for loss of future income covering work-related injury and death should be filed under the provisions of the Labor Code on Employees Compensation and State Insurance Fund.
With the ruling, the SC abandoned its previous decision that allowed the claims for loss of future income under the provisions of Article 1711 of the Civil Code.
The decision was written by Associate Justice Rodil V. Zalameda. A press statement, quoting from the decision, issued by the SC’s public information office (PIO) stated:
“Comparing Article 1711 of the Civil Code and Title II, Book IV of the Labor Code, however, the Court found that the latter law impliedly repealed the former since the Labor Code, as amended by Presidential Decree No. 626, covers the whole subject matter of compensation for work-related injury or death of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.
“Moreover, the Court found 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.”
The SC’s new declaration was contained in the decision that settled the petition filed by Oceanmarine Resources Corporation which sought the reversal of the Court of Appeals (CA) decision that awarded loss of earning capacity to Jenny Rose G. Nedic, whose 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 took the bag containing the money in the vehicle and fled.
Oceanmarine denied Nedic’s plea for damages by way of loss of future income for Ellao’s death. She filed a case for damages before the P0rañaque City regional trial court (RTC) 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.
The trial court’s ruling in 2014 dismissed Nedic’s complaint for her failure to establish the causal connection between Oceanmarine’s negligence and Ellao’s death.
On Nedic’s appeal, the CA reversed the trial court and awarded damages for loss of earning capacity.
Oceanmarine filed a petition with the SC which affirmed with modification the CA’s ruling issued on Dec. 19, 2017.
The PIO’s summary stated that “the Supreme Court affirmed with modification the Dec. 19, 2017 Decision of the CA and ordered Oceanmarine to pay the heirs of Romeo Ellao ₱1,410,000 as indemnity for loss of earning capacity, attorney’s fees, and costs of the suit.”
It also said:
“The 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 (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) which was the prevailing doctrine at the time the action was filed and prior to the abandonment of such doctrine.
“The Court noted that in 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.
“The Court hence set the following guidelines on the application of Candano and the transition to its abandonment, as follows:
“(1) For actions filed prior to 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.
“(2) For actions filed during the applicability of Candano, i.e., from its finality on Aug. 6, 2007 until the finality of this Decision, Article 1711 of the Civil Code shall be given effect based on the Candano ruling.
“(3) 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.”