THIRD DIVISION

[G.R. No. 117572. January 29, 1998]

GOVERNMENT SERVICE INSURANCE SYSTEM (GSIS), petitioner, vs. THE HON. COURT OF APPEALS

and ROSA BALAIS, respondents.

D E C I S I O N

ROMERO, J.:

This is a petition for review on certiorari seeking to annul and set aside the decision[1]

rendered by the Court of

Appeals dated October 17, 1994 which reversed the decision issued by the Employees Compensation Commission (ECC)

in ECC Case No. 6462 dated November 17, 1993, affirming the decision of petitioner Government Service Insurance

System (GSIS) that private respondent Rosa Balais is not entitled to conversion of compensation benefits from partial

disability for a 9-month period after retirement to total disability.

Private respondent started working as an emergency employee of the National Housing Authority (NHA) in

1952. She then rose from the ranks until she was promoted to Chief Paying Cashier in 1984.[2]

Medical records disclose that on December 17, 1989, private respondent suddenly experienced chills, followed by

loss of consciousness. She was brought to the Capitol Medical Center where she was sedated but allowed to go home after

three hours. Later, on the same day, however, she vomited several times and suffered from parie-occipital pains. She was

again rushed to U.E.R.M. Medical Center where she underwent a thorough medical examination. She was diagnosed to

be suffering from Subarachnoid Hemorrhage Secondary to Ruptured Aneurysm. After undergoing craniotomy, she was

finally discharged from the hospital on January 20, 1990.[3]

Despite her operation, private respondent could not perform her duties as efficiently as she had done prior to her

illness. This forced her to retire early from the government service on March 1, 1990 at the age of sixty-two (62) years.[4]

On March 13, 1990, private respondent filed a claim for disability benefits with the GSIS for the above-described

ailment. Her illness was evaluated as compensable by the GSIS Medical Evaluation and Underwriting Group.

Accordingly, the GSIS granted her temporary total disability (TTD) benefits for the period starting from December 17,

1989 to January 31, 1990 and subsequently, permanent partial disability (PPD) benefits for nine months starting on March

2, 1990.[5]

In a letter dated November 17, 1992, private respondent requested the GSIS for the conversion of the classification of

her disability benefits from permanent partial disability (PPD) to permanent total disability (PTD).[6]

Such plea, however, was denied by the GSIS in a letter dated December 8, 1992 on the ground that the GSIS Medical

Evaluation and Underwriting Department which evaluated her claim found no basis to alter its findings. She was

informed that the results of the physical examination conducted on June 5, 1990 did not satisfy the criteria for permanent

total disability. Moreover, she was told that the pension granted to her was the maximum benefit due her under the Rating

Schedule established by the ECC.[7]

The denial of her request then prompted private respondent to file on May 4, 1993 a request for reconsideration of the

earlier denial of her application for the conversion of her disability benefits from permanent partial disability to permanent

total disability, explaining that since the time of her operation she continued to suffer from dizziness, headaches, loss of

memory and inability to properly sleep. Moreover, she contended that there were instances when she felt extremely weak

and could not walk without support. She further stated that she was required to take medication for life.[8]

The GSIS, however, denied reconsideration which denial was later affirmed on appeal by the ECC in its decision

dated November 17, 1993.[9]

Undaunted, private respondent filed a petition for review with the Court of Appeals, which promulgated a decision

favorable to her on October 17, 1994, the dispositive portion of which reads:

“WHEREFORE, this petition for review is granted and the decision of the Employees Compensation Commission in ECC

Case 6462 dated 17 November 1993 should be, as it is hereby REVERSED.”[10]

Petitioner GSIS now comes to this Court by way of a petition for review on certiorari alleging that the Court of

Appeals erred:

“1. In reversing and setting aside the decision of the Employees‟ Compensation Commission which affirmed the decision

of herein petitioner GSIS.”

“2. In considering the ailment of Subarachnoid Hemorrhage Secondary to Ruptured Aneurysm as permanent total

disability.”[11]

The sole issue to be resolved here is whether private respondent is entitled to conversion of her benefits from

permanent partial disability to permanent total disability.

Both petitioner and the Solicitor General argue against private respondent‟s request for the conversion of her

disability benefits on the ground that she had already been awarded the benefits commensurate to the degree of her

physical condition at the time of her retirement. They contend that her ailment Subarachnoid Hemorrhage Secondary to

Ruptured Aneurysm only entitled her to receive benefits for permanent partial disability and such illness does not satisfy

the criteria for permanent total disability. Furthermore, they aver that private respondent‟s request for conversion cannot

be granted because other than alleging abnormalities and non-improvement of memory she failed to show sufficient

medical basis that would warrant said conversion.

Petitioner also maintains that, although private respondent was awarded permanent partial disability benefits for nine

(9) months commencing on the day of her retirement, it does not automatically follow that petitioner recognized her

disability as permanent and total because the period of 120 days mentioned in Sec. 2, Rule 7 of the Amended Rules on

Employees‟ Compensation is not the determining factor. Petitioner contends that an injury or illness that goes beyond the

said 120 days may still be considered as permanent partial disability pursuant to Sec. 2, Rule 10 of the same rules.

The Court has already dismissed the same arguments before in similar cases. Petitioner‟s insistence must therefore

suffer the same fate in the instant case.

While it is true that the degree of private respondent‟s physical condition at the time of her retirement was not

considered as permanent total disability, yet, it cannot be denied that her condition subsequently worsened after her head

operation and consequent retirement. In fact, she suffered afterwards from some ailments like headaches, dizziness,

weakness, inability to properly sleep, inability to walk without support and failure to regain her memory. All these

circumstances ineluctably demonstrate the seriousness of her condition, contrary to the claim of petitioner. More than

that, it was also undisputed that private respondent was made to take her medication for life.

“A person‟s disability may not manifest fully at one precise moment in time but rather over a period of time. It is

possible that an injury which at first was considered to be temporary may later on become permanent or one who suffers a

partial disability becomes totally and permanently disabled from the same cause.”[12]

In the same vein, this Court has ruled that “disability should not be understood more on its medical significance but

on the loss of earning capacity.”[13]

Private respondent‟s persistent illness indeed forced her to retire early which, in turn,

resulted in her unemployment, and loss of earning capacity.

Judicial precedents likewise show that disability is intimately related to one‟s earning capacity. It has been a

consistent pronouncement of this Court that “permanent total disability means disablement of an employee to earn wages

in the same kind of work, or work of a similar nature that she was trained for or accustomed to perform, or any kind of

work which a person of her mentality and attainment could do.”[14]

“It does not mean state of absolute helplessness, but

inability to do substantially all material acts necessary to prosecution of an occupation for remuneration or profit in

substantially customary and usual manner.”[15]

The Court has construed permanent total disability as the “lack of ability to follow continuously some substantially

gainful occupation without serious discomfort or pain and without material injury or danger to life.”[16]

It is, therefore,

clear from established jurisprudence that the loss of one‟s earning capacity determines the disability compensation one is

entitled to.

It is also important to note that private respondent was constrained to retire at the age of 62 years because of her

impaired physical condition. This, again, is another indication that her disability is permanent and total. As held by this

Court, “the fact of an employee‟s disability is placed beyond question with the approval of the employee‟s optional

retirement, for such is authorized only when the employee is `physically incapable to render sound and efficient service‟ x

x x.”[17]

In the case at bar, the denial of the claim for permanent total disability benefit of private respondent who, for 38 long

years during her prime had rendered her best service with an unblemished record and who was compelled to retire on

account of her worsening condition, would indeed subvert the salutary intentions of the law in favor of the worker. The

Court, therefore, affirms the decision of the respondent Court of Appeals decreeing conversion of private respondent‟s

disability from permanent partial disability to permanent total disability.

One final note. The GSIS and ECC should be commended for their vigilance against unjustified claims that will

deplete the funds intended to be disbursed for the benefit only of deserving disabled employees. Nevertheless, we should

caution them against a too strict interpretation of the rules lest it result in the withholding of full assistance from those

whose capabilities have been diminished, if not completely impaired, as a consequence of their dedicated service in the

government. A humanitarian impulse, dictated by no less than the Constitution itself under the social justice policy, calls

for a liberal and sympathetic approach to the legitimate appeals of disabled public servants like the herein private

respondent. Compassion for them is not a doleout but a right.[18]

WHEREFORE, the instant petition is hereby DENIED, and the challenged decision of the Court of Appeals dated

October 17, 1994 is AFFIRMED in toto.

G.R. No. 104139 December 22, 1992

LYDIA M. PROFETA, petitioner,

vs.

HON. FRANKLIN M. DRILON, in his capacity as Executive Secretary, Office of the President of the

Philippines, respondent.

PADILLA, J.:

This is a petition for review on certiorari assailing a portion of the decision of the Office of the President, dated 23

October 1991, declaring petitioner as compulsorily retired as of 15 October 1991 and the resolution dated 31 January

1992 denying petitioner's motion for reconsideration of said decision.

The antecedents are the following:

Petitioner, Dr. Lydia M. Profeta, served as Executive Dean of the Rizal Technological Colleges from 24 October 1974 to

15 October 1978. From 16 October 1978 to 30 April 1979, petitioner was the appointed Acting President of said College

until her promotion to President of the same college on 1 May 1979.

After the 1986 EDSA revolution or on 5 March 1986, petitioner filed her courtesy resignation as President of the Rizal

Technological Colleges and the same was accepted on 21 March 1986. A day before the acceptance of her courtesy

resignation, petitioner applied for sick leave.

On 4 November 1988, petitioner was appointed Acting President of Eulogio "Amang" Rodriguez Institute of Science and

Technology (hereinafter referred to as EARIST) and was thereafter appointed its President on 29 March 1989.

After reaching the age of sixty-five (65) years on 16 June 1989, petitioner inquired from the Government Service

Insurance System (GSIS) as to whether she may be allowed to extend her services with the government as President of

EARIST beyond the age of sixty-five (65) years, to enable her to avail of the old-age pension retirement benefits under

PD 1146 (Revised Government Service Insurance Act of 1977). In answer to her query, petitioner was advised by the

GSIS to return to the service until she shall have fulfilled the fifteen (15) years service requirement pursuant of Section 11

of PD 1146, to qualify for the old-age pension retirement plan. The GSIS declared that petitioner was not yet eligible to

retire under PD 1146, as she had not rendered the sufficient number of years of service on the date of her supposed

retirement on 16 June 1989 and that her creditable service was only twelve (12) years and two (2) months. As things

stood, she could only claim one hundred percent (100%) of her average monthly compensation for every year of

creditable service or to a refund of her premium contributions with the GSIS. 1

On 6 October 1989, as recommended by the Department of Education, Culture and Sports (DECS) Secretary and the

Board of Trustees of EARIST, President Aquino, through Deputy Executive Secretary Magdangal B. Elma, extended the

term of petitioner as President of EARIST until she shall have completed the required fifteen (15) years of service after

reaching the age of sixty five (65) years on the date of her normal retirement on 16 June 1989 or for an additional period

of two (2) years, seven (7) months and twelve (12) days. 2

In March 1990, the EARIST Faculty and Employees Union filed an administrative complaint against petitioner before the

Office of the President, for her alleged irregular appointment and for graft and corrupt practices. In a memorandum, dated

16 August 1990, the Office of the President furnished petitioner a copy of the complaint with a directive to file an answer

thereto with the DECS Secretary, who was duly authorized to conduct a formal investigation of the charges against

petitioner. Pending investigation of the complaint, petitioner was placed under preventive suspension for a period of

ninety (90) days. 3 After serving the period of suspension, petitioner re-assumed her duties and functions as President of

EARIST.

In a letter dated 20 July 1990, DECS Secretary Cariño recommended the compulsory retirement of petitioner. 4

For the purpose of investigating the administrative charges against petitioner, 5 an Ad-Hoc Committee was created by

President Aquino on 12 February 1991. The parties filed their respective pleadings and hearings in the case were

conducted by the committee.

Pending resolution of the administrative charges against her, petitioner was detailed with the DECS Central Office

pursuant to a memorandum dated 13 February 1991 signed by Deputy Executive Secretary Sarmiento III. Petitioner filed

a petition for certiorari, prohibition and mandamus before the Regional Trial Court of Manila, Branch 40, seeking her

reinstatement as EARIST President. After trial, said petition was dismissed. On appeal, the Court of Appeals denied the

petition for certiorari on 2 April 1991. 6

Petitioner likewise assailed her reassignment with the DECS Central Office, before the Civil Service Commission (CSC).

On 30 July 1991, the CSC denied petitioner's complaint. She moved for reconsideration of said resolution but the same

was denied on 3 December 1991, which prompted petitioner to file a petition for certiorari before this Court docketed as

G.R. No. 103271. On 3 March 1992, this Court dismissed said petition.

After evaluating the evidence presented before the Ad-Hoc Committee, in a decision 7 dated 23 October 1991, the Office

of the President dismissed the administrative complaint against petitioner for lack of substantial evidence. In the same

decision, the Office of the President also declared petitioner as compulsory retired from government service as of 15

October 1991, holding that:

... (I)f the aforesaid sick leave of 62 working days (approximately 3 months) were to be added to the

respondent's creditable service, together with the period of two (2) weeks which the respondent's counsel

admits in his Memorandum the respondent had served as Professorial Lecturer, the respondent should be

considered as compulsorily retired as of Oct. 15, 1991, having completed the required 15 years in the

service on or about the said date after reaching the age of 65.

Accordingly, the administrative charges against Dr. Lydia M. Profeta for her alleged "irregular

appointment and graft and corrupt practices" are hereby dismissed. However, Dr. Profeta is hereby

considered as now compulsorily retired from the service as of October 15, 1991, in accordance with the

provisions of Section 11 (b) of Presidential Decree No. 1146, having completed fifteen (15) years in the

government service on or about he said date after reaching the age of sixty-five (65) on June 16, 1989. 8

In a letter dated 23 October 1991, petitioner requested the GSIS to determine the exact date of her retirement. On 5

November 1991, petitioner was advised by the GSIS that the exact date of her retirement falls on 14 August 1992. 9

A motion for reconsideration was then filed by petitioner with the Office of the President, assailing the portion of its

decision declaring her as compulsorily retired from the service as of 15 October 1991, alleging that the said office has no

jurisdiction over the issue of her compulsory retirement from the government service.

In a resolution 10

dated 31 January 1992, petitioner's motion for reconsideration was denied by the Office of the President.

In the same resolution, the Office of the President clarified that there was an over extension of petitioner's period of

service with the government by failure to reckon with the sixty-two (62) working days during which petitioner went on

sick leave (from 20 March to 17 June 1986) and the period of two (2) weeks during which petitioner served as

Professorial Lecturer. In considering petitioner as compulsory retired as of 15 October 1991, the Office of the President

held that it merely resolvedmotu proprio to shorten by three-and-a-half (3-1/2) months the extension granted to petitioner

to complete the required fifteen (15) years of service for purposes of retirement. It further declared that it is for the

President to determine whether or not petitioner could still continue as EARIST President despite her exoneration from

the administrative charges filed against her.

Under Presidential Decree No. 1146 (Revised Government Insurance Act of 1977), one of the benefits provided for

qualified members of the GSIS is the old-age pension benefit. A member who has rendered at least fifteen (15) years of

service and is at least sixty (60) years old when separated from the service, is entitled to a basic monthly pension for life

but for not less than five (5) years. On the other hand, a member who has rendered less than fifteen (15) years of service

but with at least three (3) years of service and is sixty (60) years of age when separated from the service is entitled to a

cash payment equivalent to one hundred percent (100%) of the average monthly compensation for every year of service.

However, retirement is compulsory for a member who has reached the age of sixty-five (65) years with at least fifteen

(15) years of service. If he has less than fifteen (15) years of service, he shall be allowed to continue in the service to

complete the fifteen (15) years, 11

to avail of the old-age pension benefit.

To a public servant, a pension is not a gratuity but rather a form of deferred compensation for services performed and his

right to it commences to vest upon his entry into the retirement system and becomes an enforceable obligation in court

upon fulfillment of all conditions under which it is to be paid. Similarly, retirement benefits receivable by public

employees are valuable parts of the consideration for entrance into and continuation in public office or employment. They

serve a public purpose and a primary objective in establishing them is to induce competent persons to enter and remain in

public employment and render faithful and efficient service while so employed. 12

Retirement laws are liberally

interpreted in favor of the retiree because their intention is to provide for his sustenance and hopefully even comfort, when

he no longer has the stamina to continue earning his livelihood. 13

The liberal approach aims to achieve the humanitarian

purposes of the law in order that the efficiency, security and well-being of government employees maybe enhanced. 14

In the case at bar, at the time petitioner reached the compulsory retirement age of sixty-five (65) years, she had rendered

less than the required fifteen (15) years of service under Section 11 of P.D. 1146. Thus, to enable her to avail of the old-

age pension benefit, she was allowed to continue in the service and her term as President of EARIST was extended until

she shall have completed the fifteen (15) years service requirement, or for an additional two (2) years, seven (7) months,

and twelve (12) days, as determined by the Office of the President.

This period of extended service granted to petitioner was amended by the Office of the President. In resolving the

administrative complaint against petitioner, the Office of the President, ruled not only on the issues of alleged irregular

appointment of petitioner and of graft and corrupt practices, but went further by, in effect, reducing the period of

extension of service granted to petitioner on the ground that the latter had already completed the fifteen (15) years service

requirement under P.D. 1146, and declared petitioner as compulsorily retired as of 15 October 1991.

In other words, the extension of service of petitioner was until January 1992. However, the Office of the President made a

new computation of petitioner's period of service with the government, the Office of the President included as part of her

service the sixty-two (62) days sick leave applied for by petitioner covering the period between 20 March to 17 June 1988

and her service as a lecturer of approximately two (2) weeks, or a total of three-and-a-half (3 1/2) months. As a result of

this new computation, petitioner's extension of service which was supposed to end in January 1992 was reduced by the

Office of the President by three-and-a-half (3 1/2) months or until 15 October 1991.

On the other hand, the computation made by the GSIS as to the exact date of retirement of petitioner fell on 14 August

1992. 15

Thus, the extension of service granted to petitioner by the Office of the President for two (2) years, seven (7)

months and twelve (12) days which brought her services only up to January 1992, would not enable herein petitioner to

complete the fifteen (15) years service requirement for purposes of retirement. To allow the Office of the President to

shorten the extension of service of petitioner by three-and-a-half (3 1/2) months which consist of petitioner's sick leave

and service as lecturer, would further reduce petitioner's service with the government. Such reduction from petitioner's

service would deprive her of the opportunity of availing of the old-age pension plan, based on the computation of the

GSIS.

We hold that it is the GSIS which has the original and exclusive jurisdiction to determine whether a member is qualified

or not to avail of the old-age pension benefit under P.D. 1146, based on its computation of a member's years of service

with the government. 16 The computation of a member's service includes not only full time but also part time and other

services with compensation as may be included under the rules and regulations prescribed by the System.17

The sixty-two (62) days leave of absence of petitioner between 20 March to 17 June 1986 and her part-time service as a

lecturer f approximately two (2) weeks, or a total of three-and-a-half (3 1/2) months is not reflected in her service record.

Said period should be considered as part of her service with the government and it is only but proper that her service

record be amended to reflect said period of service.

We have observed that the computation made by the GSIS of petitioner's date of retirement failed to take into account the

three-and-a-half (3 1/2) months service of petitioner which was not reflected in her service record. If we deduct this

unrecorded three-and-a-half (3 1/2) months service of petitioner from 14 August 1992, petitioner is to be considered

retired on 30 April 1992.

The order of the Office of the President declaring petitioner as compulsorily retired as of 15 October 1991 defeats the

purpose for allowing petitioner to remain in the service until she has completed the fifteen (15) years service requirement.

Between the period of 16 October 1991 to 30 April 1992, petitioner should have been allowed to continue in the service to

be able to complete the fifteen (15) years service requirement; she was prepared to render services for said period but was

not allowed to do so; she should, therefore, the entitled to all her salaries, benefits and other emoluments during said

period (16 October 1991 - 30 April 1992). However, petitioner's claim for reinstatement to her former position to enable

her to complete the fifteen (15) year service requirement for retirement purposes is no longer possible, considering that

she is deemed to have completed the said service requirement as of 30 April 1992.

WHEREFORE, the portion of the decision of the Office of the President dated 23 October 1991 declaring petitioner as

compulsorily retired as of 15 October 1991 is SET ASIDE. Petitioner is hereby declared to have been in the service as

President of EARIST from 16 October 1991 until 30 April 1992 and therefore entitled to all salaries, benefits and other

emoluments of said office from 16 October 1991 to 30 April 1992. In addition, she is declared as entitled to her old-age

pension benefits for having reached age 65 years while in the service with 15 years of service to her credit, subject to her

compliance with all applicable regulations and requirements of the GSIS.

SO ORDERED.

Narvasa, C.J., Gutierrez, Jr., Cruz, Feliciano, Bidin, Griño-Aquino, Regalado, Davide, Jr., Romero, Nocon, Bellosillo,

Melo and Campos, Jr., JJ., concur.

SEAGULL SHIPMANAGEMENT AND TRANSPORT, INC., and DOMINION INSURANCE

CORPORATION, petitioners, vs. NATIONAL LABOR RELATIONS COMMISSION and BENJAMIN T.

FACTS:

On March 17, 1991, petitioner deployed respondent Benjamin T. Tuazon, (now deceased and represented by his daughter

in the instant case) to work as radio officer on board its vessel, MV Pixy Maru for a period of 12 months. Prior to his

deployment and as a condition to final hiring, Benjamin was required to submit to a medical examination with the

petitioner's accredited clinic, the LDM Clinic and Laboratory. The medical examination consisted among others, of the

standard X-ray exposure, and urine tests. In 1986, complainant underwent a heart surgery for an insertion of a pacemaker,

so petitioner‟s accredited clinic required Benjamin to secure from his cardiologist a certification to the effect that he could

do normal physical activities. Consequently, he was declared fit to work. While on board the vessel, however, Benjamin

suffered bouts of coughing and shortness of breathing. He was immediately sent and confined to a hospital in Japan from

December 12 to 27, 1991. Due to the medical findings that an open heart surgery was needed, he was repatriated back in

the Philippines on December 28, 1991. Upon arrival, Seagull referred him to its accredited physician and an open-heart

surgery was performed, with Benjamin shouldering all the costs and expenses. He later filed a complaint asking for

sickness and disability benefits with the POEA.

The POEA rendered a decision in favor of respondent Benjamin Tuazon and ordered herein petitioners to pay US$2,200

representing 120 days sickness benefits, and the amount of US$15,000.00 representing the permanent disability benefits

provided for under Appendix "A" of the POEA Standard Contract. On appeal, the NLRC affirmed the POEA‟s judgment,

finding that it was sufficiently established that herein petitioners‟ physician already knew, as early as June 1989, of the

existence of complainant's pacemaker, the main reason why they asked him to submit a medical certificate to the effect

that he could do normal physical activities.

ISSUE:

Whether or not respondent is entitled to sickness benefits and permanent disability benefits

COURT RULING:

The Supreme Court dismissed the petition on the ground there is no merit in petitioners' suggestion that private respondent

did not make a full disclosure of his medical history because the records reveal that private respondent was deployed by

petitioners twice already, the first one being in 1989 and the second one being in 1991.

Under the employment contract, compensability of the illness or death of seamen need not depend on whether the illness

was work connected or not. It is sufficient that the illness occurred during the term of the employment contract.

It is not necessary, in order to recover compensation, that the employees must have been in perfect health at the time he

contracted the disease. If the disease is the proximate cause of the employee's death for which compensation is sought, the

previous physical condition of the employee is unimportant, and recovery may be had for said death, independently of any

pre-existing disease.

GERMAN MARINE AGENCIES, INC. and LUBECA MARINE MANAGEMENT HK LTD., petitioners, vs.

NATIONAL LABOR RELATIONS COMMISSION and FROILAN S. DE LARA,respondents.

D E C I S I O N

GONZAGA-REYES, J.:

On 17 October 1994, private respondent was hired by petitioners to work as a radio officer on board its vessel, the

M/V T.A. VOYAGER. Sometime in June, 1995, while the vessel was docked at the port of New Zealand, private

respondent was taken ill. His worsening health condition was brought by his crewmates to the attention of the master of

the vessel. However, instead of disembarking private respondent so that he may receive immediate medical attention at a

hospital in New Zealand, the master of the vessel proceeded to Manila, a voyage of ten days, during which time the health

of private respondent rapidly deteriorated. Upon arrival in Manila, private respondent was not immediately disembarked

but was made to wait for several hours until a vacant slot in the Manila pier was available for the vessel to dock. Private

respondent was confined in the Manila Doctors Hospital, wherein he was treated by a team of medical specialists from 24

June 1995 to 26 July 1995.

After private respondent was discharged from the hospital, he demanded from petitioners the payment of his

disability benefits and the unpaid balance of his sickness wages, pursuant to the Standard Employment Contract of the

parties. Having been assured by petitioners that all his benefits would be paid in time, private respondent waited for

almost a year, to no avail. Eventually, petitioners told private respondent that, aside from the sickness wages that he had

already received, no other compensation or benefit was forthcoming.[1]

Private respondent filed a complaint with the

National Labor Relations Commission (NLRC) for payment of disability benefits and the balance of his sickness

wages. On 31 July 1997, the labor arbiter rendered a decision,[2]

the pertinent parts of which are quoted hereunder –

In the case at bar, there is no issue on the propriety or illegality of complainant‟s discharge or release from employment as

Radio Operator. What complainant is pursuing is limited to compensation benefits due a seaman pursuant to POEA

Standard Employment Contract, Part II, Section C, paragraph 4(c) and paragraph 5, which reads:

“SECTION C. COMPENSATION BENEFIT

x x x

“4. The liabilities of the employer when the seaman suffers injury or illness during the term of his contract are as follows:

x x x

c. The employer shall pay the seaman his basic wages from the time he leaves the vessel for medical treatment. After

discharge from the vessel, the seaman is entitled to one hundred percent (100%) of his basic wages until he is declared fit

to work or the degree of permanent disability has been assessed by the company-designated physician, but is [sic] no case

shall this period exceed one hundred twenty (120) days. For this purpose, the seaman shall submit himself to a post-

employment medical examination by the company-designated physician within three working days upon his return, except

when he is physically incapacitated to do so, in which case the written notice to the agency within the same period is

deemed as compliance x x x.

“5. In case of permanent total or partial disability of the seamen [sic] [during] the term of employment caused by either

injury or illness, the seamen [sic] shall be compensated in accordance with the schedule of benefits enumerated in

Appendix 1 of this Contract. Computation of his benefits arising from an illness or disease shall be governed by the rates

and the rules of compensation applicable at the time of [sic] the illness or disease was contracted.”

The aforecited provisions of the POEA Standards [sic] Employment Contract is clear and unmistakable that its literal

meaning should be preserved.

Thus, the only question at which the liability of respondents is anchored is whether complainant was really fit to work in

his position as radio operator. If this is so, it could mean that he is not entitled to disability compensation which

respondents vigorously disputed, citing in support the certification made by Dra. Victoria Forendo [sic] Cayabyab,

allegedly “the officially accredited and designated physician of respondents, which is likewise, accredited with the

Philippine Overseas Employment Administration” where it is stated that “Nothing [sic] his job description as a radio

operator, Mr. de Lara may be allowed to go back to work.” (Annex D & E). Complainant on the other hand disputes

respondent‟s above posture contending that the more persuasive and authentic evidence for purposes of deciding his

fitness or lack of fitness to work is the certificate issued by Ms. Naneth [sic] Domingo-Reyes, MD, FPMA where it

appears that after submitting himself to another medical examination by his attending physicians at the Manila Doctors

Hospital on December 4, 1996, to verify possible mistake in his post treatment examination on March 25, 1996, firmly

“was classified under partial permanent disability and is not fit to go back to his previous work due to mental

state.” (Annex “C”, complainant‟s reply to respondent‟s position paper).

We have gone into a judicious study and analysis of the arguments and exhibits particularly the ones relied upon by the

parties and find that of the complainant worthy of consideration. Looking closely at Annexes “D” and “E” of

respondents‟ position paper, there is hardly any clear affirmation that complainant was fully fit to resume his work as

radio operator. Although the document alluded to, declares that complainant may be allowed to go back to work, the

tenor of the same seems uncertain that complainant is fit to resume his work, and that assuming that such was the

message, the words “may be” can not be taken as overriding that coming from the Manila Doctor Hospital which in the

beginning handled the medical case of complainant and to which respondents unconditionally referred him and by reason

of which six or seven medical especialists [sic] of the hospital took turn[s] studying and reviewing his uncertain ailment

after release by respondents. Otherwise stated, unlike the message of annexes D to E of respondents, annex “C” of

complainant is clear and unmistakable and confirm complainant‟s partial permanent disability and his definite unfitness to

go back to his previous work due to his mental health. Some pronouncements in this exhibit mentions also that when

complainant was admitted an emerging basis for drowsiness, behavioral change and off and on fever” and different

procedures were resorted along his case, like emergency CT scan on the brain and his admission in June 24, 1995 was

catastropic, whereas, more could be said in three document[s] issued by Dra. Victoria Florendo Cayabyab.

Finally, respondents contend that the annexes issued by Dr. Domingo-Reyes of the Manila Doctors Hospital should not be

given weight because it is not issued by the hospital or doctor duly accredited by the POEA. Neither would a close look

on the applicable provision for seamen show – that a duly accredited hospital or doctor is needed for purposes of the grant

of compensation benefits to a such [sic] or ailing seamen. We are more persuaded based on the arguments of the

complainant among others, that it is absurd to require an ailing seaman in high seas or in a foreign land to still wait until

the ship where he is working land in the country to secure treatment in a duly accredited hospital or doctor.

On the basis of the above therefore, and convinced that complainant‟s “partial permanent disability” which was contracted

in the course or on account of his employment as radio operator in foreign principal‟s vessel, he is entitled to disability

benefit in accordance with the schedule of benefits enumerated in Appendix 1 of the Contract, the maximum of which is

US $50,000. But since the amount prayed for is US$25,000.00 which we presume has a more realistic basis, the same is

hereby granted.

Concerning the sickness wage, respondents averred that the same had already been paid. However, there is no evidence

that the same has been paid except the payment to the complainant of P49,546.00. Since complainant‟s salary as US$870

and a seaman‟s sick wage entitlement is fixed to a maximum of 120 days, his “sickness wages would rest to a total sum of

US$3,480 or its peso equivalent. On this, complainant has been paid only [P]49,546.00 (US$1,943), thereby leaving for

complainant a balance of US$1,537. Finally, it is also argued that as regards the balance, the same has been paid citing as

proof the Sickness Release and Quitclaim signed by complainant (Annexes “C” & “C-1”). Complainant, on the other

hand denied this, and contended that the quitclaim and release is invalid. Considering that there is no proof on record that

this balance of US$1,537 was paid, unlike the P49,546.00, the same is granted.

WHEREFORE, premises above-considered, a decision is hereby issued ordering respondent German Marine Agencies

Inc. to pay complainant the following sums:

(a) Disability benefit - - - - - - - - - - - - - - US$25,000.00

(b) Sickness wage balance - - - - - - - - - - US$1,137.00

all in the aggregate of Twenty Six Thousand One Hundred Thirty Seven Dollars (US$26,137.00) or its peso equivalent,

the claim for damages being hereby dismissed for lack of merit, plus ten (10%) percent attorney‟s fees.

SO ORDERED.

On 29 July 1998, the NLRC[3]

affirmed the labor arbiter‟s decision in toto and declared that the latter‟s findings and

conclusions were supported by substantial evidence.[4]

After its motion for reconsideration was denied by the NLRC on 20

May 1999, petitioners repaired to the Court of Appeals.[5]

The appellate court‟s assailed decision was promulgated on 1

December 1999, upholding the decision of the NLRC, with the modification that petitioners were ordered to pay private

respondent exemplary damages in the amount of P50,000.00. The appellate court reasoned out its decision,[6]

thus -

The basic issue here is: Whether or not petitioner is liable to pay private respondent‟s claim as awarded by the NLRC,

and whether or not there was abuse of discretion on the part of the NLRC in affirming such decision on appeal? To

resolve this issue, this Court took time in looking closely at the pertinent provision of the Standard Employment Contract

Governing the Employment of Filipino Seafarers on Board Ocean-Going Vessels, particularly PART II, SECTION C, par.

no. 4 (c), and par. no. 5, which states as follows:

“SECTION C. COMPENSATION AND BENEFITS

“4. The liabilities of the employer when the seaman suffers injury or illness during the term of his contract are as follows:

“x x x x

“c. The employer shall pay the seaman his basic wages from the time he leaves the vessel for medical treatment. After

discharge from the vessel the seaman is entitled to hundred percent (100%) of his basic wages until he is declared fit to

work or his degree of permanent disability has been assessed by the company-designated physician, but in no case shall

this period exceed one hundred twenty (120) days. x x x x

“5. In case of permanent total or partial disability of the seaman during the term of his employment caused by either

injury or illness the seaman shall be compensated in accordance with the schedule of benefits enumerated in Appendix 1

of his Contract. Computation of his benefits arising from an illness or disease shall be governed by the rates and the rules

of compensation applicable at the time the illness or disease was contracted.

x x x . . .”

A cursory reading of these applicable contractual provisions and a thorough evaluation of the supporting evidence

presented by both parties, lends strong credence to the contentions and arguments presented by private respondent.

The award of disability compensation has a clear and valid basis in the Standard Employment Contract and the facts as

supported by the medical certificate issued by Dr. Nannette Domingo-Reyes of the Manila Doctors Hospital. Petitioners‟

contention, that Dr. Domingo-Reyes is not company designated is far from the truth. The designation of the Manila

Doctors Hospital by petitioners as the company doctor for private respondent cannot be denied. Their very act of

committing private respondent for treatment at the Manila Doctors Hospital under the care of its physician is tantamount

to company designation. The very act of paying the hospital bills by the petitioners constitutes their confirmation of such

designation. Hence, petitioners cannot resort to the convenience of denying this fact just to evade their obligation to pay

private respondent of his claims for disability benefit.

This Court also finds no basis on (sic) the petitioners‟ contention that the company-designated [physician] must also be

accredited with the POEA before he can engage in the medical treatment of a sick seaman. There is nothing in the

Standard Employment Contract that provides this accreditation requirement, and even if there is, this would be absurd and

contrary to public policy as its effect will deny and deprive the ailing seaman of his basic right to seek immediate medical

attention from any competent physician. The lack of POEA accreditation of a physician who actually treated the ailing

seaman does not render the findings of such physician (declaring the seaman permanently disabled) less authoritative or

credible. To our mind, it is the competence of the attending physician, not the POEA accreditation, that determines the

true health status of the patient-seaman, which in this instant case, is [sic] the attending physicians from the Manila

Doctors Hospital.

As to the award of the balance of wages, this Court is inclined not to disturb the factual findings of the NLRC. The failure

of the petitioners to present a strong and credible evidence supporting the fact of alleged payment of the balance of

sickness justifies the award of such claim. The long standing doctrine in labor cases that “in case of doubt, the doubt is

resolved in favor of labor” applies. For there are indications that the evidence presented by petitioners appears to be of

dubious origin as private respondent challenged the petitioners to present the original copy of the quitclaim and the

vouchers in a motion demanding from petitioners to produce the original copy of those documents purporting to show

that he had received the alleged sum of P39,803.30, which allegedly shows the payment of the balance of his sickness

wages. This motion was vehemently opposed by petitioners. To our mind, such opposition only created more doubts and

eroded the veracity and credence of petitioners‟ documentary evidence.

As to the award of attorney‟s fees, the same is justified by the fact that private respondent actually hired the services of a

lawyer to vindicate his right to claim for his disability benefit which is being arbitrarily denied to him by petitioners. Had

it not been for the arbitrary denial of petitioners, private respondent could not have been compelled to hire the services of

a lawyer to pursue his claims in court, for which he is presumed to have incurred costs.

With respect to private respondent‟s claim for damages, this Court finds that the NLRC overlooked the attendance of

negligence on the part of petitioners in their failure to provide immediate medical attention to private respondent. It

further appears that negligence not only exists but was deliberately perpetrated by petitioners by its arbitrary refusal to

commit the ailing private respondent to a hospital in New Zealand or at any nearest port deprived of his right to immediate

medical attention by petitioners, which resulted to the serious deterioration of his health that caused his permanent partial

disability. Such deprivation of immediate medical attention appears deliberate by the clear manifestation from

petitioners‟ own words which states that, “the proposition of the complainant that respondents should have taken the

complainant to the nearest port of New Zealand is easier said than done. It is worthy to note that deviation from the route

of the vessel will definitely result to loss of a fortune in dollars not only to the respondents but likewise to the owners of

the cargoes being shipped by the said vessel.”

By petitioners‟ own statement, they reveal their utter lack of concern for their Filipino crew. This kind of attitude cannot

be taken to pass by this Court without appropriate sanction by way of payment of exemplary damages, if only to show that

the life of a Filipino crew must be accorded due attention and respect by the petitioners. For after all, had it not been for

the toils of this crew, among others, petitioners would not be doing as good in their business and making “fortunes in

dollars.”

In affirming the decision of the Labor Arbiter, this Court finds that the NLRC never abused its discretion nor exceeded its

jurisdiction.

Hence, this Court finds no valid basis to disturb the findings of the NLRC.

WHEREFORE, the decision of the NLRC dated 29 July 1998, and the Order dated 20 May 1999, are hereby AFFIRMED,

and in addition thereto, petitioners are ordered to pay exemplary damages to private respondent in the sum of Fifty

Thousand Pesos (P50,000.00).

SO ORDERED.

Petitioners‟ motion for reconsideration was denied by the Court of Appeals in its Resolution of 11 February

2000. Hence, the present appeal.

Disability Benefits

Petitioners contend that the existence and degree of a seaman‟s disability must be declared by a “company-

designated physician” who must be accredited with the POEA. Following this line of reasoning, petitioners claim that

private respondent is not entitled to disability benefits because he was found fit to return to work by Dr. Victoria Florendo

Cayabyab, the designated physician of petitioners, who is also accredited with the POEA.[7]

Disagreeing with petitioners‟ stand, the labor arbiter ruled that, for purposes of determining compensation benefits

under the Standard Employment Contract, an ailing seaman need not have his condition assessed by a doctor or hospital

accredited with the POEA. Consequently, the labor arbiter gave more weight to the opinion of the specialists from the

Manila Doctors Hospital who treated private respondent and declared him as having sustained a partial permanent

disability and unfit to go back to his previous work.[8]

Meanwhile, the Court of Appeals held that petitioners‟ act of

committing private respondent for treatment at the Manila Doctors Hospital and of paying his hospital bills therein is

tantamount to “company-designation,” and therefore, the certificate issued by Dr. Nanette Domingo-Reyes of the Manila

Doctors Hospital describing private respondent as suffering from a partial permanent disability should be construed as

decisive in the matter of private respondent‟s entitlement to disability benefits. The appellate court also declared that

nothing in the Standard Employment Contract requires the company-designated physician or hospital to also be accredited

with the POEA.[9]

In the case at bar, the parties are at odds as to the proper interpretation of the POEA Standard Employment Contract

Governing the Employment of All Filipino Seamen On Board Ocean-Going Vessels (Standard Employment Contract),

particularly Part II, Section C thereof, which provides that –

xxx xxx xxx

4. The liabilities of the employer when the seaman suffers injury or illness during the term of his contract are as follows:

a. The employer shall continue to pay the seaman his basic wages during the time he is on board the vessel;

b. If the injury or illness requires medical and/or dental treatment in a foreign port, the employer shall be liable for the

full cost of such medical, dental, surgical and hospital treatment as well as board and lodging until the seaman is declared

fit to work or to be repatriated.

However, if after repatriation the seaman still requires medical attention arising from said injury or illness, he shall be so

provided at cost to the employer until such time he is declared fit or the degree of his disability has been established by the

company-designated physician.

c. The employer shall pay the seaman his basic wages from the time he leaves the vessel for medical treatment. After

discharge from the vessel the seaman is entitled to one hundred percent (100%) of his basic wages until he is declared fit

to work or the degree of permanent disability has been assessed by the company-designated physician, but in no case shall

this period exceed one hundred twenty (120) days. For this purpose, the seaman shall submit himself to a post-

employment medical examination by the company-designated physician within three working days upon his return except

when he is physically incapacitated to do so, in which case a written notice to the agency within the same period is

deemed as compliance. Failure of the seaman to comply with the mandatory reporting requirement shall result in his

forfeiture of the right to claim the above benefits.

xxx xxx xxx

5. In case of permanent total or partial disability of the seaman during the term of employment caused by either injury or

illness the seaman shall be compensated in accordance with the schedule of benefits enumerated in Appendix 1 of his

Contract. Computation of his benefits arising from an illness or disease shall be governed by the rates and the rules of

compensation applicable at the time the illness or disease was contracted.

xxx xxx xxx

Petitioners‟ contention that the existence and grade of a seaman‟s disability must be pronounced by a physician

accredited by the POEA does not find any support in the abovecited provision, nor in any other portion of the Standard

Employment Contract. In order to claim disability benefits under the Standard Employment Contract, it is the “company-

designated” physician who must proclaim that the seaman suffered a permanent disability, whether total or partial, due to

either injury or illness, during the term of the latter‟s employment. There is no provision requiring accreditation by the

POEA of such physician. In fact, aside from their own gratuitous allegations, petitioners are unable to cite a single

provision in the said contract in support of their assertions or to offer any credible evidence to substantiate their claim. If

accreditation of the company-designated physician was contemplated by the POEA, it would have expressly provided for

such a qualification, by specifically using the term “accreditation” in the Standard Employment Contract, to denote its

intention. For instance, under the Labor Code it is expressly provided that physicians and hospitals providing medical

care to an injured or sick employee covered by the Social Security System or Government Service Insurance System must

be accredited by the Employees Compensation Commission.[10]

It is a cardinal rule in the interpretation of contracts that if

the terms of a contract are clear and leave no doubt upon the intention of the contracting parties, the literal meaning of its

stipulation shall control.[11]

There is no ambiguity in the wording of the Standard Employment Contract – the only

qualification prescribed for the physician entrusted with the task of assessing the seaman‟s disability is that he be

“company-designated.” When the language of the contract is explicit, as in the case at bar, leaving no doubt as to the

intention of the drafters thereof, the courts may not read into it any other intention that would contradict its plain

import.[12]

The word “designate” means to specify, to mark out and make known, to identify by name, to indicate, to show, to

distinguish by mark or description, or to set apart for a purpose or duty.[13]

The Court agrees with the appellate court‟s

ruling that petitioners‟ act of committing private respondent for treatment at the Manila Doctors Hospital and paying the

hospital bills therein is tantamount to “company-designation.” By such unequivocal acts, petitioners clearly set apart and

distinguished the Manila Doctors Hospital, together with its team of specialists, as the ones qualified to assess the

existence and degree of private respondent‟s disability and thereby resolve the question of the latter‟s entitlement to

disability benefits under the Standard Employment Contract.

In addition to their having been effectively designated by petitioners, it was the physicians from the Manila Doctors

Hospital who examined and treated private respondent for a little more than one month, subjecting the latter to a series of

medical procedures, such as medical therapy, neurological surgical drainage for brain abscess, bilateral thalamic area S/P

craniotomy (Burr Hole), and opthalmological (orbit) surgery for socket revision and reconstruction of his left eye. The

extensive medical attention given to private respondent enabled the Manila Doctors Hospital specialists to acquire a

detailed knowledge and familiarity with private respondent‟s medical condition.[14]

No doubt such specialized knowledge

enabled these physicians to arrive at a much more accurate appraisal of private respondent‟s condition, including the

degree of any disability which he might have sustained, as compared to another physician not privy to private

respondent‟s case from the very beginning. Thus, the appellate court was not mistaken in giving more weight to the

certificate issued by Dr. Nanette Domingo-Reyes of the Manila Doctors Hospital dated December 4, 1996, than to the one

issued by Dr. Victoria Florendo Cayabyab.

On the strength of Dr. Domingo-Reyes‟s medical certificate which stated that private respondent “can be classified

under partial permanent disability and is not fit to go back to his previous work due to his mental state,” the labor arbiter

awarded $25,000.00 as disability benefits, which award was upheld by the NLRC and the appellate court. Petitioners

insist that there is no factual basis for the award of $25,000.00 since there is no finding as to the grade of permanent

partial disability sustained by private respondent, in accordance with Appendix 1 of the Standard Employment Contract

(Schedule of Disability or Impediment For Injuries Suffered and Diseases or Illness Contracted), and therefore, no means

of determining the exact amount of compensation to which private respondent may be entitled.[15]

The Court does not agree with petitioners‟ position. Under the Standard Employment Contract the grade of disability

suffered by the seaman must be ascertained in accordance with Appendix 1 of such contract, which is partially reproduced

herein -

Appendix 1

SCHEDULE OF DISABILITY OR IMPEDIMENT

FOR INJURIES SUFFERED AND OR ILLNESS CONTRACTED

HEAD

Traumatic head injuries that result to:

1. Apperture unfilled with bone not over

three (3) inches without brain injury . . . . . . . . . . . . . . . . Gr. 9

2. Apperture unfilled with bone over

three (3) inches without brain injury . . . . . . . . . . . . . . . . Gr. 3

3. Severe paralysis of both upper or

lower extremities or one upper and one

lower extremity . . . . . . . . . . . . . . . . . . . . . . . Gr. 1

4. Moderate paralysis of two (2) extremities

producing moderate difficulty in

movements with self care activities . . . . . . . . . . . . . . . . Gr. 6

5. Slight paralysis affecting one extremity

producing slight difficulty with self-care

activities . . . . . . . . . . . . . . . . . Gr. 10

6. Severe mental disorder or Severe Complex

Cerebral function disturbance or post –

traumatic psychoneurosis which require

regular aid and attendance as to render worker

permanently unable to perform any work . . . . . . . . . . Gr. 1

7. Moderate mental disorder or moderate brain

functional disturbance which limits worker

to the activities of daily living with some

directed care or attendance . . . . . . . . . . . . . . . Gr. 6

8. Slight mental disorder or disturbance that

requires little attendance or aid and which

interferes to a slight degree with the working

capacity of the claimant . . . . . . . . . . . . . . . Gr. 10

9. Incurable imbecility . . . . . . . . . . . . . . . . . . . . . Gr. 1

Each grade under Appendix 1 has an equivalent disability allowance or benefit expressed in terms of a percentage of the

maximum amount of $50,000.00. This is specified in Appendix 1-A of the Standard Employment Contract -

APPENDIX 1-A

SCHEDULE OF DISABILITY ALLOWANCES

Impediment Grace Impediment

1 Maximum Rate x 120.00%

2 “ x 88.81%

3 “ x 78.36%

4 “ x 68.66%

5 “ x 58.96%

6 “ x 50.00%

7 “ x 41.80%

8 “ x 33.59%

9 “ x 26.12%

10 “ x 20.15%

11 “ x 14.93%

12 “ x 10.45%

13 “ x 6.72%

14 “ x 3.74%

Maximum Rate: US$50,000.

To be paid in Philippine Currency equivalent at the exchange rate prevailing during the time of payment.

Private respondent asked petitioner for disability benefits in the amount of $25,000.00, or fifty percent (50%) of the

maximum rate of $50,000.00, which, under Appendix 1-A, is awarded when the seaman sustains a grade 6 disability. One

of the grade 6 head injuries listed in Appendix 1, specifically number seven (7), is described as a “moderate mental

disorder or moderate brain functional disturbance which limits worker to the activities of daily living with some directed

care or attendance.” This coincides with Dr. Domingo-Reyes‟ diagnosis of private respondent‟s condition, as follows -

xxx xxx xxx

Work-ups and Management:

Patient was admitted on an emergency bases for drowsiness, behavioral change and on and off fever. This started with

headaches since the first week of June 1995 while on duty (on voyage). Patient progressively deteriorated and arrived

here already dehydrated with high grade fever. (emphasis supplied)

Emergency CT Scan of the brain revealed rounded masses in both thalamus on the brain; the larger mass was situated at

the right.

Burr hole at the right parietal and drainage of the right thalamic abscess was done on June 26, 1995. Repair of shallow

fornix of left eye and biopsy was done for culture studies thereafter.

Mr. De Lara stayed in the hospital for 33 days and was still in bedridden state when discharge. He became ambulant on

mid-August 1996 but his cerebral functions (cognitive and behavioral) remain impaired.

This is his 18th

month of illness. His admission last June 24, 1995 is considered catastrophic. He now can be classified

under partial permanent disability and is not fit to go back to his previous work due to his mental state.[16]

(emphasis

supplied)

xxx xxx xxx

Thus, the medical certificate of Dr. Domingo-Reyes is more than sufficient basis for the award of disability benefits in the

amount of $25,000.00 in favor of private respondent.

Sickness wages

Petitioners assert that the award of $1,137.00, representing the balance of the sickness wages owed to private

respondent, is erroneous and in absolute disregard of their documentary evidence - particularly the three check vouchers

in the total amount of P89,354.80, all issued in 1995 in favor of either private respondent or his wife, and the “Sickwages

Release & Quitclaim” - which, according to petitioners, taken together would prove that they had paid private respondent

the total amount of P89,354.80, or $3,480.00, corresponding to the 120 days sickness wages as required under the

Standard Employment Contract.

Contrary to petitioners‟ assertions, the labor arbiter held that only P49,546.00 ($1,943.00) was paid by petitioners

and that private respondent is still entitled to the balance of the sickness wages in the amount of $1,537.00. According to

the labor arbiter, petitioners failed to prove that they had paid this amount to private respondent, notwithstanding the

document entitled “Sickness Release & Quitclaim” introduced by petitioners in evidence, which was not given

credence.[17]

The NLRC and the Court of Appeals concurred with the labor arbiter on this issue. The appellate court held

that the documentary evidence of petitioners was insufficient to support their contentions.[18]

The Supreme Court has always accorded respect and finality to the findings of fact of the NLRC, particularly if they

coincide with those of the Labor Arbiter, when supported by substantial evidence. The reason for this is that a quasi-

judicial agency like the NLRC has acquired a unique expertise because its jurisdiction is confined to specific

matters.[19]

Whether or not petitioners actually paid the balance of the sickness wages to private respondent is a factual

question. In the absence of proof that the labor arbiter or the NLRC had gravely abused their discretion, the Court shall

deem conclusive and cannot be compelled to overturn this particular factual finding.[20]

Damages

We affirm the appellate court‟s finding that petitioners are guilty of negligence in failing to provide immediate

medical attention to private respondent. It has been sufficiently established that, while the M/V T.A. VOYAGER was

docked at the port of New Zealand, private respondent was taken ill, causing him to lose his memory and rendering him

incapable of performing his work as radio officer of the vessel. The crew immediately notified the master of the vessel of

private respondent‟s worsening condition. However, instead of disembarking private respondent so that he may receive

immediate medical attention at a hospital in New Zealand or at a nearby port, the master of the vessel proceeded with the

voyage, in total disregard of the urgency of private respondent‟s condition. Private respondent was kept on board without

any medical attention whatsoever for the entire duration of the trip from New Zealand to the Philippines, a voyage of ten

days. To make matters worse, when the vessel finally arrived in Manila, petitioners failed to directly disembark private

respondent for immediate hospitalization. Private respondent was made to suffer a wait of several more hours until a

vacant slot was available at the pier for the vessel to dock. It was only upon the insistence of private respondent‟s

relatives that petitioners were compelled to disembark private respondent and finally commit him to a hospital.[21]

There is

no doubt that the failure of petitioners to provide private respondent with the necessary medical care caused the rapid

deterioration and inevitable worsening of the latter‟s condition, which eventually resulted in his sustaining a permanent

disability.

In light of the foregoing, petitioners are liable for moral damages for the physical suffering and mental anguish

caused to private respondent.[22]

There is no hard and fast rule in the determination of what would be a fair amount of

moral damages, since each case must be governed by its own peculiar circumstances.[23]

In the present case, the Court

considers the amount of P50,000.00 in moral damages as proper.[24]

Meanwhile, exemplary damages are imposed by way of example or correction for the public good, pursuant to

Article 2229 of the Civil Code. They are imposed not to enrich one party or impoverish another but to serve as a deterrent

against or as a negative incentive to curb socially deleterious actions. While exemplary damages cannot be recovered as a

matter of right, they need not be proved, although plaintiff must show that he is entitled to moral, temperate, or

compensatory damages before the court may consider the question of whether or not exemplary damages should be

awarded.[25]

In quasi-delicts, exemplary damages may be granted if the defendant acted with gross negligence.[26]

Coming

now to the case at bar, the appellate court found that –

… negligence not only exists but was deliberately perpetrated by petitioners by its arbitrary refusal to commit the

ailing private respondent to a hospital in New Zealand or at any nearest port … which resulted to the serious

deterioration of his health that caused his permanent partial disability. Such deprivation of immediate medical

attention appears deliberate by the clear manifestation from petitioners‟ own words which states that, “the

proposition of the complainant that respondents should have taken the complainant to the nearest port of New

Zealand is easier said than done. It is worthy to note that deviation from the route of the vessel will definitely result

to loss of a fortune in dollars not only to the respondents [petitioners herein] but likewise to the owners of the

cargoes being shipped by the said vessel.”

Petitioners never denied making this statement. Given the prevailing circumstances, the appellate court‟s award of

P50,000.00 as exemplary damages is adequate, fair, and reasonable.[27]

Although the labor arbiter awarded attorney‟s fees, which award was subsequently affirmed by the NLRC and the

Court of Appeals, the basis for the same was not discussed in his decision nor borne out by the records of this case, and

should therefore be deleted. There must always be a factual basis for the award of attorney‟s fees.[28]

This is consistent

with the policy that no premium should be placed on the right to litigate.[29]

WHEREFORE, the 1 December 1999 Decision and 11 February 2000 Resolution of the Court of Appeals are

AFFIRMED, with the modification that petitioners must also pay private respondent P50,000.00 as moral damages and

the award of attorney‟s fees is deleted.

SO ORDERED.

Melo, (Chairman), Vitug, Panganiban, and Sandoval-Gutierrez, JJ., concur.

[G.R. No. 129315. October 2, 2000]

OSIAS I. CORPORAL, SR., PEDRO TOLENTINO, MANUEL CAPARAS, ELPIDIO LACAP, SIMPLICIO

PEDELOS, PATRICIA NAS, and TERESITA FLORES, petitioners, vs.NATIONAL LABOR RELATIONS

COMMISSION, LAO ENTENG COMPANY, INC. and/or TRINIDAD LAO ONG, respondents.

D E C I S I O N

QUISUMBING, J.:

This special civil action for certiorari seeks the review of the Resolution dated October 17, 1996 of public

respondent National Labor Relations Commission (First Division),[1]

in NLRC NCR Case No. 00-04-03163-95, and the

Resolution dated March 5, 1997 denying the motion for reconsideration. The aforecited October 17th Resolution affirmed

the Decision dated September 28, 1996 of Labor Arbiter Potenciano S. Cañizares dismissing the petitioners' complaint for

illegal dismissal and declaring that petitioners are not regular employees of private respondent Lao Enteng Company, Inc..

The records of the case show that the five male petitioners, namely, Osias I. Corporal, Sr., Pedro Tolentino, Manuel

Caparas, Elpidio Lacap, and Simplicio Pedelos worked as barbers, while the two female petitioners, Teresita Flores and

Patricia Nas worked as manicurists in New Look Barber Shop located at 651 P. Paterno Street, Quiapo, Manila owned by

private respondent Lao Enteng Co. Inc.. Petitioner Nas alleged that she also worked as watcher and marketer of private

respondent.

Petitioners claim that at the start of their employment with the New Look Barber Shop, it was a single proprietorship

owned and managed by Mr. Vicente Lao. In or about January 1982, the children of Vicente Lao organized a corporation

which was registered with the Securities and Exchange Commission as Lao Enteng Co. Inc. with Trinidad Ong as

President of the said corporation. Upon its incorporation, the respondent company took over the assets, equipment, and

properties of the New Look Barber Shop and continued the business. All the petitioners were allowed to continue working

with the new company until April 15, 1995 when respondent Trinidad Ong informed them that the building wherein the

New Look Barber Shop was located had been sold and that their services were no longer needed.[2]

On April 28, 1995, petitioners filed with the Arbitration Branch of the NLRC, a complaint for illegal dismissal,

illegal deduction, separation pay, non-payment of 13th month pay, and salary differentials. Only petitioner Nas asked for

payment of salary differentials as she alleged that she was paid a daily wage of P25.00 throughout her period of

employment. The petitioners also sought the refund of the P1.00 that the respondent company collected from each of them

daily as salary of the sweeper of the barber shop.

Private respondent in its position paper averred that the petitioners were joint venture partners and were receiving

fifty percent commission of the amount charged to customers. Thus, there was no employer-employee relationship

between them and petitioners. And assuming arguendo, that there was an employer-employee relationship, still petitioners

are not entitled to separation pay because the cessation of operations of the barber shop was due to serious business losses.

Respondent Trinidad Lao Ong, President of respondent Lao Enteng Co. Inc., specifically stated in her affidavit dated

September 06, 1995 that Lao Enteng Company, Inc. did not take over the management of the New Look Barber Shop, that

after the death Lao Enteng petitioner were verbally informed time and again that the partnership may fold up anytime

because nobody in the family had the time to be at the barber shop to look after their interest; that New Look Barber Shop

had always been a joint venture partnership and the operation and management of the barber shop was left entirely to

petitioners; that her father's contribution to the joint venture included the place of business, payment for utilities including

electricity, water, etc. while petitioners as industrial partners, supplied the labor; and that the barber shop was allowed to

remain open up to April 1995 by the children because they wanted to give the partners a chance at making it

work. Eventually, they were forced to close the barber shop because they continued to lose money while petitioners

earned from it. Trinidad also added that private respondents had no control over petitioners who were free to come and go

as they wished. Admittedly too by petitioners they received fifty percent to sixty percent of the gross paid by

customers.Trinidad explained that some of the petitioners were allowed to register with the Social Security System as

employees of Lao Enteng Company, Inc. only as an act of accommodation. All the SSS contributions were made by

petitioners. Moreover, Osias Corporal, Elpidio Lacap and Teresita Flores were not among those registered with the Social

Security System. Lastly, Trinidad avers that without any employee-employer relationship petitioners claim for 13th month

pay and separation pay have no basis in fact and in law.[3]

In a Decision dated September 28, 1995, Labor Arbiter Potenciano S. Cañizares, Jr. ordered the dismissal of the

complaint on the basis of his findings that the complainants and the respondents were engaged in a joint venture and that

there existed no employer-employee relation between them. The Labor Arbiter also found that the barber shop was closed

due to serious business losses or financial reverses and consequently declared that the law does not compel the

establishment to pay separation pay to whoever were its employees.[4]

On appeal, NLRC affirmed the said findings of the Labor Arbiter and dismissed the complaint for want of merit,

ratiocinating thus:

Indeed, complainants failed to show the existence of employer-employee relationship under the fourway test established

by the Supreme Court. It is a common practice in the Barber Shop industry that barbers supply their own scissors and

razors and they split their earnings with the owner of the barber shop. The only capital of the owner is the place of work

whereas the barbers provide the skill and expertise in servicing customers. The only control exercised by the owner of the

barber shop is to ascertain the number of customers serviced by the barber in order to determine the sharing of profits. The

barbers maybe characterized as independent contractors because they are under the control of the barber shop owner only

with respect to the result of the work, but not with respect to the details or manner of performance. The barbers are

engaged in an independent calling requiring special skills available to the public at large.[5]

Its motion for reconsideration denied in the Resolution[6]

dated March 5, 1997, petitioners filed the instant petition

assigning that the NLRC committed grave abuse of discretion in:

I. ARBITRARILY DISREGARDING SUBSTANTIAL EVIDENCE PROVING THAT PETITIONERS WERE

EMPLOYEES OF RESPONDENT COMPANY IN RULING THAT PETITIONERS WERE

INDEPENDENT CONTRACTORS.

II. NOT HOLDING THAT PETITIONERS WERE ILLEGALLY DISMISSED AND IN NOT AWARDING

THEIR MONEY CLAIMS.[7]

Petitioners principally argue that public respondent NLRC gravely erred in declaring that the petitioners were

independent contractors. They contend that they were employees of the respondent company and cannot be considered as

independent contractors because they did not carry on an independent business. They did not cut hair, manicure, and do

their work in their own manner and method. They insist they were not free from the control and direction of private

respondents in all matters, and their services were engaged by the respondent company to attend to its customers in its

barber shop. Petitioners also stated that, individually or collectively, they do not have substantial capital nor investments

in tools, equipments, work premises and other materials necessary in the conduct of the barber shop. What the barbers

owned were merely combs, scissors, and razors, while the manicurists owned only nail cutters, nail polishes, nippers and

cuticle removers. By no standard can these be considered "substantial capital" necessary to operate a barbers shop.

Finally, petitioners fault the NLRC for arbitrarily disregarding substantial evidence on record showing that

petitioners Pedro Tolentino, Manuel Caparas, Simplicio Pedelos, and Patricia Nas were registered with the Social Security

System as regular employees of the respondent company. The SSS employment records in common show that the

employer's ID No. of Vicente Lao/Barber and Pawn Shop was 03-0606200-1 and that of the respondent company was 03-

8740074-7. All the foregoing entries in the SSS employment records were painstakingly detailed by the petitioners in their

position paper and in their memorandum appeal but were arbitrarily ignored first by the Labor Arbiter and then by the

respondent NLRC which did not even mention said employment records in its questioned decision.

We found petition is impressed with merit.

In our view, this case is an exception to the general rule that findings of facts of the NLRC are to be accorded respect

and finality on appeal. We have long settled that this Court will not uphold erroneous conclusions unsupported by

substantial evidence.[8]

We must also stress that where the findings of the NLRC contradict those of the labor arbiter, the

Court, in the exercise of its equity jurisdiction, may look into the records of the case and reexamine the questioned

findings.[9]

The issues raised by petitioners boil down to whether or not an employer-employee relationship existed between

petitioners and private respondent Lao Enteng Company, Inc. The Labor Arbiter has concluded that the petitioners and

respondent company were engaged in a joint venture. The NLRC concluded that the petitioners were independent

contractors.

The Labor Arbiter's findings that the parties were engaged in a joint venture is unsupported by any documentary

evidence. It should be noted that aside from the self-serving affidavit of Trinidad Lao Ong, there were no other

evidentiary documents, nor written partnership agreements presented. We have ruled that even the sharing of proceeds for

every job of petitioners in the barber shop does not mean they were not employees of the respondent company.[10]

Petitioner aver that NLRC was wrong when it concluded that petitioners were independent contractors simply

because they supplied their own working implements, shared in the earnings of the barber shop with the owner and chose

the manner of performing their work. They stressed that as far as the result of their work was concerned the barber shop

owner controlled them.

An independent contractor is one who undertakes "job contracting", i.e., a person who (a) carries on an independent

business and undertakes the contract work on his own account under his own responsibility according to his own manner

and method, free from the control and direction of his employer or principal in all matters connected with the performance

of the work except as to the results thereof, and (b) has substantial capital or investment in the form of tools, equipment,

machineries, work premises, and other materials which are necessary in the conduct of the business.[11]

Juxtaposing this provision vis-à-vis the facts of this case, we are convinced that petitioners are not "independent

contractors". They did not carry on an independent business. Neither did they undertake cutting hair and manicuring nails,

on their own as their responsibility, and in their own manner and method. The services of the petitioners were engaged by

the respondent company to attend to the needs of its customers in its barber shop. More importantly, the petitioners,

individually or collectively, did not have a substantial capital or investment in the form of tools, equipment, work

premises and other materials which are necessary in the conduct of the business of the respondent company. What the

petitioners owned were only combs, scissors, razors, nail cutters, nail polishes, the nippers - nothing else. By no standard

can these be considered substantial capital necessary to operate a barber shop. From the records, it can be gleaned that

petitioners were not given work assignments in any place other than at the work premises of the New Look Barber Shop

owned by the respondent company. Also, petitioners were required to observe rules and regulations of the respondent

company pertaining, among other things, observance of daily attendance, job performance, and regularity of job

output. The nature of work performed by were clearly directly related to private respondent's business of operating barber

shops. Respondent company did not dispute that it owned and operated three (3) barber shops.Hence, petitioners were not

independent contractors.

Did an employee-employer relationship exist between petitioners and private respondent? The following elements

must be present for an employer-employee relationship to exist: (1) the selection and engagement of the workers; (2)

power of dismissal; (3) the payment of wages by whatever means; and (4) the power to control the worker's conduct, with

the latter assuming primacy in the overall consideration. Records of the case show that the late Vicente Lao engaged the

services of the petitioners to work as barbers and manicurists in the New Look Barber Shop, then a single proprietorship

owned by him; that in January 1982, his children organized a corporation which they registered with the Securities and

Exchange Commission as Lao Enteng Company, Inc.; that upon its incorporation, it took over the assets, equipment, and

properties of the New Look Barber Shop and continued the business; that the respondent company retained the services of

all the petitioners and continuously paid their wages. Clearly, all three elements exist in petitioners' and private

respondent's working arrangements.

Private respondent claims it had no control over petitioners. The power to control refers to the existence of the power

and not necessarily to the actual exercise thereof, nor is it essential for the employer to actually supervise the performance

of duties of the employee. It is enough that the employer has the right to wield that power.[12]

As to the "control test", the

following facts indubitably reveal that respondent company wielded control over the work performance of petitioners, in

that: (1) they worked in the barber shop owned and operated by the respondents; (2) they were required to report daily and

observe definite hours of work; (3) they were not free to accept other employment elsewhere but devoted their full time

working in the New Look Barber Shop for all the fifteen (15) years they have worked until April 15, 1995; (4) that some

have worked with respondents as early as in the 1960's; (5) that petitioner Patricia Nas was instructed by the respondents

to watch the other six (6) petitioners in their daily task. Certainly, respondent company was clothed with the power to

dismiss any or all of them for just and valid cause. Petitioners were unarguably performing work necessary and desirable

in the business of the respondent company.

While it is no longer true that membership to SSS is predicated on the existence of an employee-employer

relationship since the policy is now to encourage even the self-employed dressmakers, manicurists and jeepney drivers to

become SSS members, we could not agree with private respondents that petitioners were registered with the Social

Security System as their employees only as an accommodation. As we have earlier mentioned private respondent showed

no proof to their claim that petitioners were the ones who solely paid all SSS contributions. It is unlikely that respondents

would report certain persons as their workers, pay their SSS premium as well as their wages if it were not true that they

were indeed their employees.[13]

Finally, we agree with the labor arbiter that there was sufficient evidence that the barber shop was closed due to

serious business losses and respondent company closed its barber shop because the building where the barber shop was

located was sold. An employer may adopt policies or changes or adjustments in its operations to insure profit to itself or

protect investment of its stockholders. In the exercise of such management prerogative, the employer may merge or

consolidate its business with another, or sell or dispose all or substantially all of its assets and properties which may bring

about the dismissal or termination of its employees in the process.[14]

Prescinding from the above, we hold that the seven petitioners are employees of the private respondent company; as

such, they are to be accorded the benefits provided under the Labor Code, specifically Article 283 which mandates the

grant of separation pay in case of closure or cessation of employer's business which is equivalent to one (1) month pay for

every year of service.[15]

Likewise, they are entitled to the protection of minimum wage statutes. Hence, the separation pay

due them may be computed on the basis of the minimum wage prevailing at the time their services were terminated by the

respondent company. The same is true with respect to the 13th month pay. The Revised Guidelines on the Implementation

of the 13th Month Pay Law states that "all rank and file employees are now entitled to a 13th month pay regardless of the

amount of basic salary that they receive in a month. Such employees are entitled to the benefit regardless of their

designation or employment status, and irrespective of the method by which their wages are paid, provided that they have

worked for at least one (1) month during a calendar year" and so all the seven (7) petitioners who were not paid their 13th

month pay must be paid accordingly.[16]

Anent the other claims of the petitioners, such as the P10,000.00 as penalty for non-compliance with procedural

process; P10,000.00 as moral damages; refund of P1.00 per day paid to the sweeper; salary differentials for petitioner Nas;

attorney's fees), we find them without basis.

IN VIEW WHEREOF, the petition is GRANTED. The public respondent's Decision dated October 17, 1996 and

Resolution dated March 05, 1997 are SET ASIDE. Private respondents are hereby ordered to pay, severally and jointly,

the seven (7) petitioners their (1) 13th

month pay and (2) separation pay equivalent to one month pay for every year of

service, to be computed at the then prevailing minimum wage at the time of their actual termination which was April 15,

1995.

Costs against private respondents.

SO ORDERED.

Bellosillo, (Chairman), Mendoza, Buena, and De Leon, Jr., JJ., concur.

SECOND DIVISION

ADELAIDA B. AQUINO, G.R. No. 149256

Petitioner,

Present:

PUNO, J., Chairperson,

- v e r s u s - SANDOVAL-GUTIERREZ,

CORONA,

AZCUNA and

GARCIA, JJ.

SOCIAL SECURITY SYSTEM and

U.S. NAVAL COMMISSARY

STORE, Subic Bay, Respondents. Promulgated:

July 21, 2006

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D E C I S I O N

CORONA, J.:

At bar is an appeal by certiorari under Rule 45 of the 1997 Rules of Civil Procedure assailing the decision of the

Court of Appeals (CA) in CA-G.R. SP No. 60726, entitled Adelaida B. Aquino v. Social Security System, dismissing

petitioner Adelaida Aquino‟s claim under Presidential Decree (PD) No. 626 (the Employees Compensation Act).

Petitioner‟s husband, Jaime Aquino, worked as grocery man for the US Navy

Commissary, Subic Bay, Olongapo City from 1970 to 1977. He performed the following tasks: (1) checked the

availability of stocks before they were turned over to the supervisor of the store; (2) piled items in shelves and display

cases and assisted patrons in locating them; (3) processed retail price changes by conducting inventories of items and (4)

operated the forklift.

On February 2, 2000 or about 23 years after his separation from employment, he died of congestive heart failure.

Petitioner filed a claim for surviving spouse‟s compensation benefits under PD 626 with respondent Social Security

System (SSS). The latter denied the claim.

Petitioner then appealed the case to the Employees Compensation Commission (ECC) which

affirmed SSS‟s dismissal of the claim on the ground that the cause of death of petitioner‟s husband was not attributable to

the nature of his work as a grocery man in the Commissary. He was no longer connected with the store at that time.

Aggrieved, petitioner went to the CA seeking the reversal of the ECC‟s decision. There, petitioner insisted that the

cause of her husband‟s death was traceable to the nature of his job at the commissary store. The CA dismissed her

appeal.[1]

Petitioner sought reconsideration of the CA decision[2]

but it was denied, hence, this petition.

In this petition, petitioner essentially faults the CA for not finding that the ailment causing her husband‟s death was

compensable under PD 626.[3]

The petition will not prosper.

Under the law, the beneficiary of an employee is entitled to death benefits if the cause of death is (1) an illness

accepted as an occupational disease by the ECC or (2) any other illness caused by employment, subject to proof that the

risk of contracting the same was increased by the working conditions.[4]

Stated otherwise, a claimant must prove that the illness is listed as an occupational disease by the ECC; otherwise,

he must present substantial evidence showing that the nature of the work increased the risk of contracting it.

In the case of Panangui v. Employees Compensation Commission,[5]

the Court explained congestive heart failure

as:

…a clinical syndrome which develops eventually in 50-60% of all patients with organic

cardiovascular disease. It is defined as the clinical state resulting from the inability of the heart to expel

sufficient blood for the metabolic demands of the body. Heart failure may therefore be present when the

cardiac output is high, normal or low, regardless of the absolute level, the cardiac output is reduced to

metabolic demands…

Under the Rules on Employees Compensation, particularly “Annex A” thereof which contains the list of

occupational diseases, congestive heart failure is not included. Hence, petitioner should have shown proof that the

working conditions in the commissary store where her husband worked aggravated the risk of contracting the

ailment.[6]

Petitioner should have adduced evidence of a reasonable connection between the work of her deceased husband

and the cause of his death, or that the progression of the disease was brought about largely by the conditions in her

husband‟s job as grocery man at the commissary store.[7]

Failing in this aspect, we are constrained to rule that her

husband‟s illness which eventually caused his demise was not compensable.

Moreover, even if we were to construe the ailment of petitioner‟s husband as cardiovascular disease compensable

under ECC Resolution No. 432, the petition will still not prosper. To be compensable, the cardiovascular (or heart)

disease of Jaime Aquino must have occurred under any of the following conditions:

(a) [i]f the heart disease was known to have been present during employment[,] there must be

proof that an acute exacerbation clearly precipitated by the unusual strain by reason of the nature

of his work;

(b) [t]he strain of work that [brought] about an acute attack must be of sufficient severity and

must be followed within twenty-four (24) hours by clinical signs of a cardiac insult to constitute

causal relationship;

(c) [i]f a person who was apparently symptomatic before subjecting himself to strain at work

showed signs and symptoms of cardiac injury during the performance of his work and such

symptoms and signs persisted, it [was] reasonable to claim a causal relationship.[8]

Clearly, the circumstances of the present case do not fall under any of the foregoing conditions.

In addition, granting petitioner‟s claim will set a bad precedent considering that 23 years elapsed from the time

her husband stopped working at the commissary store up to the time he died. If we were to grant it, we might unduly

burden the funds of the ECC and jeopardize it with a flood of unsubstantiated claims. Besides, the Court cannot remain

oblivious to the possibility that, within that 23-year period, other factors intervened to cause the death of petitioner‟s

husband. Petitioner was thus under an even greater compulsion to proffer evidence to negate this possibility and establish

the causal connection between her husband‟s work and his death. The 23-year gap between his separation from

employment in 1977 and his death in 2000 was a gaping hole in petitioner‟s claim.

Furthermore, well-entrenched is the rule that findings of fact of administrative officials who have acquired

expertise on account of their specialized jurisdiction are accorded by the Courts not only respect but, most often, with

finality.

Lastly, while it is true that PD 626 operates on the principle of social justice, sympathy for the workers should

also be placed in a sensible equilibrium with the stability of the ECC trust fund.

WHEREFORE, the assailed decision of the Court of Appeals in CA-G.R. SP No. 60726 is hereby AFFIRMED.

Accordingly, the petition is DENIED.

No costs.

SO ORDERED.

SECOND DIVISION

SOLEDAD MUÑOZ MESA, Petitioner,

- versus -

SOCIAL SECURITY SYSTEM and

PHILROCK

INCORPORATED,

Respondent.

G.R. No. 160467

Present:

QUISUMBING, J., Chairperson,

CARPIO MORALES,

TINGA,

VELASCO, JR., and

BRION, JJ.

Promulgated:

April 7, 2009

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D E C I S I O N

CARPIO MORALES, J.:

On appeal is the Court of Appeals Decision[1]

dated January 16, 2003 sustaining the Decision[2]

dated August 24,

2001 of the Employees Compensation Commission (ECC) in ECC Case No. MS-12322-501, as well as its

Resolution[3]

dated October 3, 2003 denying petitioner‟s motion for reconsideration.

Teodoro Mesa (Mesa), the deceased husband of petitioner Soledad Muñoz Mesa, was an employee of respondent

Philrock Incorporated (Philrock), from April 1966 to November 1998.[4]

In the course of his employment, Mesa was diagnosed to be afflicted with diabetes mellitus, pulmonary

tuberculosis, and ischemic heart disease[5]

for which he was confined from September 23 to 30, 1988 at St. Martha‟s

Specialty Clinic in Tarlac City. Upon his discharge from the hospital, he continued to work for Philrock until he

succumbed to myocardial infarction on November 19, 1988. He last held the position of Project General

Superintendent.

Close to 12 years later or in October 2000, Mesa‟s wife, herein petitioner, claimed for employees‟ compensation

benefits under Presidential Decree (P.D.) No. 626 or the Employees‟ Compensation Law, as amended.

By pro-forma letter[6]

dated January 18, 2001, the Social Security System (SSS) denied petitioner‟s claim on the

ground of prescription. Petitioner moved for reconsideration, alleging that the filing of the claim was delayed because she

was not aware that her husband was entitled to employees‟ compensation until she heard it from a friend who was able to

claim a similar benefit, and that she could not file the claim immediately because she herself was in and out of the

hospital. The motion was elevated by the SSS to the ECC per memorandum[7]

dated April 17, 2001.

By Decision dated August 24, 2001, the ECC held that petitioner‟s claim had prescribed on November 26, 1991,

following Article 201[8]

of P.D. 626, as amended, which provides that claims under said law should be brought within

three years from the time the cause of action accrued. Even if Art. 1144[9]

of the Civil Code were applied, the ECC posed,

the claim would still be barred by prescription since the period is reckoned from the date of contingency or November 25,

1998 to the date of filing of the claim in October 2000 which entailed a period of almost 12 years.

Petitioner thereupon appealed to the Court of Appeals, contending that the three-year period in P.D. 626 should not

be construed as a prescriptive period but more of a requisite for the exercise of a right granted by law, and pleading for the

application of the social justice precepts in resolving the controversy in her favor.

Via a Supplement to the Petition,[10]

petitioner submitted the Online Inquiry System-generated “D[eath]

D[isability and] R[etirement] Claims Information” sheet[11]

showing that she filed a claim fordeath and

funeral benefits with the SSS on December 12, 1988.

By the challenged Decision dated January 16, 2003, the appellate court dismissed petitioner‟s petition and affirmed

the ECC Decision. Citing Vda. De Hornido v. ECC, Art. 201 of P.D. 626, and Art. 1144 of the Civil Code, the appellate

court held that at the time petitioner instituted the claim for employees‟ compensation benefits, almost 12 years had

elapsed, hence, it had prescribed.

On petitioner‟s filing before the SSS of a claim for death and funeral benefits on November 25, 1988, the

appellate court held that the same did not operate as constructive notice to the ECC for purposes of employees‟

compensation, hence, it did not toll the running of the prescriptive period. Additionally, it held that this issue was not

presented before the lower tribunals and was raised for the first time on appeal, hence, it could not be entertained; and that

although the November 25, 1988 claim was denominated as “SSS Death and Funeral Benefit,” what petitioner actually

claimed was funeral or burial benefits alone, not death benefits resulting from compensable injury or illness, and it was

only in 2000 that she filed for death benefits, hence, the said claim for funeral benefits could not operate as constructive

notice on the part of SSS within the purview of the rules on employees‟ compensation.

Petitioner‟s motion for reconsideration having been denied by Resolution dated October 3, 2003, the present appeal

was filed.

Petitioner reiterates her contention that her claim has not prescribed and that the funeral claim served as

constructive notice to the SSS/ECC to toll the running of the prescriptive period pursuant to ECC Resolution No. 90-03-

0022 and 93-08-0068. And she requests the Court to apply social justice precepts and humanitarian considerations.

The appeal is impressed with merit.

Apropos is the ruling in Buena Obra v. SSS[12] in which the Court, speaking through then Associate, now Chief

Justice Puno, held that the claim for funeral benefits under P.D. No. 626, as amended, which was filed after the lapse of

10 years by the therein petitioner who had earlier filed a claim for death benefits, had not prescribed,

The issue of prescription in the case at bar is governed by P.D. No. 626, or the Law on

Employees' Compensation. Art. 201 of P.D. No. 626 and Sec. 6, Rule VII of the 1987 Amended Rules on

Employees' Compensation both read as follows:

“No claim for compensation shall be given due course unless said claim

is filed with the System within three years from the time the cause of action

accrued.”

This is the general rule. The exceptions are found in Board Resolution 93-08-0068 and ECC

Rules of Procedure for the Filing and Disposition of Employees‟ Compensation Claims. Board

Resolution 93-08-0068 issued on 5 August 1993, states:

“A claim for employee's compensation must be filed with System (SSS/GSIS) within three (3)

years from the time the cause of action accrued, provided however, that any claim filed within the

System for any contingency that may be held compensable under the Employee's Compensation

Program (ECP) shall be considered as the EC claim itself. The three-year prescriptive period shall be

reckoned from the onset of disability, or date of death. In case of presumptive death, the three (3) years

limitation shall be counted from the date the missing person was officially declared to be presumptively

dead.” (emphasis supplied)

In addition, Section 4(b), Rule 3 of the ECC Rules of Procedure for the Filing and Disposition of

Employees‟ Compensation Claims, reads:

“RULE 3. FILING OF CLAIM

Section 4. When to file.

(a) Benefit claims shall be filed with the GSIS or the SSS within three (3) years from the date of

the occurrence of the contingency (sickness, injury, disability or death).

(b) Claims filed beyond the 3-year prescriptive period may still be given due course,

provided that: 1. A claim was filed for Medicare, retirement with disability, burial, death claims, or life

(disability) insurance, with the GSIS within three (3) years from the occurrence of the contingency.

2. In the case of the private sector employees, a claim for Medicare,

sickness, burial, disability or death was filed within three (3) years from the occurrence of the

contingency.

3. In any of the foregoing cases, the employees‟ compensation claim shall be filed with the

GSIS or the SSS within a reasonable time as provided by law. [Emphasis supplied.]”

We agree with the petitioner that her claim for death benefits under the SSS law should be

considered as the Employees’ Compensation claim itself. This is but logical and reasonable because

the claim for death benefits which petitioner filed with the SSS is of the same nature as her claim before

the ECC. Furthermore, the SSS is the same agency with which Employees‟ Compensation claims are

filed. As correctly contended by the petitioner, when she filed her claim for death benefits with the

SSS under the SSS law, she had already notified the SSS of her employees’ compensation claim,

because the SSS is the very same agency where claims for payment of sickness/disability/death

benefits under P.D. No. 626 are filed.

Section 4(b)(2), Rule 3 of the ECC Rules of Procedure for the Filing and Disposition of the

Employees‟ Compensation Claims, quoted above, also provides for the conditions when EC claims filed

beyond the three-year prescriptive period may still be given due course. Section 4(b)(2) states the

condition for private sector employees, requiring that a claim for Medicare, sickness, burial, disability or

death should be filed within three (3) years from the occurrence of the contingency. In the instant case,

the petitioner was able to file her claim for death benefits under the SSS law within the three-year

prescriptive period. In fact, she has been receiving her pension under the SSS law since November 1988.

It is true that under the proviso, the employees‟ compensation claim shall be filed with the

GSIS/SSS within a reasonable time as provided by law. It should be noted that neither statute nor

jurisprudence has defined the limits of “reasonable time.” Thus, what is reasonable time depends

upon the peculiar facts and circumstances of each case. In the case at bar, we also find petitioner’s

claim to have been filed within a reasonable time considering the situation and condition of the

petitioner. We have ruled that when the petitioner filed her claim for death benefits under the SSS

law, her claim for the same benefits under the Employees’ Compensation Law should be considered

as filed. The evidence shows that the System failed to process her compensation claim. Under the

circumstances, the petitioner cannot be made to suffer for the lapse committed by the

System.[13]

(Emphasis and underscoring supplied)

In light of the immediately-quoted portions of the Court‟s decision in Buena Obra, the Court holds that petitioner‟s

filing of a claim before the SSS, even arguendo that it was only for funeral benefits, on November 25, 1988 served as

constructive notice on the part of the SSS/ECC pursuant to the ECC Board Resolution 93-08-0068 vis a vis ECC Rules of

Procedure for the Filing and Disposition of Employees‟ Compensation Claims, that she was claiming before the SSS for

compensation benefits under P.D. No. 626, effectively tolling the running of the prescriptive period. The term “funeral

benefits” certainly connotes benefits arising from death. Petitioner‟s claim is thus not barred.

At this juncture, the Court reiterates its oft-repeated ruling that pursuant to the Constitutional guarantee of social

justice, a liberal attitude in favor of the employee should be adopted.

[C]laims falling under the Employees‟ Compensation Act should be liberally resolved to fulfill its

essence as a social legislation designed to afford relief to the working man and woman in our society. It

is only this kind of interpretation that can give meaning and substance to the compassionate spirit of the

law as embodied in Article 4 of the New Labor Code, which states that all doubts in the implementation

and interpretation of the provisions of the Labor Code including its implementing rules and regulations

should be resolved in favor of labor.[14]

(Underscoring supplied)

The issue of whether Mesa‟s death is compensable was never, however, fully raised nor discussed in any of the

proceedings below, nor is it ventilated in the present petition, and the records are bereft of adequate evidence to enable the

Court to rule thereon. A remand of the case to the ECC for the resolution of such issue is thus in order.

WHEREFORE, the petition is GRANTED. The challenged Court of Appeals Decision dated January 16,

2003 and Resolution dated October 3, 2003 are REVERSED and SET ASIDE.

Let the records of the case be REMANDED to the Employees Compensation Commission which

is DIRECTED to rule with dispatch on the merits of petitioner‟s claim for compensation benefits under Presidential

Decree No. 626.

SO ORDERED.

FIRST DIVISION

GOVERNMENT SERVICE INSURANCE

SYSTEM (GSIS),

Petitioner,

- versus -

TERESITA S. DE

GUZMAN,

Respondent.

G.R. No. 173049

Present:

PUNO, C.J., Chairperson,

CARPIO,

CORONA,

LEONARDO-DE CASTRO, and

BERSAMIN, JJ.

Promulgated:

May 21, 2009

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D E C I S I O N

PUNO, C.J.:

For resolution is a petition for review on certiorari under Rule 45 seeking to reverse and set aside the

Decision[1]

of the Court of Appeals in CA-G.R. SP No. 91046, which overturned the Decision[2]

of the Employees‟

Compensation Commission (ECC) in ECC Case No. GM-16855-0214-05 affirming the denial by the GSIS of

respondent‟s claim under Presidential Decree (P.D.) No. 626, as amended, for reimbursement of her medical expenses

incurred in the operation of her left eye due to cataract.

Respondent Teresita S. De Guzman, 53 years old, joined the Public Attorney‟s Office (PAO) as Citizens‟ Attorney I

in April 1988.[3]

After three months, she was promoted to Citizens‟ Attorney II, and in November 1997, she was promoted

to Public Attorney III.[4]

A year thereafter, respondent was promoted to the position of Section Chief/supervisor of section

“C” at the Special and Appealed Cases Division.[5] In May 2004, she transferred to the Field Services and Statistics

Division of the PAO.[6]

Respondent‟s medical history reveals that she was diagnosed with hyperthyroidism in 1992, and in 1997, with

hypertension. In 1999, respondent was diagnosed with diabetes mellitus, type 2.

During a routine visit to her nephrologist/endocrinologist, Dr. Romulo Ramos, at the University of the East-Ramon

Magsaysay Medical Center, respondent was referred to ophtalmologist Dr. Rizalino Jose Felarca for an eye check-up.

Upon examination on June 15, 2002, it was discovered that respondent had “near mature cataract OD and an immature

cataract OS.”[7]

After further examination, respondent decided to undergo a cataract extraction procedure to be performed by Dr.

Harvey S. Uy of the Asian Eye Institute in Makati City. In preparation for said procedure, Dr. Uy asked respondent‟s

endocrinologist, Dr. Romulo Ramos, and cardiologist, Dr. Norbert Uy, for endocrine and cardio-pulmonary clearance,

respectively.[8]

His referral letter to Dr. Ramos read:

Dear Dr. Ramos:

Ms. De Guzman has mature cataract, left eye from diabetes. She wants to undergo cataract extraction left

eye under local with sedation.

I am referring her back to you for endocrine clearance. Thank you.

(signed)

Harvey S. Uy, M.D.[9]

On the other hand, Dr. Uy‟s referral letter to respondent‟s cardiologist read:

Dear Dr. Uy:

We are refererring Ms. Teresita Guzman for cardiopulmonary clearance. She wishes to undergo cataract

extraction, left eye under local with sedation. Thank you.

(signed)

Harvey S. Uy, M.D.[10]

After the necessary medical clearances were given, respondent's cataract was successfully extracted on August 22,

2004 at the Asian Eye Institute.

On October 27, 2004, respondent filed with petitioner a claim for medical reimbursement in the amount

of P40,000.000 under the Employees' Compensation Law (P.D. No. 626, as amended). In her letter to petitioner,

respondent insisted that “[my] ailment was work-related although some doctors say it was caused by [my]

diabetes.”[11]

She pointed out that inasmuch as her eye developed a cataract due to decades of use and abuse from reading

voluminous law books, commentaries, transcripts of stenographic notes and pleadings, she should be entitled to her claim

for reimbursement.[12]

On December 14, 2004, petitioner denied respondent's claim, reasoning that cataract is associated with aging,

diabetes mellitus, genetic abnormalities and trauma in the eyes, but not with decades of reading. Moreover, petitioner

found no concrete and substantial proof that the illness was directly caused by respondent's performance of her daily

duties.

On appeal, the ECC affirmed the findings of petitioner denying respondent's claim. Per the decision, respondent‟s

ailment was not included in the exclusive list of compensable occupational diseases under the Amended Rules on

Employees‟ Compensation.[13]

Likewise, the ECC found that respondent's ailment could not be categorically attributed to

her working conditions because of the presence of another major causative factor– respondent's diabetes.[14]

Dissatisfied

with the decision of the ECC, respondent filed a petition for review before the Court of Appeals.

In its decision promulgated on June 7, 2006, the Court of Appeals reversed the ECC, reasoning that petitioner had

clearly demonstrated and explained through substantial evidence how her cataract was effectively affected because of the

readings she had to do in relation to her work.[15]

Further, it noted that notwithstanding the abandonment of the

presumption of compensability established by the old law, the present law has not ceased to be a social legislation, and

that therefore, all doubts must be resolved in favor of the claimant.

Dissatisfied, petitioner comes before us arguing that the Court of Appeals erred in granting respondent's claim in the

face of evidence that the latter's cataract was caused, not by her work but, by her diabetes.

We deny the petition.

Respondent is claiming reimbursement under Articles 185, 189 and 190[16]

of P.D. No. 626, as amended, for

expenses incurred in her cataract extraction procedure.[17]

According to the Amended Rules on Employees‟ Compensation

implementing P.D. No. 626, as amended, “[f]or the sickness and the resulting disability or death to be compensable, the

sickness must be the result of an occupational disease listed under Annex „A‟ of these Rules with the conditions set

therein satisfied, otherwise, proof must be shown that the risk of contracting the disease is increased by the working

conditions.”[18]

Stated otherwise, in order for a sickness to be compensable, it must have resulted from any illness which is

(a) definitely accepted as an occupational disease or (b) caused by employment, subject to proof that the risk of

contracting the same is increased by working conditions.[19]

The List of Occupational and Compensable Diseases provided under P.D. No. 626[20]

only allows for the

compensation of a specific kind of cataract, viz.:

Occupational Diseases

Nature of Employment

xxx xxx xxx

Cataract produced by exposure to the glare of,

or rays from molten glass or molten or red hot

metal.

xxx xxx xxx

xxx xxx xxx

Frequent and prolonged exposure to the glare of

or rays from molten glass or red hot metal.

xxx xxx xxx

As the ECC explained, the cataract compensable under the law is limited to what is known as “glass blower‟s cataract”

common among furnace men, glass blowers, bakers, blacksmiths, foundry workers, and other workers exposed to infrared

rays.[21]

However, inasmuch as respondent‟s illness does not squarely fall within the abovementioned category, respondent

is still not precluded from claiming reimbursement as she has proven the merit of her claim by showing that her risk of

contracting cataracts was increased by her working conditions.

The degree of proof required under P.D. No. 626 is merely substantial evidence, or "such relevant evidence as a

reasonable mind might accept as adequate to support a conclusion.”[22]

We have repeatedly held that to prove

compensability, the claimant must adequately show that the development of the disease is brought largely by the

conditions present in the nature of the job.[23]

What the law requires is a reasonable work-connection and not a direct

causal relation.[24]

It is enough that the hypothesis on which the workmen's claim is based is probable.[25]

Medical opinion

to the contrary can be disregarded especially where there is some basis in the facts for inferring a work-

connection.[26]

Probability, not certainty, is the touchstone. [27]

Respondent's theory hinges on her contention that her cataract was a result of “decades of use and abuse” to which

her eyes were subjected in connection with her job as a public attorney. In support thereof, respondent cites “Healthy

Women, Healthy Lives, A Guide to Preventing Diseases from the Landmark Nurse's Health Study,” thus:

A cataract is the gradual clouding of the eye's lens. The rigid disc of protein sits near the front of the eye,

right behind the pupil. Its job is to focus light onto the retina, the light sensitive tissue that lines the back

of the eye. In a child, the lens is crystal clear. Unfortunately, decades of use and abuse can change that.

Sunlight, cigarette smoke, and other noxious agents can damage the proteins in the lens, often by

generating free radicals. These are highly reactive particles that damage many of our tissues.[28]

Respondent‟s hypothesis that her years of reading thick appellate pleadings and documents can serve as basis for

inferring a probable nexus between respondent‟s illness and the nature of respondent‟s work as a causative factor. Hence,

we find the said work-connection herein reasonable despite findings that respondent‟s cataract was caused by her diabetes.

Moreover, we are well to be reminded that P.D. No. 626 still stands as a social legislation. As we expressed

in Salalima v. ECC:

P.D. 626, as amended, is said to have abandoned the presumption of compensability and the theory of

aggravation prevalent under the Workmen‟s Compensation Act. Despite such abandonment, however, the

present law has not ceased to be an employees‟ compensation law or a social legislation; hence, the

liberality of the law in favor of the working man and woman still prevails, and the official agency charged

by law to implement the constitutional guarantee of social justice should adopt a liberal attitude in favor

of the employee in deciding claims for compensability, especially in light of the compassionate policy

towards labor which the 1987 Constitution vivifies and enhances.[29]

Therefore, considering the reasonable work-connection herein proven and respondent‟s plight as a government lawyer

who has dedicated the best years of her life to public service, we deem it proper to give full effect to the humanitarian

spirit of the law.

IN VIEW WHEREOF, the instant petition is DENIED. The decision of the Court of Appeals dated June 7, 2006 is

hereby AFFIRMED. No costs.

SO ORDERED.

G.R. No. 124208 January 28, 2008

GOVERNMENT SERVICE INSURANCE SYSTEM (GSIS), petitioner,

vs.

COURT OF APPEALS and HEIRS OF ABRAHAM CATE, represented by DOROTHY CATE, respondents.

X----------------------------------------------- X

G.R. No. 124275 January 28, 2008

EMPLOYEES COMPENSATION COMMISSION and PHILIPPINE NATIONAL POLICE, petitioner,

vs.

THE HONORABLE COURT OF APPEALS and HEIRS OF ABRAHAM CATE, represented by DOROTHY

CATE,respondents.

D E C I S I O N

AZCUNA, J.:

These two consolidated cases are petitions for review on certiorari of the Decision of the Court of Appeals (CA)

promulgated on March 13, 1996, which reversed and set aside the Decision of the Employees Compensation Commission

(ECC) dated September 7, 1995 denying private respondents‟ claim for compensation benefits of the late Abraham Cate

under Presidential Decree (P.D.) No. 626, as amended.

The facts are as follows:

On March 6, 1974, Abraham Cate (Abraham) joined the military service as a Rifleman of the Philippine Navy. In 1975,

he was designated as Action Clerk. On February 22, 1986, he was transferred to the now defunct Philippine Constabulary

with the rank of Technical Sergeant and was later promoted to Master Sergeant. On January 2, 1991, he was absorbed in

the Philippine National Police (PNP) with the rank of Senior Police Officer IV (SPO4).

In 1993, Abraham complained of a mass on his left cheek which gradually increased in size. A biopsy was done at the

Philippine General Hospital (PGH). The histopath report revealed that he was suffering from Osteoblastic Osteosarcoma.

He was admitted at the PGH payward, and on October 28, 1993, he underwent "Total Maxillectomy with Orbital

Exenteration," which operation removed the mass on his left cheek. In April 1994, another biopsy revealed the recurrence

of the ailment. On June 9, 1994, Abraham underwent debulking of the recurrent tumor at the PGH. Post-operative course

was uneventful and he underwent radiotherapy.1

On December 1, 1994, Abraham was compulsorily retired from the PNP.2

On December 20, 1994, Abraham filed a claim for income benefits with the Government Service Insurance System

(GSIS) under P.D. No. 626,3 as amended.

In a letter dated December 27, 1994, GSIS denied the claim on the ground that Osteosarcoma is not considered an

occupational disease under P.D. No. 626, and there is no showing that his duties as SPO4 in the Armed Forces of the

Philippines had increased the risk of contracting said ailment.4 GSIS denied Abraham‟s request for reconsideration of the

decision in a letter dated March 22, 1995.

On May 2, 1995, Abraham died at the age of 45. He was survived by his wife, Dorothy Cate, and two children. The heirs

of Abraham appealed the decision of GSIS to the ECC.

In a Decision dated September 7, 1995, ECC affirmed the decision of GSIS and dismissed the case for lack of merit. It

ruled:

After a careful examination of the records of the instant claim, we concur with the decision of the respondent

system that appellant‟s claim is bereft of merit. Definitely, the ailment of herein appellant is not included in the

list of occupational diseases, under the rules implementing PD 626, as amended. However, even if appellant‟s

ailment is not an occupational disease, the present law on compensation allows certain diseases to be compensable

if it is sufficiently proven that the risk of contracting it is increased by the working conditions. Unfortunately for

Abraham Cate, he failed to present proofs that will establish that the development of his ailment is traceable to his

work and working conditions as a soldier of the defunct Philippine Constabulary and later as member of the

Philippine National Police.

Our conclusion is supported by the findings of the Commission‟s Medical Division which show that

Osteosarcoma is the most common primary bone tumor. It is an aggressive tumor, characterized usually by rapid

growth and early pulmonary metastasis. In most common cases of osteogenic sarcoma, no definite etiology can be

determined.

From the foregoing medical discussion, it is very clear that appellant‟s employment as member of the Philippine

National Police had no direct nor causal relationship with the contraction of appellant‟s ailment. This being the

case, the death benefits prayed for by herein appellant under the Employees‟ Compensation Law (PD 626, as

amended), cannot be given due course. 5

The heirs of Abraham filed a petition for review of the decision of ECC with the CA.

In a Decision promulgated on March 13, 1996, the CA reversed and set aside the decision of ECC. The dispositive portion

of the decision reads:

IN VIEW OF ALL THE FOREGOING, this Petition for Review is GIVEN DUE COURSE and is GRANTED.

The assailed decision of the respondent Employees Compensation Commission dated September 7, 1975 is

ordered REVERSED and SET ASIDE and a new one entered declaring the ailment of the late Abraham Cate

compensable under PD 626, as amended. No pronouncement as to cost.

SO ORDERED.6

The CA ruled that Osteosarcoma is compensable on the ground that the Employees Compensation Act is basically a social

legislation designed to afford relief to our working men, and should, therefore, be liberally construed in favor of the

applicant. It stated that Abraham‟s failure to present evidence on the causal relation of the illness to his working

conditions is due to the lack of available proof. To deny compensation to Osteosarcoma victims who will be unable to

produce such proof is unrealistic, illogical and unfair. On a very exceptional circumstance, the rule on compensability

should be relaxed. In the meantime that the origin and cause of Osteosarcoma are unknown, the benefit of the doubt

should be resolved in favor of the claim since employees‟ compensation is based on social security principles. It hoped for

a second look on the issue of compensability to those suffering Osteosarcoma or a similar disease whose cause is

unascertained.

The CA cited the dissenting opinions of former Supreme Court Justice Abraham F. Sarmiento and Justice Edgardo L.

Paras in the case of Raro v. Employees’ Compensation Commission7 where Justice Sarmiento opined that compassion is

reason enough to grant compensation benefits to the petitioner therein, a Mining Recorder at the Bureau of Mines and

Geo-Sciences, who suffered from cancer (brain tumor). Justice Paras opined that doubts must generally be resolved in

favor of the employee whenever compensation for disease is concerned, and that it would be absurd to throw upon therein

petitioner the burden of showing that her work either caused or aggravated the disease, particularly when both the GSIS

and ECC profess ignorance of the causes of the disease.

The GSIS and ECC separately filed a petition for review on certiorari of the decision of the CA. The two petitions were

consolidated per Resolution dated September 4, 1996.

The main issue in this case is whether or not the CA erred in ruling that the ailment of the late Abraham is compensable

under the present law on employees‟ compensation.

Petitioners aver that the applicable law in Abraham‟s case is the Amended Rules on Employees‟ Compensation which is

explained in Tanedo v. ECC,8 thus:

Awards of compensation benefits for death or disability can now no longer be made to rest on presumption, but

on a showing that the causative disease is among those listed by the ECC, or on substantial evidence that the risk

of contracting said disease is increased by the employee‟s working conditions.

Petitioners allege that private respondents tried to establish a preliminary link between the illness and the employment of

Abraham by speculating that since Abraham did some dirty jobs during his stint as a rifleman in the Philippine Navy, he

was exposed to some elements like virus which could have contributed more or less to the development of his ailment.

Petitioners argue that such allegation cannot be the basis of a finding that Abraham‟s ailment had a causal connection with

his employment and working conditions. Nor can it be said that the nature of his work had increased the risk of

contracting his ailment. The illness is not prevalent in the Philippine Navy or the PNP. Even under the less stringent

evidentiary norm of substantial evidence obtaining in employees‟ compensation proceedings, private respondents failed to

adduce such relevant evidence as a reasonable mind might accept as adequate to support their claim.

Art. 1679 (l), Chapter 1, Title II, Book Four of the Labor Code of the Philippines, defines sickness as "any illness

definitely accepted as an occupational disease listed by the [Employees‟ Compensation Commission], or any illness

caused by employment, subject to proof that the risk of contracting the same is increased by working conditions." The

same provision empowers ECC to determine and approve occupational diseases and work-related illnesses that may be

considered compensable based on peculiar hazards of employment.

Under Sec. 1 (b), Rule III of the Amended Rules on Employees‟ Compensation, "[f]or the sickness and the resulting

disability or death to be compensable, the sickness must be the result of an occupational disease listed under Annex „A‟ of

these Rules with the conditions set therein satisfied; otherwise, proof must be shown that the risk of contracting the

disease is increased by the working conditions."

The decision of the ECC is instructive:

After a careful examination of the records of the instant claim, we concur with the decision of the respondent

system that appellant‟s claim is bereft of merit. Definitely, the ailment of herein appellant is not included in the

list of occupational diseases, under the rules implementing PD 626, as amended. However, even if appellant‟s

ailment is not an occupational disease, the present law on compensation allows certain diseases to be compensable

if it is sufficiently proven that the risk of contract it is increased by the working conditions. Unfortunately, for

Abraham Cate, he failed to present proofs that will establish that the development of his ailment is traceable to his

work and working conditions as a soldier of the defunct Philippine Constabulary and later as member of the

Philippine National Police.10

In this case, Osteosarcoma is not listed as an occupational disease in the Amended Rules on Employees‟ Compensation.

Hence, it is supposed to be upon the claimant or private respondents to prove by substantial evidence that the risk of

contracting Osteosarcoma was increased by the working conditions of the late Abraham. Substantial evidence means such

relevant evidence as a reasonable mind might accept as adequate to support a conclusion.11

The records show that

Abraham failed to present evidence to establish that the development of his ailment was traceable to his working

conditions in the Philippine Navy, the now defunct Philippine Constabulary and the PNP. Further, private respondents‟

allegation in their petition for review with the CA that Abraham, as a rifleman in the Philippine Navy, may have been

exposed to elements like a virus which could have contributed to his ailment does not satisfy the requirement of

substantial evidence. The rule is that awards of compensation cannot rest on speculations and presumptions as the

claimant must prove a positive thing.12

The application of the rules would mean that absent any proof that the risk of

contracting the ailment was increased by the working conditions of the late Abraham, private respondents would not be

entitled to compensation.

Considering, however, that it is practically undisputed that under the present state of science, the proof referred by the law

to be presented by the deceased private respondent claimant was unavailable and impossible to comply with, the condition

must be deemed as not imposed.

For this reason, the CA held, thus:

In all due respect and with the least of intention of committing contempt and discourtesy but rather solely moved

by the time-honored principle that the Employees Compensation Act is basically a social legislation designed to

afford relief to our working men (Santos v. ECC, 221 SCRA 182 [1993] and that labor, social welfare legislations

should be liberally construed in favor of the applicant (Tira v. ECC, 208 SCRA 834 [1992]), We have to rule in

favor of herein petitioners.

The plight of any cancer patient deserves some serious considerations. We were not to be told that no one is a

willing victim of cancer. Inflicted with this dreadful malady, the patient suffers from the trauma of an impending

death not to mention the high cost of medical attendance required, only to prolong one‟s agony and the

hopelessness of any definite cure simply because the origin and cause of cancer are farfetched unresolved.

The present case at bench is no different. Petitioners‟ failure to present positive evidence of a causal relation of

the illness and his working conditions is due to the pure and simple lack of available proof to be offered in

evidence. Verily, to deny compensation to osteosarcoma victims who will definitely be unable to produce a single

piece of proof to that effect, is unrealistic, illogical and unfair. At the very least, on a very exceptional

circumstance, the rule on compensability should be relaxed and be allowed to apply to such situations. To

disallow the benefit will even more add up to the sufferings, this time, for the ignorance of the inability of

mankind to discover the real truth about cancer.

It is not the intention of this decision to challenge the wisdom of the Raro case. What is being hoped for is to have

a second look on the issue of compensability of those inflicted with osteosarcoma or like disease, where the origin

or cause is still virtually not ascertained. The protection of the stability and integrity of the State Insurance Fund

against non-compensable claims, is much to be desired. Nonetheless, to allow the presumption of compensability

to Osteosarcoma victims, will not adversely prejudice such state policy. In fact, it will give more meaning to the

very purpose and essence of the State Insurance Fund. Upon the other hand, to deny the claim will not only defeat

the very reason for its creation but will likewise turn down benefits to the intended rightful beneficiary thereof. As

employee‟s compensation is based on social security principles. We believe that in the meantime that

osteosarcoma‟s cause and origin are not yet unearthed, the benefit of the doubt should be resolved in favor of the

claim.

In main, We subscribe to the more compassionate and humane considerations contained in the dissenting opinions

of Justices Sarmiento and Paras in the same Raro case and We quote:

"It must be likewise be noted that the petitioner is suffering from cancer (brain tumor), whose cause

medical science is yet to unravel. It would then be asking too much to make her prove that her illness was

cause by work or aggravated by it, when experts themselves are ignorant as to what brings it about. I do

not believe, finally, that the question is a matter of legislation. Compassion, it is my view, is reason

enough." (J. Sarmiento)

"While „brain tumor‟ is not expressly or specifically referred to as an occupational disease, and while

admittedly it precise causes are still unknown, We may say that the disease is akin to „cancer of the brain‟

and should therefore be regarded as either compensable or borderline case. At any rate, the precise work

of the petitioner at the Bureau of Mines and Geo-Sciences consisted of the following: "As Mining

Recorded II, to record and file mining instruments and documents in the Mining Recorder‟s Section and

to type correspondence and other documents pertaining to the same action. (See Petitioner‟s Brief, Rollo,

p. 13). It will readily be seen that her work required at times mental concentration. Whether this is

specifically causative of brain tumor is of course still unknown but doubts must generally be resolved in

favor whenever compensation for disease is concerned. It would certainly be absurd to throw upon

petitioner the burden of showing that her work either caused or aggravated the disease, particularly when

both the GSIS and ECC profess ignorance themselves of the causes of the disease." (Justice Paras).13

Stated otherwise, before the amendment, the law simply did not allow compensation for the ailment of respondent. It is

under this set-up that the Raro case was decided. However, as the ECC decision noted, the law was amended and now

"the present law on compensation allows certain diseases to be compensable if it is sufficiently proven that the risk of

contracting is increased by the working conditions."14

It, therefore, now allows compensation subject to requirement of

proving by sufficient evidence that the risk of contracting the ailment is increased by the working conditions.

As earlier noted, however, in the specific case of respondent, the requirement is impossible to comply with, given the

present state of scientific knowledge. The obligation to present such as an impossible evidence must, therefore, be deemed

void.15

Respondent, therefore, is entitled to compensation, consistent with the social legislation‟s intended beneficial

purpose.

In fine, the Court sees no reversible error in the decision of the Court of Appeals.

WHEREFORE, the petitions are DENIED.

No costs.

[G.R. No. 134028. December 17, 1999]

EMPLOYEES’ COMPENSATION COMMISSION (SOCIAL SECURITY SYSTEM), petitioner, vs. EDMUND

SANICO, respondent.

D E C I S I O N

KAPUNAN, J.:

Through this petition for review, the Employees‟ Compensation Commission seeks to set aside the decision of the

Court of Appeals (CA) in CA G.R. SP No. 47804, dated 28 May 1998, reversing petitioner‟s decision, dated 20 March

1997, in ECC Case No. 8342 and granting Edmund Sanico‟s (private respondent‟s) claim for compensation benefits under

Presidential Decree No. 626, as amended (Book IV, Title II of the Labor Code).

Private respondent was a former employee of John Gotamco and Sons. He worked in said company as “wood filer”

from 1986 until he was separated from employment on 31 December 1991 due to his illness. His medical evaluation

report, dated 31 September 1991, showed that he was suffering from pulmonary tuberculosis (PTB). Subsequent chest x-

rays taken on 9 October 1994 and 3 May 1995 diagnostically confirmed his illness.

On 9 November 1994, private respondent filed with the Social Security System (SSS) a claim for compensation

benefits under P.D. No. 626, as amended. On 23 April 1996, the SSS denied private respondent‟s claim on the ground of

prescription. The SSS ruled that under Article 201 of the Labor Code, a claim for compensation shall be given due course

only when the same is filed with the System three (3) years for the time the cause of action accrued. In private

respondent‟s case, the SSS reckoned the three-year prescriptive period on 21 September 1991 when his PTB first became

manifest. When he filed his claim on 9 November 1994, the claim had allegedly already prescribed.

On appeal, petitioner affirmed the decision of the SSS. Private respondent then elevated the case to the CA, which

reversed petitioner‟s decision and granted private respondent‟s claim for compensation benefits. In ruling that private

respondent‟s claim was filed well within the prescriptive period under the law, the CA reconciled Article 201 of the Labor

Code with Article 1144(2) of the Civil Code. Under the latter provision of law, an action upon an obligation created by

law must be filed within ten (10) years from the time the cause of action accrues. Thus, while private respondent‟s illness

became manifest in September 1991, the filing of his compensation claim on 9 November 1994 was within, even long

before, the prescriptive period.

The sole issue to be resolved in this case is whether or not private respondent‟s claim for compensation benefit had

already prescribed when he filed his claim on 9 November 1994.

We rule in favor of private respondent.

This Court has consistently ruled that “disability should not be understood more on its medical significance but

on the loss of earning capacity. Permanent total disability means disablement of an employee to earn wages in the same

kind of work, or work of similar nature that [he] was trained for or accustomed to perform, or any kind of work which a

person of [his] mentality and attainment could do. It does not mean absolute helplessness.”[1]

This Court has also held

that:

In disability compensation, it is not the injury which is compensated, but rather it is the incapacity to work resulting in the

impairment of one‟s earning capacity.[2]

Petitioner thus seriously erred when it affirmed the decision of the SSS denying private respondent‟s claim on the

ground of prescription. In determining whether or not private respondent‟s claim was filed within the three-year

prescriptive period under Article 201 of the Labor Code, petitioner and the SSS reckoned the accrual of private

respondent‟s cause of action on 31 September 1991, when his PTB became known. This is erroneous.

Following the foregoing rulings, the prescriptive period for filing compensation claims should be reckoned from the

time the employee lost his earning capacity, i.e., terminated from employment, due to his illness and not when the same

first became manifest. Indeed, a person‟s disability might not emerge at one precise moment in time but rather over a

period of time.[3]

In this case, private respondent‟s employment was terminated on 31 December 1991 due to his illness,

he filed his claim for compensation benefits on 9 November 1994. Accordingly, private respondent‟s claim was filed

within the three-year prescriptive period under Article 201 of the Labor Code.

In this light, the Court finds no need at this time to rule on the seeming conflict between the prescriptive period for

filing claims for compensation benefits under Article 201 of the Labor Code and Article 1144(2) of the Civil Code.

In conclusion, the Court takes this opportunity to once again remind petitioner that P.D. No. 626, as amended, is a

social legislation whose primordial purpose is to provide meaningful protection to the working class against the hazards of

disability, illness and other contingencies resulting in the loss of income. Thus:

As an official agent charged by law to implement social justice guaranteed and secured by the Constitution, the ECC

should adopt a liberal attitude in favor of the employee in deciding claims for compensability especially where there is

some basis in the facts for inferring a work connection with the incident. This kind of interpretation gives meaning and

substance to the compassionate spirit of the law as embodied in Article 4 of the New Labor Code which states that all

doubts in the implementation and interpretation of the provisions of the Labor Code including its implementing rules and

regulations should be resolved in favor of labor.[4]

WHEREFORE, premises considered, the instant petition is hereby DISMISSED.

SO ORDERED.