480

San Pedro Hospital v Secretary of Labor

263 SCRA 98
Employment Not Deemed Terminated/Temporary Suspension of
Operations
FACTS
Petitioner San Pedro Hospital of Digos and private respondent
Nagkabiusang Mamumuo sa San Pedro Hospital of Digos
National Federation of Labor (NAMASAP-NFL) were negotiating on a
new Collective Bargaining Agreement (CBA). The union demands
wage increases and a provision for a union shop.
When both parties failed to reach an agreement, members of the
union abandoned their respective department and conducted a
strike. Doctors began leaving the hospital and number of patients
dwindled to nothing.
On June 12, 1991, petitioner hospital filed a Notice of Temporary
Suspension of Operation; that it would temporarily suspend
operations for six (6) months effective June 15, 1991, or up to
December 15, 1991.
Private respondent union alleged that petitioner was not in serious
financial condition and that petitioner acted in bad faith and
circumvented the return-to-work order when it suspended operations.
Secretary of Labor Nieves held that suspension of operations was
not for a valid or justifiable cause but was actually for the purpose of
defeating the workers' right to self-organization. But because the
hospital had actually cease operations, he decided to grant, by way
of penalty, backwages for the workers from June 21, 1991, the date
they were refused admittance by petitioner, until December 15, 1991,
the expiration of the temporary suspension of the hospital's
operation. He also enjoined petitioner to enter in a new CBA with
respondent union.
Petitioner hospital insists that the union members were not entitled to
backwages because the temporary cessation of petitioner's
operation suspended the employer-employee relationship between
the union members and petitioner. They also failed to negotiate on a
new CBA. On December 15, 1991, petitioner hospital formally
ceased operations.

ISSUE
WON the secretary gravely abused his discretion when he granted
backwages to employee and enjoined petitioner to enter in a new
CBA with respondent union.
RULING
NO. Article 286 of the Labor Code provides: "The bona fide
suspension of the operation of a business or undertaking for a period
not exceeding six (6) months . . . shall not terminate employment."
Section 12, Rule 1, Book VI of the Omnibus Rules Implementing the
Labor Code provides that the employer-employee relationship shall
be deemed suspended in case of the suspension of operation
referred to above, it being implicitly assumed that once operations
are resumed, the employer-employee relationship is revived and
restored.
In the absence of any other information, the plain and natural
presumption will be that petitioner would resume operations after six
months, and therefore, it follows that a new CBA will be needed to
govern the employment relations of the parties, the old one having
already expired. Clearly then, under the circumstances, the
respondent Secretary cannot be faulted nor considered to have
gravely abused his discretion for ordering the parties to enter into a
new CBA.
The Court, however, cannot ignore the supervening event of
permanent closure of the petitioner hospital. Business reverses or
losses are recognized by law as a just cause for terminating
employment. Thus, despite the absence of grave abuse of discretion
on the part of the respondent Secretary, this Court cannot impose
upon petitioner the directive to enter into a new CBA with the union
for the very simple reason that it had already decided to close shop.
The court affirmed the grant of backwages from June 21 December
15. But set aside the order for the parties to enter into a new
collective agreement for it being moot and academic.

481
De Guzman v NLRC
540 SCRA 21
Employment Not Deemed Terminated/Temporary Suspension of
Operations
FACTS
Petitioner De Guzman was employed as a bus conductor by private
respondent Philippine Rabbit Bus Line Company. Petitioner filed an
application for leave of absence alleging that he was experiencing
chronic pain from the gunshot wounds he sustained in January 1984
when he tried to defend the earnings of the company from
"brigands."
Respondent company placed petitioner under preventive suspension
for his absence without an approved leave of absence. Petitioner
was directed to report to a certain Mr. T. Cunanan within three (3)
days from receipt of the notice at the companys Main Office to
explain his side in a formal investigation.
Petitioner tried to talk to company president Nisce and he was told
that he would be allowed to report to work the next day. When he
reported for work, however, he was not given any assignment.
Petitioner filed a complaint against respondents for illegal dismissal,
underpayment/nonpayment of overtime pay, premium pay for holiday
and rest day and service incentive leave pay, as well as moral and
exemplary damages.
Private respondents (company) contend that petitioner was validly
dismissed for abandonment of work.
The Labor Arbiter stated that "[a]n unacted application for leave has
the effect of abandonment if an employee begins to enjoy a leave of
absence even before its approval."
ISSUE
WON Petitioner
employment

De

Guzman

was

illegally

dismissed

factor and being manifested by some overt acts. Mere absence is not
sufficient. The burden of proof is on the employer to show an
unequivocal intent on the part of the employee to discontinue
employment.
In this case, the respondent company failed to discharge this burden.
Certain facts dissuade the Court from believing that petitioner
intended to sever his employment relations with respondent
company. Notably, petitioner commenced this suit on May 24, 1996
or more than six (6) months after respondent company stopped
giving him any work assignment.
Under Article 286 of the Labor Code, the bona fide suspension of the
operation of a business or undertaking for a period not exceeding six
months shall not terminate employment. Consequently, when the
bona fide suspension of the operation of a business or undertaking
exceeds six months, then the employment of the employee shall be
deemed terminated. By the same token and applying said rule by
analogy, if the employee was forced to remain without work or
assignment for a period exceeding six months, then he is in effect
constructively dismissed.
Petitioners dismissal by reason of abandonment has not been
convincingly established.
The Court granted the petitioner separation pay; full backwages;
unpaid overtime pay, premium pay for holiday and rest day, and
service incentive leave pay; moral and exemplary damages.

from

RULING
YES. To constitute abandonment, two elements must concur: (1) the
failure to report for work or absence without valid or justifiable
reason, and (2) a clear intention to sever the employer-employee
relationship, with the second element as the more determinative

482
Sentinel Security v NLRC
295 SCRA 123
Temporary Off Detail or Floating Status
FACTS
The complainants were employees of Sentinel Security Agency
(SSA) and were assigned as guards at the premises of Philippine
American Life Insurance (PALI). PALI asked for the replacement of
all the security guards in certain offices including the complainants.
Complainants reported to SSA but instead of being reassigned to
other clients, they were told that they were replaced because they
are already old.
The decision of the Court declared that complainants were illegally
dismissed by the agency and was ordered to pay back wages.
ISSUE
(1) WON respondents employees were illegally dismissed. (2) WON
Petitioner-Client is liable for back wages.
RULING
(1) YES. There was no suspension of operation, business or
undertaking, bona fide or not, that would have justified placing the
complainants off-detail and making them wait for a period of six
months. The only logical conclusion from the foregoing discussion is
that the Agency illegally dismissed the complainants.
(2) NO. The Court held that Client (PALI) was not responsible for the
illegal dismissal of the complainants. Thus, it should not be held
liable for back wages. However, the court did not absolve PALI
which, as an indirect employer, is solidarily liable with Petitioner
Agency for complainants unpaid service incentive leave.

483
Namawu v Marcopper
570 SCRA 637
Stoppage of Operations by Government
FACTS
Department of Environment and Natural Resources (DENR) ordered
the indefinite suspension of MARCOPPER's operations for causing
damage to the environment of the Province of Marinduque by spilling
the company's mine waste or tailings from an old underground
impounding area into the Boac River, in violation of its Environmental
Compliance Certificate (ECC). Subsequently, DENR Secretary
ordered the cancellation of MARCOPPERs ECC.
NATIONAL MINES and ALLIED WORKERS UNION (NAMAWU),
petitioner, claimed that due to the indefinite suspension of
MARCOPPER's operations, its members were not paid the wages
due them and separation pay. Prior to the case arising from the
suspension of operations, there is already a pending case between
the same parties of an illegal strike. Three (3) employees in the
present case did not participate in the illegal strike case to which 615
NAMAWU members were parties.
The Court of Appeals, in deciding the illegal strike case, decided in
favour of the company and denied the separation pay award.
The NLRC, on the other hand, decided on the suspension of
operation case granting the employees separation pay.
The respondent company claim that CA had already confirmed the
dismissal of the 615 NAMAWU members and had already decided
on the grant of the separation pay.

Regarding the 3 non-participating employees, the Court granted

them separation pay.
As of the day the companys ECC was cancelled, the temporary
suspension of operations became permanent so that MARCOPPER
did not have to wait for the end of the six-month suspension of
operations before the services of the three employees were deemed
terminated. In Labor Code terms, the cancellation of the ECC
amounted to a company closure governed by Article 283 of the
Labor Code - the provision that governs the relationship of
employers and employees in closure situations. Pursuant to Article
283 of the Labor Code, MARCOPPER is ordered to pay the 3 nonparticipating employees their separation pay.

ISSUE
WON the employees are to be granted their separation pay.
RULING
Regarding the 615 NAMAWU members who participated in the
illegal strike case, the Court held that NLRC cannot reverse the
decision of a higher tribunal in a case with the same claim already
decided. The Court dismissed the petition with respect to the 615
NAMAWU members for they are no longer employees at the time
MARCOPPER suspended its operations.

484
Pres. Decree No. 183 May 6, 1973
Fulfillment of Military Duty or Civil Duty
PROVIDING
FOR
THE
ANNUAL
REGISTRATION
OF
RESERVISTS OF THE ARMED FORCES OF THE PHILIPPINES;
GRANTING SECURITY OF TENURE TO RESERVISTS
EMPLOYED IN PRIVATE FIRMS WHILE UNDERGOING
REFRESHER TRAINING, MOBILIZATION OR ASSEMBLY TESTS
OR ANNUAL ACTIVE DUTY TRAINING IN FULFILLMENT OF
THEIR MILITARY OBLIGATIONS; AND FOR OTHER PURPOSES
WHEREAS, to provide for a more effective reserve training and
defense build-up program, it is further necessary to grant security of
tenure for reservists employed in private firms and establishment
during periods of absence while fulfilling their military obligations to
the Republic, subject to certain conditions.
NOW, THEREFORE, I, FERDINAND E. MARCOS, President of the
Philippines, by virtue of the powers vested in me by the Constitution
as Commander-in-Chief of all the Armed Forces of the Philippines,
and pursuant to Proclamation No. 1081, dated September 21, 1972,
continued in Proclamation No. 1104, dated January 17, 1973, and
General Order No. 1, dated September 22, 1972, as amended, do
hereby order and decree that henceforth:
(f) Any employee of any private commercial, industrial, or agricultural
firm, with an annual gross volume of business of not less than two
hundred and fifty thousand pesos and with a personnel force of at
least twenty employees, who is called to undergo refresher training,
or a mobilization or assembly test, or annual active duty training in
the Armed Forces of the Philippines, shall not loss his position or
suffer any loss of pay due to his absence in the fulfillment of his
military obligation: Provided, That said firm shall be entitled to claim
the salaries paid to such employee during such training period as a
deductible item in its income tax return.

485
Llora v Drilon
179 SCRA 175
RA 7641 Retirement Pay Law Dec 9, 1992
FACTS
Primitivo V. Alviar was a truck driver of petitioner. At the time he
stopped working, he was 65 years of age. He filed a complaint and
was asking for his retirement benefits.
Petitioners opposed the complaint and alleged that all of the
employment benefits claimed by private respondent Alviar had
already been fully paid. On the matter of retirement benefits, it was
contended that Mr. Alviar had not been dismissed by Llora Motors, it
was complainant who abandoned his work since the last week of
April 1985 and never reported since then. Neither had Mr. Alviar
been retired for the simple reason that respondent corporation does
not have any retirement plan or any collective bargaining agreement
with the employees for no union exists within the company because
the employees, drivers included, received more than the standard
benefits for their labor.
Labor Arbiter granted Alviar a total of P16, 164.87 money claims
including the P9,985.80 retirement benefits.
ISSUE
WON Alviar is legally entitled to receive retirement benefits from
petitioners.

Article 287 above shows that entitlement to retirement benefits may

accrue either (a) under existing laws or (b) under a collective
bargaining agreement or other employment contract. It is at once
apparent that Article 287 does not itself purport to impose any
obligation upon employers to set up a retirement scheme for their
employees over and above that already established under existing
laws.
Article 287 recognizes that existing laws already provide for a
scheme by which retirement benefits may be earned or accrue in
favor of employees, as part of a broader social security system that
provides for retirement benefits. It is not disputed that Alviar already
received his retirement benefits as provided in the Social Security
Act.
Article 287 of the Labor Code also recognizes that employers and
employees may, by a collective bargaining or other agreement, set
up a retirement plan in addition to that established by the Social
Security law, but prescribes at the same time that such consensual
additional retirement plan cannot be substituted for or reduce the
retirement benefits available under the compulsory scheme
established by the Social Security law. As been reiterated by
petitioners, there is no collective bargaining between them and
employees nor was there an agreement about retirement benefits.
There being no contractual or statutory basis on the payment of
retirement by the petitioners to private respondent Alviar, the
decision of the Labor Arbiter regarding the retirement is set aside.

RULING
NO. Our Labor Code has only one article that deals with the subject
of "retirement from the service." Article 287 of the Code reads as
follows:
Article 287. Retirement. Any employee may be retired
upon reaching the retirement age established in the
Collective Bargaining Agreement or other applicable
employment contract.
In case of retirement, the employee shall be entitled to
receive such retirement benefits as he may have earned
under existing laws and any collective bargaining or other
agreement.

486
Abaquin v Atienza
190 SCRA 460
RA 7641 Retirement Pay Law Dec 9, 1992
FACTS
Petitioner security agency employed private respondent Antonio B.
Jose as a security guard. Almost twenty-five (25) years later, Jose
voluntarily resigned in view of his failing health and his desire to
withdraw his cash deposits with petitioner. He was then sixty-one
(61) years old. The petitioner company, relying on the absence of
any management policy or agreement between them regarding
retirement or termination benefits, paid Jose only his cash deposits.
Feeling aggrieved, Jose filed a complaint against petitioner for
separation pay.
Labor Arbiter dismissed Jose's complaint on the ground that an
employee's enjoyment of retirement benefits or separation pay under
Article 288 of the Labor Code and Sections 13 and 14 (a), Rule I,
Book VI of the Rules and Regulations Implementing the Labor Code
is subject to the existence of a retirement plan, individual or
collective agreement or established management policy.
NLRC set aside Labor Arbiters decision and held that Jose be paid
his retirement or termination pay equivalent to month salary for
every year of service
ISSUE
WON Jose is entitled to retirement or termination pay.
RULING
Yes, he is entitled to termination pay but not retirement pay.
The legal provisions involved in this petition provide as follows:
Art, 288. * Retirement. Any employee may be retired upon
reaching the retirement age established in the collective
bargaining agreement or other applicable employment
contract.
In case of retirement, the employee shall be entitled to
receive such retirement benefits as he may have earned
under existing laws and any collective bargaining or other
agreement. (Labor Code)

Sec. 14. Retirement benefits. An employee who is retired

pursuant to a bona-fide retirement plan or in accordance with
the applicable individual or collective agreement or
established employer policy shall be entitled to all the
retirement benefits provided therein or to termination pay
equivalent at least to one-half month salary for every year of
service, whichever is higher, a fraction of at least six (6)
months being considered as one whole year.
There being no individual or collective agreement between the
parties or established employer's policy regarding retirement
benefits, petitioner's resistance to private respondent's claim
therefore is legally defensible.
Be that as it may, the Court is not prepared to altogether set aside
the award of termination pay, considering that there exists another
legal basis. The Court applied Article 285, which considers disease
as a ground for termination, in justifying the grant for termination pay.
The Court also reiterated the distinction made in the Llora case
between retirement benefits and termination pay: Termination pay or
separation pay is required to be paid by an employer in particular
situations Identified by the Labor Code itself or by Implementing Rule
I. Termination pay where properly due and payable under some
applicable provision of the Labor Code or under Section 4 (b) of
Implementing Rule I, must be paid whether or not an additional
retirement plan has been set up under an agreement with the
employer or under an "established employer policy."
The Court dismissed the petition and granted the monetary award.
The monetary award in favor of private respondent Antonio B. Jose
is understood to be in the concept of termination pay, rather than
retirement benefits.

487
Esco Hale Shoe Company v NLRC
193 SCRA 678
RA 7641 Retirement Pay Law Dec 9, 1992
FACTS
Private respondent Casimira Pedrosa was employed by petitioner
Esco Hale Shoe Company as a shoebox maker, then as a heel pad
attacher. Having reached 65, Pedrosa applied for retirement with the
Social Security Commission and received retirement benefits
therefrom. However, Pedrosa continued working for petitioner until
years after when petitioner excluded her from the regular work
schedule.
Private respondent filed a complaint and asked for the payment of
retirement benefits or separation pay.
Petitioner argued that it has neither separate retirement nor private
benefit plan and all its employees, including the private respondent,
are reported to the SSS for coverage; that private respondent had
effectively retired from the petitioner in 1982 when she received
retirement benefits from the SSS.

In computing the separation or retirement benefits of complainants,

we have to consider the period when the country was at war with
Japan and also the occupation years which started in December,
1941 up to 1945. The separation benefits, therefore, have to be
based on forty-five (45) years instead of forty-nine years as claimed
and computed on the basis of the minimum wage rate in 1986 at
P37.00 a day when complainant was separated from work. And
being a daily paid employee, the computation has to be computed at
13 days per year of service, as follows:
P37.00 x 13/days = P481.00/mo.
P481.00 x 45 years = P21,645.00

ISSUE
WON private respondent Casimira Pedrosa be granted retirement
benfits.
RULING
YES. Art 287 states:
Art. 287. Retirement. any employee may be retired upon
reaching the retirement age established in the collective
bargaining agreement or other applicable employment
contract.
In case of retirement, the employee shall be entitled to
receive such retirement benefits as he may have earned
under existing laws and any collective bargaining or other
agreement. (Section 287, Labor Code, as amended)
However, since private respondent had worked with the petitioner for
such a long time, We deem it just and equitable to grant her
separation pay as she is retiring from the service of the petitioner ten
(10) years beyond the statutory age of sixty 60).

488
Oxales v United Laboratories
559 SCRA 26
Retirement Plan
FACTS
UNILAB established the United Retirement Plan (URP). The plan is a
comprehensive retirement program aimed at providing for retirement,
resignation, disability, and death benefits of its members. An
employee of UNILAB becomes a member of the URP upon his
regularization in the company. The URP mandates the compulsory
retirement of any member-employee who reaches the age of 60.
As retirement benefits, the employee receives (1) from Trust Fund A
a lump sum of 1 months pay per year of service "based on the
5
members last or terminal basic monthly salary," and (2) whatever
the employee has contributed to Trust Fund B, together with the
income minus any losses incurred. The URP excludes commissions,
overtime, bonuses, or extra compensations in the computation of the
basic salary for purposes of retirement.
Petitioner Oxales was the Director of Manufacturing Services Group
when he retired from Unilab after more than 25 years of service. He
received a total amount of P2,173,230.39 as retirement benefits.
Oxales claimed that he shouldve received more than a million more
for his retirement benefits. He insisted that his bonuses, allowances,
th
and 13 month pay should have been factored in the computation of
his retirement benefits.
UNILAB disagreeing, reminded Oxales about the provision of the
URP excluding any commissions, overtime, bonuses or extra
compensations in the computation of the basic salary of the retiring
employee.

retirement benefits is made in consideration of the continued faithful

service of the employee for the requisite period.
The Court ruled that Oxales is not entitled to the additional retirement
benefits he is asking. The URP is very clear: "basic monthly salary"
for purposes of computing the retirement pay is "the basic monthly
salary, or if daily[,] means the basic rate of pay converted to basic
monthly salary of the employee excluding any commissions,
overtime, bonuses, or extra compensations."
R.A. No. 7641 also does not apply to this case because the URP
grants to the retiring employee more than what the law gives. Under
the URP, the employee receives a lump sum of 1 pay per year of
service, compared to the minimum month salary for every year of
service
set
forth
by
R.A.
No.
7641.

ISSUE
th
WON petitioners bonuses, allowances and 13 month pay should be
included in the computation of retirement benefits.
RULING
NO. The clear language of the URP should be respected.
A retirement plan in a company partakes the nature of a contract,
with the employer and the employee as the contracting parties. It
creates a contractual obligation in which the promise to pay

489
PAL v ALPAP
373 SCRA 302
Retirement Plan

service he rendered to petitioner. This is in addition to the amount of

not less than P100,000.00 that he shall receive under the 1967
Retirement Plan.
The benefits from CBA is clearly higher than those he would receive
under
Article
287
of
the
Civil
Code.

FACTS
The case stemmed from the unilateral act of petitioner to retire airline
pilot Captain Albino Collantes under Section 2, Article VII, of the
1967 PAL-ALPAP Retirement Plan. Contending, inter alia, that the
retirement of Captain Collantes constituted illegal dismissal and
union busting, ALPAP filed a Notice of Strike with the Department of
Labor and Employment (DOLE). Pursuant of Article 263 (g) of the
Labor Code, the Secretary of the DOLE (hereafter referred to as
Secretary) assumed jurisdiction over the labor dispute.
The retirement plan between PAL and ALPAP stated two types of
retirement: (1) Normal Retirement after 20 years of service or
20,000 hours as pilot for PAL, a retired employee shall receive
P100,000 lumpsum or legally entitled benefits whichever is higher (2)
Late Retirement any member who remains in the service after his
normal retirement date may retire either at his option or at the option
of the Company and when so retired he shall be entitled either to a
lump sum payment of P5,000.00 for each completed year of service
rendered as a pilot, or to such termination pay benefits to which he
may be entitled under existing laws, whichever is the greater
amount.
Article 287 provides that employees, may retire and shall be entitled
to retirement pay equivalent to at least one-half (1/2) month salary
for every year of service, a fraction of at least six (6) months being
considered as one whole year.
ISSUE
Whether the CBA or Art. 287 of the Labor Code should be the basis
for computation of retirement pay in this case.
RULING
CBA. An employees retirement benefits under any collective
bargaining agreement shall not be less than those provided in the
Labor Code.
Under the CBA, an employee upon retirement gets an amount
equivalent to 240% of his gross monthly income for every year of

10

490
Eastern Shipping v Sedan
486 SCRA 565
Option
FACTS
Petitioners hired on a per-voyage basis private respondent Dioscoro
Sedan as 3rd marine engineer and oiler in one of the vessels owned
by petitioners. His last voyage was on July 27, 1997 on board the
vessel M/V Eastern Universe. He said he was disembarking because
he was going to take the board examinations for marine engineers.
Two months later, on September 27, 1997, Sedan sent a letter to
petitioners applying for optional retirement, citing as reason the
death of his only daughter, hence the retirement benefits he would
receive would ease his financial burden. However, petitioners
deferred action on his application for optional retirement since his
services on board ship were still needed.

also avail of optional retirement, subject to the exclusive prerogative

and sole option of petitioner company.
Records show that private respondent was only 48 years old when
he applied for optional retirement. Thus he cannot claim optional
retirement benefits as a matter of right. His application for optional
retirement was subject to the exclusive prerogative and sole option
of the shipping company pursuant to the above cited agreement
between the workers and the company.

ISSUE
WON private respondent Sedan may exercise the option to retire.
RULING
NO. The age of retirement is primarily determined by the existing
agreement between the employer and the employees. However, in
the absence of such agreement, the retirement age shall be fixed by
law. Under Art 287 of the Labor Code, the legally mandated age for
compulsory retirement is 65 years, while the set minimum age for
optional retirement is 60 years.
In the instant case, there is an agreement between petitioner
shipping company and its employees. The agreement states:
C. Optional Retirement:
It will be the exclusive prerogative and sole option of this
company to retire any covered employee who shall have
rendered at least fifteen (15) years of credited service for
land based employees and 3,650 days actually on board
vessel for shipboard personnel.
Clearly, the eligibility age for optional retirement is set at 60 years.
However, employees of herein petitioners who are under the age of
60 years, but have rendered at least 3650 days (10 years) on board
ship or fifteen (15) years of service for land-based employees may

11

491
JACULBE vs. SILLIMAN UNIVERSITY
518 SCRA 445
OPTION
FACTS
Sometime in 1958, petitioner began working for respondents
university medical center as a nurse. In a letter in December 1992,
respondent, through its Human Resources Development office,
informed petitioner that she was approaching her 35th year of
service with the university and was due for automatic retirement on
November 18, 1993, at which time she would be 57years old. This
was pursuant to respondents retirement plan for its employees
which provided that its members could be automatically retired
upon reaching the age of 65 or after 35 years of uninterrupted
service to the university. Respondent required certain documents
in connection
With petitioners impending retirement.
A brief exchange of letters between petitioner and respondent follow
ed. Petitioner emphatically insisted that the compulsory retirement
under the plan was tantamount to a dismissal and pleaded with
respondent to be allowed to work until the age of 60 because this
was the minimum age at which she could qualify for SSS pension.
But respondent stood pat on its decision to retire her, citing
company policy. On November 15, 1993, petitioner filed a
complaint in the National Labor Relations Commission (NLRC) for
termination of service with preliminary injunction and/or restraining
order. On November 18, 1993, respondent compulsorily retired
petitioner. The labor arbiter rendered a decision finding respondent
guilty of illegal dismissal and ordered that petitioner instated and paid
full back wages. On appeal, the NLRC reversed the labor arbiters
decision and dismissed the complaint. The CA affirmed the NLRC.

RULING
Retirement plans allowing employers to retire employees who are
less than the compulsory retirement age of 65 are not per se
repugnant to the constitutional guaranty of security of tenure.
Article 287 of the Labor Code provides: Retirement - Any employee
may be retired upon reaching the retirement age established in the
collective bargaining agreement orother applicable employment
contract. By its express language, the Labor Code permits
employers and employees to fix the applicable retirement age at
below 60 years. The rules and regulations of the plan show that
participation therein was not voluntary at all. It was through no
voluntary act of her own that petitioner became a member of the
plan. In fact, the only way she could have ceased to be a member
thereof was if she stopped working for respondent altogether.
Retirement is the result of a bilateral act of the parties, a voluntary
agreement between the employer and the employee whereby the
latter, after reaching a certain age agrees to severe his or her
employment with the former. The truth was that petitioner had no
choice but to participate in the plan, given that the only way she
could refrain from doing so was to resign or lose her job. It is
axiomatic that employer and employee do not stand on equal footing,
a situation which often causes an employee to act out of need
instead of any genuine acquiescence to the employer. This was
clearly just such ainstance.
An employer is free to impose a retirement age less than 65 for as lo
ng as it has the empoyeesconsent. Stated conversely, employees
are free to accept the employers offer to lower the retirement age if
they feel they can get a better deal with the retirement plan
presented by the employer. Thus, having terminated petitioner solely
on the basis of a provision of a retirement plan which was not freely
assented to by her. Respondent was guilty of illegal dismissal.

ISSUE
Whether or not the respondent has the option on retirement or the
employers can compulsory make them retire?

12

492
PRODUCERS BANK VS NLRC
298 SCRA 517
EXTENSION OF SERVICE

employee has retired but his benefits under the law or CBA have not
yet been given, he still retains, for the purpose of prosecuting his
claims, the status of an employee entitled to the protection of the
Labor Code, one of which is the protection of the labor union

FACTS
Petitioner was placed by Central Bank of thePhilippines
(BangkoSentral ngPilipinas) under a conservator for the purpose of
protecting its assets. When the respondents ought to implement the
CBA (Sec. 1,Art. 11)regarding the retirement plan and pertaining to
uniform allowance, the acting conservator of the petition expressed
objection resulting an impasse between the petitioner bank and
respondent union. The deadlock continued for at least six months.
The private respondent, to resolve the issue filed a case against
petitioner for unfair labor practice and flagrant violation of the CBA.
The Labor Arbiter dismissed the petition. NLRC reversed the findings
and ordered the implementation of the CBA.
ISSUE
WON the employees who have retired have no personality to file an
action since there is no longer an employer-employee relationship.
RULING
Employees who have retired still have the personality to file a
complaint. Retirement results from a voluntary agreement between
the employer and the employee whereby the latter after reaching a
certain age agrees to sever his employment with the former. The
very essence of retirement is the termination of employer-employee
relationship. Retirement of the employee does not in itself affect his
employment status especially when it involves all rights and benefits
due to him, since these must be protected as though there had been
no interruption of service. It must be borne in mind that the
retirement scheme was part of the employment package and the
benefits to be derived therefrom constituted as it were a continuing
consideration of services rendered as well as an effective
inducement foe remaining with the corporation. It is intended to help
the employee enjoy the remaining years of his life. When the retired
employees were requesting that their retirement benefits be granted,
they were not pleading for generosity but merely demanding that
their rights, embodied in the CBA, be recognized. When an

13

493
CARLOS F. SALOMON,
SHIPPING LINES
457 SCRA254
BENEFITS

vs. ASSOCIATE

INTERNATIONAL

FACTS
The Association of International Shipping Lines, Inc., respondent, is
a corporation engaged in the principal business of shipping and
container and/or cargo services. As a result of a decline in the
volume of cargo measuring activities and shipping transactions,
respondent suffered substantial financial losses With this
development, respondent adopted an organizational streamlining
program that resulted in the closure of its Measuring Department and
retrenchment or termination from the service of seventeen (17)
workers. Among them were Carlos F. Salomon, Stephen L. Bathan,
Nicolas E. Camara, Emmanuel B. Dela Torre, Leonilo C. Donato,
Segundo E. Ferrer, Jesus L. Guela, Jr., Amado P. Liongson,
Deogracias C. Manalanzan, Gerundio A. Natanauan, Ricardo D.
Parza, Ricardo R. Samaniego, Jr., Valentin R. Urrea, Jr., and
Francisco H. Villanueva, herein petitioners who occupied booking
coordinator and measurer positions. Respondent terminated
petitioners services effective April 30, 1998. Simultaneously,
respondent filed with the Department of Labor and Employment
(DOLE) a Notice of Closure or report of petitioners retrenchment
from the service.
Aggrieved, petitioners filed with the National Conciliation and
Mediation Board (NCMB) a complaint for illegal dismissal and
payment of retirement benefits against respondent.During the
conciliation proceedings,
respondent
paid petitioners their
retirement pay at the rate of 1 month salary per year of service.
Petitioners filed with the Labor Arbiter a complaint for payment
of retirement benefits, damages and attorneys fees against
respondent, They alleged that what each received was a separation
pay, not retirement benefits.Labor Arbiter rendered a Decision
dismissing the complaint.
Petitioners then filed a motion for reconsideration but was denied by
the NLRC in a Resolution dated January 8, 2001. Hence, they filed
with the Court of Appeals a petition for certiorari alleging that the
NLRC committed grave abuse of discretion in declaring that they are

not entitled to retirement benefits and in holding that they are

precluded from claiming such benefits because of their quitclaims.
On November 28, 2002, the Court of Appeals issued a Resolution
denying petitioners motion for reconsideration.
ISSUE
Does the petitioner entitled for optional retirement benefits?
RULING
Petitioners
were separated
from
the
service
for
cause. Consequently, pursuant to the CBA, what each actually
received is a separation pay. Accordingly and considering their
Releases and Quitclaims, they are no longer entitled to retirement
benefits.
It bears stressing that as held by the Labor Arbiter, the NLRC and the
Court of Appeals, there is no provision in the parties CBA authorizing
the grant to petitioners of retirement benefits in addition to their
retrenchment pay; and that there is no indication that they were
forced by respondent to sign the Releases and Quitclaims.
WHEREFORE, the petition is DENIED. The assailed Decision dated
June 13, 2002 and Resolution dated November 28, 2002 of the
Court of Appeals in CA-G.R. SP No. 63176 are hereby AFFIRMED.
Costs against petitioners.

14

494
SMC VS NLRC
G.R. No. 107693. July 23, 1998
FORCED RETIREMENT
FACTS
Complainants allege that on March 14, 1984 the respondent
company notified them that effective at the close of the business
hours on April 15, 1984, it will exercise its option to retire them from
the service; that complainants would not anymore be allowed to work
from March 14, 1984 but that they would continue to receive their
compensation up to April 15, 1984; that at the time the respondent
corporation exercised the said option, all the complainants have not
yet reached the compulsory retirable age of sixty (60) years old; The
complainants allege that they had no bad record with the respondent
corporation as they were never admonished, reprimanded or
suspended during the term of their employment; that their retirement
from work effected at the option of the respondent corporation
violated their tenurial security of employment, as provided for in
Article 280 of the Labor Code. They were informed on respondents
option to retire them from the service, the latters prerogative was
solely premised on the companys retirement and death benefit plan;
that the said plan or company policy violated the security of tenure of
the complainants as it is not one of the grounds enumerated in Art.
183 of the Labor Code for terminating the services of an employee.
Complainants claim that their unceremonious and unlawful
retirement amount to constructive dismissal. Respondents further
aver that complainants were correctly and completely paid their
separation benefits; that complainants received twice than what is
provided for by the Labor Code of the Philippines,

questionable or doubtful circumstances. It bears stressing that, the

private respondents had no choice but to sign subject quitclaims
without which they could not receive the benefits due them, amounts
they badly needed while out of work. t is hard to believe that the
private respondents would voluntarily retire. It should be borne in
mind that the original complainants, Messrs. Chu, Teddy Jr. and
Adad, were all in their advanced years and could not expect to get a
similar employment. In the case of private respondent Torres, he
was 41 years old when he was forced to retire. At that age, it would
not be easy for him to land a job with the same high benefits. In the
case of Mr. Castellano, he was only 36 years old when forced to
resign. It was inconceivable for him to resign from a secure position
considering the minimal financial benefits accruing from voluntary
retirement at age 36, and the scarcity of employment opportunities.
Under its last assigned error, petitioner maintains that the provision
in the Collective Bargaining Agreement (CBA) reducing the retirable
period of service from 20 to 15 years is applicable to private
respondents. As can be gleaned from the petition itself, not only were
private respondents supervisory employees, they were also with
the sales force. Mr. Edmundo Torres, Jr. was a Regional Sales
Manager while Mr. Castellano was a District Sales Supervisor of
petitioner.
WHEREFORE, for lack of merit, the petition is hereby DISMISSED.
There is an illegal dismissal.

ISSUE
Is the force retirement lawful or the employer is guilty of illegal
dismissal?
RULING
All things studiedly considered, we are therefore of the opinion, and
so find, that the dismissal of the herein private respondents was
involuntary and therefore illegal. Continuing accretion of case law
upholds the nullity of quitclaims especially if undertaken under

15

495
Sulit v. EMPLOYEES COMPENSATION COMMISSION
98 SCRA 483
LAW CONCEPTS
FACTS
This is a claim for employees compensation. Gregorio S. Sulit was
employed as a mechanic in the Cavite Naval Shipyard, Naval Shore
Establishment, Cavite Naval Base of the Philippine Navy from May
26, 1966 up to his death on December 17, 1975 at the age of fifty
three years. libraryDue to persistent backaches and bilateral lumbar
pains, accompanied by fever and chills, he was confined in the
Philippine General Hospital from December 11, 1975 up to his death
six days later. He died of acute pyelonephritis and
bronchopneumonia.
Fe N. Sulit, the widow of the deceased mechanic, filed a claim for
employees compensation under Presidential Decree No. 626. She
contended that her husbands work was postural in nature and time
consuming and that his repairing of a motor vehicle while in a prone
position under it for long perspiring hours daily in the span of his
working career produced a kinking of his ureters, thereby causing a
constant and progressive stagnancy of urine flow which led to
infection in the urinary tract and stone formation therein.
The Government Service Insurance System and the Employees
Compensation
Commission
rejected
the
claim
because
pyelonephritis and bronchopneumonia are not occupational diseases
since they do not usually and directly result from the occupation or
profession of the worker.
Mrs. Sulit appealed to this Court. She contends that she was denied
due process because she was not accorded an opportunity to be
heard.

caused by such employment, or either aggravated by or the result of

the nature of such employment, his employer shall pay
compensation in the sums and to the persons hereinafter specified.
The right to compensation as provided in this Act shall not be
defeated or impaired on the ground that the death, injury or disease
was due to the negligence of a fellow servant or employee, without
prejudice to the right of the employer to proceed against the
negligent party." Hence, to restore a sensible equilibrium between
the employers obligation to pay workmens compensation and the
employees right to receive reparation for work-connected death or
disability.
As correctly observed by the learned Government Corporate
Counsel, Manuel M. Lazaro, the Labor Code abolished the
presumption of compensability and the rule on aggravation of illness
caused by the nature of the employment. This Court is powerless to
apply those rules under the Labor Code (WHEREFORE, the appeal
is dismissed and the decisions of the GSIS and the Employees
Compensation Commission, denying the claim, are affirmed.

ISSUE
Is GSIS correct in ruling that the petitioner is not entitled for the
benefit?
RULING
"SEC. 2. Grounds for compensation. When an employee suffers
personal injury from any accident arising out of and in the course of
his employment, or contracts tuberculosis or other illness directly

16

496
Santos vs. EMPLOYEES' COMPENSATION COMMISSION
221 SCRA 182
LAW CONCEPT

hazards to which Francisco was exposed. And in the long course of

time, 32 years at that, his continuous exposure to burned electrodes
and chemicals emitted therefrom would likely cause poisoning and
malfunction of the liver.

FACTS
Carmen Santoss husband died of liver cirrhosis while still a civilian
employee of the Philippine Navy. Francisco Santos was employed as
welder at the Philippine Navy and its Naval Shipyard as early as
March 22, 1955. He spent the last 32 years of his life in the
government service, the first year as a welder helper and the last two
years as shipyard assistant. On January 11, 1987, he died, the
cause of which as indicated in the Death Certificate was liver
cirrhosis.
Mrs. Carmen A. Santos filed a claim for the death benefit of her
husband, Francisco, on January 28, 1987, pursuant to Presidential
Decree No. 626, as amended. However, on a letter dated April 30,
1987, the Government Service Insurance System (GSIS), denied the
claim on the ground that upon proofs and evidence submitted,
Francisco's ailment cannot be considered an occupational disease
as contemplated under P.D. 626, as amended.
On appeal to the Employees' Compensation Commission (ECC), the
Commission affirmed the denial of the GSIS on petitioner's but took
cognizant of the fact that the deceased employee did not have a
previous history of alcoholism, hepatitis or a previous history of
biliary condition which could give a clue to the nature of cirrhosis he
had.
Where the claimant's illness is not listed in the Table of Occupational
Diseases embodied in Annex A of the Rules of Employees'
Compensation, said claimant must positively prove that the risk of
contracting the disease is increased by the working conditions. In the
case at bar, the Commission said that liver cirrhosis may be
classified by a mixture of etiologically and morphologically defined
entities.
As a welder, Francisco was exposed to heat, gas fumes and
chemical substances coming from the burning electrodes caused by
welding. Research shows that ingestion or inhalation of small
amounts of iron over a number of years may lead to siderosis. Acute
poisoning brings about circulatory collapse which may occur rapidly
or be delayed to 48 hours with liver failure. These are industrial

ISSUE
Can Mrs. Santos claim the benefit even if the death of his husband is
not listed to the guidelines of what are compensable?
RULING
The Employees' Compensation Act is basically a social legislation
designed to afford relief to the working man and woman in our
society. The Employees' Compensation Commission, as the agency
tasked with implementing the social justice mandate guaranteed by
the Constitution, should be more liberal in resolving compensation
claims of employees especially where there is some basis in the
facts for inferring a work connection to the cause of death.
This interpretation gives meaning and substance to the liberal and
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 shall be resolved in favor of
labor."
The policy is to extend the applicability of PD 626 to a greater
number of employees who can avail of the benefits under the law,
which is in consonance with the avowed policy of the state to give
maximum aid and protection to labor.
Premises considered, We find the petition meritorious. Liver
cirrhosis, although not one among those listed as compensable
ailment, as considered in the case at bar as covered under the Act,
on the ground that the nature of the work of petitioner's husband,
exposed him to the risk of contracting the same.WHEREFORE,
petition is hereby GRANTED and the decision of the Employees'
Compensation Commission is REVERSED.

17

497
Latagan v. EMPLOYEES COMPENSATION COMMISSION
213 SCRA 715
LAW CONCEPT
FACTS
Josue A. Latagan, who was employed in the Philippine Navy from
1949 up to the time he died in 1978. She claims that his fatal ailment
known as bronchogenic carcinoma was caused by his employment,
and that the risk of contracting the disease was aggravated by the
working conditions attendant to his duties as gunnersmate in the
Philippine Navy.
Petitioners husband died on 29 January 1978. Subsequently, she
filed a claim for death benefits with the Survivorship Benefits
Department, Government Service Insurance System (GSIS).
Petitioner now assails the denial of her claim for death benefits on
the ground that respondent ECC committed reversible error in
sustaining the position of GSIS that the fatal ailment of her husband
was not an occupational disease, hence, not compensable, and in
affirming the denial sans formal hearing. The cause of her husbands
death, bronchogenic carcinoma, is not an occupational disease.
ISSUE: Can the widow of Josue Latagan entitled to get occupational
death benefit even if the disease of his husband is not enlisted to the
guidelines?
RULING:
Admittedly, petitioner failed to present substantial evidence to prove
that the decedents working conditions as gunnersmate increased
the risk of his contracting the fatal illness. Consequently, We quote
with approval the findings of respondent ECC careful review of the
records show that petitioner did not present any evidence to
establish work connection. She relied solely on the theory of
aggravation and presumption of compensability under the old
compensation law. In the absence of proof, and none appears on
record, We cannot conclude that the employment of the decedent
increased the risk of his contracting the disease. As regards the
contention of petitioner that she was denied a formal hearing and
thus deprived of an opportunity to present additional substantial
evidence to support her claim,

Our ruling in Sulit v. ECC 10 is enlightening

"The filing with the GSIS of a claim for income benefits is in its
inception not an adversary proceeding. The claim is filed on a
prescribed form. The claimant may present with the claim supporting
papers or proof that the disability or death was work-connected or
that the risk of contracting the disease involved in the claim was
increased by the working conditions.
"The claim is processed by the GSIS. No formal hearing is required
in the processing of the claim.
"If after processing, the GSIS finds, as in this case, that on its face
the claim has no basis, then it is rejected outright. The claim
becomes controversial when the claimant appeals to the Employees
Compensation Commission, or when an aggrieved party appeals
from the Commission to this Court (Arts. 180 and 181, Labor Code;
Secs. 3 to 5, Rule XVIII and sec. 1, Rule XVII, Amended Rules on
Employees Compensation."
Petitioner, on the instant case, was afforded the fair and reasonable
opportunity to prove that her husbands death was work-connected.
The respondent agencies appear to have taken into account her
application for death benefits, her supporting documents, her motion
for reconsideration of the denial of her claim, and her appeal before
respondent ECC. Unfortunately, however, We cannot like
respondents find any legal justification for a favorable award on her
claim.
WHEREFORE, the petition is DENIED for lack of merit, and the
decisions of respondents Government Service Insurance System
(GSIS) and Employees Compensation Commission (ECC) are
hereby AFFIRMED. No costs.

18

498
Orate v CA
399 SCRA 572
EMPLOYER
FACTS
On December 5, 1972, petitioner Norma Orate was employed by
Manila Bay Spinning Mills, Inc., as a regular machine operator. she
was diagnosed to be suffering from invasive ductal carcinoma
(breast, left), commonly referred to as cancer of the
breast. Consequently, she underwent modified radical mastectomy
on June 9, 1995. The operation incapacitated her from performing
heavy work, for which reason she was forced to go on leave and,
eventually, to retire from service at the age of 44.On November 17,
1995, petitioner applied for employees compensation benefits with
the Social Security System (SSS), but the same was denied on the
ground that her illness is not work-related. On January 22, 1996,
she moved for reconsideration contending that her duties as
machine operator which included lifting heavy objects increased the
risk of contracting breast cancer. The SSS, however, reiterated its
denial of petitioners claim for benefits. The Court of Appeals
reversed the decision of the ECC, and granted petitioners claim for
compensation benefit under the Workmens Compensation Act (Act
No. 3428). it held that petitioners breast cancer must have
intervened before the effectivity of Title II, Book IV of the Labor Code
on Employees Compensation and State Insurance Fund on January
1, 1975, hence, the governing law on petitioners claim for
compensation benefit is Act No. 3428, which works upon the
presumption of compensability, and not the provisions of the Labor
Code on employees compensation. Petitioner instead should be
entitled to the benefits under Act No. 3428, as amended, together
with the medical-surgical expenses, including doctors bill. Petitioner
filed a motion for reconsideration arguing that it is the Labor Code
which should be applied to her case inasmuch as there is no
evidence that the onset of her breast carcinoma occurred before
January 1, 1975. She claimed that the basis of the computation of
her compensation benefits should be the Labor Code and not the
Workmens Compensation Act.
ISSUE
Is the Court of Appeals correct in ruling that the benefit is not

compensable against the employer or the State fund?

RULING
In workmens compensation cases, the governing law is determined
by the date when the claimant contracted the disease. An injury or
illness which intervened prior to January 1, 1975, the effectivity date
of P.D. No. 626, shall be governed by the provisions of the
Workmen's Compensation Act, while those contracted on or after
January 1, 1975 shall be governed by the Labor Code, as amended
by P.D. No. 626. Corollarily, where the claim for compensation
benefit was filed after the effectivity of P.D. No. 626 without any
showing as to when the disease intervened, the presumption is that
the disease was contracted after the effectivity of P.D. No. 626In the
case at bar, petitioner was found to be positive for breast cancer on
March 22, 1995. No evidence, however, was presented as to when
she contracted said ailment. Hence, the presumption is that her
illness intervened when P.D. No. 626 was already the governing law.
Hence, while we sustain petitioners claim that it is the Labor Code
that applies to her case, we are nonetheless constrained to rule that
under the same code, her disability is not compensable. Much as we
commiserate with her, our sympathy cannot justify an award not
authorized by law. It is well to remember that if diseases not
intended by the law to be compensated are inadvertently or
recklessly included, the integrity of the State Insurance Fund is
endangered. Compassion for the victims of diseases not covered by
law ignores the need to show a greater concern for the trust fund to
which the tens of millions of workers and their families look to for
compensation whenever covered accidents, diseases and deaths
occur. This stems from the development in the law that no longer is
the poor employee still arrayed against the might and power of his
rich corporate employer, hence the necessity of affording all kinds of
favorable presumptions to the employee. It is now the trust fund and
not the employer which suffers if benefits are paid to claimants who
are not entitled under the law
WHEREFORE, in view of all the foregoing, the decision of the Court
of The decision of the Employees Compensation Commission
dismissing petitioners claim for compensation benefits under the
Employees Compensation Program is REINSTATED.

19

499
PHILIPPINE BLOOMING MILLS CO., INC. vs SOCIAL SECURITY
SYSTEM
17 SCRA 107
COVERAGE

lawful exercise of the police power of the State, to which the principle of
non-impairment of the obligation of contract is not a proper defense. As
pointed out by the Solicitor General, the issue that should be determined
in this case is whether, in implementing the SSS law and denying
appellants' claim for refund of their premium contributions, due process
was observed.

FACTS
The Philippine Blooming Mills Co., Inc., a domestic corporation since the
start of its operations in 1957, has been employing Japanese
technicians under a pre-arranged contract of employment, the minimum
period of which employment is 6 months and the maximum is 24
months.
From April 28, 1957, to October 26, 1958, the corporation had in its
employ 6 Japanese technicians. In connection with the employment of
these aliens, it sent an inquiry to the Social Security System (SSS)
whether these employees are subject to compulsory coverage under the
System, which inquiry was answered by the First Deputy Administrator
of the SSS.
Starting September, 1957, and until the aforementioned Japanese
employees left the Philippines on October 26, 1958, the corresponding
premium contributions of the employer and the employees on the latter's
memberships in the SSS On October 7, 1958, the Assistant General
Manager of the corporation, on its behalf and as attorney-in-fact of the
Japanese technicians, filed a claim with the SSS for the refund of the
premiums paid to the System, on the ground of termination of the
members' employment. As this claim was denied, they filed a petition
with the Social Security Commission for the return or refund of the
premiums, in the total sum of P2,520.00, paid by the employer
corporation and the 6 Japanese employees, plus attorneys' fees. This
claim was controverted by the SSS, alleging that Rule IX of the Rules
and Regulations of the System,
After hearing, the Commission denied the petition for the reason that,
although under the original provisions of Section 3 (d) of Rule I of the
Rules and Regulations of the SSS, alien-employees (who are employed
temporarily) and their employers are entitled to a rebate of a
proportionate amount of their respective contributions upon the
employees' departure from the Philippines, said rule was amended by
eliminating that portion granting a return of the premium contributions.
Republic Act 1161 requires compulsory coverage of employers and
employees under the System. It is actually a legal imposition, on said
employers and employees, designed to provide social security to the
workingmen. Membership in the SSS is, therefore, in compliance with a

ISSUE
Is the compulsory contribution of the temporary alien-employees
lawful? Can the employer get a refund?
RULING
These rules and regulations were promulgated to provide guidelines
to be observed in the enforcement of the law. As a matter of fact,
Section 3 of Rule I is merely an enumeration of the "general
principles to (shall) guide the Commission" in the determination of
the extent or scope of the compulsory coverage of the law. One of
these guiding principles is paragraph (d) relied upon by appellants,
on the coverage of temporarily-employed aliens. It is not here
pretended, that the amendment of this Section 3(d) of Rule I, as to
eliminate the provision granting to these aliens the right to a refund
of part of their premium contributions upon their departure from the
Philippines, is not in implementation of the law or beyond the
authority of the Commission to do.
It may be argued, however, that while the amendment to the Rules may
have been lawfully made by the Commission and duly approved by the
President on January 14, 1958, such amendment was only published in the
November 1958 issue of the Official Gazette, and after appellants'
employment had already ceased. Suffice it to say, in this regard, that under
Article 2 of the Civil Code, the date of publication of laws in the Official
Gazette is material for the purpose of determining their effectivity, only if the
statutes themselves do not so provide.In the present case, the original Rules
and Regulations of the SSS specifically provide that any amendment thereto
subsequently adopted by the Commission, shall take effect on the date of its
approval by the President. Consequently, the delayed publication of the
amended rules in the Official Gazette did not affect the date of their
effectivity, which is January 14, 1958, when they were approved by the
President. It follows that when the Japanese technicians were separated
from employment in October, 1958, the rule governing refund of premiums is
Rule IX of the amended Rules and Regulations, which requires membership
for 2 years before such refund of premiums may be allowed.
Wherefore, finding no error in the resolution of the Commission appealed
from, the same is hereby affirmed, with costs against the appellants.

20

500
Sta. Rita v. CA
247 SCRA 487
COVERAGE
FACTS
Petitioner Sta. Rita was charged in the RTC with violating Section
2(a) in relation to Sections 22(d) and 28(e) of Republic Act No. 1161,
as amended, otherwise known as the Social Security Law. The RTC
sustained petitioner's motion and dismissed the criminal case filed
against him. It ruled that the Memorandum of Agreement entered into
between the Department of Labor and Employment ("DOLE") and
the Social Security System ("SSS") extending the coverage of Social
Security, Medical Care and Employment Compensation laws to
Filipino seafarers on board foreign vessels was null and void as it
was entered into by the Administrator of the SSS without the
sanction of the Commission and approval of the President of the
Philippines, in contravention of Section 4 (a) of R.A. No. 1161, as
amended.In the Petition for Review, petitioner Sta. Rita contends that
the Filipino seafarers recruited by B. Sta. Rita Co. and deployed on
board foreign vessels outside the Philippines are exempt from the
coverage.
ISSUE
Is the Sta. Rita exempted of the SSS Law because he was deployed
on foreign vessel?
RULING:
Terms Defined
EMPLOYMENT Any service performed by an employee for his
employer, except
(5) Service performed on or in connection with an alien vessel by an
employee if he is employed when such vessel is outside the
Philippines.
According to petitioner, the Memorandum of Agreement entered into
by the DOLE and the SSS is null and void as it has the effect of
amending the aforequoted provision of R.A. No. 1161 by expanding
its coverage. This allegedly cannot be done as only Congress may
validly amend legislative enactments.
Petitioner prays that the Court set aside the decision of the Court of

Appeals ordering the reinstatement of Criminal Case No. Q-9235426 and that the Order of the RTC dismissing the same be upheld.
It is well-settled in our jurisdiction that the right to appeal is a
statutory right and a party who seeks to avail of the right must
comply with the rules. These rules, particularly the statutory
requirement for perfecting an appeal within the reglementary period
laid down by law, must be strictly followed as they are considered
indispensable interdictions against needless delays and for orderly
discharge of judicial business. Petitioner's failure to seasonably file
the Petition and its failure to comply with the aforequoted Circulars of
the Court necessitate the denial of the Petition.
Besides, even if the Petition had been filed on time and had
complied with the Circulars, it would still have to be denied as
petitioner has failed to show that respondent appellate court
committed any reversible error in rendering the assailed decision.
The Court agrees with the CA that the Information filed against
petitioner was sufficient as it clearly stated the designation of the
offense by the statute. Thus, the Standard Contract of Employment
to be entered into between foreign shipowners and Filipino seafarers
is the instrument by which the former express their assent to the
inclusion of the latter in the coverage of the Social Security Act. In
other words, the extension of the coverage of the Social Security
System to Filipino seafarers arises by virtue of the assent given in
the contract of employment signed by employer and seafarer; that
same contract binds petitioner Sta. Rita or B. Sta. Rita Company,
who is solidarily liable with the foreign shipowners/employers.
It may be noted that foreign shipowners and manning agencies had
generally expressed their conformity to the inclusion of Filipino
seafarers within the coverage of the Social Security Act even prior to
the signing of the DOLE-SSS Memorandum of Agreement.The Court
of Appeals properly held that the reinstatement of the criminal case
against petitioner did not violate his right against double jeopardy
since the dismissal of the information by the trial court had been
effected at his own instance. There are only two (2) instances where
double jeopardy will attach notwithstanding the fact that the case
was dismissed with the express consent of the accused
WHEREFORE, the Court Resolved to DENY the Petition for having
been filed late, for failure to comply with applicable Court Circulars
and for lack of merit. The assailed Decision of the Court of Appeals is
hereby AFFIRMED.

21

501
Corporal, Sr. v. NLRC
341 SCRA 658
COVERAGE

independent calling requiring special skills available to the public at

large.
ISSUE
Is NLRC correct that the respondent is an independent contractor and
should not be covered and be given corresponding benefits?

FACTS
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 to 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.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.
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 differentialsIn a Decision dated September 28,
1995, Labor Arbiter Potenciano S. Caizares, 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. 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

RULING
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. 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.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.
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. 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.The petition is GRANTED. 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.

22

502
CHUA vs CA
440SCRA121
COVERAGE
FACTS
On 20 August 1985, private respondents Andres Paguio, Pablo Canale,
Ruel Pangan, Aurelio Paguio, Rolando Trinidad, Romeo Tapang and
Carlos Maliwat filed aPetition with the SSC for SSS coverage and
contributions against petitioner Reynaldo Chua, owner of Prime Mover
Construction Development, claiming that they were all regular
employees of the petitioner in his construction business.Private
respondents alleged that petitioner dismissed all of them without
justifiable grounds and without notice to them and to the then Ministry of
Labor and Employment. They further alleged that petitioner did not
report them to the SSS for compulsory coverage in flagrant violation of
the Social Security Act. Petitioner claimed that private respondents had
no cause of action against him, and assuming there was any, the same
was barred by prescription and laches. In addition, he claimed that
private respondents were not regular employees, but project employees
whose work had been fixed for a specific project or undertaking the
completion of which was determined at the time of their
engagement. This being the case, he concluded that said employees
were not entitled to coverage under the Social Security Act.[9]The SSS
stated that it is the mandatory obligation of every employer to report its
employees to the SSS for coverage and to remit the required
contribution, including the penalty imposed for late premium
remittances. The SSC, relying on NLRC Case No. RAB-III-8-2373-85,
declared private respondents to be petitioners regular employees. It
ordered
petitioner
to
pay
the
SSS
the
unpaid
SS/EC and Medicare contributions plus penalty
for
the delayed remittance thereof, without prejudice to any other
penalties which may have accrued.
The SSC denied the Motion for Reconsideration of petitioner for lack of
merit. The Court of Appeals, citing Article 280 of the Labor Code,
declared that private respondents were all regular employees of the
petitioner in relation to certain activities since they all worked either as
masons, carpenters and fine graders in petitioners various construction
projects for at least one year, and that their work was necessary and
desirable to petitioners business which involved the construction of
roads and bridges.

ISSUE
Is the CA correct in granting that there is an employee- employer
relationship and the employees should be covered by SSS?
RULING
Stripped of the lengthy, if not repetitive, disquisition of the private
parties in the case, and also of the public respondents, on the nature
of private respondents employment, the controversy boils down to
one issue: the entitlement of private respondents to compulsory
SSS coverage. The Social Security Act was enacted pursuant to the
policy of the government to develop, establish gradually and perfect
a social security system which shall be suitable to the needs of the
laborers throughout the Philippines, and shall provide protection
against the hazards of disability, sickness, old age and death. It
provides for compulsory coverage of all employees not over sixty
years of age and their employers. This Court has held that an
employment ceases to be co-terminus with specific projects when
the employee is continuously rehired due to the demands of the
employers business and re-engaged for many more projects without
interruption. The Court likewise takes note of the fact that, as cited by the
SSC, even the National Labor Relations Commission in a labor case
involving the same parties, found that private respondents were regular
employees of the petitioner. Anent the issue of prescription, this Court rules
that private respondents right to file their claim had not yet prescribed at
the time of the filing of their petition, considering that a mere eight (8) years
had passed from the time delinquency was discovered or the proper
assessment was made. Republic Act No. 1161, as amended, prescribes a
period of twenty (20) years, from the time the delinquency is known or
assessment is made by the SSS, within which to file a claim for nonremittance against employers. Likewise, this Court is in full accord with the
findings of the Court of Appeals that private respondents are not guilty of
laches. The principle of laches or stale demands ordains that the failure or
neglect, for an unreasonable and unexplained length of time, to do that
which by exercising due diligence could or should have been done earlier, or
the negligence or omission to assert a right within a reasonable time,
warrants a presumption that the party entitled to assert it either has
abandoned it or declined to assert it. In the instant case, this Court finds no
proof that private respondents had failed or neglected to assert their right,
considering that they filed their claim within the period prescribed by law.
WHEREFORE, the Petition is DENIED. The Decision and Resolution of the
Court of Appeals promulgated on 6 March 1996 and 30 July 1996
respectively, are AFFIRMED. Costs against petitioner.

23

503
POBLETE CONSTRUCTION CO. vs. JUDITH ASIAIN
20 SCRA 1143
SSS Reporting Requirements
FACTS
Miguel Asiain was an employee of the Poblete Construction
Company from 1956 until his death on November 22, 1959, with a
monthly salary of P300. Upon his death his widow, Judith Asiain, for
herself and her minor children, filed a petition before the Social
Security Commission against the company and its manager,
Domingo Poblete (Case No. 78), to recover the following sum: (1)
P3,600.00 equivalent to one year's salary of the deceased; (2)
P600.00 representing his unpaid salary for two months; (3) P288.00
"representing the cash received by respondents from their laborers
as contribution to the family of the deceased;" and (4) P2,000.00 by
way of attorney's fees. The respondents below moved to dismiss the
petition on the grounds that the Social Security Commission had no
jurisdiction over the subject-matter and that the petitioner Judith
Asiain had no capacity to sue. The Commission denied the motion to
dismiss in its order of February 25, 1960 and ordered the
respondents to file their answer. When no answer was forthcoming,
the respondents were declared in default in an order dated March 9,
1960, and the petitioners were allowed to present their evidence. It
appears that although the deceased Miguel Asiain had been
employed in the Poblete Construction Company since 1956 and had
accomplished SSS Form E-1 (Employees' Date Record) and
transmitted the same to the said company's Manila Office, it was
never filed with the Social Security System for the reason, according
to the company, that he refused to have his share of the
corresponding monthly contributions deducted from his salary.

the duty of the employer to "report immediately to the System" his

name, age, civil status, occupation, salary and dependents.
Compliance with this duty did not depend upon the employee's
willingness to give his share of the contribution. Section 24 is
mandatory, to such an extent that if the employee should die or
become sick or disabled without the report having been made by the
employer, the latter is liable for an amount equivalent to the benefits
to which the employee would have been entitled had such report
been made. It is true that the provision uses the word "damages" in
referring to the amount that may be claimed. But this fact alone does
not mean that the Social Security Commission lacks jurisdiction to
award the same. Section 5(a) of the Social Security Act provides that
"the filing, determination and settlement of claims shall be governed
by the rules and regulations promulgated by the Commission;" and
the rules and regulations thus promulgated state that "the effectivity
of membership in the System, as well as the final determination and
settlement of claims, shall be vested in the Commission.Otherwise
an employer could nullify the jurisdiction of the Commission by the
simple expedient of not making a report as required by said Section.
The collection of the employee's share is a duty imposed by law, and
his unwillingness to have it deducted from his salary does not excuse
the employer's failure to make the report aforesaid. It is precisely in
this situation that the employer is liable, and there is no question as
to the amount of such liability in this case.The decision of the Social
Security Commission is affirmed.

ISSUE
Whether or not the SSS had no jurisdiction to entertain the claim of
P3,600, which should have been presented before the ordinary
courts.
RULING
Yes. There is no question that the deceased Miguel Asiain was
subject to compulsory coverage in the Social Security System. It was

24

504
CMS ESTATE, INC. vs. SOCIAL SECURITY SYSTEM
132 SCRA 108
SSS Fund Ownership
FACTS
Petitioner CMS Estate Inc is a domestic corporation engaged in the
real estate business. In December 1952, it began with only 6
employees. In 1956, it also engaged in the logging business and
obtained an ordinary license from the Bureau of Forestry to operate
forest concession (13,000 hectares) in Baganga, Davao. In January
1957, CMS Estate entered into a contract of management with
Eufracio Rojas for the operation of the logging concession which
began in April 1957 with four employees earning monthly salaries.
By September 1957, CMS Estate had 89 employees in the logging
operation. But on December 1957, CMS Estate revoked its contract
with Rojas. By August 1958, CMS Estate became a member of SSS
with respect to its real estate business and remitted to the SSS
P203.13 representing the initial premium of the salaries of the
employees in the logging business. But on October 1958, petitioner
demanded the refund of the amount, alleging that it is not yet subject
to compulsory coverage in its logging business. Respondent SSS
denied the petition on the ground that the logging business is only an
expansion of the companys existing activities and that it should be
considered a member since December 1952 when it opened its
business. CMS Estate contends that the SSS contributions required
of employees and employers under the SSS Act of 1954 are not in
the nature of excise taxes and therefore, not compulsory
of employers.
ISSUE
W/N Petitioners logging business is subject to compulsory coverage
in the SSS.
RULING
Prior to its amendment, Sec. 9 of the Act provides that before an
employer could be compelled to become a member of the System,
he must have been in operation for at least two years and has at the
time of admission at least six employees. It should be pointed out
that it is the employer, either natural, or judicial person, who is

subject to compulsory coverage and not the business. If the intention

of the legislature was to consider every venture of the employer as
the basis of a separate coverage, an express provision to that effect
could have been made. Unfortunately, however, none of that sort
appeared provided for in the said law. Should each business venture
of the employer be considered as the basis of the coverage, an
employer with more than one line of business but with less than six
employees in each, would never be covered although he has in his
employ a total of more than six employees which is sufficient to bring
him within the ambit of compulsory coverage. This would frustrate
rather than foster the policy of the Act. The legislative intent must be
respected. In the absence of an express provision for a separate
coverage for each kind of business, the reasonable interpretation is
that once an employer is covered in a particular kind of business, he
should be automatically covered with respect to any new name. Any
interpretation which would defeat rather than promote the ends for
which the Social Security Act was enacted should be eschewed. The
Social Security Law was enacted pursuant to the policy to develop,
establish gradually and perfect a social security system which shall
be suitable to the needs of the people throughout the Philippines and
provide protection against the hazards of disability, sickness, old age
and death. It is clear then that the implementation of the SSS Law is
in line with the general welfare mandate of the Constitution and as
such, is a legitimate exercise of the police power. As held in
Philippine Blooming Mills Co. vs. SSS: membership in the SSS is not
a bilateral, consensual agreement where obligations and rights of the
parties are subject to their will. RA 1161 requires compulsory
coverage of employees and employers under the system. As such,
the principle of non-impairment of obligation of contract cannot be
raised as a defense. The taxing power of the State is exercised for
the purpose of raising revenues. However, under our Social Security
Law, the emphasis is more on the promotion of the general welfare.
The Act is not part of our Internal Revenue Code nor are the
contributions and premiums therein dealt with and provided for,
collectible by the BIR.

25

505
Santiago v. CA
133 SCRA 34
Effect of Non-remittance SSS Failure Remit
FACTS
Petitioners were employees of I-Feng Enamelling Company (Phil.)
Inc. for several years, some from 1950 up to the time the company
closed its business in 1965. Since the enactment of the Social
Security Act, Republic Act No. 1161, as amended, said employees
have been paying, through salary deductions, their personal
contributions to the System. Appellants, during their employment,
also enjoyed salary loan benefits, their installment payments
deducted and collected by their employer, and said employer failed
to remit to the System not only the installment payments to their
salary loans (P7,940.13) but also the back premiums (P137,787.90),
excluding of course the penalties therefor (P63,734.97).
Petitioners argue that they are entitled to full credit for the unremitted
premium contributions and salary loan installment payments
deducted from their wages because, by law, a contract of agency
exists between the SSS and the Employer in the collection of the
salary loan installment payments, and therefore, as such agent,
payment to the Employer is payment to the principal, which is the
System.
ISSUE
W/N the premium contributions and payments of salary
loans by petitioners, which were deducted and collected
from their salaries by their Employer, but not remitted to the
System, should be credited in their favor by the System
RULING
Only the premium contributions paid by petitioners to its employer
shall be credited in petitioners' favor.
SSS Circular No. 52 states: V. Service and Collection Fee. -The
System shall charge a service fee of P3.50 for every approved
application deductible in advance from the proceeds of the loan.
However, the employer shall be entitled to deduct from the total
quarterly collections that he remits to the System a collection fee of
seven centavos (P.07) for every ten pesos (P10.00) or fraction

thereof. The fee was devised to encourage employers to be prompt

in the remittance of their collections to the System.
There is a difference, however, in respect of premium contributions,
by reason of the explicit provision of Section 22(b) of the Social
Security Act, reading: (b) The contributions payable under this Act in
cases where an employer refuses or neglects to pay the same shall
be collected by the System in the same manner as taxes are made
collectible under the National Internal Revenue Code, as amended,
Failure or refusal of the employer to pay or remit the contributions
herein prescribed shall not prejudice the right of the covered
employee to the benefits of the coverage.
Clearly, if the employer neglects to pay the premium contributions,
the System may proceed with the collection in the same manner as
the Bureau of Internal Revenue in case of unpaid taxes. Plainly, too,
notwithstanding non-remittance by employers of the premium
contributions, covered employees are entitled to the benefits of the
coverage, such as death sickness, retirement, and permanent
disability benefits. These benefits continue to be enjoyed by the
employees by operation of law and not, as petitioners allege,
because the premium contributions and salary loan installment
payments have already became the money of the System upon
payment by the employees to the employer. It should be
remembered that funds contributed to the System by compulsion of
law are funds belonging to the members, which are merely held in
trust by the government. The mentioned benefits, however, do not
include the salary loan privileges that member-employees apply for.
The System may or may not grant those loans pursuant to its rules
and regulations. The salary loans are not covered by law but by
contract between the System as lender, and the private employee,
as borrower.
Contrary to petitioners' contention, the penalty of 3% per month
imposed on the employer, if any premium contribution is not paid to
the System, prescribed by Section 22 of the Act from the date the
contribution falls due until paid, does not necessarily make the
employer the agent of the System. The prescribed penalty is
intended to exact compliance by the employer. It is evidently of a
punitive character.

26

506
Benedicto v. Abad
183 SCRA 434
Effect of Non-remittance SSS Failure Remit
FACTS
Petitioner Benedicto started a trucking business in which he
employed the late Salvador Pillon as truck driver. Petitioner,
however, did not report Pillon's employment to the Social Security
System ("SSS") for compulsory coverage and did not pay the
corresponding SSS contributions.
The above facts came to the knowledge of the SSS. After Pillon's
death, an investigator of the SSS Regional Office in Bacolod City
was deputized to conduct an enquiry in respect of Benedicto's
alleged violations of the Social Security Act (RA 1161). In his Field
Investigation Report, he stated that Benedicto had admitted having
failed to report and to register with the SSS Pillon's employment for
the period from his employment up to the time of his death, and to
pay the corresponding SSS contributions; that upon the inspectors
suggestion, petitioner Benedicto had accomplished and submitted
SSS Forms reporting himself and Pillon for SSS compulsory
coverage; that Benedicto and Pillon were assigned SSS
Identification numbers; that Benedicto was assessed SSS premiums
in the total amount of P491.70 excluding penalties. The inspector
recommended that his report be transmitted to the Legal Department
of the SSS in Quezon City for appropriate action. Approximately ten
(10) years later, upon complaint of the Legal Department of the SSS,
the Assistant City Fiscal of Bacolod City filed an information charging
petitioner Benedicto with violations of Section 24 (a) in relation to
Section 28 (e) of the Social Security Act. Before arraignment,
petitioner Benedicto moved to quash the information asserting that
his liability thereunder had already been extinguished by
prescription. Upon the other hand, the complainant SSS opposed the
Motion to Quash contending that the offense charged in the
information had not yet prescribed since the applicable prescriptive
period was twenty (20) years and since the information was filed
within this 20-year period. Respondent Judge denied the motion to
quash. Hence the present Petition for Prohibition and Mandamus
with preliminary injunction.

ISSUE
W/N the offense with which petitioner Benedicto is charged has
prescribed
RULING
Petition for Prohibition and Mandamus with preliminary injunction is
hereby GRANTED insofar as prosecution of the criminal action
against petitioner Benedicto is concerned. The same Petition is
hereby DISMISSED insofar as the civil action for the enforcement of
the civil liability arising from the offense charged. Firstly, the 20-year
prescriptive period is found in Section 22 of the Social Security Act
which deals generally with the remittance of contributions to the
SSS, not with penal sanctions for violations of provisions of the
Social Security Act nor of the rules and regulations promulgated by
the Social Security Commission. Secondly, close examination of
Section 22 (b) will show that the "necessary action against the
employer" referred to in the second paragraph thereof is an action
that is brought against the employer for the collection of contributions
payable under the Social Security Act which the employer has refused or
neglected to pay. Thirdly, a 20-year statute of limitation if made applicable in
respect of criminal liability of an employer for failure to remit contributions to
the SSS would constitute a disproportionately long statute of limitations if
one compared it with the Revised Penal Code or Act No. 3326, as amended.
In the case at bar, the information was filed against petitioner Benedicto ten
(10) years after the alleged violations had been discovered by the SSS. The
Court held that the statutory crime here charged had prescribed by then, the
prescriptive period here applicable being four (4) years. The general rule is,
of course, that extinction of the penal action does not carry with it the
extinction of the civil action to enforce civil liability arising from the offense
charged, unless the extinction proceeds from a declaration in a final
judgment that the fact from which the civil might arise did not exist. In the
case at bar, no final judgment had been rendered by the trial court since the
criminal case was in effect aborted by the Motion to Quash. Thus, the
extinction of the criminal liability of petitioner by reason of prescription has
had no impact upon the related civil action for enforcement of the civil liability
of petitioner. Said civil action, in accordance with the provisions of Section
22 (b), second paragraph quoted above of the Social Security Act, may be
brought within twenty (20) years from the time the employer's delinquency
was discovered. Such civil action may proceed notwithstanding the
extinction of the criminal action against petitioner Benedicto.

27

507
CHUA V. COURT OF APPEALS
440 SCRA 121
SSS Failure Remit
FACTS
On August 20, 1985, private respondents Andres Paguio, Pablo
Canale, Ruel Pangan, Aurelio Paguio, Rolando Trinidad, Romeo
Tapang and Carlos Maliwat filed a petition with the SSC for SSS
coverage and contributions against petitioner Reynaldo Chua, owner
of Prime Mover Construction Development, claiming that they were
all regular employees of the petitioner in his construction business.
Private respondents alleged that petitioner dismissed all of them
without justifiable grounds, and without notice to them and to the
then Ministry of Labor and Employment. They further alleged that
petitioner did not report them to the SSS for compulsory coverage in
flagrant violation of the Social Security Act.
Petitioner claimed that private respondents were not regular
employees, but project employees whose work had been fixed for a
specific project or undertaking the completion of which was
determined at the time of their engagement. This being the case, he
concluded that said employees were not entitled to coverage under
the Social Security Act. Petitioner also claimed that the case has
prescribed. The Court of Appeals ruled in favor of the private
respondents.

relationship between the parties can easily be determined by the

application of the control test.
It is clear that private respondents are employees of petitioner, the
latter having control over the results of the work done, as well as the
means and methods by which the same were accomplished. Suffice
it to say that regardless of the nature of their employment, whether it
is regular or project, private respondents are subject of the
compulsory coverage under the SSS Law, their employment not
falling under the exceptions provided under Section 8(j) of the Social
Security Act. In addition, private respondents right to file their claim
had not yet prescribed at the time of the filing of their petition.
Republic Act No. 1161, as amended, prescribes a period of twenty
(20) years, from the time the delinquency is known or assessment is
made by the SSS, within which to file a claim for non-remittance
against employers.

ISSUE
Whether or not the private respondents are entitled to compulsory
SSS coverage.
RULING
Yes. Well-settled is the rule that the mandatory coverage of Republic
Act No. 1161, as amended, is premised on the existence of an
employer-employee relationship, the essential elements of which
are: (a) selection and engagement of the employee; (b) payment of
wages; (c) the power of dismissal; and (d) the power of control with
regard to the means and methods by which the work is to be
accomplished, with the power of control being the most
determinative factor. The existence of an employer-employee

28

508
CONTE V. COMMISSION ON AUDIT
264 SCRA 19
GSIS RETIREMENT BENEFITS

Petition was dismissed for lack of merit, the assailed COA decision is
upheld, and SSS Resolution No. 56 is declared illegal, void and of no
effect.

FACTS
Avelina Conte and Leticia Boiser were both former employees
of SSS who availed of compulsory retirement benefits provided for
under RA No.
660.
Both also claimed with the
SSS financial
assistance benefits as provided for under SSS Resolution No. 56,
Series of 1971.
The subject SSS resolution was disallowed by COA in a ruling
issued on July 10, 1989 stating that scheme of financial assistance
authorized by SSS is similar to separate retirement plan
or incentives/
separation pay plans adopted by other
government agencies which in turn results in the increase of benefits
beyond what is allowed under existing retirement laws.
The SSS thereafter sought presidential authority to continueimpleme
nting Res. 56 to which the Office of the ExecutiveSecretary
replied
that the Office of the President is not inclined to favourably act on the
request or let alone overrule COAs earlier ruling.
Petitioners Conte and Boiser sought reconsideration of COAsruling
disallowing their claim and also sought payment from
SSSof benefits as prescribed under Res. 56, both of which were
denied by COA and SSS.
ISSUE
Whether or not the benefits provided for under SSS Resolution No.
56 be considered simply as financial assistance for retiring
employees, or does such a scheme constitute a supplementary
retirement plan prescribed by RA 4968.
RULING
The Supreme Court ruled that SSS Resolution No. 56 constitute a
supplementary retirement plan, thus, within the ambit of Sec. 28(b) of
CA 186 as amended by RA 4968 which bars the creation of any
insurance or \retirement plan other than the GSIS for government
officers and employees, in order to prevent the undue and iniquitous
proliferation of such plans.
Resolution No. 56 is therefore invalid, void and of no effect.

29

509
Employees Compensation Commission vs Sanico
34 SCRA 268
Definition - Disability
FACTS
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. 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.

employment, due to his illness and not when the same first became
manifest. Indeed, a person's disability might not emerge at one
3
precise moment in time but rather over a period of time. 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. Petition was dismissed.

ISSUE
Whether or not private respondent's claim for compensation benefit
had already prescribed.
RULING
NO. 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
1
do. It does not mean absolute helplessness." 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. The prescriptive period for
filing compensation claims should be reckoned from the time the
employee lost his earning capacity, i.e., terminated from

30

510
SSS vs Court of Appeals
439 SCRA 239
Definition - Disability
FACTS
Private respondent Jose Rago worked as an electrician for Legend
Engineering in Basak, Pardo, Cebu City. On 1 December 1993, at
about 6:15 p.m., while working on the ceiling of a building, he
stepped on a weak ceiling joist. The structure gave way and he
crashed into the corridor twelve feet below. The x-rays taken that day
revealed that he had a (1) marked compression fracture of L1
vertebra without signs of dislocation and bone destruction; and (2)
slight kyphosis at the level of L1 vertebrae, with the alignment of the
spine still normal. On 20 May 1994, Rago filed a claim for permanent
partial disability with the Cebu City office of the Social Security
System (SSS). Since he had only 35 monthly contributions, he was
5
granted only a lump sum benefit. He made additional premium
contributions on 6 November 1995, and sought the adjustment of his
approved partial disability benefits from lump sum to monthly
payments. Rago filed several requests for the adjustment of his
partial disability to total disability. This time, his requests were denied
by the Cebu City office of the SSS in its letters of 11 April 1999, 10
September 1999, 28 September 1999, 4 April 2000, and 17 April
2000. The denial was based on the medical findings of the Cebu City
office that he was not totally prevented from engaging in any gainful
occupation. Rago appealed to the Court of Appeals by filing a
petition for review and reiterating his claim for permanent disability
benefits

his injury is permanent and total. While permanent total disability

invariably results in an employees loss of work or inability to perform
his usual work, permanent partial disability, on the other hand,
occurs when an employee loses the use of any particular anatomical
part of his body which disables him to continue with his former work.
Stated otherwise, the test of whether or not an employee suffers
from permanent total disability is a showing of the capacity of the
employee to continue performing his work notwithstanding the
disability he incurred. The Court further reiterate that disability should
be understood less on its medical significance than 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
35
does not mean absolute helplessness. Moreover, a persons
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.
The three x-ray reports submitted by Rago clearly show the
degenerative condition of his injury. Clearly, Rago is entitled to
permanent total disability benefits. Although the SSS and the SSC
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, they should be cautioned
against a very strict interpretation of the rules lest it results in the
withholding of full assistance from those whose capabilities have
been diminished, if not completely impaired, as a consequence of
their dedicated service.

ISSUE
Whether or not private respondent's claim for compensation benefit
is proper.
RULING
YES. The Court of Appeals correctly observed that Ragos injury
made him unable to perform any gainful occupation for a continuous
period exceeding 120 days. The SSS had granted Rago sickness
benefit for 120 days and, thereafter, permanent partial disability for
38 months. Such grant is an apparent recognition by the SSS that

31

511
Government Insurance System V Court of Appeals
285 SCRA 430 (1998)
Manifestation
FACTS
Private respondents, Rosa Balais, started working as an emergency
employee of the National Housing Authority (NHA) IN 1952. She
then rose from ranks until she was promoted to Chief Paying Cashier
in 1984.
Medical records shows that she was diagnosed suffering
Subarachonoid Hemmorrhage Secondary to Ruptured Aneurysm.
Despite her operation she was not as efficient in performing her
duties thus she was force to retire. 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. 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).
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.
On appeal to CA, promulgated a decision favourable to respondent
Rosa Balais.

RULING
While it is true that the degree of private respondents 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. It was also undisputed that private respondent was made
to take her medication for life. A persons 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. 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. Private respondents persistent illness
indeed forced her to retire early which, in turn, resulted in her
unemployment, and loss of earning capacity. 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 respondents disability from
permanent partial disability to permanent total disability.

ISSUE
Whether private respondent is entitled to conversion of her benefits
from permanent partial disability to permanent total disability?

32

512
Government Insurance System V Court of Appeals
304 SCRA 243 (1999)
Distinction-Disability
FACTS
On June 10, 1964, private respondent Romeo S. Bella was
employed by the Bureau of Animal Industry as a livestock inspector.
He retired from the service on August 16, 1986. On July 16, 1987,
he was re-employed by the Department of Agriculture as Agricultural
Food Technologist and on March 1, 1994, promoted to the position
of Agriculturist II.The medical records of private respondent reveal
that he was suffering from Acute Myocardial Infraction and was
confined at the Notre Dame Hospital in Cotabato City from
September 13, 1988 to September 19, 1988 and at the Philippine
Heart Center from September 6, 1994 to September 26, 1994. Thus,
private respondent filed with the GSIS, Cotabato Branch, a claim for
compensation benefits under P.D. 626, as amended. Finding his
application meritorious and his ailment compensable, the GSIS
awarded him a Temporary Total Disability income benefit during the
periods of July 16 to July 21, 1994 and August 24 to August 29,
1994, as well as reimbursement for medical expenses. Private
respondent Romeo S. Bella was also granted a Permanent Partial
Disability income benefit equivalent to thirty-eight (38) months for his
Ischemic Cardiomayopathy. Private respondent requested for the
conversion of his benefits from Permanent Partial Disability to
Permanent Total Disability, reasoning out that his ailments of
Ischemic Cardiomayopathy and Chronic Obstructure Pulmonary
Disease rendered him unable to engage in any gainful occupation for
a continuous period exceeding 120 days, as certified to by his
attending physicians, Dr. Romulo Uy, Dr. Anne Marie Luat, Dr.
Danilo Rustia, Dr. Juanito Lastimosa and Dr. Eldefonso Maglasang.
But petitioner GSIS denied his request for Permanent Total Disability
on the ground that the degree of private respondents disability as
evaluated by petitioners medical officers, did not satisfy the criteria
for Permanent Total Disability. His motion for reconsideration was
similarly denied as well as appeal the on Employees Compensation
Commission (ECC). On appeal to CA, promulgated a decision
favourable to respondent Romeo S. Bella.

ISSUE
Whether the private respondent is entitled to permanent total
disability benefits?
RULING
The Labor Code classifies employees disability into three distinct
categories, namely: a) temporary total disability; b) permanent total
disability; and c) permanent partial disability. Section 2, Rule VII, of
the Rules and Regulation Implementing Title II, Book IV of the Labor
Code defines and clarifies these categories, as follows: (a) A total
disability is temporary if as a result of the injury or sickness the
employee is unable to perform any gainful occupation for a
continuous period not exceeding 120 days, except as otherwise
provided for in Rule X of these Rules.(b) A disability is total and
permanent if as a result of the injury or sickness the employee is
unable to perform any gainful occupation for a continuous period
exceeding 120 days except as otherwise provided for in Rule of
these Rules. (c) A disability is partial and permanent if as a result of
the injury or sickness the employee suffers a permanent partial loss
of the use of any part of his body.
The fact that he was forced to retire at the early age of 56, due to a
sickness disabling him from performing his job as Agriculturist II,
qualifies his disability as a Permanent Total Disability, though he lost
no use of any particular anatomical part of his body.

33

513
Employeess Compensation Commission v. Sanico
G. R. No. 134028 34 SCRA 268 December 17, 1999
Permanent Total Disability
FACTS
Private respondent Edmund Sanico was a former employee of John
Gotamco and Sons. He worked as wood filer from 1986 until he
was separated in 1991 due to his illness pulmonary tuberculosis
(PTB).
The private respondent filed with the Social Security System (SSS) a
claim for compensation benefits under P.D. No. 626, as amended.
In 1996, his claim from the SSS was denied on the ground of
prescription.
On appeal, petitioner affirmed the decision of the SSS and elevated
the case to the CA, which reversed petitioners decision and granted
private respondents claim for compensation benefits.
ISSUE
Whether the disability claims of the private respondent can be denied
on the ground of prescription.
RULING
The 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.
The Court also held that disability compensation, it is not the injury
which is compensated, but rather it is the incapacity to work resulting
in the impairment of ones earning capacity.
The claim was denied on the ground of prescription is erroneous. It
should be reckoned from the time the employee lost his earning
capacity, terminated from employment, due to his illness and not
when the same first became manifest. Accordingly, his claim was
filed within the three-year period under Article 201 of the Labor
Code.

34

514
Government Service Insurance System v. Court of Appeal
G. R. No. 117572 285 SCRA 430 January 29, 1998
Permanent Total Disability
FACTS
In 1952, Private respondent started working as an emergency
employee of the National Housing Authority (NHA).
In 1984, she then rose from the ranks and was promoted to Chief
Paying Cashier.
In 1989, private respondent suddenly experienced chills, loss of
consciousness and was diagnosed to be suffering from
Subarachnoid Hemorrhage Secondary to Ruptured Aneurysm.
Despite her operation, private respondent could not perform her
duties as efficiently as she had done prior to her illness. This forced
her for an early retirement in 1990.
She filed a claim for disability benefits with the GSIS and was
evaluated as compensable by the GSIS Medical Evaluation and
Underwriting Group. Accordingly, she was granted temporary total
disability (TTD) from December 17, 1989 to January 31, 1990 and
subsequently, permanent partial disability (PPD) benefits.

regardless of whether or he loses the use of any part of his body.

Permanent total disability does not mean a state of absolute
helplessness, but 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 any work which a person of similar mentally and
attainment could do.
A persons 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.
The Court ruled that disability should not be understood more on its
medical significance but on the loss of earning capacity. Private
respondents persistent illness indeed forced her to retire early which
in turn, resulted in her unemployment, and loss of earning capacity.
It is also important that private respondent was constrained to retire
at the age of 62 years because of her impaired physical condition,
which indicates permanent and total disability. The Court ruled the
fact of an employees disability is placed beyond question with the
approval of the employees optional retirement, for such is authorized
only when the employee is physically incapable to render sound and
efficient service.

ISSUE
Whether private respondent is entitled to conversion of her benefits
commensurate from permanent partial disability to permanent total
disability.
RULING
The Court ruled that while permanent total disability invariably results
in an employees loss of work or inability to perform his usual work,
permanent partial disability occurs when an employee loses the use
of any particular anatomical part of his body which disables him to
continue with his former work. The test whether an employee suffers
from permanent total disability is the capacity of the employee to
continue performing his work notwithstanding the disability he
incurred. If by reason of the injury or sickness he sustained, the
employee is unable to perform his customary job for more than 120
days and he does not come within the coverage Rule X of the
Amended Rules of Employees Compensability, then the said
employee undoubtedly suffers from a permanent total disability

35

515
Santos v. Employees Compensation Commission
221 SCRA 182
Permanent Total Disability
FACTS
Francisco Santos was employed as welder at the Philippine Navy
and its Naval Shipyard as early as March 22, 1955. He spent the last
32 years of his life in the government service, the first year as a
welder helper and the last two years as shipyard assistant. Francisco
was admitted at the Naval Station Hospital in Cavite City. His case
was diagnosed as bleeding Peptic Ulcer disease (PUD),
cholelithiasis and diabetes mellitus. On January 11, 1987, he died,
the cause of which as indicated in the Death Certificate was liver
cirrhosis.
Mrs. Carmen A. Santos filed a claim for the death benefit of her
husband, Francisco, pursuant to Presidential Decree No. 626, as
amended. However, the Government Service Insurance System
(GSIS), denied the claim on the ground that upon proofs and
evidence submitted, Francisco's ailment cannot be considered an
occupational disease as contemplated under P.D. 626, as amended.
Mrs. Santos then sought the assistance of the Commander of
NASCOM, PN, who in turn wrote the GSIS requesting for a favorable
action on her claim. Said letter also substantiated petitioner's claim
that her husband's duties as Senior Welder, caused him to be
exposed to heat and inhalation of burning chemical substances and
gas fumes coming from burning welding electrodes. Despite such
endorsement, petitioner's motion for reconsideration was likewise
denied, upon claim of the GSIS that Francisco's job as a welder
would instead cause lung disease rather than liver cirrhosis. On
appeal to the Employees' Compensation Commission (ECC), the
Commission affirmed the denial of the GSIS on petitioner's claim.
ISSUE
Whether or not the death of Francisco Santos due to liver cirrhosis is
compensable?
RULING
YES. The law defines compensable sickness as any illness definitely
accepted as occupational disease listed by the Commission, or any

illness caused by employment subject to proof that the risk of

contracting the same is increased by the working conditions. For
sickness and the resulting death of an employee to be compensable,
the claimant must show either: (1) that it is a result of an
occupational disease listed under Annex A of the Amended Rules on
Employees' Compensation with the conditions set therein satisfied;
or (2) if not so listed, that the risk of contracting the disease is
increased by the working conditions. Cirrhosis of the liver is not listed
as an occupational disease.
We do not pretend to be an expert in the realm of medical discipline.
However, we cannot discount the fact that the cause of death of
petitioner's husband could very well be related to his previous
working conditions. Even the Commission volunteered the theory
that post necrotic cirrhosis show that of the many types of advanced
liver injury, one cause may be due to toxins. As a welder, Francisco
was exposed to heat, gas fumes and chemical substances coming
from the burning electrodes caused by welding. Generally, the metal
burned is iron. In the course thereof, other compounds and oxides,
such as carbon monoxide, carbon dioxide, sulfur and phosphorus,
may be emitted in the process of welding, depending on the kind of
material used and extent of corrosion of the metal worked on. These
vaporized metals are inhaled by the welder in the process and
significantly in this case, Francisco had to do welding jobs within
enclosed compartments. These are industrial hazards to which
Francisco was exposed. And in the long course of time, 32 years at
that, his continuous exposure to burned electrodes and chemicals
emitted therefrom would likely cause poisoning and malfunction of
the liver.
While the presumption of compensability and theory of aggravation under
the Workmen's Compensation Act may have been abandoned under the
new Labor Code, the liberality of the law in general in favor of the working
man still prevails. The Employees' Compensation Act is basically a social
legislation designed to afford relief to the working man and woman in our
society. The Employees' Compensation Commission, as the agency tasked
with implementing the social justice mandate guaranteed by the Constitution,
should be more liberal in resolving compensation claims of employees
especially where there is some basis in the facts for inferring a work
connection to the cause of death. The policy is to extend the applicability of
PD 626 to a greater number of employees who can avail of the benefits
under the law, which is in consonance with the avowed policy of the state to
give maximum aid and protection to labor.

36

516
Narazo v. Employees Compensation Commission
181 SCRA 874
Permanent Total Disability
FACTS
Geronimo Narazo was employed for thirty eight (38) years as Budget
Examiner in the Office of the Governor, Province of Negros
Occidental. His duties included preparation of the budget of the
Province, financial reports and review or examination of the budget
of some provincial and municipal offices. Narazo died at the age of
fifty seven (57). He was thereafter diagnosed to be suffering from
"obstructive nepropathy due to benign prostatic hypertrophy",
commonly known as "Uremia.
Petitioner, as the widow of the deceased, filed a claim with the
Government Service Insurance System (GSIS) for death benefits for
the death of her husband, under the Employees Compensation Law
(PD 626, as amended). However, said claim was denied on the
ground that the cause of death of Narazo is not listed as an
occupational disease, and that there is no showing that the position
and duties of the deceased as Budget Examiner had increased the
risk of contracting "Uremia."
Petitioner moved for reconsideration of said decision, claiming that
although the cause of her husbands death is not considered as an
occupational disease, nevertheless, his job as Budget Examiner
which required long hours of sedentary work, coupled with stress
and pressure, caused him many times to delay urination, which
eventually led to the development of his ailments. The GSIS denied
said motion for reconsideration. On appeal, the Employees
Compensation Commission affirmed the decision of the GSIS on the
ground that the ailments of the deceased could not be attributed to
employment factors and as impressed by medical experts, benign
prostatic hypertrophy is quite common among men over fifty (50)
years of age, regardless of occupation, while uremia is a
complication of obstructive nephtropathy due to benign prostatic
hypertrophy.
ISSUE
Whether or not the death of Geronimo Narazo due to Uremia is
compensable?

RULING
YES. Rule III, section 1, paragraph 3(b) of Presidential Decree No.
626, as amended, defines a "compensable sickness" as any illness
definitely accepted as an occupational disease listed by the ECC or
any illness caused by employment subject to proof by the employee
that the risk of contracting the same is increased by working
conditions. The ECC is empowered to determine and approve
occupational diseases and work-related illnesses that may be
considered compensable based on peculiar hazards of employment.
Thus, a sickness or death caused by said sickness is compensable if
the same is listed as an occupational disease. If it is not so listed,
compensation may still be recovered if the illness was aggravated by
employment. However, it is incumbent upon the claimant to show
proof that the risk of contracting the illness was increased by his
working conditions.
Under the circumstances, the burden of proof was upon petitioner to
show that the conditions under which her deceased husband was
then working had increased the risk of contracting the illness which
caused his death. The claimant must show proof of reasonable workconnection, not necessarily direct causal relation. The degree of
proof required is merely substantial evidence which means such
relevant evidence as will support a decision, or clear and convincing
evidence. Strict rules of evidence are not applicable. To require proof
of actual causes or factors which lead to an ailment would not be
consistent with the liberal interpretation of the Labor Code and the
social justice guarantee in favor of the workers.
The nature of the work of the deceased as Budget Examiner in the
Office of the Governor dealt with the detailed preparation of the
budget, financial reports and review and/or examination of the
budget of other provincial and municipal offices. Full concentration
and thorough study of the entries of accounts in the budget and/or
financial reports were necessary, such that the deceased had to sit
for hours, and more often than not, delay and even forego urination
in order not to interrupt the flow of concentration. In addition, tension
and pressure must have aggravated the situation. The cause of
death of petitioners husband is work-connected, i.e. the risk of
contracting the illness was aggravated by the nature of the work, so
much so that petitioner is entitled to receive compensation benefits
for the death of her husband.

37

517
Raro vs. EMPLOYEES' COMPENSATION COMMISSION
172 SCRA 845
Unknown Cause

presumed. The court as the supreme instrument of justice must first

and for most consider the provisions stated by law unless it is vague
and needed construction. Since the legal requirement does not
produce, the court held the petition denied.

FACTS
The petitioner states that she was in perfect health when employed
as a clerk by the Bureau of Mines and Geo-Sciences at its Daet,
Camarines Norte regional office on March 17, 1975. About four years
later, she began suffering from severe and recurrent headaches
coupled with blurring of vision. Forced to take sick leaves every now
and then, she sought medical treatment in Manila. She was then a
Mining Recorder in the Bureau. The petitioner was diagnosed at the
Makati Medical Center to be suffering from brain tumor. By that time,
her memory, sense of time, vision, and reasoning power had been
lost. A claim for disability benefits filed by her husband with the
Government Service Insurance System (GSIS) was denied. The one
adopted by the petitioner insists that if a claimant cannot prove the
necessary work connection because the causes of the disease are
still unknown, it must be presumed that working conditions increased
the risk of contracting the ailment. On the other hand, the
respondents state that if there is no proof of the required work
connection, the disease is not compensable because the law says
so. A motion for reconsideration was similarly denied. An appeal to
the Employees' Compensation Commission resulted in the
Commission's affirming the GSIS decision.
ISSUE
Whether or not, brain tumor which causes are unknown but
contracted during employment, is compensable under the present
compensation laws.
RULING
No. The key argument of the petitioner is based on the fact that
medical science cannot, as yet, positively identify the causes of
various types of cancer. The law, as it now stands requires the
claimant to prove that the illness was caused by employment. Since
the proof is not available, therefore, the trust fund has the obligation
to pay is contrary to the legal requirement that proof must be
produced. The existence of otherwise non-existent proof cannot be

38

518
BEJERANO vs. EMPLOYEES COMPENSATION COMMISSION
205 SCRA 598
Permanent Total Disability
FACTS
Petitioner Jose Bejerano was a cash supervisor of the Development
Bank of the Philippines, Zamboanga City Branch Office. He retired at
the age of sixty-two (62), after having served the bank for almost
twenty-nine (29) years. Medical records disclose that sometime in
1985, petitioner complained of dyspnea or shortness of breath
accompanied by productive cough. He was admitted to the Brent
Hospital, where he was diagnosed with Chronic Obstructive Lung
Disease Emphysema with severe asthmatic component. Due to his
disability, petitioner was forced to retire at the age of sixty-two (62)
on 31 December 1985 and received the sum of P60,890.57
corresponding to five (5) years lump sum of his annuity. To adhere to
the expenses of his hospitalization, he pleaded for the benefits of
GSIS through the provisions regarding permanent total disability.
GSIS later claimed that the petitioner will not be considered t have a
permanent total disability but instead erred that the disability is just
temporary.
ISSUE
Whether or not the petitioner's disability would entitle him to
compensation benefits corresponding to permanent total disability
RULING
YES. Wherefore, the courts decision to grant the respondents
liability to the petitioner is justified. This was proven by the
petitioners medical examinations and the advice of the doctor. It was
found out that the petitioner easily feels tired in simple work in which
he cant even settle for a 10 meter walk without getting tired. Thus,
because of this, curt erred that the petitioner is within the permanent
total disability for he is already incapacitated to perform the work
expected of him. Curt held the decision of the Employees'
Compensation Commission is MODIFIED and the GSIS is hereby
ordered to pay petitioner compensation benefits for permanent total
disability effective January 1986, which is the start of the period
when his earning capacity was impaired due to his disability.

39

519
GSIS v CA
285 SCRA 430 (1998)
Occupational Disease
FACTS
Private respondent Rosa Balais 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. In December 1989, she was diagnosed to be suffering from
Subarachnoid Hemorrhage Secondary to Ruptured Aneurysm. After
undergoing craniotomy, she was finally discharged from the hospital
in January 1990. 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 in
March1990 at the age of sixty-two (62) years.
She filed a claim for disability benefits with the GSIS for the abovedescribed 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.
In 1992, she requested for the conversion of her disability benefits
from PPD to permanent total disability (PTD). This was denied as
GSIS found no basis to alter its findings. Moreover, the benefit she
has been receiving is the maximum due her under the Rating
Schedule established by the Employees Compensation Commission.
GSISs denial of the request was later affirmed by the ECC.
Undaunted, private respondent filed a petition for review with the
Court of Appeals, which promulgated a decision favorable to her.
Hence, this petition by the GSIS.

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 persons 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. Furthermore, the Court
has ruled that disability should not be understood more on its
medical significance but on the loss of earning capacity. Private
respondents persistent illness indeed forced her to retire early
which, in turn, resulted in her unemployment, and loss of earning
capacity.
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. 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. The Court, therefore, affirms the
decision of the respondent Court of Appeals decreeing conversion of
private respondents disability from permanent partial disability to
permanent total disability.

ISSUE
Whether private respondent is entitled to conversion of her benefits
from permanent partial disability to permanent total disability
RULING
While it is true that the degree of private respondents physical
condition at the time of her retirement was not considered as

40

520
Rino v Employee Compensation Commission
331 SCRA 596 (2000)
Basis of Claim- Increased Risks
FACTS
Virgilio T. Rio Sr., husband of herein petitioner, was employed by
Allied Port Services Inc. as stevedore since July 1982. His duties
included: (1) handling of steel cargoes; (2) loading and unloading of
silica sand; (3) handling, loading and unloading of lumber products;
(4) supervising other stevedores; and (5) performing other related
work.
On July 19, 1992, Rio collapsed while working and was rushed to
the Philippine General Hospital (PGH) because of "melena, fever,
chills and abdominal pains 8 days (prior to confinement). He died
three days later. According to the Medical Certificate, the cause of
death was "uremia [secondary] to chronic renal failure. Chronic
glomerulonephritis.
His spouse filed a claim for death benefits before the Social Security
System (SSS). However, it was denied because the cause of Rinos
death was not work-related because the deceased husband had
already on and off attack of edema and hypertension which are signs
of kidney disease even before his employment with the company.
This decision was affirmed by the ECC. Petitioner then appealed to
the CA. In affirming the ECC, the Court of Appeals ruled: "Since
petitioner failed to establish any causal connection of the disease
which led to the death of her husband with the nature of his working
conditions, and, in particular, that said working condition had
increased the risk of contracting the disease, then the claim for death
benefits must fail.

contracting the same is increased by the working conditions.

The primary and antecedent causes of Virgilio Rios death are not
listed as occupational diseases. Hence, petitioner should have
presented substantial evidence, or such relevant evidence which a
reasonable mind might accept as adequate to justify a conclusion,
showing that the nature of her husbands employment or working
conditions increased the risk of uremia, chronic renal failure or
chronic glomerulonephritis. This the petitioner failed to do.
At most, petitioner merely claims that: "The nature of his work
required physical strength in handling cargoes and at the same time
giving full attention in supervising his men as the groups leadman
assigned at Del Pan Area. It is worth mentioning that in the place
where the deceased was assigned, there were no available comfort
rooms to enable him to answer the call of nature. In effect, delayed
urination was a reality, coupled with the fact that being the leadman
of his group, his continuing physical presence at the works premises
was indispensable.
Such bare allegation does not ipso facto make Virgilios death
compensable. Awards of compensation cannot rest on speculations
or presumptions. The beneficiaries must present evidence to prove a
positive proposition.
Therefore the present petition is denied and the challenged decision
is affirmed.

ISSUE
Whether petitioners claim for death benefits under P.D. No. 626, as
amended, shall prosper under the increased risk theory
RULING
Under the Labor Code, as amended, the beneficiaries of an
employee are entitled to death benefits if the cause of death is a
sickness listed as occupational disease by the ECC; or any other
illness caused by employment, subject to proof that the risk of

41

521
LENTEJAS vs. EMPLOYEES COMPENSATION COMMISSION
197 SCRA 441
COMING AND GOING RULE
FACTS
Victorio Lentejas, the husband of petitioner Rosa Lentejas, entered
the government service on 13 January 1968 as Maintenance
"Capataz" at the Bureau of Public Highways in Calbayog City,
Western Samar. Victorio went there to inspect work being done on a
damaged seawall protecting the shoreline against encroachment by
the sea. At around 4:30 P.M., being then (according to the police
report) on his way home from that place, Victorio was suddenly
attacked and stabbed with a knife by Arnulfo Luaton who inflicted
upon him multiple stab wounds on different parts of the body causing
his instantaneous death. Because of petitioners death, petitioner as
the surviving spouse filed with the Government Service Insurance
System (GSIS) a claim for compensation benefits under the
provisions of Presidential Decree No. 626, as amended. The GSIS
denied her claim upon the ground that the killing was not workconnected since the motive of the assailant in slaying her husband
was a personal grudge.
ISSUE
Whether or not the claim is compensable
RULING
Yes. Although Victorio might have been on his way home from
Barangay Banti at the time he was attacked and killed by Arnulfo
Luaton, that circumstance did not by itself operate to render his
death non- compensable. We note, at the same time, that in all the
cases noted above from Vda. de Torbela to Lazo, the events which
caused or precipitated injury or death did not involve the intentional
inflicting of harm or injury or death upon the employee
concerned. The deceased was at a place where his work required
him to be, that is, at Barangay Banti and there is no evidence to
show that the route he took leaving the situs of the damaged seawall
was not a usual or convenient route from that place. He was not, to
borrow a phrase from the common law of torts, on "a frolic of his
own."

42

522
Benedicto v. Abad Santos
183 SCRA 434
REMITTANCE
FACTS
Petitioner Benedicto started a trucking business sometime in March
1971 in which business he employed the late Salvador Pillon as
truck driver. Petitioner, however, did not report Pillon's employment
to the Social Security System ("SSS") for compulsory coverage and
did not pay the corresponding SSS contributions.
The above facts came to the knowledge of the SSS sometime in
1975. On 19 October 1975, after Pillon's death, Mr. Antonio Obillos,
Jr., an investigator of the SSS Regional Office in Bacolod City, was
deputized to conduct an enquiry in respect of Benedicto's alleged
violations of the Social Security Act (Republic Act No. 1161, as
amended).
Sec. 22. Remittance of Contributions.
(b) The contribution payable under this Act in cases where an
employer refuses or neglects to pay the same shall be collected by
the SSS in the same manner as taxes are made collectible under the
National Internal Revenue Code, as amended. Failure or refusal of
the employer to pay or remit the contributions herein penalized shall
not prejudice the right of the covered employee to the benefits of the
employee.
The right to institute the necessary action against the employer may
be commenced within twenty (20) years from the time the
delinquency is known or the assessment is made by the SSS, or
from the time the benefit accrues, as the case may be. (Emphasis
supplied)
Sec 28. Whoever fails or refuses to comply with the provisions of this
Act or with the rules and regulations promulgated by the
Commission, shall be punished by a fine of not less than five
hundred pesos nor more than five thousand pesos, or imprisonment
for not less than six months nor more than one year, or both, at the
discretion of the court: Provided, That, where the violation consists in
failure or refusal to register employees, or to deduct contributions
from employee's compensation and remit the same to the SSS, the
penalty shall be a fine of not less than five hundred pesos nor more

than five thousand pesos and imprisonment for not less than six
months nor more than one year.
Before arraignment, petitioner Benedicto moved to quash the
information asserting that his liability thereunder had already been
extinguished by prescription. Upon the other hand, the complainant
SSS opposed the Motion to Quash contending that the offense
charged in the information had not yet prescribed since the
applicable prescriptive period was twenty (20) years and since the
information was filed within this 20-year period.
ISSUE
Whether or not the offense with which petitioner Benedicto is
charged has prescribed.
RULING
YES. in the first place, that the 20-year prescriptive period is found in
Section 22 of the Social Security Act which deals generally with
the remittance of contributions to the SSS. Section 22 (b)
does not deal with penal sanctions for violations of provisions of the
Social Security Act nor of the rules and regulations promulgated by
the Social Security Commission. The penal sanctions established by
the Social Security Act are found in Section 28 which forms part of
the final portion or chapter of the Act denominated as "G.
Miscellaneous Provisions." In contrast, Section 22 is found in chapter
E entitled "Sources of Funds Employment Records and Reports."
But an examination of Section 28 entitled "Penal Clauses" shows
that none of the subsections thereof purports to establish a
prescriptive period in respect of such criminal sanctions. If the 20year period of prescription had been intended by the legislative
authority to apply to the penal sanctions established by the statute,
one would expect it either to be textually located in chapter G
"Miscellaneous Provisions" and not in chapter E "Sources of Funds,"
or at the very least to refer to the sections on penal sanctions in
chapter G. In other words, the context of Section 22 (b) indicates that
it does not relate to criminal sanctions at all.

43

523
People vs Montiero
192 SCRA 548
Remittance

nullify the purpose of the law, which is precisely to protect the

members of the working class.

FACTS
Salvador Monteiro, being the operator and owner of "Monteiro's
Footwear," an establishment engaged in the manufacture of
footwear, fail to register and/or report to the Social Security System,
Elizabeth Collantes as member in violation of the Social Security
Laws; and despite demands failed to register aforesaid employee to
the damage and prejudice of the offended party. Collantes
discovered that she was not registered by employer when she claims
for benefits for her husbands hospitalization.
Monteiro contends that the action has prescribed four years from
date Montiero failed to register employee (January 1964). He also
suggests that the subsequent registration of Collantes with the SSS
had the effect of extinguishing the offense.
Collantes contends the period should commence when it was
discovered (May 1974).
ISSUE
1. WON the action has prescribed. 2.WON the subsequent
registration extinguishes the offense.
RULING
1. NO. period of prescription for the offense of failure to register with
the SSS shall begin from the day of the discovery of the violation if
this was not shown at the time of its commission A contrary view
would be dangerous as the successful concealment of an offense
during the period fixed for its prescription would be the very means
by which the offender may escape punishment.
2.NO. appellee's claim that his subsequent registration of Collantes
with the SSS extinguished his current liability, if any, is not
acceptable. If subsequent compliance with the law were sufficient to
condone past violation, then the penal clause might as well be
deleted from the statute. Many an unscrupulous employer could
simply not register his employees and, when found out and
prosecuted, register them belatedly. Such an interpretation would

44

524
Buena Obre v SSS
401 SCRA 206
Statute of Limitation
FACTS
Juanito Buena Obra, husband of petitioner, worked as a dump truck
driver at Jollar Industrial Sales and Services Inc. Juanito suffered a
heart attack while driving a dump truck inside the work compound,
and died shortly thereafter. In the Report of Death submitted by his
employer to the Social Security System (SSS), Juanito expired at the
Worker's Quarters at 10:30 a.m., of Myocardial Infarction. Maria M.
Buena Obra immediately filed her claim for death benefits under the
SSS law. She started receiving her pension in November 1988. More
than ten (10) years after the death of her husband and after she
learned of the benefits for employees compensation if the spouse
died while working for the company, she filed for the claim.
SSS denied the claim of petitioner for funeral benefits ruling that
petitioner's claim has prescribed, the prescription period being 3
years.
Petitioner appealed to the Court of Appeals. She alleged that her
cause of action had not prescribed because the filing of her claim for
SSS benefits shortly after Juanito's death suspended the running of
the prescriptive period for filing EC claims. The appellate court
dismissed the petition. It ruled that petitioner's filing of her claim for
SSS benefits shortly after Juanito's death did not suspend the
running of the prescriptive period for filing EC claims. It interpreted
the aforementioned ECC Resolutions to mean that a claimant must
indicate the kind of claim filed before the running of the prescriptive
period for filing EC claims may be interrupted. In the case at bar,
petitioner indeed filed a claim with SSS. In fact, she has been
receiving her pension since November 1988. However, she failed to
specify whether the basis of her claim was any contingency which
may be held compensable under the EC Program.

RULING
NO. The claim of petitioner for funeral benefits has not prescribed.
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) 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.

ISSUE
WON the action has prescribed

45

525
YSMAEL MARITIME CORPORATION V. AVELINO
151 SCRA 333
EXCLUSIVITY
FACTS
On December 22, 1971, Rolando Lim, a licensed second mate, died
when the vessel. He was on board ran aground and sank near
Sabtan, Batanes. The vessel was owned by petitioner Ysmael
Maritime Corporation. The parents of the deceased claiming that the
untimely death of their son was due to the negligence of the
petitioner, sued the petitioner in the CFI for damages. By way of
affirmative defense, petitioner claimed that the private respondents
had already been compensated by the Workmans Compensation
Commission (WCC) for the same incident, for which reason they are
now precluded from seeking other remedies against the same
employer under the Civil Code.

Court rejected the doctrine of exclusivity of the rights and remedies

granted by the WCA.As thus applied to the case at bar, respondent
Lim spouses cannot be allowed to maintain their present action to
recover additional damages against petitioner under the Civil
Code.In open court, respondent admitted that they had previously
filed a claim for death benefits with the WCC and had received the
compensation payable to them under the WCA. It is therefore clear
that the respondents had not only opted to recover under the Act but
they had also been duly paid. At the very least,a sense of fair play
would demand that if a person entitled to a choice of remedies made
a first election and accepted the benefits there of, he should no
longer be allowed to exercise the second option. Having staked his
fortunes on a particular remedy, he is precluded from pursuing the
alternate course, at least until the prior claim is rejected by the
Compensation Commission.

ISSUE
Whether the compensation remedy under the Workmens
Compensation Act (WCA), and now under the Labor Code, for workconnected death or injuries sustained by an employee is exclusive of
the other remedies under the Civil Code.
RULING
In the recent case of Floresca v. Philex Mining Company, the Court
was confronted with three divergent opinion on the exclusivity
rule.One view is that the injured employee or his heirs, in case of
death, may initiate an action to recover damages (not compensation
under the Workmans Compensation Act) with the regular courts on
the basis of negligence of the employer pursuant to the Civil Code.
Another view, is that the remedy of an employee for work-connected
injury or accident is exclusive in accordance with Section 5 of WCA.
The third view is that the action is selective and the employee or his
heirs have a choice of availing themselves of the benefits under the
WCA or of suing in the regular courts under the Code for higher
damages from the employer by reason of his negligence. But once
the election has been exercised, the employee or his heirs are no
longer free to opt for the other remedy. This latter view was adopted
by the Court in Floresca v. Philex Mining Company. In doing so, the

46

526
HINOGUIN V. EMPLOYEES COMPENSATION COMMISSION
172 SCRA 350
OFFICIAL FUNCTION
FACTS
Sgt. Lemick Hinoguin was a sergeant in 14TH Infantry Battalion, 5Th
Infantry Division. The headquarters of the 14th Infantry Battalion was
located at Bical, Muoz, Nueva Ecija. On August 1, 1985, Sgt.
Hinoguin, Cpl. Rogelio Clavo and Dft. Nicomedes Alibuyog sought
permission from Capt. Frankie Besas, to go on overnight pass to
Aritao, Nueva Viscaya. Capt. Besas orally granted them permission
to go to Aritao and to take their issued firearms with them
considering that Aritao was regarded as a critical place. The three
soldiers went to Alibuyogs home for a meal and some drinks. At
around 7:00 PM, the soldiers headed back to the headquarters. They
boarded a tricycle, Hinoguin and Clavo seating themselves in the
tricycle cab while Alibuyog occupied the seat behind the tricycle
driver. When they reached the poblacion, Alibuyog dismounted from
the tricycle. Not noticing that his rifles safety lever was on semiautomatic, he accidentally touched the trigger, firing a single shot in
the process and hitting Sgt. Hinoguin in the left lower abdomen. Sgt.
Hinoguin died a few days after the incident. In the investigation
conducted by the 14TH Infantry Battalion, it was found that
theshooting of Sgt. Hinoguin was purely accidental in nature and that
he died in the lineof duty. The Life of Duty Board of Officers
recommended that all benefits due the legal dependents of the late
Sgt. Hinoguin be given. However, when the father of the deceased
made a claim from GSIS, the same was denied on the ground that
the deceased was not at his work place nor performing his duty as a
soldier of the Philippine Army at the time of his death. This denial
was confirmed by the ECC.
ISSUE
Whether or not the death of Sgt. Hinoguin compensable under the
applicable statute and regulations.
Whether Sgt. Hinoguin died while he was in official duty

SEC.1.Conditions to Entitlement (a) The beneficiaries of a

deceased employee shall be entitled to an income benefit if all of the
following conditions are satisfied: The employee had been duly
reported to the System; He died as a result of injury or sickness; and
The System has been duly notified of his death, as well as the injury
or sickness which caused his death. His employer shall be liable for
the benefit if such death occurred before the employer is duly
reported for coverage of the System. Art. 167 (k) of the Labor Code
defines Compensable injury quite simply as any harmful change in
the human organism from any accident arising out of and in the
course of the employment. The Amended Rules elaborated the
succinct statutory provision:
SEC. 1Grounds a) For the injury and resulting disability or death to
be compensable, the injury must be the result of an employment
accident satisfying all of the following grounds:(1)The employee must
have been injured at the place where his work requires him to
be.(2)The employee must have been performing his official
functions; and(3)If the injury is msustained elsewhere, the employee
must have been executing an order for the employer.
The concept of work place referred in Ground 1, for instance, cannot
always be literally applied to a soldier on active duty status, as if he
were a machine operator or a worker inan assembly line in a factory
or a clerk in a particular fixed office. A soldier must go where his
company is stationed. Aritao, Nueva Viscaya was not of course,
Carranglan, Nueva Ecija. Aritao being approximately 1 hours
from the later by public transportation but Sgt. Hinoguin, Cpl. Clavo
and Dft. Alibuyog had permission from their Commanding Officer to
proceed to Aritao and the place which soldiers have secured lawful
permission to be at cannot be very different, legally speaking, from a
place where they are required to go by their commanding officer. The
soldiers were on an overnight pass. They were not on vacation
leave. In this connection, a soldier on active duty status is really on
24 hours a day official duty status and is subject to military discipline
and military law 24 hours a day. He is subject to call and to the
orders of his superior officers at all times, 7 days a week, except, of
course, when he is on vacation leave status.

RULING
YES. The amended Implementing Rules provides in part as follows:

47