GR 163212; (March, 2007) (Digest)
G.R. No. 163212 ; March 13, 2007
CANDANO SHIPPING LINES, INC., Petitioner, vs. FLORENTINA J. SUGATA-ON, Respondent.
FACTS
Petitioner Candano Shipping Lines, Inc. employed Melquiades Sugata-on as Third Marine Engineer on board its vessel, M/V David, Jr. On March 27, 1996, the vessel sank in Lianga Bay, Surigao del Sur, due to rough seas and strong winds. Melquiades was reported missing. Respondent Florentina J. Sugata-on, his widow, sought death benefits from Candano Shipping, which refused payment, arguing the death was not yet established as Melquiades was merely missing. Florentina filed an action for damages based on Article 1711 of the Civil Code, which holds an employer liable for an employee’s death arising from and in the course of employment, even if caused by a fortuitous event.
The Regional Trial Court ruled in favor of Florentina, applying the presumption of death under Article 391 of the Civil Code after the lapse of four years from the disappearance. It awarded actual, moral, and exemplary damages plus attorney’s fees. The Court of Appeals affirmed the finding of liability but modified the award. It deleted the moral and exemplary damages and attorney’s fees for lack of basis and recomputed the actual damages.
ISSUE
Whether the Court of Appeals correctly held petitioner liable for the death of Melquiades Sugata-on and properly computed the indemnity due to the respondent.
RULING
Yes. The Supreme Court affirmed the appellate court’s decision. On liability, the Court reiterated that under Article 1711 of the Civil Code, an employer is liable for the death of an employee that arises from and in the course of employment, regardless of whether it was due to a fortuitous event. The presumption of death under Article 391 was correctly invoked, as more than four years had lapsed since Melquiades disappeared with the sinking vessel, establishing the fact of death for the purpose of claiming compensation.
Regarding the proper computation of damages, the Supreme Court upheld the Court of Appeals’ application of the Labor Code standard over the Civil Code formula for loss of earning capacity. In cases where the claim is based on the employer’s liability under Article 1711 of the Civil Code, which is essentially a claim for death benefits, the Court has consistently ruled that the compensation should be guided by the rates provided under the Labor Code’s provisions on death benefits, as these represent the public policy on the matter. The Civil Code formula in Villa Rey Transit is applicable to actions based on quasi-delict or breach of contract, not to the direct employer liability under Article 1711. Therefore, the reduction of the award to ₱608,400.00, computed under Article 194 of the Labor Code, was correct. The deletion of moral and exemplary damages was also proper, as the claim was essentially for death compensation, and no evidence showed that the employer acted in a wanton or fraudulent manner.