G.R. No. 236263, July 19, 2022
Oceanmarine Resources Corporation, Petitioner, vs. Jenny Rose G. Nedic, on behalf of her minor son, Jerome Nedic Ellao, Respondent.

FACTS

The case originated from a complaint for damages filed by respondent Jenny Rose Nedic on behalf of her minor son, stemming from the death of Romeo Ellao, her common-law partner and the child’s father. Romeo was employed as a company driver by petitioner Oceanmarine Resources Corporation. On November 2, 2011, while performing his duties by driving company employees to various banks for transactions, Romeo was shot and killed by unidentified motorcycle-riding assailants who robbed the company funds in the vehicle. Following his death, respondent demanded compensation from the petitioner for loss of future income. Upon denial, she filed an action for damages under Article 1711 of the Civil Code, which holds employers liable for compensation for an employee’s death arising out of and in the course of employment.
The Regional Trial Court dismissed the complaint, ruling that the respondent failed to establish the necessary causal connection between the petitioner’s negligence and Romeo’s death, which is required in an ordinary action for damages. On appeal, the Court of Appeals reversed the RTC. The CA held that Article 1711 imposes an automatic liability on the employer, without need to prove negligence, so long as the death occurred in the course of employment. It awarded actual damages for loss of earning capacity. Petitioner elevated the case to the Supreme Court, arguing primarily that Article 1711 had been superseded by the Labor Code’s Employees’ Compensation provisions.

ISSUE

The primary issue is whether an heir of a deceased employee can recover damages for loss of earning capacity from the employer under Article 1711 of the Civil Code, notwithstanding the existence of the Employees’ Compensation program under the Labor Code.

RULING

The Supreme Court granted the petition in part. It held that Title II, Book IV of the Labor Code on Employees Compensation and State Insurance Fund has indeed superseded Article 1711 of the Civil Code. The current system is a no-fault compensation scheme where liability is primarily shouldered by the State Insurance Fund, not the employer directly. Therefore, an employee or heir’s primary recourse for a work-connected death or injury is to file a claim for benefits under the Employees’ Compensation Commission (ECC), not a direct action against the employer under Article 1711.
However, the Court clarified that this does not leave the heirs without an alternative remedy against the employer. The heirs retain a choice of action. They may either: (1) claim compensation benefits under the Labor Code, which provides fixed and limited benefits regardless of fault; or (2) institute an ordinary action for damages under the Civil Code, specifically Article 2176 on quasi-delict. The second option requires proof of the employer’s negligence or fault as the proximate cause of the death, but if successful, can yield higher damages, including loss of earning capacity. In this case, the respondent erroneously invoked Article 1711, which is no longer operative. Since she did not prove any negligence on the part of the employer that led to the criminal attack, her action for damages under the Civil Code could not prosper. The award of damages by the CA was thus set aside. The Court emphasized that the proper remedy for the heirs was to file a claim for death benefits under the ECC, which they had apparently not pursued.