G.R. No. L-27885 February 26, 1981
Franklin Baker Company of the Philippines, petitioner, vs. Workmen’s Compensation Commission, Procopio K. Santos and City Sheriff of San Pablo City, respondents.

FACTS

Salvador Abrigo, an employee of Franklin Baker Company, filed a claim for disability compensation due to psycho-neurosis allegedly traceable to his work. The Workmen’s Compensation Commission, in a 1964 decision, found his illness compensable and ordered the company to pay him P358.55. The decision became final as the company did not appeal. The company issued a check for the award but deducted P118.75, claiming this amount represented prior payments made to Abrigo under its non-occupational sickness disability benefit plan from a collective bargaining agreement.
The Commission, in a 1966 order, declared the deduction erroneous, stating the compensation award was a statutory liability distinct from private contractual benefits. The company refused to pay the balance. Consequently, the Commission issued a writ of execution in 1967. The company then filed this petition for certiorari and prohibition to challenge the order and restrain the execution.

ISSUE

Whether the employer may deduct from a final compensation award an amount it previously paid to the claimant under a private non-occupational disability benefit plan.

RULING

No, the deduction is improper. The legal logic is anchored on the distinct nature and source of the liabilities. The award of P358.55 was made pursuant to the Workmen’s Compensation Act, a public law imposing a statutory obligation on the employer. In contrast, the P118.75 payment arose from a private collective bargaining agreement providing benefits for non-occupational illnesses. The Commission correctly ruled that these are separate liabilities; one is a public, legal duty, and the other is a private, contractual obligation. The employer cannot unilaterally offset a contractual payment against a final judicial or quasi-judicial award for a separate statutory liability.
Furthermore, the 1964 decision had attained finality. The company’s failure to appeal rendered the award executory and compliance mandatory. Its subsequent, self-authorized deduction constituted an invalid modification of a final judgment. The Court also noted that the prior payment covered periods of disability including non-occupational ailments like asthma and vertigo, not solely the compensable psycho-neurosis, making the deduction factually baseless. The employer’s refusal to pay the balance after final judgment amounted to bad faith and unjustifiable delay. Consequently, the Court affirmed the Commission’s orders and writ of execution, ordering the company to pay the balance with 12% annual interest from 1964.