PHILIPPINE GLOBAL COMMUNICATIONS, INC., petitioner, vs. RICARDO DE VERA, respondent.

D E C I S I O N

GARCIA, J.:

Before us is this appeal by way of a petition for review on certiorari from the 12 September 2002 Decision[1] and the 13 February 2003 Resolution[2] of the Court of Appeals in CA-G.R. SP No. 65178, upholding the finding of illegal dismissal by the National Labor Relations Commission against petitioner.

As culled from the records, the pertinent facts are:

Petitioner Philippine Global Communications, Inc. (PhilCom), is a corporation engaged in the business of communication services and allied activities, while respondent Ricardo De Vera is a physician by profession whom petitioner enlisted to attend to the medical needs of its employees. At the crux of the controversy is Dr. De Veras status vis a vis petitioner when the latter terminated his engagement.

It appears that on 15 May 1981, De Vera, via a letter dated 15 May 1981,[3] offered his services to the petitioner, therein proposing his plan of works required of a practitioner in industrial medicine, to include the following:

1. Application of preventive medicine including periodic check-up of employees;

2. Holding of clinic hours in the morning and afternoon for a total of five (5)

hours daily for consultation services to employees;

3. Management and treatment of employees that may necessitate hospitalization

including emergency cases and accidents;

4. Conduct pre-employment physical check-up of prospective employees with no

additional medical fee;

5. Conduct home visits whenever necessary;

6. Attend to certain medical administrative function such as accomplishing

medical forms, evaluating conditions of employees applying for sick leave

of absence and subsequently issuing proper certification, and all matters

referred which are medical in nature.

The parties agreed and formalized respondents proposal in a document denominated as RETAINERSHIP CONTRACT[4] which will be for a period of one year subject to renewal, it being made clear therein that respondent will cover the retainership the Company previously had with Dr. K. Eulau and that respondents retainer fee will be at P4,000.00 a month. Said contract was renewed yearly.[5] The retainership arrangement went on from 1981 to 1994 with changes in the retainers fee. However, for the years 1995 and 1996, renewal of the contract was only made verbally.

The turning point in the parties relationship surfaced in December 1996 when Philcom, thru a letter[6] bearing on the subject boldly written as TERMINATION RETAINERSHIP CONTRACT, informed De Vera of its decision to discontinue the latters retainers contract with the Company effective at the close of business hours of December 31, 1996 because management has decided that it would be more practical to provide medical services to its employees through accredited hospitals near the company premises.

On 22 January 1997, De Vera filed a complaint for illegal dismissal before the National Labor Relations Commission (NLRC), alleging that that he had been actually employed by Philcom as its company physician since 1981 and was dismissed without due process. He averred that he was designated as a company physician on retainer basis for reasons allegedly known only to Philcom. He likewise professed that since he was not conversant with labor laws, he did not give much attention to the designation as anyway he worked on a full-time basis and was paid a basic monthly salary plus fringe benefits, like any other regular employees of Philcom.

On 21 December 1998, Labor Arbiter Ramon Valentin C. Reyes came out with a decision[7] dismissing De Veras complaint for lack of merit, on the rationale that as a retained physician under a valid contract mutually agreed upon by the parties, De Vera was an independent contractor and that he was not dismissed but rather his contract with [PHILCOM] ended when said contract was not renewed after December 31, 1996.

On De Veras appeal to the NLRC, the latter, in a decision[8] dated 23 October 2000, reversed (the word used is modified) that of the Labor Arbiter, on a finding that De Vera is Philcoms regular employee and accordingly directed the company to reinstate him to his former position without loss of seniority rights and privileges and with full backwages from the date of his dismissal until actual reinstatement. We quote the dispositive portion of the decision:

WHEREFORE, the assailed decision is modified in that respondent is ordered to

reinstate complainant to his former position without loss of seniority rights and

privileges with full backwages from the date of his dismissal until his actual

reinstatement computed as follows:

Backwages:

a) Basic Salary

From Dec. 31, 1996 to Apr. 10, 2000 = 39.33 mos.

P44,400.00 x 39.33 mos. P1,750,185.00

b) 13th Month Pay:

1/12 of P1,750,185.00 145,848.75

c) Travelling allowance:

P1,000.00 x 39.33 mos. 39,330.00

GRAND TOTAL P1,935,363.75

The decision stands in other aspects.

SO ORDERED.

With its motion for reconsideration having been denied by the NLRC in its order of 27 February 2001,[9] Philcom then went to the Court of Appeals on a petition for certiorari, thereat docketed as CA-G.R. SP No. 65178, imputing grave abuse of discretion amounting to lack or excess of jurisdiction on the part of the NLRC when it reversed the findings of the labor arbiter and awarded thirteenth month pay and traveling allowance to De Vera even as such award had no basis in fact and in law.

On 12 September 2002, the Court of Appeals rendered a decision,[10] modifying that of the NLRC by deleting the award of traveling allowance, and ordering payment of separation pay to De Vera in lieu of reinstatement, thus:

WHEREFORE, premises considered, the assailed judgment of public respondent,

dated 23 October 2000, is MODIFIED. The award of traveling allowance is deleted

as the same is hereby DELETED. Instead of reinstatement, private respondent shall be

paid separation pay computed at one (1) month salary for every year of service

computed from the time private respondent commenced his employment in 1981 up to

the actual payment of the backwages and separation pay. The awards of backwages

and 13th month pay STAND.

SO ORDERED.

In time, Philcom filed a motion for reconsideration but was denied by the appellate court in its resolution of 13 February 2003.[11]

Hence, Philcoms present recourse on its main submission that -

THE COURT OF APPEALS ERRED IN SUSTAINING THE DECISION OF THE

NATIONAL LABOR RELATIONS COMMISSION AND RENDERING THE

QUESTIONED DECISION AND RESOLUTION IN A WAY THAT IS NOT IN

ACCORD WITH THE FACTS AND APPLICABLE LAWS AND

JURISPRUDENCE WHICH DISTINGUISH LEGITIMATE JOB CONTRACTING

AGREEMENTS FROM THE EMPLOYER-EMPLOYEE RELATIONSHIP.

We GRANT.

Under Rule 45 of the Rules of Court, only questions of law may be reviewed by this Court in decisions rendered by the Court of Appeals. There are instances, however, where the Court departs from this rule and reviews findings of fact so that substantial justice may be served. The exceptional instances are where:

xxx xxx xxx (1) the conclusion is a finding grounded entirely on speculation, surmise

and conjecture; (2) the inference made is manifestly mistaken; (3) there is grave abuse

of discretion; (4) the judgment is based on a misapprehension of facts; (5) the findings

of fact are conflicting; (6) the Court of Appeals went beyond the issues of the case and

its findings are contrary to the admissions of both appellant and appellees; (7) the

findings of fact of the Court of Appeals are contrary to those of the trial court; (8) said

findings of facts are conclusions without citation of specific evidence on which they

are based; (9) the facts set forth in the petition as well as in the petitioners main and

reply briefs are not disputed by the respondents; and (10) the findings of fact of the

Court of Appeals are premised on the supposed absence of evidence and contradicted

by the evidence on record.[12]

As we see it, the parties respective submissions revolve on the primordial issue of whether an employer-employee relationship exists between petitioner and respondent, the existence of which is, in itself, a question of fact[13] well within the province of the NLRC. Nonetheless, given the reality that the NLRCs findings are at odds with those of the labor arbiter, the Court, consistent with its ruling in Jimenez vs. National Labor Relations Commission,[14] is constrained to look deeper into the attendant circumstances obtaining in this case, as appearing on record.

In a long line of decisions,[15] the Court, in determining the existence of an employer-employee relationship, has invariably adhered to the four-fold test,

to wit: [1] the selection and engagement of the employee; [2] the payment of wages; [3] the power of dismissal; and [4] the power to control the employees conduct, or the so-called control test, considered to be the most important element.

Applying the four-fold test to this case, we initially find that it was respondent himself who sets the parameters of what his duties would be in offering his services to petitioner. This is borne by no less than his 15 May 1981 letter[16] which, in full, reads:

May 15, 1981

Mrs. Adela L. Vicente

Vice President, Industrial Relations

PhilCom, Paseo de Roxas

Makati, Metro Manila

M a d a m :

I shall have the time and effort for the position of Company physician with your

corporation if you deemed it necessary. I have the necessary qualifications, training

and experience required by such position and I am confident that I can serve the best

interests of your employees, medically.

My plan of works and targets shall cover the duties and responsibilities required of a

practitioner in industrial medicine which includes the following:

1. Application of preventive medicine including periodic check-up of

employees;

2. Holding of clinic hours in the morning and afternoon for a total of five (5)

hours daily for consultation services to employees;

3. Management and treatment of employees that may necessitate

hospitalization including emergency cases and accidents;

4. Conduct pre-employment physical check-up of prospective employees with

no additional medical fee;

5. Conduct home visits whenever necessary;

6. Attend to certain medical administrative functions such as accomplishing

medical forms, evaluating conditions of employees applying for sick leave

of absence and subsequently issuing proper certification, and all matters

referred which are medical in nature.

On the subject of compensation for the services that I propose to render to the

corporation, you may state an offer based on your belief that I can very well qualify

for the job having worked with your organization for sometime now.

I shall be very grateful for whatever kind attention you may extend on this matter and

hoping that it will merit acceptance, I remain

Very truly yours,

(signed)

RICARDO V. DE VERA, M.D.

Significantly, the foregoing letter was substantially the basis of the labor arbiters finding that there existed no employer-employee relationship between petitioner and respondent, in addition to the following factual settings:

The fact that the complainant was not considered an employee was recognized by the

complainant himself in a signed letter to the respondent dated April 21, 1982 attached

as Annex G to the respondents Reply and Rejoinder. Quoting the pertinent portion of

said letter:

To carry out your memo effectively and to provide a systematic and workable time

schedule which will serve the best interests of both the present and absent employee,

may I propose an extended two-hour service (1:00-3:00 P.M.) during which period I

can devote ample time to both groups depending upon the urgency of the situation. I

shall readjust my private schedule to be available for the herein proposed extended

hours, should you consider this proposal.

As regards compensation for the additional time and services that I shall render to the

employees, it is dependent on your evaluation of the merit of my proposal and your

confidence on my ability to carry out efficiently said proposal.

The tenor of this letter indicates that the complainant was proposing to extend his time

with the respondent and seeking additional compensation for said extension. This

shows that the respondent PHILCOM did not have control over the schedule of the

complainant as it [is] the complainant who is proposing his own schedule and asking

to be paid for the same. This is proof that the complainant understood that his

relationship with the respondent PHILCOM was a retained physician and not as an

employee. If he were an employee he could not negotiate as to his hours of work.

The complainant is a Doctor of Medicine, and presumably, a well-educated person.

Yet, the complainant, in his position paper, is claiming that he is not conversant with

the law and did not give much attention to his job title- on a retainer basis. But the

same complainant admits in his affidavit that his service for the respondent was

covered by a retainership contract [which] was renewed every year from 1982 to

1994. Upon reading the contract dated September 6, 1982, signed by the complainant

himself (Annex C of Respondents Position Paper), it clearly states that is a

retainership contract. The retainer fee is indicated thereon and the duration of the

contract for one year is also clearly indicated in paragraph 5 of the Retainership

Contract. The complainant cannot claim that he was unaware that the contract was

good only for one year, as he signed the same without any objections. The

complainant also accepted its renewal every year thereafter until 1994. As a literate

person and educated person, the complainant cannot claim that he does not know what

contract he signed and that it was renewed on a year to year basis.[17]

The labor arbiter added the indicia, not disputed by respondent, that from the time he started to work with petitioner, he never was included in its payroll; was never deducted any contribution for remittance to the Social Security System (SSS); and was in fact subjected by petitioner to the ten (10%) percent withholding tax for his professional fee, in accordance with the National Internal Revenue Code, matters which are simply inconsistent with an employer-employee relationship. In the precise words of the labor arbiter:

xxx xxx xxx After more than ten years of services to PHILCOM, the complainant

would have noticed that no SSS deductions were made on his remuneration or that the

respondent was deducting the 10% tax for his fees and he surely would have

complained about them if he had considered himself an employee of PHILCOM. But

he never raised those issues. An ordinary employee would consider the SSS payments

important and thus make sure they would be paid. The complainant never bothered to

ask the respondent to remit his SSS contributions. This clearly shows that the

complainant never considered himself an employee of PHILCOM and thus,

respondent need not remit anything to the SSS in favor of the complainant.[18]

Clearly, the elements of an employer-employee relationship are wanting in this case. We may add that the records are replete with evidence showing that respondent had to bill petitioner for his monthly professional fees.[19] It simply runs against the grain of common experience to imagine that an ordinary employee has yet to bill his employer to receive his salary.

We note, too, that the power to terminate the parties relationship was mutually vested on both. Either may terminate the arrangement at will, with or without cause.[20]

Finally, remarkably absent from the parties arrangement is the element of control, whereby the employer has reserved the right to control the employee not only as to the result of the work done but also as to the means and methods by which the same is to be accomplished.[21]

Here, petitioner had no control over the means and methods by which respondent went about performing his work at the company premises. He could even embark in the private practice of his profession, not to mention the fact that respondents work hours and the additional compensation therefor were negotiated upon by the parties.[22] In fine, the parties themselves practically agreed on every terms and conditions of respondents engagement, which thereby negates the element of control in their relationship. For sure, respondent has never cited even a single instance when petitioner interfered with his work.

Yet, despite the foregoing, all of which are extant on record, both the NLRC and the Court of Appeals ruled that respondent is petitioners regular employee at the time of his separation.

Partly says the appellate court in its assailed decision:

Be that as it may, it is admitted that private respondents written retainer contract was

renewed annually from 1981 to 1994 and the alleged renewal for 1995 and 1996,

when it was allegedly terminated, was verbal.

Article 280 of the Labor code (sic) provides:

The provisions of written agreement to the contrary notwithstanding and regardless

of the oral agreements of the parties, an employment shall be deemed to be regular

where the employee has been engaged to perform in the usual business or trade of the

employer, except where the employment has been fixed for a specific project or

undertaking the completion or termination of which has been determined at the time

of the engagement of the employee or where the work or services to be performed is

seasonal in nature and the employment is for the duration of the season.

An employment shall be deemed to be casual if it is not covered by the preceding

paragraph: Provided, That, any employee who has rendered at least one (1) year

of service, whether such is continuous or broken, shall be considered a regular with

respect to the activity in which he is employed and his employment shall continue

while such activity exists.

Parenthetically, the position of company physician, in the case of petitioner, is usually

necessary and desirable because the need for medical attention of employees cannot

be foreseen, hence, it is necessary to have a physician at hand. In fact, the importance

and desirability of a physician in a company premises is recognized by Art. 157 of the

Labor Code, which requires the presence of a physician depending on the number of

employees and in the case at bench, in petitioners case, as found by public respondent,

petitioner employs more than 500 employees.

Going back to Art. 280 of the Labor Code, it was made therein clear that the

provisions of a written agreement to the contrary notwithstanding or the existence of a

mere oral agreement, if the employee is engaged in the usual business or trade of the

employer, more so, that he rendered service for at least one year, such employee shall

be considered as a regular employee. Private respondent herein has been with

petitioner since 1981 and his employment was not for a specific project or

undertaking, the period of which was pre-determined and neither the work or service

of private respondent seasonal. (Emphasis by the CA itself).

We disagree to the foregoing ratiocination.

The appellate courts premise that regular employees are those who perform activities which are desirable and necessary for the business of the employer is not determinative in this case. For, we take it that any agreement may provide that one party shall render services for and in behalf of another, no matter how necessary for the latters business, even without being hired as an employee. This set-up is precisely true in the case of an independent contractorship as well as in an agency agreement. Indeed, Article 280 of the Labor Code, quoted by the appellate court, is not the yardstick for determining the existence of an employment relationship. As it is, the provision merely distinguishes between two (2) kinds of employees, i.e., regular and casual. It does not apply where, as here, the very existence of an employment relationship is in dispute.[23]

Buttressing his contention that he is a regular employee of petitioner, respondent invokes Article 157 of the Labor Code, and argues that he satisfies all the requirements thereunder. The provision relied upon reads:

ART. 157. Emergency medical and dental services. It shall be the duty of every

employer to furnish his employees in any locality with free medical and dental

attendance and facilities consisting of:

(a) The services of a full-time registered nurse when the number of employees

exceeds fifty (50) but not more than two hundred (200) except when the

employer does not maintain hazardous workplaces, in which case the

services of a graduate first-aider shall be provided for the protection of

the workers, where no registered nurse is available. The Secretary of

Labor shall provide by appropriate regulations the services that shall be

required where the number of employees does not exceed fifty (50) and

shall determine by appropriate order hazardous workplaces for purposes

of this Article;

(b) The services of a full-time registered nurse, a part-time physician and

dentist, and an emergency clinic, when the number of employees

exceeds two hundred (200) but not more than three hundred (300); and

(c) The services of a full-time physician, dentist and full-time registered nurse

as well as a dental clinic, and an infirmary or emergency hospital with

one bed capacity for every one hundred (100) employees when the

number of employees exceeds three hundred (300).

In cases of hazardous workplaces, no employer shall engage the services of a

physician or dentist who cannot stay in the premises of the establishment for at least

two (2) hours, in the case of those engaged on part-time basis, and not less than eight

(8) hours in the case of those employed on full-time basis. Where the undertaking is

nonhazardous in nature, the physician and dentist may be engaged on retained basis,

subject to such regulations as the Secretary of Labor may prescribe to insure

immediate availability of medical and dental treatment and attendance in case of

emergency.

Had only respondent read carefully the very statutory provision invoked by him, he would have noticed that in non-hazardous workplaces, the employer may engage the services of a physician on retained basis. As correctly observed by the petitioner, while it is true that the provision requires employers to engage the services of medical practitioners in certain establishments depending on the number of their employees, nothing is there in the law which says that medical practitioners so engaged be actually hired as employees,[24] adding that the law, as written, only requires the employer to retain, not employ, a part-time physician who needed to stay in the premises of the non-hazardous workplace for two (2) hours.[25]

Respondent takes no issue on the fact that petitioners business of telecommunications is not hazardous in nature. As such, what applies here is the last paragraph of Article 157 which, to stress, provides that the employer may engage the services of a physician and dentist on retained basis, subject to such regulations as the Secretary of Labor may prescribe. The successive retainership agreements of the parties definitely hue to the very statutory provision relied upon by respondent.

Deeply embedded in our jurisprudence is the rule that courts may not construe a statute that is free from doubt. Where the law is clear and unambiguous, it must be taken to mean exactly what it says, and courts have no choice but to see to it that the mandate is obeyed.[26] As it is, Article 157 of the Labor Code clearly and unequivocally allows employers in non-hazardous establishments to engage on retained basis the service of a dentist or physician. Nowhere does the law provide that the physician or dentist so engaged thereby becomes a regular employee. The very phrase that they may be engaged on retained basis, revolts against the idea that this engagement gives rise to an employer-employee relationship.

With the recognition of the fact that petitioner consistently engaged the services of respondent on a retainer basis, as shown by their various retainership contracts, so can petitioner put an end, with or without cause, to their retainership agreement as therein provided.[27]

We note, however, that even as the contracts entered into by the parties invariably provide for a 60-day notice requirement prior to termination, the same was not complied with by petitioner when it terminated on 17 December 1996 the verbally-renewed retainership agreement, effective at the close of business hours of 31 December 1996.

Be that as it may, the record shows, and this is admitted by both parties,[28] that execution of the NLRC decision had already been made at the NLRC despite the pendency of the present recourse. For sure, accounts of petitioner had already been garnished and released to respondent despite the previous Status Quo Order[29] issued by this Court. To all intents and purposes, therefore, the 60-day notice requirement has become moot and academic if not waived by the respondent himself.

WHEREFORE, the petition is GRANTED and the challenged decision of the Court of Appeals REVERSED and SET ASIDE. The 21 December 1998 decision of the labor arbiter is REINSTATED.

JEROMIE D. ESCASINAS and

EVAN RIGOR SINGCO,

Petitioners,

- versus -

SHANGRI-LAS MACTAN

ISLAND RESORT and DR.

JESSICA J.R. PEPITO,

Respondents.

G.R. No. 178827

Present:

QUISUMBING, J., Chairperson,

CARPIO MORALES,

NACHURA,*

BRION, and

PERALTA,**

JJ.

Promulgated:

March 4, 2009

x - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -x

D E C I S I O N

CARPIO MORALES, J.:

Registered nurses Jeromie D. Escasinas and Evan Rigor Singco (petitioners)

were engaged in 1999 and 1996, respectively, by Dr. Jessica Joyce R. Pepito

(respondent doctor) to work in her clinic at respondent Shangri-las Mactan Island

Resort (Shangri-la) in Cebu of which she was a retained physician.

In late 2002, petitioners filed with the National Labor Relations Commission

(NLRC) Regional Arbitration Branch No. VII (NLRC-RAB No. VII) a

complaint[1]

for regularization, underpayment of wages, non-payment of holiday

pay, night shift differential and 13th month pay differential against respondents,

claiming that they are regular employees of Shangri-la. The case was docketed

as RAB Case No. 07-11-2089-02.

Shangri-la claimed, however, that petitioners were not its employees but of

respondent doctor whom it retained via Memorandum of Agreement

(MOA)[2]

pursuant to Article 157 of the Labor Code, as amended.

Respondent doctor for her part claimed that petitioners were already

working for the previous retained physicians of Shangri-la before she was retained

by Shangri-la; and that she maintained petitioners services upon their request.

By Decision[3]

of May 6, 2003, Labor Arbiter Ernesto F. Carreon declared

petitioners to be regular employees of Shangri-la. The Arbiter thus ordered

Shangri-la to grant them the wages and benefits due them as regular employees

from the time their services were engaged.

In finding petitioners to be regular employees of Shangri-la, the Arbiter

noted that they usually perform work which is necessary and desirable to Shangri-

las business; that they observe clinic hours and render services only to Shangri-las

guests and employees; that payment for their salaries were recommended to

Shangri-las Human Resource Department (HRD); that respondent doctor was

Shangri-las in-house physician, hence, also an employee; and that the MOA

between Shangri-la and respondent doctor was an insidious mechanism in order to

circumvent [the doctors] tenurial security and that of the employees under her.

Shangri-la and respondent doctor appealed to the NLRC. Petitioners appealed too,

but only with respect to the non-award to them of some of the benefits they were

claiming.

By Decision[4]

dated March 31, 2005, the NLRC granted Shangri-las and

respondent doctors appeal and dismissed petitioners complaint for lack of merit, it

finding that no employer-employee relationship exists between petitioner and

Shangri-la. In so deciding, the NLRC held that the Arbiter erred in interpreting

Article 157 in relation to Article 280 of the Labor Code, as what is required under

Article 157 is that the employer should provide the services of medical personnel

to its employees, but nowhere in said article is a provision that nurses are required

to be employed; that contrary to the finding of the Arbiter, even if Article 280

states that if a worker performs work usually necessary or desirable in the business

of the employer, he cannot be automatically deemed a regular employee; and that

the MOA amply shows that respondent doctor was in fact engaged by Shangri-la

on a retainer basis, under which she could hire her own nurses and other clinic

personnel.

Brushing aside petitioners contention that since their application for

employment was addressed to Shangri-la, it was really Shangri-la which hired

them and not respondent doctor, the NLRC noted that the applications for

employment were made by persons who are not parties to the case and were not

shown to have been actually hired by Shangri-la.

On the issue of payment of wages, the NLRC held that the fact that, for

some months, payment of petitioners wages were recommended by Shangri-las

HRD did not prove that it was Shangri-la which pays their wages. It thus credited

respondent doctors explanation that the recommendations for payment were based

on the billings she prepared for salaries of additional nurses during Shangri-las

peak months of operation, in accordance with the retainership agreement, the

guests payments for medical services having been paid directly to Shanrgi-la.

Petitioners thereupon brought the case to the Court of Appeals which, by

Decision[5]

of May 22, 2007, affirmed the NLRC Decision that no employer-

employee relationship exists between Shangri-la and petitioners. The appellate

court concluded that all aspects of the employment of petitioners being under the

supervision and control of respondent doctor and since Shangri-la is not principally

engaged in the business of providing medical or healthcare services, petitioners

could not be regarded as regular employees of Shangri-la.

Petitioners motion for reconsideration having been denied by

Resolution[6]

of July 10, 2007, they interposed the present recourse.

Petitioners insist that under Article 157 of the Labor Code, Shangri-la is

required to hire a full-time registered nurse, apart from a physician, hence, their

engagement should be deemed as regular employment, the provisions of the MOA

notwithstanding; and that the MOA is contrary to public policy as it circumvents

tenurial security and, therefore, should be struck down as being void ab initio. At

most, they argue, the MOA is a mere job contract.

And petitioners maintain that respondent doctor is a labor-only contractor

for she has no license or business permit and no business name registration, which

is contrary to the requirements under Sec. 19 and 20 of the Implementing Rules

and Regulations of the Labor Code on sub-contracting.

Petitioners add that respondent doctor cannot be a legitimate

independent contractor, lacking as she does in substantial capital, the clinic having

been set-up and already operational when she took over as retained physician; that

respondent doctor has no control over how the clinic is being run, as shown by the

different orders issued by officers of Shangri-la forbidding her from receiving cash

payments and several purchase orders for medicines and supplies which were

coursed thru Shangri-las Purchasing Manager, circumstances indubitably showing

that she is not an independent contractor but a mere agent of Shangri-la.

In its Comment,[7]

Shangri-la questions the Special Powers of Attorneys

(SPAs) appended to the petition for being inadequate. On the merits, it prays for

the disallowance of the petition, contending that it raises factual issues, such as the

validity of the MOA, which were never raised during the proceedings before the

Arbiter, albeit passed upon by him in his Decision; that Article 157 of the Labor

Code does not make it mandatory for a covered establishment to employ health

personnel; that the services of nurses is not germane nor indispensable to its

operations; and that respondent doctor is a legitimate individual independent

contractor who has the power to hire, fire and supervise the work of the nurses

under her.

The resolution of the case hinges, in the main, on the correct interpretation

of Art. 157 vis a vis Art. 280 and the provisions on permissible job contracting of

the Labor Code, as amended.

The Court holds that, contrary to petitioners postulation, Art. 157 does not

require the engagement of full-time nurses as regular employees of a company

employing not less than 50 workers. Thus, the Article provides:

ART. 157. Emergency medical and dental services. It shall be

the duty of every employer to furnish his employees in any locality

with free medical and dental attendance and facilities consisting of:

(a) The services of a full-time registered nurse when

the number of employees exceeds fifty (50) but

not more than two hundred (200) except when the

employer does not maintain hazardous workplaces, in which case the services of a graduate

first-aider shall be provided for the protection of the

workers, where no registered nurse is available. The

Secretary of Labor shall provide by appropriate

regulations the services that shall be required where

the number of employees does not exceed fifty (50)

and shall determine by appropriate order hazardous

workplaces for purposes of this Article;

(b) The services of a full-time registered nurse, a

part-time physician and dentist, and an

emergency clinic, when the number of employees

exceeds two hundred (200) but not more than three hundred (300); and

(c) The services of a full-time physician, dentist and

full-time registered nurse as well as a dental clinic,

and an infirmary or emergency hospital with one bed

capacity for every one hundred (100) employees

when the number of employees exceeds three

hundred (300).

In cases of hazardous workplaces, no employer shall engage the

services of a physician or dentist who cannot stay in the premises of the

establishment for at least two (2) hours, in the case of those engaged on

part-time basis, and not less than eight (8) hours in the case of those

employed on full-time basis. Where the undertaking is nonhazardous

in nature, the physician and dentist may be engaged on retained

basis, subject to such regulations as the Secretary of Labor may

prescribe to insure immediate availability of medical and dental treatment and attendance in case of emergency. (Emphasis and

underscoring supplied)

Under the foregoing provision, Shangri-la, which employs more than 200

workers, is mandated to furnish its employees with the services of a full-time

registered nurse, a part-time physician and dentist, and an emergency clinic which

means that it should provide or make available such medical and allied

services to its employees, not necessarily to hire or employ a service

provider. As held in Philippine Global Communications vs. De Vera:[8]

x x x while it is true that the provision requires

employers to engage the services of medical

practitioners in certain establishments depending on the

number of their employees, nothing is there in the law

which says that medical practitioners so engaged be actually hired as employees, adding that the law, as

written, only requires the employer to retain, not employ, a

part-time physician who needed to stay in the premises of

the non-hazardous workplace for two (2) hours. (Emphasis

and underscoring supplied)

The term full-time in Art. 157 cannot be construed as referring to the type of

employment of the person engaged to provide the services, for Article 157

must not be read alongside Art. 280[9]

in order to vest employer-employee

relationship on the employer and the person so engaged. So De Vera teaches:

x x x For, we take it that any agreement may provide

that one party shall render services for and in behalf of

another, no matter how necessary for the latters

business,even without being hired as an employee. This

set-up is precisely true in the case of an independent

contractorship as well as in an agency agreement. Indeed,

Article 280 of the Labor Code, quoted by the appellate

court, is not the yardstick for determining the existence of an employment relationship. As it is, the provision

merely distinguishes between two (2) kinds of

employees, i.e., regular and casual. x x x[10] (Emphasis

and underscoring supplied)

The phrase services of a full-time registered nurse should thus be taken to refer to

the kind of services that the nurse will render in the companys premises and to its

employees, not the manner of his engagement.

As to whether respondent doctor can be considered a legitimate independent

contractor, the pertinent sections of DOLE Department Order No. 10, series of

1997, illuminate:

Sec. 8. Job contracting. There is job contracting permissible under

the Code if the following conditions are met: (1) The contractor carries on an independent business and

undertakes the contract work on his own account under his own

responsibility according to his own manner and method, free from the

control and direction of his employer or principal in all matters

connected with the performance of the work except as to the results

thereof; and (2) The contractor has substantial capital or investment in the

form of tools, equipment, machineries, work premises, and other

materials which are necessary in the conduct of his business. Sec. 9. Labor-only contracting. (a) Any person who undertakes to

supply workers to an employer shall be deemed to be engaged in labor-

only contracting where such person: (1) Does not have substantial capital or investment in the form

of tools, equipment, machineries, work premises and other

materials; and (2) The workers recruited and placed by such persons are

performing activities which are directly related to the principal

business or operations of the employer in which workers are

habitually employed. (b) Labor-only contracting as defined herein is hereby prohibited

and the person acting as contractor shall be considered merely as an

agent or intermediary of the employer who shall be responsible to the

workers in the same manner and extent as if the latter were directly

employed by him. (c) For cases not falling under this Article, the Secretary of Labor

shall determine through appropriate orders whether or not the

contracting out of labor is permissible in the light of the circumstances of

each case and after considering the operating needs of the employer and

the rights of the workers involved. In such case, he may prescribe

conditions and restrictions to insure the protection and welfare of the

workers. (Emphasis supplied)

The existence of an independent and permissible contractor relationship is

generally established by considering the following determinants: whether the

contractor is carrying on an independent business; the nature and extent of the

work; the skill required; the term and duration of the relationship; the right to

assign the performance of a specified piece of work; the control and supervision of

the work to another; the employer's power with respect to the hiring, firing and

payment of the contractor's workers; the control of the premises; the duty to supply

the premises, tools, appliances, materials and labor; and the mode, manner and

terms of payment.[11]

On the other hand, existence of an employer-

employee relationship is established by the presence of the following

determinants: (1) the selection and engagement of theworkers; (2) power of

dismissal; (3) the payment of wages by whatever means; and (4) the power to

control the worker's conduct, with the latter assuming primacy in the overall

consideration.[12]

Against the above-listed determinants, the Court holds that respondent

doctor is a legitimate independent contractor. That Shangri-la provides the clinic

premises and medical supplies for use of its employees and guests does not

necessarily prove that respondent doctor lacks substantial capital and

investment. Besides, the maintenance of a clinic and provision of medical services

to its employees is required under Art. 157, which are not directly related to

Shangri-las principal business operation of hotels and restaurants.

As to payment of wages, respondent doctor is the one who underwrites the

following: salaries, SSS contributions and other benefits of the staff[13]

; group life,

group personal accident insurance and life/death insurance[14]

for the staff with

minimum benefit payable at 12 times the employees last drawn salary, as well as

value added taxes and withholding taxes, sourced from her P60,000.00 monthly

retainer fee and 70% share of the service charges from Shangri-las guests who

avail of the clinic services. It is unlikely that respondent doctor would report

petitioners as workers, pay their SSS premium as well as their wages if they were

not indeed her employees.[15]

With respect to the supervision and control of the nurses and clinic staff, it is

not disputed that a document, Clinic Policies and Employee Manual[16]

claimed to

have been prepared by respondent doctor exists, to which petitioners gave their

conformity[17]

and in which they acknowledged their co-terminus employment

status. It is thus presumed that said document, and not the employee manual being

followed by Shangri-las regular workers, governs how they perform their

respective tasks and responsibilities.

Contrary to petitioners contention, the various office directives issued by

Shangri-las officers do not imply that it is Shangri-las management and not

respondent doctor who exercises control over them or that Shangri-la has control

over how the doctor and the nurses perform their work. The letter[18]

addressed to

respondent doctor dated February 7, 2003 from a certain Tata L. Reyes giving

instructions regarding the replenishment of emergency kits is, at most,

administrative in nature, related as it is to safety matters; while the letter[19]

dated

May 17, 2004 from Shangri-las Assistant Financial Controller, Lotlot Dagat,

forbidding the clinic from receiving cash payments from the resorts guests is a

matter of financial policy in order to ensure proper sharing of the proceeds,

considering that Shangri-la and respondent doctor share in the guests payments for

medical services rendered. In fine, as Shangri-la does not control how the work

should be performed by petitioners, it is not petitioners employer.

WHEREFORE, the petition is hereby DENIED. The Decision of the Court

of Appeals dated May 22, 2007 and the Resolution dated July 10,

2007 are AFFIRMED.

OCEAN BUILDERS

CONSTRUCTION CORP.,

and/or DENNIS HAO,

Petitioners,

- versus -

SPOUSES ANTONIO and

ANICIA CUBACUB,

Respondents.

G.R. No. 150898

Present:

CARPIO MORALES, Chairperson,

BRION,

BERSAMIN,

VILLARAMA, JR., and

SERENO, JJ.

Promulgated:

April 13, 2011

x - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - x

D E C I S I O N

CARPIO MORALES, J.:

Bladimir Cubacub (Bladimir) was employed as maintenance man by petitioner

company Ocean Builders Construction Corp. at its office in Caloocan City.

On April 9, 1995, Bladimir was afflicted with chicken pox. He was thus

advised by petitioner Dennis Hao (Hao), the companys general manager, to rest for

three days which he did at the companys barracks where he lives free of charge.

Three days later or on April 12, 1995, Bladimir went about his usual chores

of manning the gate of the company premises and even cleaned the company

vehicles. Later in the afternoon, however, he asked a co-worker, Ignacio Silangga

(Silangga), to accompany him to his house in Capas, Tarlac so he could

rest. Informed by Silangga of Bladimirs intention, Hao gave Bladimir P1,000.00

and ordered Silangga to instead bring Bladimir to the nearest hospital.

Along with co-workers Narding and Tito Vergado, Silangga thus brought

Bladimir to the Caybiga Community Hospital (Caybiga Hospital), a primary-care

hospital around one kilometer away from the office of the company.

The hospital did not allow Bladimir to leave the hospital. He was then

confined, with Narding keeping watch over him. The next day, April 13, 1995, a

doctor of the hospital informed Narding that they needed to talk to Bladimirs

parents, hence, on Silanggas request, their co-workers June Matias and Joel Edrene

fetched Bladimirs parents from Tarlac.

At about 8 oclock in the evening of the same day, April 13, 1995, Bladimirs

parents-respondent spouses Cubacub, with their friend Dr. Hermes Frias (Dr.

Frias), arrived at the Caybiga Hospital and transferred Bladimir to the Quezon City

General Hospital (QCGH) where he was placed in the intensive care unit and died

the following day, April 14, 1995.

The death certificate issued by the QCGH recorded Bladimirs immediate

cause of death as cardio-respiratory arrest and the antecedent cause as

pneumonia. On the other hand, the death certificate issued by Dr. Frias recorded

the causes of death as cardiac arrest, multiple organ system failure, septicemia and

chicken pox.

Bladimirs parents-herein respondents later filed on August 17, 1995 before the

Tarlac Regional Trial Court (RTC) at Capas a complaint for damages against

petitioners, alleging that Hao was guilty of negligence which resulted in the

deterioration of Bladimirs condition leading to his death.

By Decision of April 14, 1997,[1]

Branch 66 of the Tarlac RTC at Capas dismissed

the complaint, holding that Hao was not negligent. It ruled that Hao was not under

any obligation to bring Bladimir to better tertiary hospitals, and assuming that

Bladimir died of chicken pox aggravated by pneumonia or some other

complications due to lack of adequate facilities at the hospital, the same cannot be

attributed to Hao.

On respondents appeal, the Court of Appeals, by Decision of June 22,

2001, reversed the trial courts decision, holding that by Haos failure to bring

Bladimir to a better-equipped hospital, he violated Article 161 of the Labor

Code. It went on to state that Hao should have foreseen that Bladimir, an adult,

could suffer complications from chicken pox and, had he been brought to hospitals

like St. Lukes, Capitol Medical Center, Philippine General Hospital and the like,

Bladimir could have been saved.

Thus the appellate court disposed: WHEREFORE, the decision of the Regional Trial Court of Capas,

Tarlac, Branch 66 in Civil Case No. 349 dated April 14, 1997 is hereby

REVERSED and SET ASIDE and a new one rendered holding the

defendants solidarily liable to plaintiffs-appellants for the following:

1. P50,000.00 for the life of Bladimir Cubacub;

2. P584,630.00 for loss of Bladimirs earning capacity;

3. P4,834.60 as reimbursement of expenses incurred at Quezon

City General Hospital as evidenced by Exhibits E to E-14

inclusive;

4. P18,107.75 as reimbursement of expenses for the 5-day wake

covered by Exhibits F to F-17;

5. P30,000.00 as funeral expenses at Prudential Funeral Homes

covered by Exhibit I;

6. P6,700.00 for acquisition of memorial lot at

Sto. Rosario Memorial Park covered by Exhibit J;

7. P50,000.00 as moral damages;

8. P20,000.00 as exemplary damages;

9. P15,000.00 as attorneys fees and

10. Cost of suit.

SO ORDERED.[2]

The motion for reconsideration was denied by Resolution[3]

of November 26, 2001,

hence this petition.

Petitioners maintain that Hao exercised the diligence more than what the law

requires, hence, they are not liable for damages.

The petition is meritorious.

At the onset, the Court notes that the present case is one for damages based

on torts, the employer-employee relationship being merely incidental. To

successfully prosecute an action anchored on torts, three elements must be

present, viz: (1) duty (2) breach (3) injury and proximate causation. The assailed

decision of the appellate court held that it was the duty of petitioners to provide

adequate medical assistance to the employees under Art. 161 of the Labor Code,

failing which a breach is committed.

Art. 161 of the Labor Code provides:

ART. 161. Assistance of employer. It shall be the duty of any employer to

provide all the necessary assistance to ensure the adequate and

immediate medical and dental attendance and treatment to an injured or

sick employee in case of emergency. (emphasis and underscoring

supplied)

The Implementing Rules of the Code do not enlighten what the phrase adequate

and immediate medical attendance means in relation to an emergency. It would

thus appear that the determination of what it means is left to the employer, except

when a full-time registered nurse or physician are available on-site as required,

also under the Labor Code, specifically Art. 157 which provides:

Article 157. Emergency Medical and Dental Services. It shall be the duty of

every employer to furnish his employees in any locality with free

medical and dental attendance and facilities consisting of:

(a) The services of a full-time registered nurse when the

number of employees exceeds fifty (50) but not more than

two hundred (200) except when the employer does not

maintain hazardous workplaces, in which case, the services

of a graduate first-aider shall be provided for the protection

of workers, where no registered nurse is available. The

Secretary of Labor and Employment shall provide by

appropriate regulations, the services that shall be required

where the number of employees does not exceed fifty (50)

and shall determine by appropriate order, hazardous

workplaces for purposes of this Article;

(b) The services of a full-time registered nurse, a part-time

physician and dentist, and an emergency clinic, when the

number of employees exceeds two hundred (200) but not

more than three hundred (300); and

(c) The services of a full-time physician, dentist and a full-time

registered nurse as well as a dental clinic and an infirmary or

emergency hospital with one bed capacity for every one

hundred (100) employees when the number of employees

exceeds three hundred (300). (emphasis and underscoring

supplied)

In the present case, there is no allegation that the company premises are

hazardous. Neither is there any allegation on the number of employees the

company has. If Haos testimony[4]

would be believed, the company had only seven

regular employees and 20 contractual employees still short of the minimum 50

workers that an establishment must have for it to be required to have a full-time

registered nurse.

The Court can thus only determine whether the actions taken by petitioners

when Bladimir became ill amounted to the necessary assistance to ensure adequate

and immediate medical . . . attendance to Bladimir as required under Art. 161 of

the Labor Code.

As found by the trial court and borne by the records, petitioner Haos advice

for Bladimir to, as he did, take a 3-day rest and to later have him brought to the

nearest hospital constituted adequate and immediate medical attendance that he is

mandated, under Art. 161, to provide to a sick employee in an emergency.

Chicken pox is self-limiting. Hao does not appear to have a medical

background. He may not be thus expected to have known that Bladimir needed to

be brought to a hospital with better facilities than the Caybiga Hospital, contrary to

appellate courts ruling.

AT ALL EVENTS, the alleged negligence of Hao cannot be considered as

the proximate cause of the death of Bladimir. Proximate cause is that which, in

natural and continuous sequence, unbroken by an efficient intervening cause,

produces injury, and without which, the result would not have occurred.[5]

An

injury or damage is proximately caused by an act or failure to act, whenever it

appears from the evidence in the case that the act or omission played

a substantial part in bringing about or actually causing the injury or damage, and

that the injury or damage was either a direct result or a reasonably probable

consequence of the act or omission.[6]

Verily, the issue in this case is essentially factual in nature. The dissent, apart from

adopting the appellate courts findings, finds that Bladimir contracted chicken pox

from a co-worker and Hao was negligent in not bringing that co-worker to the

nearest physician, or isolating him as well. This finding is not, however, borne by

the records. Nowhere in the appellate courts or even the trial courts decision is

there any such definite finding that Bladimir contracted chicken pox from a co-

worker. At best, the only allusion to another employee being afflicted with chicken

pox was when Hao testified that he knew it to heal within three days as was the

case of another worker, without reference, however, as towhen it happened.[7]

On the issue of which of the two death certificates is more credible, the

dissent, noting that Dr. Frias attended to Bladimir during his last illness, holds that

the certificate which he issued citing chicken pox as antecedent cause

deserves more credence.

There appears, however, to be no conflict in the two death certificates on the

immediate cause of Bladimirs death since both cite cardio-respiratory arrest due to

complications from pneumonia per QCGH, septicemia and chicken pox per Dr.

Frias. In fact, Dr. Frias admitted that the causes of death in both certificates were

the same.[8]

Be that as it may, Dr. Frias could not be considered as Bladimirs attending

physician, he having merely ordered Bladimirs transfer to the QCGH after seeing

him at theCaybiga Hospital. He thereafter left Bladimir to the care of doctors at

QCGH, returning to Capas, Tarlac at 4 oclock the following morning or eight

hours after seeing Bladimir.As he himself testified upon cross-examination, he

did not personally attend to Bladimir anymore once the latter was brought to the

ICU at QCGH.[9]

It bears emphasis that a duly-registered death certificate is considered a

public document and the entries therein are presumed correct, unless the party who

contests its accuracy can produce positive evidence establishing otherwise.[10]

The

QCGH death certificate was received by the City Civil Registrar on April 17,

1995. Not only was the certificate shown by positive evidence to be inaccurate. Its

credibility, more than that issued by Dr. Frias, becomes more pronounced as note

is taken of the fact that he was not around at the time of death.

IN FINE, petitioner company and its co-petitioner manager Dennis Hao are

not guilty of negligence.

WHEREFORE, the petition is GRANTED. The challenged Decision of the

Court of Appeals is REVERSED, and the complaint is hereby DISMISSED.

MORRIS v. BAKER AUTO PARTS

Michigan Court of Appeals.

Decided November 27, 1974.

Cholette, Perkins & Buchanan (by Kenneth L. Block), for Baker Auto Parts and Employers

Mutual Casualty Company.

Vandeveer, Garzia, Tonkin, Kerr & Heaphy, P.C. (by James A. Sullivan), for Lustre Finish,

American Auto Parts, and Michigan State Accident Fund.

Hillman, Baxter & Hammond, for Gerald DeYoung and Citizens Mutual Insurance Company.

Before: HOLBROOK, P.J., and T.M. BURNS and VAN VALKENBURG, JJ.

HOLBROOK, P.J.

While in the employ of defendant Baker Auto Parts in 1966, plaintiff suffered an injury to

his left elbow which necessitated an operation to transplant his ulnar nerve. Plaintiff

petitioned on August 28, 1967, for a hearing on his claim for compensation. By decision

dated May 17, 1968, the referee found in plaintiff's favor. In November 1969 plaintiff

petitioned for another hearing. The hearing was held in May 1972 and plaintiff was

awarded continuing partial disability compensation. The award was affirmed by the

Workmen's Compensation Appeal Board (hereinafter referred to as WCAB), on April 5,

1974, with the exception that the WCAB ordered that interest be paid at the rate of 6%

per annum from the date each weekly payment was due until paid rather than 5% as

ordered by the referee. Leave to appeal was granted by this Court on August 21, 1974,

restricted to the propriety of the award of

[57 Mich. App. 67]

6% interest, and we further ordered that past due payments be made forthwith together with

interest at 5%, holding in abeyance the additional 1% interest. We are now advised that

$12,658.82 for 182 weeks compensation plus 5% interest and some other compensation has

since been paid.

In Maxwell v General Motors Corp, Fleetwood Division, WCO 1973 No 1075, the WCAB

began to order 6% interest be paid in its awards. In this state, interest had not been

allowed on workmen's compensation awards until Wilson v Doehler-Jarvis Division of

Nat'l Lead Co, 358 Mich. 510; 100 N.W.2d 226 (1960). Wilson expressly

overruled Fowler v Muskegon County 340 Mich. 522; 65 N.W.2d

801 (1954). Fowler had held that as interest in Michigan was purely statutory and there

was no provision in the workmen's compensation law therefor, interest could not be

awarded. In Wilson, at 358 Mich. 514-517; 100 N.W.2d 228-229, Mr. Justice VOELKER,

speaking for the Supreme Court, wrote:

"The Workmen's Compensation Act neither provides for, nor forbids, the allowance of

interest by the circuit court; the subject is simply not mentioned. The question is, does

the circuit court have authority to allow the legal rate of interest when it enters a

judgment on a compensation award? In the Fowler Case we said that interest is purely

statutory, yet the fact is that we have consistently allowed interest in many cases in

which no express statute could be invoked. See Hammond v Hannin, 21 Mich. 374

(1870) (damages for breach of contract to convey land); McCreery v Green, 38 Mich.

172 (1878) (fraudulent conveyance, breach of contract); Snow v Nowlin, 43 Mich. 383; 5

NW 443 (1880) (fraudulent conveyance); Taylor v Bay City Street R Co, 101 Mich. 140;

59 NW 447 (1894) (damages for negligence); Kaminski v Wayne County Board of

Auditors, 287 Mich. 62; 282 NW 902 (1938) (suit for back salary of a circuit court

commissioner).

[57 Mich. App. 68]

"On this same subject the United States Supreme Court in Rodgers v United States, 332 U.S.

371, 373; 68 S.Ct. 5; 92 L Ed 3 (1947), speaking through Mr. Justice Black said:

"`There is no language in the agricultural adjustment act or in any other act of congress

which specifically allows or forbids interest on penalties such as these prior to judgment.

But the failure to mention interest in statutes which create obligations has not been

interpreted by this Court as manifesting an unequivocal congressional purpose that the

obligation shall not bear interest. Billings v United States, 232 U.S. 261, 284-288; 34

S.Ct. 421; 58 L Ed 596 (1914). For in the absence of an unequivocal prohibition of

interest on such obligations, this Court has fashioned rules which granted or denied

interest on particular statutory obligations by an appraisal of the congressional purpose

in imposing them and in the light of general principles deemed relevant by the Court.

See, e.g., Royal Indemnity Co v United States, 313 U.S. 289; 61 S.Ct. 995; 85 L Ed

1361 (1941); Board of Commissioners of Jackson County v United States, 308 U.S.

343; 60 S.Ct. 285; 84 L Ed 313 (1939).

"`As our prior cases show, a persuasive consideration in determining whether such

obligations shall bear interest is the relative equities between the beneficiaries of the

obligation and those upon whom it has been imposed. And this Court has generally

weighed these relative equities in accordance with the historic judicial principle that one

for whose financial advantage an obligation was assumed or imposed, and who has

suffered actual money damages by another's breach of that obligation, should be fairly

compensated for the loss thereby sustained (citing authority).'

"We also feel that the failure of the legislature to mention interest does not necessarily

mean that it intended that the obligation created by it should not bear interest. Rather

we must look to the purpose of the legislation:

"`The primary purpose of the Workmen's Compensation Act is to provide compensation

for disability or death resulting from occupational injuries or diseases or accidental injury

to or death of employees. The

[57 Mich. App. 69]

statute is a remedial one enacted primarily for the benefit of the man who works in the pursuits

subject to its provisions; it is for the benefit of injured employees and not injured employers.' (24

MLP, Workmen's Compensation, 2, p 229).

"Who benefited from the delay in payment here? Who, if anyone, suffered any loss? In

the instant case, the disputed claim for compensation has been in the throes of litigation

for over 5 years. In the meantime the defendant-appellant has had the possession and

use of funds that it now appears rightfully belonged all along to the plaintiff, while the

plaintiff (theoretically if not actually) had to raise money elsewhere (and presumably pay

interest on it) to meet the daily necessities of life. In a real sense, then, the employee

and his dependents have been obliged to help subsidize the employer in the long,

expensive fight for possession of the money thus wrongfully withheld.

"Considering the broad purposes of the Workmen's Compensation Act and the various

equities involved we think and hold that the circuit court properly had jurisdiction to allow

interest on the award. In so holding we expressly overrule the contrary principles

expressed in the Fowler Case." (Emphasis supplied.)

In the case of Drake v Norge Division, Borg-Warner Corp, 367 Mich. 464, 468; 116

N.W.2d 842, 844 (1962), our Supreme Court stated:

"Unless interest is charged for past due benefits awarded, the employee inevitably will

receive less than he is entitled to receive. By the same token, unless interest is charged

for past due benefits awarded, the employer will have had the free use of money

determined to have been due the employee. Our belated recognition of the elementary

nature of the equities involved in this controversy finally establishes a parity between

the employee who ultimately collects accrued benefits and the employer who redeems a

claim by paying benefits in advance, at a commuted value of course (1948 CL

412.22; MSA 17.172)." (Emphasis supplied.)

[57 Mich. App. 70]

In 3 Larson's Workmen's Compensation Law, 83.40, pp 354.83-354.84, Professor Larson

wrote as follows:

"As to the right to interest on compensation payments, there is considerable difference

among the states as to the date from which interest should run. Minnesota has held in a

death case that interest should run. Minnesota has held in a death case that interest

should run only from the date of the claim, not from the date of the death; but Michigan,

by judicial decision, has decreed that interest is payable from the date of death, that is,

from the date each compensation payment `would have been due if it had been paid

voluntarily,' rather than from the date of death or the date of the highest appellate

decision. Accordingly, in a subsequent case, interest was allowed from the date of

injury, 1953, although no claim had been made until 1958. Oklahoma has selected a still

different date, that of the award following the original hearing. In the case of an award

that had been appealed, vacated, and reinstated, the court held that interest should run

from the date the award first became due, that is, immediately after the original hearing

and decision, which was favorable to claimant. Florida has held that, when attorneys'

fees have been awarded to claimant and the case has been appealed, interest is

payable on the attorneys' fees for the time the case is on appeal, if the decision is

affirmed." (Emphasis supplied.)

In Ralston Purina Co v Parsons Feed & Farm Supply, Inc, 416 F.2d 207, 213 (CA 8,

1969), Judge Blackmun, citing the Rodgers case, stated that the United States

Supreme Court, when faced with the problem of interest not provided for by statute,

"has approached and resolved these problems in a sense of equity or fairness".

Rodgers was also cited in Strachan Shipping Co v Wedemeyer, 452 F.2d 1225, 1228,

fn 10 (CA 5, 1971), cert den 406 U.S. 958; 92 S.Ct. 2060; 32 L Ed 2d 344 (1972). The

lone issue there decided was

[57 Mich. App. 71]

whether a Deputy Commissioner of the Bureau of Employees Compensation of the United

States Department of Labor, in making a compensation award under the Longshoremen's &

Harbor Workers' Compensation Act, 33 USC 901, et seq., had authority to include interest at the

rate of 6% per annum on compensation installments from the time payment would have been

due had the employer not controverted the right to compensation. In reviewing the legislative

history of the act, it was found that, as first enacted in 1927, there was no provision for interest

on defaulted payments. The Court wrote, on pp 1229-1230:

"In the absence of a provision either providing for or forbidding the allowance of interest

in compensation cases, most state courts have awarded interest on each installment

from its due date. The rationale as expressed by the Supreme Court of Florida is

particularly pertinent to the case at bar:

"`The compensation act is to be construed in favor of the working man. Not only have

we said this on many occasions but the act itself so provides. Section 440.26, FSA. If an

employer controverts the right to compensation, the penalty fixed by the law for an

unsuccessful contest is not only the payment in full of the award from the beginning but

also attorneys' fees and other specified costs. If a carrier fails to pay an installment due

without an award within the specified period of fourteen days, under specified

circumstances, the carrier suffers a penalty of 10% thereof, Section 440.20(5); and if the

carrier fails to pay an award within fourteen days, there may be added thereto an

amount equal to 20% thereof, Section 440.20(6), FS 1951, FSA. The basic philosophy

of the act is to insure and secure prompt payment of compensation or other awards to

the man who works for wages or his beneficiaries. This Court knows that the smaller the

award of compensation, the greater is the need for the prompt payment thereof. It is

common knowledge that those who work for small wages are dependent upon such

wages for their immediate

[57 Mich. App. 72]

livelihood. Inherent in the act itself is the intention that if such an award is wrongfully withheld

(and under the law it is wrongfully withheld if it be eventually determined that it should have

been paid), the person or the party which should have paid it should be compelled to pay, as

damages for its detention, lawful interest thereon from the date it should have been paid ...'

Parker v Brinson Construction Co, 78 So.2d 873, 875 (Fla, 1955).

"Under a well-settled rule, this Court should show `great deference to the interpretation

given the statute by the officers or agency charged with its administration.'" (Emphasis

supplied.)

Thus, it is apparent that the basis for awarding interest on workmen's compensation

awards may rest in equity and fairness absent a specific statute on the subject. The

WCAB has awarded interest at 6% per annum. Such awards of interest, when fair and

reasonable, should be upheld. We rule that under the law it has that power subject only

to judicial review. Under the present law, legal interest is permitted to be charged at the

rate of 6% per annum. With this in mind and considering that 6% interest is being

awarded to compensate an injured worker for monies improperly withheld, we find that

such an award is necessary to do equity and is therefore fair, just and valid. In passing,

it is well to state that we are cognizant that an injured worker not paid compensation

when due him or her would certainly, if the need arose, not be able to borrow money to

live on at the 6% rate awarded.

In speaking of delays in workmen's compensation cases, this Court in DeMott v Battle

Creek Goodwill Industries, 51 Mich.App. 127, 130; 214 N.W.2d 554, 556 (1974), stated

in part as follows:

"We do not assess blame for the long delay. Surely, the parties and their attorneys, the

hearing referee and

[57 Mich. App. 73]

the Workmen's Compensation Appeal Board, and indeed this Court all share responsibility for

the extensive time consumed in deciding plaintiff's claim. Perhaps delay occurs because time

limits for filing and adjudication are either too lenient or not strictly applied. In any case, clearly

the process takes entirely too long and demands legislative overhaul. Continuation of the

present time consuming system neither serves the litigants nor the policy objectives of the

Workmen's Compensation Act." (Emphasis supplied.)

We again reiterate our concern over the long delays occasioned in contested

compensation cases through the present process. We note that the fundamental

purpose of the Workmen's Compensation Act is to provide payment to injured

employees and dependents to enable them to have sustenance while they are in need.

Such payment in order to be effective must be received promptly by the proper persons.

MCLA 418.801; MSA 17.237(801) in pertinent part reads as follows:

"Compensation shall be paid promptly and directly to the person entitled thereto and

shall become payable on the fourteenth day after the employer has notice or knowledge

of the disability or death, on which date all compensation then accrued shall be paid.

Thereafter compensation shall be paid in weekly installments."

Delays in the WCAB and the Courts on occasion are so extended that when finally

determined, there is no one to be paid because the claimants and the dependents died.

See Dean v Arrowhead Steel Products Co, Inc, 5 Mich.App. 691; 147 N.W.2d

751 (1967). Fortunately, in this case the claimant is living and now receiving

compensation payments.

We are constrained to suggest that the Legislature give its attention to the problem of

such delays as we have addressed ourselves to in this

[57 Mich. App. 74]

opinion. It would seem that additional safeguards should be enacted to insure prompt payment

in accordance with the statute. Penalties should be provided by statute to be paid by the

employer or carrier when payment is withheld in every contested case.

We have held herein that the award of 6% interest by the WCAB is proper and legal.

We are aware of the holding in White v Extra Labor Power of America, 54 Mich.App.

370; 221 N.W.2d 214 (1974), where a panel of this Court found that interest in

workmen's compensation cases should be fixed at 5%. We decline to follow the

decision for the reasons herein fully explained.

JOSE B. SARMIENTO, petitioner, vs. EMPLOYEES' COMPENSATION COMMISSION & GOVERNMENT SERVICE INSURANCE SYSTEM (National Power Corporation), respondents.

Perpetuo L.B. Alonzo for petitioner.

The Solicitor General and The Government Corporate Counsel for respondents.

GUTIERREZ, JR., J.:

This is a petition for review of the decision rendered by the Employees' Compensation Commission in ECC Case No. 2134 on August 25, 1983 which affirmed the decision of the Government Service Insurance System (GSIS) denying the petitioner's claim for death benefits as surviving spouse of the late Flordeliza Sarmiento.

The findings of the respondent Commission are as follows:

The record shows that the late Flordeliza Sarmiento was employed by the National Power Corporation in Quezon City as accounting clerk in May 1974. At the time of her death on August 12, 1981 she was manager of the budget division. History of the deceased's illness showed that symptoms manifested as early as April 1980 as a small wound over the external auditory canal and mass over the martoid region. Biopsy of the mass revealed cancer known as "differentiated squamous cell carcinoma." The employee sought treatment in various hospitals, namely, Veterans Memorial Hospital, United Doctors Medical Hospital and Makati Medical Center. In March 1981, a soft tissue mass emerged on her left upper cheek as a result of which her lips became deformed and she was unable to close her left eye. She continued treatment and her last treatment at the Capitol Medical Center on July 12, 1 981 was due to her difficulty of swallowing food and her general debility. On August 12, 1981, she succumbed to cardiorespiratory arrest due to parotid carcinoma. She was 40 years old.

Believing that the deceased's fatal illness having been contracted by her during employment was service-connected, appellant herein filed a claim for death benefits under Presidential Decree No. 626, as amended. On September 9, 1982, the GSIS, through its Medical Services Center, denied the claim. It was pointed out that parotid carcinoma is "Malignant tumor of the parotid gland (salivary gland)" and that its development was not caused by employment and employment conditions. Dissatisfied with the respondent System's decision of denial, claimant wrote a letter dated October 8, 1982 to the GSIS requesting that the records of the claim be elevated to the Employees' Compensation Commission for review pursuant to the law and the Amended Rules on Employees' Compensation. (At pp. 17-18, Rollo)

On August 25, 1983, the respondent Commission affirmed the GSIS' decision. It found that the deceased's death causation by parotid carcinoma is not compensable because she did not contract nor suffer from the same by reason of her work but by reason of embryonic rests and epithelial growth.

It may be noted that the petitioner was earlier paid GSIS benefits in the amount of P142,285.03 but the claim for employee's compensation was disallowed.

Hence, the instant petition.

The petitioner, while principally stressing the compensability of the deceased's ailment, attacks the constitutionality of Presidential Decree No. 626, as amended, the law on employees' compensation which superseded the Labor Code and the of the Workmen's Compensation Act. He alleges that provisions the said law infringes upon the guarantees of promotion of social justice, substantive due process, and equal protection of laws, and also permits unjust discrimination and amounts to class legislation in its enforcement. He prays for the application of the Old Workmen's Compensation Act which provided for a presumption of compensability whenever an ailment supervened during the course of the employment.

We dismiss the petition.

We cannot give serious consideration to the petitioner's attach against the constitutionality of the new law on employee's compensation. It must be noted that the petitioner filed his claim under the provisions of this same law. It was only when his claim was rejected that he now questions the constitutionality of this law on appeal by certiorari.

The Court has recognized the validity of the present law and has granted and rejected claims according to its provisions. We find in it no infringement of the worker's constitutional rights. It is now settled jurisprudence (see Sulit v. Employees' Compensation Commission, 98 SCRA 483; Armena v. Employees' Compensation Commission, 122 SCRA 851; Erese v. Employees' Compensation Commission, 138 SCRA 192; De Jesus v. Employees' Compensation Commission, 142 SCRA 92) that the new law discarded the concepts of "presumption of compensability" and "aggravation" to restore what the law believes is a sensible equilibrium between the employer's obligation to pay workmen's compensation and the employees' rights to receive reparation for work-connected death or disability.

In the case of De Jesus v. Employees' Compensation, (supra), this Court explained the new scheme of employees' compensation as follows:

The new law establishes a state insurance fired built up by the contributions of employers based on the saries of their employees. The injured worker does not have

to litigate his right to compensation. No employer opposes his claim. There is no notice of injury nor requirement of controversion. The sick worker simply files a claim with a new neutral Employees' Compensation Commission which then determines on the basis of the employee's supporting papers and medical evidence whether or not compensation may be paid. The payment of benefits is more prompt. The cost of administration is low. The amount of death benefits has also been doubled.

On the other hand, the employer's duty is only to pay the regular monthly premiums to the scheme. It does not look for insurance companies to meet sudden demands for compensation payments or set up its own funds to meet these contingencies. It does not have to defend itself from spuriously documented or long past claims.

The new law applies the social security principle in the handling of workmen's compensation. The Commission administers and settles claims from a find under its exclusive control. The employer does not intervene in the compensation process and it has no control, as in the past, over payment of benefits. The open ended Table of Occupational Diseases requires no proof of causation. A covered claimant suffering from an occupational disease is automatically paid benefits.

Since there is no employer opposing or fighting a claim for compensation, the rules on presumption of compensability and controversion cease to have importance. The lopsided situation of an employer versus one employee, which called for equalization through the various rules and concepts favoring the claimant, is now absent. (At pp. 99-100)

The petitioner's challenge is really against the desirability of the new law. These is no serious attempt to assail it on constitutional grounds.

The wisdom of the present scheme of workmen's compensation is a matter that should be addressed to the President and Congress, not to this Court. Whether or not the former workmen's compensation program with its presumptions, controversions, adversarial procedures, and levels of payment is preferable to the present scheme must be decided by the political departments. The present law was enacted in the belief that it better complies with the mandate on social justice and is more advantageous to the greater number of working men and women. Until Congress and the President decide to improve or amend the law, our duty is to apply it.

Under the present law, a compensable illness means any illness accepted as an occupational disease and listed by the Employees' Compensation Commission, or any illness caused by employment subject to proof by the employee that the risk of contracting the same is increased by working conditions (Bonifacio v. Government Service Insurance System, 146 SCRA 276).

Applying the law to the present case, parotid carcinoma or cancer of the salivary glands is not an occupational disease considering the deceased's employment as accounting clerk and later as manager of the budget division. The petitioner must, therefore, prove that his wife's ailment was caused by her employment or that her working conditions increased the risk of her contracting the fatal illness.

The petitioner alleges that as budget manager, the deceased visited regional and field operations and was, naturally, exposed to the elements. According to the petitioner, the deceased's field trips necessitated her to take frequent plane travels which caused deafening and numb sensations in her ears. This, he says, caused her "differentiated carcinoma" which, according to the certificate of Dr. Ariston Bautista, "apparently started on external auditory canal."

We find these allegations as mere conjectures. As with other kinds of cancer, the cause and nature of parotid carcinoma is still not known. A medical authority, however, declares that:

SALIVARY GLANDS

Painless swelling of the parotid glands is often noted in hepatic cirrhosis in sarcoidis, in mumps, following abdominal surgery, or associated with neoplasm or infections. The common factors may be dehydration and inattention to oral hygiene. The latter promotes the growth of large numbers of bacteria which, in the absence of sufficient salivary flow, ascend from the mouth into the duct of a gland. Another cause of a painful salivary gland is sialolithiasis (salivary duct stone). The submandibular glands are most commonly affected. Pain and swelling associated with eating are characteristic. Saliva promotes retention of artificial dentures because of its mucin content. Thus, conditions characterized by diminished saliva flow often adversely affect the ease with which dentures may be worn. Calcium phosphate stone tend to form because of a high pH and viscosity of the submandibular gland saliva which has a high mucin content. Stones are removed by manipulation or excision.

Autoimmune sialosis is the MikulicsSjogren Syndrome, a unilateral or bilateral enlargement of the parotid and/or submandibular gland, and often the lacrimal glands. Occasionally painful, it is associated with xerostomia (dry mouth) due to impaired saliva formation that is most common in older women. Beriow et al., The Merek Manuel, 14th Edition, pp. 2095-2096).

Another author states the following regarding squamous cell carcinoma:

Moreover, when the salivary gland is almost totally destroyed and replaced by epidermoid cancer it may be difficult or even impossible to ascribe the origin of the growth to salivary gland tissue. Indeed many squamous cell carcinomas, especially of the parotid, may be metastatic lesions that develop in lymph nodes included within the parotid. And it is important to stress that the juxtaparotid and intraparotid lymph nodes are not merely accumulations of lymphoid tissue but nodes with efferent and afferent lymphatics.

Squamous cell carcinomas of the major salivary glands are generally fixed to the skin and the underlying tissues and, in the case of the parotid, are often the cause of facial palsy.

Epidermoid cancers grow swiftly and the clinical course is usually rapid. A few tumours, however, have been present for as long as two years before the patient seeks advice. Some patients remain alive and asymptomatic after radical surgery, but ordinarily the lesions are highly malignant, infiltrating locally and metastasizing to the regional nodes Distant metastasis is seldom a prominent clinical feature. In the case of the submandibular gland the tumor may simulate osteomyelitis of the mandible or an abscess in the gland itself, and if such lesions are incised a chronic sinus is liable to persist until radical treatment is undertaken. (Evans and Cruickshank, Epithelial Tumours of the Salivary Glands, Vol. 1, p. 254)

Given the preceding medical evaluations, we affirm the findings of the public respondents which found no proof that the deceased's working conditions have indeed caused or increased the risk of her contracting her illn