REPUBLIC OF THE PHILIPPINES (PHILIPPINE AIR FORCE), PETITIONER, VS. THE WORKMEN’S COMPENSATION COMMISSION, AND NAZARIO BAUTISTA, RESPONDENTS.

Appeal from a decision of the Workmen’s Compensation Commission.

On 15 January 1959, the Philippine Air Force, represented by its
Base Installation Engineer, Major Francisco C. Millena,
contracted with Carlos Pineda for the sum of P2,000.00,
for the latter to “furnish labor and equipment and construct complete
(except electrical)” the former’s “Men’s and
Ladies Toilet, Base Theatre, PAF, Nichols Air Base, Pasay
City” per scope of works specified in the agreement, Exhibit
“I”.  The agreement also
provided that the work should be completed within sixty days, exclusive of
Sundays and holidays; extension of delays on account of inclement weather or
unforeseen circumstances; liquidated damages in the sum of P10 for each day of delay; the manner
of payment and a 10% retention thereof until after the lapse of 60 days from
completion of the work.

Carlos Pineda recruited the respondent, Nazario
Bautista, as one of his laborers. 
Bautista had been working as a mason at an average weekly wage of P36.00
since 1958 in several Air Force projects.

On 24 February 1959,
immediately after alighting from a jeepney, at the
corner of Sales and Gozar Streets, inside the base, Nazario Bautista was bumped from behind by a baby tractor
owned by the Philippine Air Force and driven by one of its prisoners, causing
Bautista fractures in his lower extremities. 
He was given first-aid treatment at the military dispensary, then brought to the National
Orthopedic Hospital.  His injuries were evaluated by the attending
physician at 63% permanent partial disability of the left leg and 26% of the
right leg.

The Philippine Air Force conducted two benefit shows and turned
over the proceeds, in the sum of P900 through a certain Captain Valdemor, to the injured worker, as a gesture of sympathy,
but, for which, Bautista signed, on 5 March 1959, a notarized deed releasing
the Philippine Air Force and all persons and entities from all claims and
demands resulting from the accident.  (Exhibit “A”).

Notwithstanding the sum received and the quitclaim by him Nazario Bautista filed a claim for compensation with the
Department of Labor.  After hearing, the
regional office hearing officer, Regino Veridiano II, rendered a decision for the claimant.  Said decision was affirmed with some
modification by the Workmen’s Compensation Commission, through Commissioner Cesario Perez and, on a motion for reconsideration, said
commissioner’s decision was affirmed in banc.

Still dissatisfied, the petitioner filed the present petition for
review, arguing, in the main, that it had no employer-employee relationship
with Bautista, and pointing to independent contractor Carlos Pineda as the
claimant’s employer.

We agree with the Commission that the petitioner is the employer
of Bautista, pursuant to Section 39(a) of the Workmen’s Compensation Act, which
provides:

“‘Employer’ includes every person or association of persons,
incorporated or not, public or private, and the legal representative of the
deceased employer.  It includes the owner
or lessee of a factory or establishment or place of work or any other person
who is virtually the owner or manager of the business carried on in the
establishment or place of work but who, for the reason that there is an
independent contractor in the same, or for any other reason, is not the direct
employer of laborers employed there.”

The Philippine Air Force was organized, trained and equipped primarily
for prompt and sustained combat operations in the air.  (Sec. 12[a], Executive Order No. 389, 23 Dec. 1950, 46 O.G.
5905).  To effectively carry out
this function, it has to provide the facilities, like baths, toilets, etc. to
keep its personnel under proper and healthful conditions.  While the construction of these facilities is not its function or “business”,
the existence of these structures is necessarily tied up with the
exercise of its broad primary function. 
Not only this: the conduct of claimant Bautista and contractor Pineda,
along with everybody else, while on-base, was subject to military restrictions
or control because the whole base is under the charge of the petitioner’s base
commander, Col. Juan V. Guevarra.  (T.S.N., 28 Sept. 1962, p.
6).  Therefore, even if it is not
the direct employer of claimant Bautista, the petitioner, as virtual owner or
manager of the construction job where he was working at the time of the
accident, is still his statutory employer, and liable for the compensation.

The next issue tendered is which party has the right to
controvert the laborer’s claim, the Philippine Air Force or the Solicitor
General.  This is a question between said
parties inter se and its resolution does not affect the rights of
the claimant.  At any rate, the question
is irrelevant in the present case, even in an incidental manner, because
neither of the said parties complied with the requirements for a valid controversion – the Philippine Air Force, which knew of the
accident on the day of its occurrence on 24 February 1959, controverted
the claim only on 11 August 1959, much beyond the period prescribed in Section
24 of the Workmen’s Compensation Act, while the Solicitor General failed to
file an employer’s report, as required by Section 45 of the Act.  It may well be pointed out also that any
report by the latter would be essentially hearsay, without actual knowledge of
the facts.

In the decision under review, the Commission did not deduct the P900 voluntarily given to Bautista from
the amount of P4,000 awarded to him.  The petitioner argues that the P900 should be
deemed as a voluntary payment under Section 20 of the Act and, as such, is
deductible from the sum to be paid as compensation.

The Philippine Air Force never agreed to its liability for the
injury of Bautista, because it had believed bona fide that it was
not his employer; nevertheless, for humanitarian reasons, and without the
solicitation by Bautista, it
raised funds, through benefit shows, to help him.  In tendering the money (P900), however, the
Philippine Air Force had its reservations, which were embodied in the deed of
release.  Bautista accepted the money and
signed the deed.  As it developed, the
Air Force has been found legally, even though not actually, the claimant’s
employer.  Now, the claimant,
backtracking from the quitclaim deed
that he signed, still wants to keep the money also, aside from the compensation
award.

We find no reason for his doing so.  Since he relies on his strictly legal rights,
he is only entitled to the corresponding legal compensation and no more.  It is morally certain that the petitioner
would not have paid the P900 independently of the legal compensation, had it
realized that it would be liable therefore; hence, it would be unjust if the
hand of equity should not reach out to relieve the Philippine Air Force from
abuse of its generosity.  We hold, therefore,
that the sum of P900 should be deducted from the award.

For the foregoing reasons,
the decision under review is hereby affirmed, with the
modification that the P900 previously paid should be deducted from the compensation award.  No costs.

SO ORDERED.

Concepcion, C.J., Dizon,
Makalintal, Regala, Bengzon, J.P., Zaldivar, and Sanchez, JJ., concur.

Castro, J., took no part.