G.R. No. L-12753; November 28, 1959
ESPIRITU SANTO PARISH (Espiritu Santo Parochial School), petitioner, vs. JOSE HABITAN and WORKMEN’S COMPENSATION COMMISSION, respondents.

FACTS

Respondent Jose Habitan was employed as a carpenter from February to April 27, 1955, in the construction of the Espiritu Santo Parochial School building in Manila. On March 9, 1955, the scaffold on which he was standing broke. He and a co-worker were prevented from falling by clinging to a lower scaffolding until rescued. Habitan continued working without apparent injury until his employment ended on April 27, 1955, when he was laid off and paid all wages. On November 7, 1955, Habitan filed a claim for compensation against the school, alleging the March 9 incident resulted in a disability. The petitioner, Espiritu Santo Parish (operating the parochial school), moved to dismiss the claim on two grounds: (1) it is a charitable institution not engaged in a trade or occupation for gain and thus not subject to the Workmen’s Compensation Commission’s jurisdiction, and (2) the claim was barred under Section 24 of the Workmen’s Compensation Act for not being filed within the statutory period. The Workmen’s Compensation Commission denied the motion and awarded compensation. The Commission found that the school building construction was financed partly by an interest-bearing loan, the school charged various fees, it paid an income tax, employed 80 workers on the project, and had employer’s liability insurance. The Commission concluded the school was an “educational project operating for gain” under the Act. Petitioner sought review.

ISSUE

Whether the Espiritu Santo Parochial School is an industrial employer engaged in work “for the purpose of gain” and thus subject to the jurisdiction of the Workmen’s Compensation Act.

RULING

No. The Supreme Court revoked the decision of the Workmen’s Compensation Commission and dismissed the claim. The Court held that the Espiritu Santo Parochial School is an educational institution whose operation and maintenance are largely dependent on charity and church funds, not organized for profit. The Commission’s findings were insufficient to classify it as a project operating for gain. The interest-bearing loan was being paid more from church funds and donations than from other sources. Payment of the 1% tax on private schools was a legal duty and not indicative of a profit motive. The existence of employer’s liability insurance was for protection under other laws (like the new Civil Code), not an admission of coverage under the Workmen’s Compensation Act. Citing precedents, the Court stated that institutions like San Beda College and the University of Santo Tomas are not industrial organizations for gain, and similarly, the Espiritu Santo Parochial School, as a church property, is not an institution established for gain within the meaning of the Workmen’s Compensation Act and is consequently not covered by it.