TOPIC PIERCING THE VEIL OF CORPORATE FICTION
Case Name TELEPHONE ENGINEERING & SERVICE COMPANY, INC. vs. WORKMEN'S
COMPENSATION COMMISSION, PROVINCIAL SHERIFF OF RIZAL and LEONILA
SANTOS GATUS, for herself and in behalf of her minor children, Teresita,
Antonina and Reynaldo, all surnamed GATUS
G.R. No. G.R. No. L-28694 | May 13, 1981
Facts Petitioner TESCO is a domestic corporation engaged in the business of
manufacturing telephone equipment with offices at Sheridan Street,
Mandaluyong, Rizal. Its Executive Vice-President and General Manager is Jose
Luis Santiago. It has a sister company, the UMACOR, with offices in the same
location. UMACOR is also under the management of Jose Luis Santiago.
UMACOR employed Pacifico Gatus as Purchasing Manager. He was later
assigned in TESCO for 2.5 months, then, reported back to UMACOR. On January
13, 1967, he contracted illness and although he retained to work on May 10,
1967, he died nevertheless on July 14, 1967 of "liver cirrhosis with malignant
degeneration."
Leonila, Pacifico’s widowed wife, filed a "Notice and Claim for Compensation"
with the Workmen's Compensation Section, alleging therein that her deceased
husband was an employee of TESCO, and that he died of liver cirrhosis. The
Notice and Claim was transmitted to TESCO, and the latter responded with an
Employer’s Report of Accident or Sickness, signed by Santiago, stating that
UMACOR was Pacifico’s employer, and that employer UMACOR would not
controvert the claim for compensation, and admitted that the deceased
employee contracted illness “in regular occupation.” Thus, the Acting Referee
awarded death benefits plus burial expenses in favor of the heirs of Gatus in a
letter-award against TESCO.
TESCO filed an "Urgent Motion to Compel Referee to Elevate the Records to the
Workmen's Compensation Commission for Review", then later, a Motion for
Reconsideration and Petition to Set Aside the Award alleging that the admission
in the Employer’s Report was due to honest mistake and excusable negligence,
and that the illness for which compensation is sought is not an occupational
disease; hence, not compensable under the law. The Motion for
Reconsideration was denied. The provincial Sheriff levied on and attached the
properties of TESCO and scheduled the sale of such at public auction. Hence,
this petition.
Issue Whether or not the award may be rendered against TESCO considering its claim
of lack of employer-employee relationship
Ruling Yes.
We note that it is only in this Petition before us that petitioner denied, for the
first time, the employer-employee relationship. In fact, in its letter to the Acting
Referee, in its request for extension of time to file Motion for Reconsideration,
in its "Motion for Reconsideration and/or Petition to Set Aside Award," and in
its "Urgent Motion to Compel the Referee to Elevate Records to the
Commission for Review," petitioner represented and defended itself as the
employer of the deceased. Nowhere in said documents did it allege that it was
not the employer. Petitioner even admitted that TESCO and UMACOR are sister
companies operating under one single management and housed in the same
building. Although respect for the corporate personality as such, is the general
rule, there are exceptions. In appropriate cases, the veil of corporate fiction
may be pierced as when the same is made as a shield to confuse the legitimate
issues.
While, indeed, jurisdiction cannot be conferred by acts or omission of the
parties, TESCO'S denial at this stage that it is the employer of the deceased is
obviously an afterthought, a devise to defeat the law and evade its obligations.
This denial also constitutes a change of theory on appeal which is not allowed
in this jurisdiction. Moreover, issues not raised before the Workmen's
Compensation Commission cannot be raised for the first time on appeal. For
that matter, a factual question may not be raised for the first time on appeal to
the Supreme Court.
