Telephone Engineering & Service Company, Inc. vs. Workmen's Compensation Commission

The existence of employer-employee relationship is the jurisdictional foundation for recovery of compensation under the Workmen's Compensation Law, but the lack thereof is a matter of defense that the employer should properly raise in the proceedings below. A party who fails to raise this defense before the Workmen's Compensation Commission cannot raise it for the first time on appeal, as this constitutes a change of theory on appeal which is not allowed.

Petitioner TESCO is a domestic corporation engaged in the business of manufacturing telephone equipment, with offices at Sheridan Street, Mandaluyong, Rizal. It has a sister company, the Utilities Management Corporation (UMACOR), with offices in the same location, both under the management of Jose Luis Santiago, who serves as Executive Vice-President and General Manager of TESCO. The case arises under the Workmen's Compensation Act (Act No. 3428), which governs compensation claims for work-related illnesses and deaths of employees.

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 Utilities Management Corporation (UMACOR), with offices in the same location, also under the management of Jose Luis Santiago.

On September 8, 1964, UMACOR employed the late Pacifico L. Gatus as Purchasing Agent. On May 16, 1965, Gatus was detailed with petitioner company. He reported back to UMACOR on August 1, 1965. On January 13, 1967, he contracted illness and although he returned to work on May 10, 1967, he died on July 14, 1967 of "liver cirrhosis with malignant degeneration."

On August 7, 1967, his widow, respondent Leonila S. Gatus, filed a "Notice and Claim for Compensation" with Regional Office No. 4, Quezon City Sub-Regional Office, Workmen's Compensation Section, alleging that her deceased husband was an employee of TESCO and that he died of liver cirrhosis. On August 9, 1967, the Office wrote petitioner transmitting the Notice and Claim for Compensation and requiring it to submit an Employer's Report of Accident or Sickness pursuant to Section 37 of the Workmen's Compensation Act (Act No. 3428). An "Employer's Report of Accident or Sickness" was submitted with UMACOR indicated as the employer of the deceased, signed by Jose Luis Santiago. In answer to questions Nos. 8 and 17, the employer stated that it would not controvert the claim for compensation and admitted that the deceased employee contracted illness "in regular occupation."

On the basis of this Report, the Acting Referee awarded death benefits in the amount of P5,759.52 plus burial expenses of P200.00 in favor of the heirs of Gatus in a letter-award dated October 6, 1967 against TESCO. Replying on October 27, 1967, TESCO, through Jose Luis Santiago, informed the Acting Referee that it would avail of the 15-days-notice given to it to state its non-conformity to the award and contended that the cause of the illness contracted by Gatus was in no way aggravated by the nature of his work. On November 6, 1967, TESCO requested an extension of ten days within which to file a Motion for Reconsideration, and on November 15, 1967, asked for an additional extension of five days.

TESCO filed its "Motion for Reconsideration and/or Petition to Set Aside Award" on November 18, 1967, alleging as grounds therefor that the admission made in the "Employer's Report of Accident or Sickness" was due to honest mistake and/or excusable negligence on its part, and that the illness for which compensation is sought is not an occupational disease, hence, not compensable under the law. The extension requested was denied. The Motion for Reconsideration was likewise denied in an Order issued by the Chief of Section of the Regional Office dated December 28, 1967, predicated on two grounds: that the alleged mistake or negligence was not excusable, and that the basis of the award was not the theory of direct causation alone but also on that of aggravation. On January 28, 1968, an Order of execution was issued by the same Office.

On February 3, 1968, petitioner filed an "Urgent Motion to Compel Referee to Elevate the Records to the Workmen's Compensation Commission for Review." Meanwhile, the Provincial Sheriff of Rizal levied on and attached the properties of TESCO on February 17, 1968, and scheduled the sale of the same at public auction on February 26, 1968. On February 28, 1968, the Commission issued an Order requiring petitioner to submit verified or true copies of the Motion for Reconsideration and/or Petition to Set Aside Award and Order of December 28, 1967, and to show proof that said Motion for Reconsideration was filed within the reglementary period, with the warning that failure to comply would result in the dismissal of the Motion. However, before this Order could be released, TESCO filed with this Court, on February 22, 1968, the present petition for "Certiorari with Preliminary Injunction" seeking to annul the award and to enjoin the Sheriff from levying and selling its properties at public auction.

In support of its contention that there was no employer-employee relationship, petitioner submitted photostat copies of the payroll of UMACOR for the periods May 16-31, 1967 and June 1-15, 1967 showing the name of the deceased as one of the three employees listed under the Purchasing Department of UMACOR. It also presented a photostat copy of a check of UMACOR payable to the deceased representing his salary for the period June 14 to July 13, 1967.

• Lack of Jurisdiction: Petitioner asserted that the Workmen's Compensation Commission had no jurisdiction nor authority to render the award against it because there was no employer-employee relationship between it and the deceased Gatus, the deceased having been an employee of UMACOR and not of TESCO.
• Estoppel Cannot Confer Jurisdiction: Petitioner argued that it can never be estopped from questioning the jurisdiction of the respondent Commission, especially considering that jurisdiction is never conferred by the acts or omissions of the parties.
• Jurisdiction of the Supreme Court: Petitioner maintained that this Honorable Court has jurisdiction to nullify the award of respondent Commission.

• Estoppel: Both public and private respondents contended that TESCO is estopped from claiming lack of employer-employee relationship, given that it had previously represented and defended itself as the employer of the deceased in the proceedings below.

• Jurisdiction of the Commission: Whether the Workmen's Compensation Commission had jurisdiction to render the award against petitioner despite the alleged lack of employer-employee relationship between petitioner and the deceased.
• Estoppel: Whether petitioner can be estopped from questioning the jurisdiction of the Commission.
• Prematurity of the Petition: Whether the petition for certiorari was prematurely brought for failure to exhaust administrative remedies.

• Jurisdiction of the Commission: The petition was dismissed. The existence of employer-employee relationship is the jurisdictional foundation for recovery of compensation under the Workmen's Compensation Law, but the lack thereof is a matter of defense that the employer should properly raise in the proceedings below. The determination of this relationship involves a finding of fact, which is conclusive and binding and not subject to review by this Court.
• Estoppel: Yes. Although jurisdiction cannot be conferred by acts or omissions of the parties, TESCO's denial at that stage that it was the employer of the deceased was obviously an afterthought, a devise to defeat the law and evade its obligations. The denial also constituted a change of theory on appeal which is not allowed in this jurisdiction.
• Prematurity of the Petition: Yes. The certiorari proceeding was prematurely brought because TESCO did not pursue the remedies available to it under Rules 23, 24 and 25 of the Rules of the Workmen's Compensation Commission, namely, an appeal from the award of the Referee within fifteen days from notice to the Commission, a petition for reconsideration of the latter's resolution to the Commission en banc, and within ten days from receipt of an unfavorable decision by the latter, an appeal to this Court.

• Jurisdiction of the Commission: The Court restated basic principles: the existence of employer-employee relationship is the jurisdictional foundation for recovery of compensation under the Workmen's Compensation Law. The lack of employer-employee relationship, however, is a matter of defense that the employer should properly raise in the proceedings below. The determination of this relationship involves a finding of fact, which is conclusive and binding and not subject to review by this Court. The Court noted that it was only in the Petition before it that petitioner denied, for the first time, the employer-employee relationship. In its letter dated October 27, 1967 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.

• Estoppel: The Court held that 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. Petitioner even admitted that TESCO and UMACOR are sister companies operating under one single management and housed in the same building. While jurisdiction cannot be conferred by acts or omission of the parties, TESCO's denial at that stage that it was the employer of the deceased was obviously an afterthought, a devise to defeat the law and evade its obligations. This denial also constituted 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, and a factual question may not be raised for the first time on appeal to the Supreme Court.

• Prematurity of the Petition: The Court held that before a petition for certiorari can be instituted, all remedies available in the trial Court must be exhausted first. Certiorari cannot be resorted to when the remedy of appeal is present. What was sought to be annulled was the award made by the Referee. However, TESCO did not pursue the remedies available to it under Rules 23, 24 and 25 of the Rules of the Workmen's Compensation Commission, namely, an appeal from the award of the Referee, within fifteen days from notice, to the Commission; a petition for reconsideration of the latter's resolution, if adverse, to the Commission en banc; and within ten days from receipt of an unfavorable decision by the latter, an appeal to this Court. As petitioner had not utilized these remedies available to it, certiorari would not lie, it being prematurely filed. Although this rule admits of exceptions, as where public welfare and the advancement of public policy so dictate, the broader interests of justice so require, or where the Orders complained of were found to be completely null and void or that the appeal was not considered the appropriate remedy, the case at bar did not fall within any of these exceptions.

• Employer-Employee Relationship as Jurisdictional Foundation — The existence of employer-employee relationship is the jurisdictional foundation for recovery of compensation under the Workmen's Compensation Law. The lack of employer-employee relationship is a matter of defense that the employer should properly raise in the proceedings below. The determination of this relationship involves a finding of fact, which is conclusive and binding and not subject to review by the Supreme Court. In this case, the Court applied this doctrine by noting that petitioner raised the defense for the first time only in the petition before the Supreme Court, having previously represented itself as the employer in all proceedings before the Commission.

• Change of Theory on Appeal — A party cannot change its theory of the case on appeal. Issues not raised before the Workmen's Compensation Commission cannot be raised for the first time on appeal, and a factual question may not be raised for the first time on appeal to the Supreme Court. The Court applied this doctrine to TESCO's belated denial of employer-employee relationship, characterizing it as "an afterthought, a devise to defeat the law and evade its obligations."

• Exhaustion of Administrative Remedies — Before a petition for certiorari can be instituted, all remedies available in the trial Court must be exhausted first. Certiorari cannot be resorted to when the remedy of appeal is present. The Court applied this doctrine in dismissing the petition, holding that TESCO failed to pursue the remedies available under Rules 23, 24 and 25 of the Rules of the Workmen's Compensation Commission before resorting to judicial review.

• Piercing the Veil of Corporate Fiction — 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. The Court noted that TESCO and UMACOR are sister companies operating under one single management and housed in the same building, and that TESCO's denial of employer-employee relationship was a devise to defeat the law and evade its obligations.

• "The existence of employer-employee relationship is the jurisdictional foundation for recovery of compensation under the Workmen's Compensation Law." — This passage states the fundamental jurisdictional principle governing workmen's compensation claims and is the ratio decidendi for the Court's treatment of the employer-employee relationship issue.

• "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 passage articulates the Court's rejection of TESCO's belated defense and its application of the change of theory doctrine.

• "Before a petition for certiorari can be instituted, all remedies available in the trial Court must be exhausted first. Certiorari cannot be resorted to when the remedy of appeal is present." — This passage states the exhaustion of administrative remedies doctrine as applied to workmen's compensation proceedings and is the basis for dismissing the petition as prematurely filed.

• Madrigal Shipping Co. vs. Melad, 7 SCRA 330 (1963) — Cited as controlling precedent for the principle that the existence of employer-employee relationship is the jurisdictional foundation for recovery of compensation under the Workmen's Compensation Law.
• Abong vs. WCC, 54 SCRA 379 (1973) — Cited for the principle that the determination of employer-employee relationship involves a finding of fact, which is conclusive and binding and not subject to review by the Supreme Court.
• Santos vs. Vasquez, 22 SCRA 1156 (1968) — Cited for the principle that the veil of corporate fiction may be pierced in appropriate cases, as when the same is made as a shield to confuse the legitimate issues.
• La Campana Coffee Factory, Inc. vs. Kaisahan ng mga Manggagawa sa La Campana (KKM), 93 Phil. 160 (1953) — Cited in support of the characterization of TESCO's denial as an afterthought and a devise to defeat the law and evade its obligations.
• Carantes vs. Court of Appeals, 76 SCRA 514 (1977) — Cited for the principle that a change of theory on appeal is not allowed in this jurisdiction.
• Buenaventura vs. WCC, 76 SCRA 485 (1977) — Cited for the principle that issues not raised before the Workmen's Compensation Commission cannot be raised for the first time on appeal.
• Gonzales-Precilla vs. Rosario, 33 SCRA 228 (1970) — Cited for the principle that a factual question may not be raised for the first time on appeal to the Supreme Court.
• De Gala-Sison vs. Maddela, 67 SCRA 478 (1975) — Cited for the principle that before a petition for certiorari can be instituted, all remedies available in the trial Court must be exhausted first.
• Fernando vs. Vasquez, 31 SCRA 288 (1970) — Cited for the principle that certiorari cannot be resorted to when the remedy of appeal is present, and for the exceptions to the exhaustion rule.
• Manila Jockey Club, Inc. vs. Del Rosario, 2 SCRA 462 (1961) — Cited as controlling precedent for the rule that an aggrieved party by the decision of a Commissioner should seek a reconsideration of the decision by the Commission en banc, and if the decision is adverse, he may appeal to the Supreme Court; an appeal brought without first resorting to the remedy referred to is premature and may be dismissed.

• Section 37, Workmen's Compensation Act (Act No. 3428) — This provision requires the employer to submit an Employer's Report of Accident or Sickness upon notice of a claim for compensation. The Court noted that the Office wrote petitioner transmitting the Notice and Claim for Compensation and requiring it to submit the Report pursuant to this section.
• Rules 23, 24 and 25, Rules of the Workmen's Compensation Commission — These rules provide the administrative remedies available to an aggrieved party: appeal from the award of the Referee within fifteen days from notice to the Commission; a petition for reconsideration of the latter's resolution, if adverse, to the Commission en banc; and within ten days from receipt of an unfavorable decision by the latter, an appeal to the Supreme Court. The Court held that TESCO's failure to pursue these remedies rendered its certiorari petition prematurely filed.

Teehankee (Chairman), Makasiar, Fernandez, and Guerrero, JJ., concurred.