CORPO 26 Piercing the Veil: Juridical personality cannot be employed to confuse the

legitimate issues.
TELEPHONE ENGINEERING AND SERVICE
COMPENSATION COMMISSION (WCC)
No. L-28694; 13May1981
J. Melencio-Herrera

CO

INC

(TESCO)

v.

WORKMENS

Topic: Piercing the veil of corporate fiction in compensation cases

Case: Petition for certiorari from the award of the Workmens Compensation Section
FACTS:
TESCO is a domestic corporation engaged in telephone manufacturing, with sister company,
Utilities Management Corporation (UMACOR). Both companies are under the management of Jose
Louis Santiago, as Exec VP and General Manager.
UMACOR employed Pacifico Gatus as Purchasing Agent in 1964. He was assigned in TESCO for
2.5 months, and reported back to UMACOR. In 1967, he contracted an illness and died eventuall
of liver cirrhosis with malignant degeneration.
Pacificos widowed wife, Leonila Gatus, filed a Notice and Claim for Compensation with the
Workmens Compensation Section alleging the employment of Pacifico under TESCO and his
death of liver cirrhosis. The Notice and Claim was transmitted to TESCO, to which TESCO
responded with an Employers Report of Accident or Sickness, signed by Santiago, stating that
UMACOR was Pacificos 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 (5,759) and burial expenses (200)
in favor of Pacificos heirs.
TESCO filed a Motion for Reconsideration and Petition to Set Aside Award alleging that the
admission in the Employers 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 MR 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 seeking to annul the award and to enjoin the Sheriff
from levying and selling its properties at public auction.
In its Petition, TESCO asserts that there is no employer-employee relationship between it and
Pacifico Gatus.
ISSUE:
Whether TESCO is liable for the compensation claim of Pacificos heirs when it claims that it is
not the employer of Pacifico.
HELD/RATIO.
YES, the assertion of lack employer-employee relationship cannot be admitted at the point of the
petition before the Supreme Court anymore; the difference between the corporate personality of
TESCO and UMACOR cannot be admitted anymore to confuse the legitimate issues in this case.
In TESCOs pertinent documents letter to Acting Referee, Motion for Reconsideration and
Petition to Set Aside Award, and Urgent Motion to Compel the Referee to Elevate Records to
Commission for Review it represented and defended itself as the employer of the deceased.
Nowhere in the said documents did it allege that it was not the employer. TESCO even admitted
that it and UMACOR are sister companies operating under one single management and housed in

CORPO 26 Piercing the Veil: Juridical personality cannot be employed to confuse the
legitimate issues.

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.