A. D. SANTOS, INC., PETITIONER, VS. VENTURA VASQUEZ, RESPONDENT.

Santos versus Vasquez

The Case

This is A. D. Santos, Incorporated versus Ventura Vasquez, a workmen's compensation case decided in March 1968. The petitioner is a taxi operator; the respondent is the taxi driver who fell ill with pulmonary tuberculosis while in its employ and claimed compensation before the Workmen's Compensation Commission. The case matters for two enduring lessons: an employer who sleeps on its right to controvert a claim loses the defense of late filing, and the corporate veil may be pierced to keep the true employer from hiding behind a related entity.

Procedural History

Ventura Vasquez filed his claim for compensation with the Workmen's Compensation Commission in May 1962. The Hearing Officer ruled in his favor, and the Commission affirmed that decision, ordering the employer to pay compensation, reimburse medical expenses, provide continuing medical services, pay attorney's fees, and pay costs. The case then reached the Supreme Court on review, and the Court affirmed the Commission's decision in full.

Facts

Ventura Vasquez was a taxi driver for A. D. Santos, Incorporated. On December 22 or 23, 1961, at about eleven in the morning, while driving the company's taxicab, he vomited blood. He also suffered back pains, fever, and headache. He reported the incident to the company, which sent him to its physician, Doctor Roman, who treated him and confined him at Santo Tomas Hospital for six days.

He was thereafter admitted at the Quezon Institute, where he stayed until March 19, 1962, under the care of Doctor Mario Lirag. Doctor Lirag diagnosed his ailment as pulmonary tuberculosis, moderately advanced in both lungs. Upon discharge he was clinically improved, but his X-ray examination showed the same finding. He never resumed work.

He filed his claim for compensation in May 1962. The employer raised two defenses: that the claim was filed beyond the statutory period, and that the claim should have been directed against Amador Santos rather than the corporation, because the driver had mentioned in his testimony that he worked for the City Cab operated by Amador Santos.

Issues

• Whether or not the claim should be dismissed for failure to file the notice of injury and claim for compensation within the period fixed by Section 24 of the Workmen's Compensation Act.
• Whether or not the claim for compensation was properly directed against A. D. Santos, Incorporated, rather than against Amador Santos.

Applicable Provisions

Section 24 of the Workmen's Compensation Act fixes the period for giving notice of injury and filing the claim, and the employer invoked it as a ground for dismissal:

Section 24 of the Workmen's Compensation Act requires the filing of a notice of injury and claim for compensation within the statutory period.

Its bearing is that the employer claims the action was filed too late, since the illness appeared in December 1961 and the claim was filed in May 1962.

Section 45 of the Workmen's Compensation Act, second paragraph, requires the employer to file a notice of controversion with the Commission:

Section 45 of the Workmen's Compensation Act requires the employer to file with the Commission a notice of controversion of the claim.

Its bearing is decisive: the employer never filed such a notice, and that omission is treated as a waiver of the defense of late filing and an admission that the claim is compensable.

Ruling

On the first issue, the Court held that the employer's failure to file with the Commission the notice of controversion required by the second paragraph of Section 45 of the Workmen's Compensation Act is a waiver of the defense that the claim was not filed within the statutory period, and a forfeiture of the employer's right to controvert the claim. The employer knew of the driver's illness, yet did not controvert his right to compensation. Constructively, that failure is an admission that the claim is compensable. The defense of late filing therefore fails.

On the second issue, the Court held that the claim was properly directed against the corporation. The employer, in its answer, categorically admitted that the claimant was its taxi driver, and the claimant contracted pulmonary tuberculosis by reason of that employment, so his cause of action against the corporation was complete. The driver's mention of Amador Santos did not detract from that right, because Amador Santos had at one time been the sole owner and operator of the City Cab, which was subsequently transferred to A. D. Santos, Incorporated, of which he was an officer. The Court quoted its own ruling that such mention should not be allowed to confuse the facts relating to the employer-employee relationship, and that when the veil of corporate fiction is made a shield to perpetrate a fraud or confuse legitimate issues, the same should be pierced.

Doctrine

First, an employer's failure to file a notice of controversion with the Commission under the second paragraph of Section 45 of the Workmen's Compensation Act waives the defense of late filing under Section 24 and forfeits the right to controvert the claim; constructively, it is an admission that the claim is compensable.

Second, the corporate veil may be pierced when it is used as a shield to perpetrate a fraud or confuse legitimate issues, such as the employer-employee relationship, so that the true employer cannot escape liability by pointing to a related entity or individual.

Disposition

The Supreme Court affirmed the decision of the Workmen's Compensation Commission in favor of Ventura Vasquez, with costs against the petitioner.

Remember This

Memorize this line: failure to file a notice of controversion is a waiver of the defense of late filing and an admission that the claim is compensable. Examiners use this case to test the consequences of an employer's failure to controvert, and the piercing of the corporate veil to identify the real employer in a compensation claim.