Court Opinion

ID: 9480610
Source: CourtListenerOpinion
Date Created: 2023-08-05 07:53:17.460045+00
Date Added: 2024-06-11T17:47:48.011709
License: Public Domain

JUSTICE NEGRON GARCIA,
concurring.
San Juan, Puerto Rico, March 21, 1990
“The governing view for the situation we are considering should be detached from facts which may change depending upon the cleverness of the parties in formulating the conditions of the juridical relation and rather framed within the determination of the position of the one in relation to the other with special stress on the degree of economical dependence. Primordial attention should be paid to the economic realities rather than to technical classifications which might prevail in other areas of the law, but which do not lead to a fair solution when remedial legislation is involved.” Nazario v. Velez, 97 P.R.R. 447, 453 (1969).
The breadth of these pronouncements require us to focus our attention on the grounds that pave the way for the fairest solution in harmony with the letter and original spirit of the Workmen’s Accident Compensation Act, in keeping with the changing realities of our industrial society.
I
The present action concerns the application of the statutory employer doctrine to the particular contractual relationship between a United States based parent corporation and its local subsidiary.
Faced with this issue — not expressly addressed by this Court before — the United States Court of Appeals for the First Circuit, through the certification procedure laid down in Civil Procedure Rule 53.1(c) (32 L.P.R.A., App. Ill) and in our Rule 27 (4 L.P.R.A., App. I-A), certified to us the following questions: “1) Does the statutory employer doctrine apply in the context of parent-subsidiary corporations, where the subsidiary is wholly owned by the parent, and the corporations are bound in the activities relevant to the case by a licensing agreement?; 2) If so, is the determination of statutory employer status to be made solely on the basis of the agreement, or may courts consider the de facto relationship, based, for example, on the corporate structure of the parent-subsidiary relationship or the economic nature of the relationship?” (Underscore supplied.) Certification, pp. 16-17.
For the reasons we shall state below, we answer the first question in the negative. Appellant Parke Davis & Co. (“Parke”) does not have employer immunity from claims brought by the workers of its wholly-owned subsidiary, Parke Davis Labs (“Labs”). Consequently, the second question becomes academic; we need not address it.
II
The factual framework clearly arises from the certification. Pan Ame. Comp. Corp. v. Data Gen. Corp., 112 D.P.R. 780, 790 (1982). The facts were heard and adjudicated before the federal forum. Therefore, we shall refer to the opinion of the Court. Let us then focus on the applicable law.
In order to recognize employer immunity as provided by the Workmen’s Accident Compensation Act, No. 45, April 18, 1935, as amended, 11 L.P.R.A. § 1 et seq., we should address two crucial concepts that together reflect the true aim and scope of this legislation. This requires a brief summary of the insured employer scheme vis-á-vis a third party that may be sued for damages, and which we shall call the vulnerable third party.
The Workmen’s Accident Compensation Act establishes a system through which the injured worker is entitled to compensation — independently of the identity of the wrongdoer — if and when the injury is work-related. In exchange for this remedial scheme, the employer acquires immunity from worker claims by paying the policy premiums.
*642Now then, art. 31 (11 L.P.R.A. § 32) recognized the third party’s vulnerability to workers' damage suits. And art. 19 (11 L.P.R.A. § 20) defines who is the employer obliged to insure his workers. This obligation not only falls on the employer with regard to his immediate and direct employees, but covers that employer who as the principal (statutory employer) enters into an agreement with a contractor with regard to the latter’s employees. The key to this “subsidiary” obligation lies in the fact that if the contractor is insured, the principal employer is not required to insure the former’s employees.
Hence, the determination of who is the insured employer under the Workmen’s Accident Compensation Act, shall be effected in the light of “1) whether or not there is an obligation to insure; and 2) whether the person is actually covered by the Fund, with respect to the claimant worker.” F.S.E. v. E.L.A., 111 D.P.R. 402, 405 (1981). Only in the event that the contractor has failed to insure his workers is that the statutory employer is obliged to cover them through the statutory coverage. Otherwise, if the statutory employer fails to cover these workers, he mil not be protected by the statutory immunity. As we held when we joined the dissenting opinion of former Justice Davila in Lugo Sanchez v. A.F.F., 105 D.P.R. 861, 871 (1977), “[t]his being so, we see no reason why the immunity granted by the law to the statutory employer should be extended when, on account of his negligence, an employee of a contractual employer sustains injuries. We cannot forget that the third parties who offer the greater risk to the security of the workers are the employees of the statutory employers that work in the same project. The obvious purpose of the provision that permits complaints against third-party tort-feasors is that the loss be suffered by the tortfeasor and not by the injured worker or the State Insurance Fund.”
Thus, we must conclude that the statutory employer contemplated in the immunity clause of the Workmen’s Accident Compensation Act is the person who, as a question of fact, has insured his uninsured contractor’s employees. Only thus can we see the legal relation that binds the statutory employer, the contractors or direct employer’s worker, and the State Insurance Fund. Therefore, we see that there are two types of statutory employers: an immune employer paying the policy premiums of his contractor’s employees, and another, the vulnerable third party, who pays no coverage. This was our position in our dissent in Vda. de Costas v. P.R. Olefins, 107 D.P.R. 782 (1978).
Ill
Having briefly outlined these principles, let us apply them to the present case.
Labs, a wholly-owned subsidiary of Parke, is, for purposes of the present action, a direct insured employer. Hence, it has the absolute immunity of the Workmen’s Accident Compensation Act. However, Parke has not paid nor pays the statutory premiums for Labs’ employees. This evidently places Parke in the position of a vulnerable third party. Even if it could be a statutory employer — that is, one who employs workers through others1 — it is an uncontested fact that Parke did not insure Labs’s workers hence it was not *643covered by “the protective mantle of immunity.” Lugo Sanchez, supra, at 872.
IV
The opinion rendered by the Court today, although correct in its result, leaves a very broad avenue for interpretation. Simple formalities or contractual agreements could lead to the absurdity that the immunity be granted to the person who does not pay, just because he has “the mutual legal obligation to insure” his contractor’s employees. The mere expectation of this obligation is not enough. We should avoid the prejudicial effects that case law extensions not foreseen by the Workmen’s Accident Compensation Act could have on the workers’ rights.
For the foregoing reasons, we concur.
CHIEF CLERK’S CERTIFICATE
I, Francisco R. Agrait Liado, Chief Clerk of the Supreme Court of Puerto Rico, DO HEREBY CERTIFY:
That the annexed document is a photocopy of the official translation from Spanish into English (said translation having been made under the authority of Act No. 87 of May 31, 1972) of the opinion rendered by this Court on March 21, 1990, in Case No. CT-88-615, Mercedes Santiago Hodge, et al., v. Parke Davis Co. et al., the original of which in Spanish is under my custody in this Office. The concurring opinion of Mr. Justice Negron Garcia is attached hereto.
IN WITNESS WHEREOF, and at the request of the interested party, I issue these presents for official use, fee-free, under my hand and the seal of this Court in San Juan, Puerto Rico, this 27th day of April 1990.
/S/ Francisco R. Agrait Liado
Francisco R. Agrait Liado
Chief Clerk
Supreme Court of Puerto Rico

. Since Labs is an insured employer who pays its worker's premiums, we do not deem it necessary to settle the issue of whether or not Parke is a statutory employer in the light of the legal relations between it and Labs, to wit: 1) prior to 1970, Parke produced the oral contraceptives in one of its divisions; 2) since then, Labs is the manufacturer; 3) all of Labs’ production is authorized by Parke, since the latter allowed Labs to use its patents, certificates and federal permits to handle and use the raw material involved in the production, aside from designing its plant operations, quality control standards and packaging (which would carry Parke’s logo, not Labs’); and 4) from the outset. Labs’ full stock was sold to Parke even when it "could” sell its product elsewhere.
We shall likewise refrain from pronouncing ourselves on the effects the Parke-Labs legal identity would have on the "single employer doctrine” that has gained acceptance by this Court in the labor relations field. See, J.R.T. v. Asoc. C. Playa Azul I, 117 D.P.R. 20, 28 (1986); and Odriozola v. S. Cosmetic Dist. Corp., 116 D.P.R. 485, 496-497 n. 5 (1985).