G.R. No. 163786, 16 February 2005
Petitioner (Times) is a corporation engaged in the business of land transportation. Prior to its closure, the Times Employees Union (TEU) was formed.
Respondents were retrenched after Times’ management implemented a retrenchment program in the height of a labor dispute between Times and TEU. In the meantime, Mencorp Transport Systems, Inc. (Mencorp) had acquired ownership over Times’ Certificates of Public Convenience and a number of its bus units by virtue of several deeds of sale. Mencorp is controlled and operated by Mrs. Virginia Mendoza, daughter of Santiago Rondaris, the majority stockholder of Times
After the closure of Times, the retrenched employees filed cases for illegal dismissal, money claims and unfair labor practices against Times. The Labor Arbiter ruled that Times and Rondaris are liable for unfair labor practice.
Whether or not the doctrine of piercing the veil of corporate fiction was properly applied.
YES. Piercing the corporate veil may be allowed only if the following elements concur: (1) control—not mere stock control, but complete domination—not only of finances, but of policy and business practice in respect to the transaction attacked; (2) such control must have been used to commit a fraud or a wrong to perpetuate the violation of a statutory or other positive legal duty, or a dishonest and an unjust act in contravention of a legal right; and (3) the said control and breach of duty must have proximately caused the injury or unjust loss complained of.
The sale of Times’ franchise as well as most of its bus units to a company owned by Rondaris’ daughter and family members, right in the middle of a labor dispute, is highly suspicious. It is evident that the transaction was made in order to remove Times’ remaining assets from the reach of any judgment that may be rendered in the unfair labor practice cases filed against it.
*Case digest by Radolf Zell Adasa JD-IV, Andres Bonifacio Law School, SY 2019-2020