Scribd
Upload
31 views4 pages

Concept Builders Vs NLRC

The Supreme Court upheld the NLRC's decision to pierce the corporate veil between petitioner Concept Builders, Inc. and third-party claimant Hydro (Phils.), Inc. The Court found that: 1) The two corporations shared common directors, officers, office address, and corporate secretary; 2) Petitioner claimed to have ceased operations but still filed an information sheet with the SEC using the same office as Hydro; 3) This established control and domination of petitioner by Hydro, satisfying the test to pierce the corporate veil under the doctrine of alter ego. Piercing the veil was necessary to prevent petitioner from evading its legal obligations to its employees.

Uploaded by

I took her to my penthouse and i freaked it
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as DOCX, PDF, TXT or read online on Scribd
31 views4 pages

Concept Builders Vs NLRC

The Supreme Court upheld the NLRC's decision to pierce the corporate veil between petitioner Concept Builders, Inc. and third-party claimant Hydro (Phils.), Inc. The Court found that: 1) The two corporations shared common directors, officers, office address, and corporate secretary; 2) Petitioner claimed to have ceased operations but still filed an information sheet with the SEC using the same office as Hydro; 3) This established control and domination of petitioner by Hydro, satisfying the test to pierce the corporate veil under the doctrine of alter ego. Piercing the veil was necessary to prevent petitioner from evading its legal obligations to its employees.

Uploaded by

I took her to my penthouse and i freaked it
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as DOCX, PDF, TXT or read online on Scribd
You are on page 1/ 4

G.R. Number G.R. No.

108734

Date of May 29, 1996


Promulgation

Petitioner CONCEPT BUILDERS, INC.

Respondent THE NATIONAL LABOR RELATIONS, COMMISSION

Ponente HERMOSISIMA, JR., J

Doctrine/ Relevant Doctrine of Piercing the Veil


Topic The test in determining the applicability of the doctrine of piercing the
veil of corporate fiction is as follows:
1. Control, not mere majority or complete stock control, but complete
domination, not only of finances but of policy and business practice in
respect to the transaction attacked so that the corporate entity as to
this transaction had at the time no separate mind, will or existence of
its own;
2. Such control must have been used by the defendant to commit
fraud or wrong, to perpetuate the violation of a statutory or other
positive legal duty or dishonest and unjust act in contravention of
plaintiff's legal rights; and
3. The aforesaid control and breach of duty must proximately cause
the injury or unjust loss complained of.
The absence of any one of these elements prevents "piercing the
corporate veil." In applying the "instrumentality" or "alter ego" doctrine,
the courts are concerned with reality and not form, with how the
corporation operated and the individual defendant's relationship to
that operation.

Facts  Petitioner Concept Builders, Inc., a domestic corporation,


engaged in the construction business. Private respondents were
employed by said company as laborers, carpenters and riggers.
 Private respondents were served individual written notices of
termination of employment by petitioner. It was stated in the
individual notices that their contracts of employment had expired
and the project in which they were hired had been completed.
 Public respondent found it to be, the fact, however, that at the
time of the termination of private respondent’s employment, the
project in which they were hired had not yet been finished and
completed. 
 Aggrieved, private respondents filed a complaint for illegal
dismissal, unfair labor practice and non-payment of their legal
holiday pay, overtime pay and thirteenth-month pay against
petitioner.
 the Labor Arbiter rendered judgment ordering petitioner to
reinstate private respondents and to pay them back wages
 NLRC dismissed the motion for reconsideration  of petitioner
  Labor Arbiter issued a writ of execution directing the sheriff to
G.R. Number G.R. No. 108734

execute
 The said special sheriff recommended that a, "break-open
order" be issued to enable him to enter petitioner’s premises
 A certain Dennis Cuyegkeng filed a third-party claim with the
Labor Arbiter alleging that the properties sought to be levied
upon by the sheriff were owned by Hydro (Phils.), Inc. (HPPI) of
which he is the Vice-President.
 HPPI filed an Opposition to private respondents’ motion for
issuance of a break-open order, contending that HPPI is a
corporation which is separate and distinct from petitioner. HPPI
also alleged that the two corporations are engaged in two
different kinds of businesses, i.e., HPPI is a manufacturing firm
while petitioner was then engaged in constitution.
 The Labor Arbiter issued an Order which denied private
respondents’ motion for break-open order.
 Private respondents then appealed to the NLRC. The NLRC set
aside the order of the Labor Arbiter, issued a break-open order
and directed private respondents to file a bond. Thereafter, it
directed the sheriff to proceed with the auction sale of the
properties already levied upon. 
 Petitioner moved for reconsideration but the motion was denied
by the NLRC 
 Hence, the resort to the present petition.

Issue/s Whether or not the doctrine of piercing the corporate veil should not have
been applied

Ruling  Yes. The second corporation seeks the protective shield of a


corporate fiction whose and should, be pierced

 The question of whether a corporation is a mere alter ego, a mere


sheet or paper corporation, a sham or a subterfuge is purely one of
fact.

 The conditions under which the juridical entity may be disregarded


vary according to the peculiar facts and circumstances of each
case. No hard and fast rule can be accurately laid down, but
certainly, there are some probative factors of identity that will justify
the application of the doctrine of piercing the corporate veil, to wit:
o 1. Stock ownership by one or common ownership of both
corporations.

o 2. Identity of directors and officers.

o 3. The manner of keeping corporate books and records.


G.R. Number G.R. No. 108734

o 4. Methods of conducting the business." 

 The SEC en banc explained the "instrumentality rule" which the


courts have applied in disregarding the separate juridical
personality of corporations as follows:
o "Where one corporation is so organized and controlled and
its affairs are conducted so that it is, in fact, a mere
instrumentality or adjunct of the other, the fiction of the
corporate entity of the ‘instrumentality’ may be disregarded.
The control necessary to invoke the rule is not majority or
even complete stock control but such domination of
finances, policies and practices that the controlled
corporation has, so to speak, no separate mind, will or
existence of its own, and is but a conduit for its principal. It
must be kept in mind that the control must be shown to
have been exercised at the time the acts complained of
took place. Moreover, the control and breach of duty must
proximately cause the injury or unjust loss for which the
complaint is made."

 The test in determining the applicability of the doctrine of piercing


the veil of corporate fiction is as follows:
o 1. Control, not mere majority or complete stock control, but
complete domination, not only of finances but of policy and
business practice in respect to the transaction attacked so
that the corporate entity as to this transaction had at the
time no separate mind, will or existence of its own;

o 2. Such control must have been used by the defendant to


commit fraud or wrong, to perpetuate the violation of a
statutory or other positive legal duty, or dishonest and
unjust act in contravention of plaintiff’s legal rights; and

o 3. The aforesaid control and breach of duty must


proximately cause the injury or unjust loss complained of:

o The absence of any one of these elements prevents


‘piercing the corporate veil’. In applying the ‘instrumentality’
or ‘alter ego’ doctrine, the courts are concerned with reality
and not form, with how the corporation operated and the
individual defendant’s relationship to that operation."

 The NLRC noted that, while petitioner claimed that it ceased its
business operations, it filed an Information Sheet with the
Securities and Exchange Commission on, stating its office address.
On the other hand, HPPI, the third-party claimant, submitted on the
same day, a similar information sheet stating the same office
address. Both information sheets were filed by the same Virgilio O.
G.R. Number G.R. No. 108734

Casiño as the corporate secretary of both corporations. It would


also not be amiss to note that both corporations had the same
president, the same board of directors, the same corporate officers,
and substantially the same subscribers.

 Clearly, petitioner ceased its business operations in order to evade


the payment to private respondents of back wages and to bar their
reinstatement to their former positions. HPPI is obviously a
business conduit of petitioner corporation and its emergence was
skillfully orchestrated to avoid the financial liability that already
attached to petitioner corporation.

You might also like

pFad - Phonifier reborn

Pfad - The Proxy pFad of © 2024 Garber Painting. All rights reserved.

Note: This service is not intended for secure transactions such as banking, social media, email, or purchasing. Use at your own risk. We assume no liability whatsoever for broken pages.


Alternative Proxies:

Alternative Proxy

pFad Proxy

pFad v3 Proxy

pFad v4 Proxy