QUINTIN ROBLEDO, MARIO SINLAO, LEONARDO SAAVEDRA, VICENTE SECAPURI, DANIEL AUSTRIA, ET AL., petitioners, vs. THE NATIONAL LABOR RELATIONS COMMISSION, BACANI SECURITY AND ALLIED SERVICES CO., INC., AND BACANI SECURITY AND PROTECTIVE AGENCY AND/OR ALICIA BACANI, respondents. Ponente: Mendoza, J. Doctrne!:
a. Corporation Law: The The doctrine doctrine of piercing piercing the veil of corporate corporate entity entity is used used whenever whenever a court finds that the corporate fiction is being used to defeat public convenience, justify wrong wrong,, protec protectt fraud fraud,, or defen defend d crie, crie, or to confus confuse e legiti legitiat ate e issue issues, s, or that that a corpo corporat ratio ion n is the ere alter alter ego ego or busin busines ess s cond conduit uit of a perso person n or where where the the corporation corporation is so organized and controlled and its affairs are so conducted as to a!e it erely an instruentality, agency, conduit or adjunct of another corporation. b. Labour Labour Law: Law: The rule is settled settled that unless unless e"press e"pressly ly assued assued labor labor contracts contracts are not enforceable against the transferee of an enterprise. The reason for this is that labor contracts are in personam . Conse#uently, it has been held that clais for bac!wages earne earned d fro fro the forer forer eplo eploye yerr canno cannott be filed filed again against st the new owne owners rs of an enterprise. $or is the new operator of a business liable for clais for retireent pay of eployees. %nder &rt. ''( of the Labor Code, oney clais of laborers enjoy preference over clais of other creditors in case of ban!ruptcy or li#uidation of the eployer)s business. c. *eedial Law: Law: &ll clais clais for oney oney against against the decedent, decedent, arising fro contract, contract, e"press e"press or iplied, whether the sae be due, not due, or contingent, all clais for funeral e"penses and e"penses for the last sic!ness of the decedent, and judgent for oney against the decedent, ust be filed within the tie liited in the notice+ otherwise they are barred forever, e"cept e"cept that they ay be set forth as counterclais counterclais in any action that the e"ecutor or adinistrator ay bring against the claiants. The rationale for the rule is that upon the death of the defendant, a testate or intestate proceeding shall be instituted in the proper court wherein all his creditors ust appear and file their clais which which shall shall be paid paid propo proporti rtion onat ately ely out out of the the prope property rty left left by the decea decease sed. d. The The objective is to avoid duplicity of procedure. ence the ordinary actions ust be ta!en out fro the ordinary courts. "ACTS: *obledo -T. &l. filed a etition for *eview of the /ecision of $L*C, setting aside the
decision of the Labor &rbiter, which held private respondents jointly and severally liable to the petitioners for overtie and legal holiday pay. etitioners were forer eployees of 0acani 1ecurity and rotective &gency 201&3. They were eployed as security guards at different ties during the period '454 to /eceber '464 when when 01& 01& ceased to operate operate.. 01& 01& was a single single proprieto proprietorshi rship p owned, owned, anaged anaged,, and operated by the late 7elipe 0acani. 8n /eceber 9', '464, 7elipe 0acani retired the business nae and 01& ceased to operate effective on that day. 8n Jan. ', '44( 7elipe 0acani died. &n intestate intestate proceeding proceeding was instituted instituted for for the settleent settleent of his estate estate before before asig;*TC. asig;*TC. -arlier, -arlier, on 8ct. <5, '464, respondent 0acani 1ecurity and &llied 1ervices Co., =nc. 20&1-C3 had been
organized and registered as a corporation with 1-C. The following were the incorporators with their respective shareholdings: &L=C=& 0&C&$= > <,<( shares L?/=& 0&C&$= > <,<( shares &M&/8 . -L-/& > <,<( shares @=CT8*=& 0. &%*=A%- > <,<( shares 7-L=- 0&C&$= > <(,((( shares 8n July , '44(, the petitioners filed a coplaint with the /8L- for underpayent of wages and nonpayent of overtie pay and other accrued benefits, and for the return of their cash bond, which they posted, with 01&. Made respondents were 01& and 0&1-C. 8n March ', '44<, the Labor &rbiter rendered a decision upholding the right of petitioners, finding the coplainants entitled to their oney clais to be paid by all the respondentsB solidarily. 8n appeal, the $L*C reversed the decision declaring that the Labor &rbiter is without jurisdiction and instead suggested that petitioners file their clais with asig;*TC where an intestate proceeding of 0acaniBs estate was pending. etitioners oved for reconsideration but their otion was denied for lac! of erit. The case was elevated to the 1C and was treated as a special civil action of certiorari to deterine whether the $L*C coitted a grave abuse of discretion in reversing the Labor &rbiterBs decision. ISSUE: hether 0acani 1ecurity and &llied 1ervices, =nc. 20&1-C3 can be held liable for clais
of petitioners against 0acani 1ecurity and rotective &gency 201&3. RULING: $o. etitioners contend that public respondent, $L*C, erred in setting aside the
Labor &rbiterBs judgent on the ground that 0&1-C is the sae entity as 01& the latter being owned and controlled by one and the sae faily, the 0acani faily. 7or this reason they urge that corporate fiction should be disregarded and 0&1-C should be held liable for the obligations of the defunct 01&. &s correctly found by the $L*C, 0&1-C is an entity separate and distinct fro that of 01&. 01& is a single proprietorship owned and operated by 7elipe 0acani. ence, its debts and obligations were the personal obligations of its owner. etitionerBs clais, which are based on these debts and personal obligations, did not survive the death of 7elipe 0acani on Jan. ', '44( and should have been filed instead in the intestate proceedings involving his estate. The rule is settled that unless e"pressly assued labor contracts are not enforceable against the transferee of an enterprise. The reason for this is that labor contracts are in personam. Conse#uently, it has been held that clais for bac!wages earned fro the forer eployer cannot be filed against the new owners of an enterprise. #$or is the new operator of a business liable for clais for retireent pay of eployees. =t is apparent, therefore, that the doctrine of piercing the corporate veil has no application to this case where the purpose is not to hold the individual stoc!holders liable for the obligations of the corporation but, on the contrary, to hold the corporation liable for the obligations of a stoc!holder or stoc!holders. iercing the veil of corporate entity eans loo!ing through the corporate for to the individual stoc!holders coposing it. ere there is no reason to pierce the veil of
corporate entity because there is no #uestion that petitioners) clais, assuing the to be valid, are the personal liability of the late 7elipe 0acani. =t is iaterial that he was also a stoc!holder of 0&1-C. =ndeed, the doctrine is stood on its head when what is sought is to a!e a corporation liable for the obligations of a stoc!holder. 0ut there are several reasons why 0&1-C is not liable for the personal obligations of 7elipe 0acani. 7or one, 0&1-C cae into e"istence before 01& was retired as a business concern. 0&1-C was incorporated on 8ctober <5, '464 and its license to operate was released on May <6, '44(, while 01& ceased to operate on /eceber 9', '464. 0efore, 01& was retired, 0&1-C already e"isted. =t is, therefore, not true that 0&1-C is a ere continuity of 01&.
