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Concept Builders, Inc. Vs NLRC: G.R. No. 108734

This case involved Concept Builders, Inc. illegally terminating employees. When the employees attempted to collect on an arbitration ruling in their favor, the company claimed it no longer occupied the premises. The court ruled that piercing the corporate veil was proper, as a corporation's separate identity is a legal fiction that can be disregarded when it is being used to defeat public policy or the law. Some factors that show common identity between corporations and justify piercing the veil include common ownership, shared directors and officers, and similar record keeping and business practices. The court found Concept Builders, Inc. was merely an extension of another corporation attempting to avoid labor law obligations.

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Michelle Gay Palasan
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45 views

Concept Builders, Inc. Vs NLRC: G.R. No. 108734

This case involved Concept Builders, Inc. illegally terminating employees. When the employees attempted to collect on an arbitration ruling in their favor, the company claimed it no longer occupied the premises. The court ruled that piercing the corporate veil was proper, as a corporation's separate identity is a legal fiction that can be disregarded when it is being used to defeat public policy or the law. Some factors that show common identity between corporations and justify piercing the veil include common ownership, shared directors and officers, and similar record keeping and business practices. The court found Concept Builders, Inc. was merely an extension of another corporation attempting to avoid labor law obligations.

Uploaded by

Michelle Gay Palasan
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as PDF, TXT or read online on Scribd
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CONCEPT BUILDERS, INC.

VS NLRC
G.R. No. 108734
May 29, 1996

DOCTRINE: Doctrine of Piercing the Veil of Corporate Fiction; The separate


and distinct personality of a corporation is merely a fiction created by law
for convenience and to promote justice; When the notion of separate juridi-
cal personality is used to defeat public convenience, justify wrong, protect
fraud or defend crime, or is used as a device to defeat the labor laws, this
separate personality of the corporation may be disregarded or the veil of
corporate fiction pierced.—It is a fundamental principle of corporation law
that a corporation is an entity separate and distinct from its stockholders
and from other corporations to which it may be connected. But this separate
and distinct personality of a corporation is merely a fiction created by law
for convenience and to promote justice. So, when the notion of separate
juridical personality is used to defeat public convenience, justify wrong, pro-
tect fraud or defend crime, or is used as a device to defeat the labor laws,
this separate personality of the corporation may be disregarded, or the veil
of corporate fiction pierced. This is true likewise when the corporation is
merely an adjunct, a business conduit or an alter ego of another corporation.

FACTS: The petitioner is a domestic corporation engaged in the construc-


tion business. The private respondents were employed by said company as
laborers, carpenters and riggers; however, they were illegally dismissed.

On November 1981, private respondents were served with individual written


notices of termination of employment by petitioner, effective on November
30, 1981. It was stated in the individual notices that their contracts of em-
ployment had expired and the project in which they were hired had been
completed. Public respondent found it to be the fact, however, at the time
of the termination of private respondents’ employment, the project in which
they were hired had not yet been finished and completed. Petitioner had to
engage the services of the subcontractors whose workers performed the
functions of private respondents. Aggrieved, private respondents filed a
complaint for illegal dismissal, unfair labor practices and non-payment of
their holiday pay, overtime pay, and 13th month pay against petitioners. The
labor arbiter rendered decision in favor of the private respondents. When
the same became final and executory, a writ of execution was issued, how-
ever, the same was refused by the security guard on duty on the ground
that the petitioners no longer occupied the premises. A break-open order
was then recommended.
ISSUE: Whether or not the piercing the veil of corporate entity is proper

RULING: Yes.

It is a fundamental principle of corporation law that a corporation is an entity


separate and distinct from its stockholders and from other corporations to
which it may be connected. But this separate and distinct personality of a
corporation is merely a fiction created by law for convenience and to pro-
mote justice. So, when the notion of separate juridical personality is used to
defeat public convenience, justify wrong, protect fraud or defend crime, or
is used as a device to defeat the labor laws, this separate personality of the
corporation may be disregarded, or the veil of corporate fiction pierced. This
is true likewise when the corporation is merely an adjunct, a business con-
duit or an alter ego of another corporation.

The conditions under which the juridical entity may be disregarded vary ac-
cording 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:

• Stock ownership by one or common ownership of both corporations.

• Identity of directors and officers.

• The manner of keeping corporate books and records.

• Methods of conducting the business.

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