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G.R. No.

96490 February 3, 1992


INDOPHIL TEXTILE MILL OR!ER" #NION$PTGO, petitioner,
vs.
%OL#NT&R' &R(ITR&TOR TEODORI)O P. )&LI)& a*+ INDOPHIL TEXTILE
MILL", IN)., respondents.
Romeo C. Lagman for petitioner.
Borreta, Gutierrez & Leogardo for respondent Indophil Textile Mills, Inc.

MEDI&LDE&, J.:
This is a petition for certiorari seeking the nullification of the award issued by the respondent
Voluntary Arbitrator Teodorico P. Calica dated December , !""# finding that $ection ! %c&,
Article ' of the Collective (argaining Agreement between 'ndophil Te)tile *ills, 'nc. and
'ndophil Te)tile *ill +orkers ,nion-PT.+/ does not e)tend to the employees of 'ndophil
Acrylic *anufacturing Corporation as an e)tension or e)pansion of 'ndophil Te)tile *ills,
'ncorporated.
The antecedent facts are as follows0
Petitioner 'ndophil Te)tile *ill +orkers ,nion-PT.+/ is a legitimate labor organi1ation duly
registered with the Department of 2abor and 3mployment and the e)clusive bargaining agent of
all the rank-and-file employees of 'ndophil Te)tile *ills, 'ncorporated. 4espondent Teodorico P.
Calica is impleaded in his official capacity as the Voluntary Arbitrator of the 5ational
Conciliation and *ediation (oard of the Department of 2abor and 3mployment, while private
respondent 'ndophil Te)tile *ills, 'nc. is a corporation engaged in the manufacture, sale and
e)port of yarns of various counts and kinds and of materials of kindred character and has its
plants at (arrio 2ambakin. *arilao, (ulacan.
'n April, !"6, petitioner 'ndophil Te)tile *ill +orkers ,nion-PT.+/ and private respondent
'ndophil Te)tile *ills, 'nc. e)ecuted a collective bargaining agreement effective from April !,
!"6 to *arch 7!, !""#.
/n 5ovember 7, !"86 'ndophil Acrylic *anufacturing Corporation was formed and registered
with the $ecurities and 3)change Commission. $ubse9uently, Acrylic applied for registration
with the (oard of 'nvestments for incentives under the !"6 /mnibus 'nvestments Code. The
application was approved on a preferred non-pioneer status.
'n !", Acrylic became operational and hired workers according to its own criteria and
standards. $ometime in :uly, !"", the workers of Acrylic unioni1ed and a duly certified
collective bargaining agreement was e)ecuted.
'n !""# or a year after the workers of Acrylic have been unioni1ed and a C(A e)ecuted, the
petitioner union claimed that the plant facilities built and set up by Acrylic should be considered
as an e)tension or e)pansion of the facilities of private respondent Company pursuant to $ection
!%c&, Article ' of the C(A, to wit,.
c& This Agreement shall apply to the Company;s plant facilities and
installations and to any e)tension and e)pansion thereat. %Rollo,
p.<&
'n other words, it is the petitioner;s contention that Acrylic is part of the 'ndophil
bargaining unit.
The petitioner;s contention was opposed by private respondent which submits that it is a =uridical
entity separate and distinct from Acrylic.
The e)isting impasse led the petitioner and private respondent to enter into a submission
agreement on $eptember 8, !""#. The parties =ointly re9uested the public respondent to act as
voluntary arbitrator in the resolution of the pending labor dispute pertaining to the proper
interpretation of the C(A provision.
After the parties submitted their respective position papers and replies, the public respondent
Voluntary Arbitrator rendered its award on December , !""#, the dispositive portion of which
provides as follows0
P43*'$3$ C/5$'D343D, it would be a strained interpretation and application
of the 9uestioned C(A provision if we would e)tend to the employees of Acrylic
the coverage clause of 'ndophil Te)tile *ills C(A. +herefore, an award is made
to the effect that the proper interpretation and application of $ec. l, %c&, Art. ', of
the !"6 C(A do %sic& not e)tend to the employees of Acrylic as an e)tension or
e)pansion of 'ndophil Te)tile *ills, 'nc. %Rollo, p.>!&
?ence, this petition raising four %<& issues, to wit0
!. +?3T?34 /4 5/T T?3 43$P/5D35T A4('T4AT/4
3443D '5 '5T34P43T'5. $3CT'/5 !%c&, A4T ' /@ T?3
C(A (3T+335 P3T'T'/534 ,5'/5 A5D 43$P/5D35T
C/*PA5A.
>. +?3T?34 /4 5/T '5D/P?'2 AC4A2'C '$ A $3PA4AT3
A5D D'$T'5CT 35T'TA @4/* 43$P/5D35T C/*PA5A
@/4 P,4P/$3$ /@ ,5'/5 43P43$35TAT'/5.
7. +?3T?34 /4 5/T T?3 43$P/5D35T A4('T4AT/4
.4AV32A A(,$3D ?'$ D'$C43T'/5 A*/,5T'5. T/
2ACB /4 '5 3CC3$$ /@ ?'$ :,4'$D'CT'/5.
<. +?3T?34 /4 5/T T?3 43$P/5D35T A4('T4AT/4
V'/2AT3D P3T'T'/534 ,5'/5;$ CA4D'5A2 P4'*A4A
4'.?T T/ D,3 P4/C3$$. %Rollo, pp. 8-6&
The central issue submitted for arbitration is whether or not the operations in 'ndophil Acrylic
Corporation are an e)tension or e)pansion of private respondent Company. Corollary to the
aforementioned issue is the 9uestion of whether or not the rank-and-file employees working at
'ndophil Acrylic should be recogni1ed as part of, andDor within the scope of the bargaining unit.
Petitioner maintains that public respondent Arbitrator gravely erred in interpreting $ection l%c&,
Article ' of the C(A in its literal meaning without taking cogni1ance of the facts adduced that
the creation of the aforesaid 'ndophil Acrylic is but a devise of respondent Company to evade the
application of the C(A between petitioner ,nion and respondent Company.
Petitioner stresses that the articles of incorporation of the two corporations establish that the two
entities are engaged in the same kind of business, which is the manufacture and sale of yarns of
various counts and kinds and of other materials of kindred character or nature.
Contrary to petitioner;s assertion, the public respondent through the $olicitor .eneral argues that
the 'ndophil Acrylic *anufacturing Corporation is not an alter ego or an ad=unct or business
conduit of private respondent because it has a separate legitimate business purpose. 'n addition,
the $olicitor .eneral alleges that the primary purpose of private respondent is to engage in the
business of manufacturing yarns of various counts and kinds and te)tiles. /n the other hand, the
primary purpose of 'ndophil Acrylic is to manufacture, buy, sell at wholesale basis, barter,
import, e)port and otherwise deal in yarns of various counts and kinds. ?ence, unlike private
respondent, 'ndophil Acrylic cannot manufacture te)tiles while private respondent cannot buy or
import yarns.
@urthermore, petitioner emphasi1es that the two corporations have practically the same
incorporators, directors and officers. 'n fact, of the total stock subscription of 'ndophil Acrylic,
P!,6<","6#.## which represents seventy percent %6#E& of the total subscription of P>,F##,###.##
was subscribed to by respondent Company.
/n this point, private respondent cited the case of iatagon La!or "ederation #. $ple, ..4. 5o.
2-<<<"7-"<, December 7, !"#, !#l $C4A F7<, which ruled that two corporations cannot be
treated as a single bargaining unit even if their businesses are related. 't submits that the fact that
there are as many bargaining units as there are companies in a conglomeration of companies is a
positive proof that a corporation is endowed with a legal personality distinctly its own,
independent and separate from other corporations %see Rollo, pp. !8#-!8!&.
Petitioner notes that the foregoing evidence sufficiently establish that Acrylic is but an e)tension
or e)pansion of private respondent, to wit0
%a& the two corporations have their physical plants, offices and
facilities situated in the same compound, at (arrio 2ambakin,
*arilao, (ulacanG
%b& many of private respondent;s own machineries, such as dyeing
machines, reeling, boiler, Bamitsus among others, were transferred
to and are now installed and being used in the Acrylic plantG
%c& the services of a number of units, departments or sections of
private respondent are provided to AcrylicG and
%d& the employees of private respondent are the same persons
manning and servicing the units of Acrylic. %see Rollo, pp. !>-!7&
Private respondent insists that the e)istence of a bonafide business relationship between Acrylic
and private respondent is not a proof of being a single corporate entity because the services
which are supposedly provided by it to Acrylic are au)iliary services or activities which are not
really essential in the actual production of Acrylic. 't also pointed out that the essential services
are discharged e)clusively by Acrylic personnel under the control and supervision of Acrylic
managers and supervisors.
'n sum, petitioner insists that the public respondent committed grave abuse of discretion
amounting to lack or in e)cess of =urisdiction in erroneously interpreting the C(A provision and
in failing to disregard the corporate entity of Acrylic.
+e find the petition devoid of merit.
Time and again, +e stress that the decisions of voluntary arbitrators are to be given the highest
respect and a certain measure of finality, but this is not a hard and fast rule, it does not preclude
=udicial review thereof where want of =urisdiction, grave abuse of discretion, violation of due
process, denial of substantial =ustice, or erroneous interpretation of the law were brought to our
attention. %see /campo, et al. v. 5ational 2abor 4elations Commission, ..4. 5o. !866, >F :uly
!""#, @irst Division *inute 4esolution citing /ceanic (ic Division %@@+& v. 4omero, ..4. 5o.
2-<7"#, :uly !8, !"<, !7# $C4A 7">&
't should be emphasi1ed that in rendering the sub=ect arbitral award, the voluntary arbitrator
Teodorico Calica, a professor of the ,.P. Asian 2abor 3ducation Center, now the 'nstitute for
'ndustrial 4elations, found that the e)isting law and =urisprudence on the matter, supported the
private respondent;s contentions. Contrary to petitioner;s assertion, public respondent cited facts
and the law upon which he based the award. ?ence, public respondent did not abuse his
discretion.
,nder the doctrine of piercing the veil of corporate entity, when valid grounds therefore e)ist,
the legal fiction that a corporation is an entity with a =uridical personality separate and distinct
from its members or stockholders may be disregarded. 'n such cases, the corporation will be
considered as a mere association of persons. The members or stockholders of the corporation
will be considered as the corporation, that is liability will attach directly to the officers and
stockholders. The doctrine applies when the corporate fiction is used to defeat public
convenience, =ustify wrong, protect fraud, or defend crime, or when it is made as a shield to
confuse the legitimate issues, or where a corporation is the mere alter ego or business conduit of
a person, or where the corporation is so organi1ed and controlled and its affairs are so conducted
as to make it merely an instrumentality, agency, conduit or ad=unct of another corporation.
%,mali et al. v. Court of Appeals, ..4. 5o. "F8!, $eptember !7, !""#, !" $C4A F>", F<>&
'n the case at bar, petitioner seeks to pierce the veil of corporate entity of Acrylic, alleging that
the creation of the corporation is a devise to evade the application of the C(A between petitioner
,nion and private respondent Company. +hile we do not discount the possibility of the
similarities of the businesses of private respondent and Acrylic, neither are we inclined to apply
the doctrine invoked by petitioner in granting the relief sought. The fact that the businesses of
private respondent and Acrylic are related, that some of the employees of the private respondent
are the same persons manning and providing for au)illiary services to the units of Acrylic, and
that the physical plants, offices and facilities are situated in the same compound, it is our
considered opinion that these facts are not sufficient to =ustify the piercing of the corporate veil
of Acrylic.
'n the same case of %mali, et al. #. Court of &ppeals %supra&, +e already emphasi1ed that Hthe
legal corporate entity is disregarded only if it is sought to hold the officers and stockholders
directly liable for a corporate debt or obligation.H 'n the instant case, petitioner does not seek to
impose a claim against the members of the Acrylic.
@urthermore, +e already ruled in the case of iatagon La!or "ederation Local ''( of the
%LG)* #. $ple %supra& that it is grave abuse of discretion to treat two companies as a single
bargaining unit when these companies are indubitably distinct entities with separate =uridical
personalities.
?ence, the Acrylic not being an e)tension or e)pansion of private respondent, the rank-and-file
employees working at Acrylic should not be recogni1ed as part of, andDor within the scope of the
petitioner, as the bargaining representative of private respondent.
All premises considered, the Court is convinced that the public respondent Voluntary Arbitrator
did not commit grave abuse of discretion in its interpretation of $ection l%c&, Article ' of the C(A
that the Acrylic is not an e)tension or e)pansion of private respondent.
ACC/4D'5.2A, the petition is D35'3D and the award of the respondent Voluntary Arbitrator
are hereby A@@'4*3D.
$/ /4D343D.