Concept Builders vs NLRC

GR 108734; 29 May 1996

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. However, they were illegally dismissed.
Aggrieved, private respondents filed a complaint for illegal dismissal. The Labor Arbiter rendered judgment ordering petitioner to reinstate private
respondents and to pay them back wages. It became final and executory.
The alias Writ of Execution cannot be enforced by the sheriff because all the employees inside petitioner’s premises at 355 Maysan Road,
Valenzuela, Metro Manila, claimed that they were employees of Hydro Pipes Philippines, Inc. (HPPI) and not by petitioner. Thus, NLRC issued a
break-open order against Concept Builders and HPPI.
Issue: Whether the piercing the veil of corporate entity is proper.
Held: 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
promote 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 conduit or an alter ego of another corporation.
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:
1. Stock ownership by one or common ownership of both corporations.
2. Identity of directors and officers.
3. The manner of keeping corporate books and records.
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:
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 instances, 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:
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.
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.

G.R. No. 166282, 13 February 2013 (690 SCRA 519)

Heirs of Fe Tan Uy v. International Exchange Bank

Mendoza, J.:

FACTS:
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Respondent International Exchange Bank (iBank), granted loans to Hammer Garments Corporation (Hammer), covered by promissory notes and
deeds of assignment. The loans were likewise secured by a P 9 Million-Peso Real Estate Mortgage executed by Goldkey Development Corporation
(Goldkey) over several of its properties and a P 25 Million-Peso Surety Agreement signed by Chua and his wife, Fe Tan Uy (Uy).

However, Hammer defaulted in the payment of its loans, prompting iBank to foreclose on Goldkey’s third-party Real Estate Mortgage. The
mortgaged properties were sold for P 12 million during the foreclosure sale, leaving an unpaid balance of P 13,420,177.62.9. For failure of Hammer
to pay the deficiency, iBank filed a Complaint for sum of money on December 16, 1997 against Hammer, Chua, Uy, and Goldkey before the
Regional Trial Court, Makati City (RTC).

Hammer did not file any Answer, thus it was held in default. On the other hand, Uy claimed that she was not liable to iBank because she never
executed a surety agreement in favor of iBank. Goldkey also denies liability, averring that it acted only as a third-party mortgagor and that it was a
corporation separate and distinct from Hammer.

RTC decision: ruled in favor of iBank. The lower court said that while it made the pronouncement that the signature of Uy on the Surety Agreement
was a forgery, it nevertheless held her liable for the outstanding obligation of Hammer because she was an officer and stockholder of the said
corporation. The RTC agreed with Goldkey that as a third-party mortgagor, its liability was limited to the properties mortgaged. It came to the
conclusion, however, that Goldkey and Hammer were one and the same entity.

Aggrieved, the heirs of Uy and Goldkey (petitioners) elevated the case to the CA.

CA decision: affirming the findings of the RTC. The CA found that iBank was not negligent in evaluating the financial stability of Hammer. According
to the appellate court, iBank was induced to grant the loan because petitioners, with intent to defraud the bank, submitted a falsified Financial Report
for 1996 which incorrectly declared the assets and cashflow of Hammer. Because petitioners acted maliciously and in bad faith and used the
corporate fiction to defraud iBank, they should be treated as one and the same as Hammer.

Hence, the present petitions filed separately by the heirs of Uy and Goldkey which later on consolidated by this Court.

ISSUE: Whether or not the doctrine of piercing the corporate veil should apply in this case?

RULING: NO.

RATIO:

Basic is the rule in corporation law that a corporation is a juridical entity which is vested with a legal personality separate and distinct from those
acting for and in its behalf and, in general, from the people comprising it. Following this principle, obligations incurred by the corporation, acting
through its directors, officers and employees, are its sole liabilities. A director, officer or employee of a corporation is generally not held personally
liable for obligations incurred by the corporation.

Nevertheless, this legal fiction may be disregarded if it is used as a means to perpetrate fraud or an illegal act, or as a vehicle for the evasion of an
existing obligation, the circumvention of statutes, or to confuse legitimate issues.

In this case, petitioners are correct to argue that it was not alleged, much less proven, that Uy committed an act as an officer of Hammer that would
permit the piercing of the corporate veil. A reading of the complaint reveals that with regard to Uy, iBank did not demand that she be held liable for
the obligations of Hammer because she was a corporate officer who committed bad faith or gross negligence in the performance of her duties such
that the lifting of the corporate mask would be merited. What the complaint simply stated is that she, together with her errant husband Chua, acted
as surety of Hammer, as evidenced by her signature on the Surety Agreement which was later found by the RTC to have been forged.

The Court emphasized that the application of the doctrine of piercing the corporate veil should be done with caution. A court should be mindful of the
milieu where it is to be applied. It must be certain that the corporate fiction was misused to such an extent that injustice, fraud, or crime was
committed against another, in disregard of its rights. The wrongdoing must be clearly and convincingly established; it cannot be presumed.
Otherwise, an injustice that was never unintended may result from an erroneous application.

However, the Court finds Goldkey liable for it is a mere alter ego of Hammer.

Goldkey contends, among others, that iBank is estopped from expanding Goldkey’s liability beyond the real estate mortgage. It adds that it did not
authorize the execution of the said mortgage. Finally, it passes the blame on to iBank for failing to exercise the requisite due diligence in properly
evaluating Hammer’s creditworthiness before it was extended an omnibus line.

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The Court disagrees.

Goldkey’s argument, that iBank is barred from pursuing Goldkey for the satisfaction of the unpaid obligation of Hammer because it had already
limited its liability to the real estate mortgage, is completely absurd. Goldkey needs to be reminded that it is being sued not as a consequence of the
real estate mortgage, but rather, because it acted as an alter ego of Hammer. Accordingly, they must be treated as one and the same entity, making
Goldkey accountable for the debts of Hammer.

Similarly, Goldkey is undoubtedly mistaken in claiming that iBank is seeking to enforce an obligation of Chua. The records clearly show that it was
Hammer, of which Chua was the president and a stockholder, which contracted a loan from iBank. What iBank sought was redress from Goldkey by
demanding that the veil of corporate fiction be lifted so that it could not raise the defense of having a separate juridical personality to evade liability
for the obligations of Hammer.

Under a variation of the doctrine of piercing the veil of corporate fiction, when two business enterprises are owned, conducted and controlled by the
same parties, both law and equity will, when necessary to protect the rights of third parties, disregard the legal fiction that two corporations are
distinct entities and treat them as identical or one and the same.

CASE: PNB VS. HYDRO RESOURCES CONTRACTORS CORPORATION

G.R NO. 167530, 693 SCRA 294
March 13, 2013

Topic: Doctrine of Piercing the Veil of Corporate Fiction

FACTS:
Sometime in 1984, petitioners DBP and PNB foreclosed on certain mortgages made on the properties of Marinduque Mining and Industrial
Corporation (MMIC). As a result of the foreclosure, DBP and PNB acquired substantially all the assets of MMIC and resumed the business
operations of the defunct MMIC by organizing NMIC.7 DBP and PNB owned 57% and 43% of the shares of NMIC, respectively, except for five
qualifying shares. As of September 1984, the members of the Board of Directors of NMIC, namely, Jose Tengco, Jr., Rolando Zosa, Ruben Ancheta,
Geraldo Agulto, and Faustino Agbada, were either from DBP or PNB.

Subsequently, NMIC engaged the services of Hercon, Inc., for NMIC’s Mine Stripping and Road Construction Program in 1985 for a total contract
price of P35,770,120. After computing the payments already made by NMIC under the program and crediting the NMIC’s receivables from Hercon,
Inc., the latter found that NMIC still has an unpaid balance of P8,370,934.74.10 Hercon, Inc. made several demands on NMIC, including a letter of
final demand dated August 12, 1986, and when these were not heeded, a complaint for sum of money was filed in the RTC of Makati, Branch 136
seeking to hold petitioners NMIC, DBP, and PNB solidarily liable for the amount owing Hercon, Inc.

Subsequent to the filing of the complaint, Hercon, Inc. was acquired by HRCC in a merger.

Thereafter, on December 8, 1986, then President Corazon C. Aquino issued Proclamation No. 50 creating the APT for the expeditious disposition
and privatization of certain government corporations and/or the assets thereof. Pursuant to the said Proclamation, on February 27, 1987, DBP and
PNB executed their respective deeds of transfer in favor of the National Government assigning, transferring and conveying certain assets and
liabilities, including their respective stakes in NMIC. In turn and on even date, the National Government transferred the said assets and liabilities to
the APT as trustee under a Trust Agreement.

NMIC and DPB claimed that HRCC had no cause of action and asserted that the contract with HRCC was entered into by its President without any
authority. It also failed o comply with the rules and regulations concerning government of contracts. DBP asserts that it is not a privy to the contact
with NMIC and NMIC’s juridical personality id separate from DBP.

RTC of Makati rendered decision in favor of HRCC, it pierced veil of NMIC and held DBP and PNB solidarily liable with NMIC.

ISSUE: Whether or not there is sufficient ground to pierce the veil of corporate fiction.
Whether or not DBP and PNB solidarily liable with NMIC.

RULING:
No, there s no sufficient proof to pierce the veil of corporate fiction.

Although from all indications, it appears that NMIC is a mere adjunct, business conduit or alter ego of both DBP and PNB. Thus, the DBP and PNB
are jointly and severally liable with NMIC for the latter’s unpaid obligations to plaintiff, where owned, conducted and controlled the business of NMIC
as shown by the following circumstances: NMIC was owned by DBP and PNB, the officers of DBP and PNB were also the officers of NMIC, and DBP
and PNB financed the operations of NMIC. As it is well-settled that "where it appears that the business enterprises are owned, conducted and
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controlled by the same parties, both law and equity will, when necessary to protect the rights of third persons, disregard legal fiction that two (2)
corporations are distinct entities, and treat them as identical." (Phil. Veterans Investment Development Corp. vs. CA, 181 SCRA 669).

CA then concluded that, "in keeping with the concept of justice and fair play," the corporate veil of NMIC should be pierced.

For to treat NMIC as a separate legal entity from DBP and PNB for the purpose of securing beneficial contracts, and then using such separate entity
to evade the payment of a just debt, would be the height of injustice and iniquity. Surely that could not have been the intendment of the law with
respect to corporations.

A corporation is an artificial entity created by operation of law. It possesses the right of succession and such powers, attributes, and properties
expressly authorized by law or incident to its existence. It has a personality separate and distinct from that of its stockholders and from that of other
corporations to which it may be connected. As a consequence of its status as a distinct legal entity and as a result of a conscious policy decision to
promote capital formation, a corporation incurs its own liabilities and is legally responsible for payment of its obligations. In other words, by virtue of
the separate juridical personality of a corporation, the corporate debt or credit is not the debt or credit of the stockholder.41 This protection from
liability for shareholders is the principle of limited liability.4

Equally well-settled is the principle that the corporate mask may be removed or the corporate veil pierced when the corporation is just an alter ego of
a person or of another corporation. For reasons of public policy and in the interest of justice, the corporate veil will justifiably be impaled only when it
becomes a shield for fraud, illegality or inequity committed against third persons.

The doctrine of piercing the corporate veil applies only in three (3) basic areas, namely: 1) defeat of public convenience as when the corporate
fiction is used as a vehicle for the evasion of an existing obligation; 2) fraud cases or when the corporate entity is used to justify a wrong, protect
fraud, or defend a crime; or 3) alter ego cases, where a corporation is merely a farce since it is a mere alter ego or business conduit of a person, or
where the corporation is so organized and controlled and its affairs are so conducted as to make it merely an instrumentality, agency, conduit or
adjunct of another corporation.

In this connection, case law lays down a three-pronged test to determine the application of the alter ego theory, which is also known as the
instrumentality theory, namely:

(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;(Control Test)

(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 right; and (Fraud Test)

(3) The aforesaid control and breach of duty must have proximately caused the injury or unjust loss complained of. (Harm Test)

For piercing the corporate veil based on the alter ego theory requires the concurrence of three elements: control of the corporation by the
stockholder or parent corporation, fraud or fundamental unfairness imposed on the plaintiff, and harm or damage caused to the plaintiff by the
fraudulent or unfair act of the corporation. The absence of any of these elements prevents piercing the corporate veil.

These are not present in this case.

As a general rule, a corporation will be looked upon as a legal entity, unless and until sufficient reason to the contrary appears. For the separate
juridical personality of a corporation to be disregarded, the wrongdoing must be clearly and convincingly established. It cannot be presumed.

There being a total absence of evidence pointing to a fraudulent, illegal or unfair act committed against HRCC by DBP and PNB under the guise of
NMIC, there is no basis to hold that NMIC was a mere alter ego of DBP and PNB. Thus, DBP and PNB may not be held solidarily liable with NMIC,
no contingent liability may be imputed to the APT as well. Only NMIC as a distinct and separate legal entity is liable to pay its corporate obligation to
HRCC in the amount of ₱8,370,934.74, with legal interest thereon from date of demand.

PNB v.Ritratto
G.R. No. 142616 July 31, 2001 J. Kapunan
petitioners Philippine National Bank
respondents Ritratto Group Inc., Riatto International, Inc., and Dadasan General Merchandise
summary PNB-IFL extended a letter of credit to Ritratto secured by a real estate mortgage. The latter defaulted so PNB-IFL
through its attorney-in-fact PNB sent them notice of the foreclosure. Ritratto filed for an injunction against PNB to
stop the foreclosure. RTC ruled in favor of Ritratto and CA dismissed PNB’s petition for certiorari. The SC ruled in
favor of PNB and reversed the CA decision. They held that PNB was an agent, being a mere attorney-in-fact, of
PNB-IFL with limited authority and specific duties. It is therefore not privy to the contract between PNB-IFL and
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 Ritratto and therefore the latter has no cause of action against PNB.

Commissioner of Customs v. Oilink International Corporation

G.R. 161759, July 2, 2014

Facts:
The District Collector of the Port of Manila, formally demanded that Union Refinery Corporation (URC) pay the taxes and duties on its oil
imports that had arrived between January 6, 1991 and November 7, 1995 at the Port of Lucanin in Mariveles, Bataan.
The Commissioner also made the same demand, and an assessment. Oilink formally protested the assessment.
Oilink appealed to the Court of Tax Appeals (CTA), seeking the nullification of the assessment for having been issued without authority and
with grave abuse of discretion tantamount to lack of jurisdiction because the Government was thereby shifting the imposition from URC to Oilink.
Thus the petition by the Commissioner. It argued, among others, that the CTA gravely erred in holding that the Commissioner of Customs
could not pierce the veil of corporate fiction.
The CA concurred with the CTA, that the Commissioner did not submit any evidence to support his allegations.

Issue:
Is there a ground to pierce the corporate veil of fiction?

Ruling:
None.

In Philippine National Bank v. Ritratto Group, Inc., the Court has outlined the following circumstances thatare useful in the determination of
whether a subsidiary is a mere instrumentality of the parent-corporation, viz:
1. Control, not mere majority or complete control, but complete domination, not only of finances butof policy and business practice in
respect to the transaction attacked so that the corporate entity as to this transaction had at the time no separatemind, will or existence of its own;

2. Such control must have been used by the defendant to commit fraud or wrong, to perpetrate the violation of a statutory or other positive
legal duty, or dishonest and, unjust act incontravention of plaintiff's legal rights; and

3. The aforesaid control and breach of duty must proximately cause the injury or unjust loss complained of.

In applying the "instrumentality" or"alter ego" doctrine, the courts are concerned with reality, not form, and with how the corporation
operated and the individual defendant's relationship to the operation.11 Consequently, the absence of any one of the foregoing elements
disauthorizes the piercing of the corporate veil.

Indeed, the doctrine of piercing the corporate veil has no application here because the Commissioner of Customs did not establish that
Oilink had been set up to avoid the payment of taxes or duties, or for purposes that would defeat public convenience, justify wrong, protect fraud,
defend crime, confuse legitimate legal or judicial issues, perpetrate deception or otherwise circumvent the law. It is also noteworthy that from the
outset the Commissioner of Customs sought to collect the deficiency taxes and duties from URC, and that it was only on July 2, 1999 when the
Commissioner of Customs sent the demand letter to both URC and Oilink. That was revealing, because the failure of the Commissioner of Customs
to pursue the remedies against Oilink from the outset manifested that its belated pursuit of Oilink was only an afterthought.

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facts of the case
PNB International Finance Ltd., a subsidiary company of PNB extended a letter of credit to Ritratto Group Inc., which was secured by a real
estate mortgage over 4 parcels of land. Ritratto later defaulted and pursuant to the terms of the real estate mortgages, PNB-IFL through its attorney-
in-fact PNB notified Ritratto of the foreclosure and public auction. Ritratto then filed for a complaint for injunction with prayer for the issuance of a writ
of preliminary injunction and/or temporary restraining order. PNB filed for a motion to dismiss on the grounds of failure to state a cause of action and
the absence of any privity between the petitioner and the respondents. The RTC ruled in favor of Ritratto and ordered the issuance of the writ. The
petition for certiorari before the CA was dismissed for lack of merit.

issue
WON PNB is a real party-in-interest in the contract, being merely an attorney-in-fact authorized to enforce an ancillary contract? NO.

ratio
Ritratto argues that PNB is a party-in-interest even if PNB-IFL and PNB are separate entities and thus be the proper subject for the writ of
preliminary injunction they prayed for because it is tasked to commit the acts of foreclosure of Ritratto’s properties. They also argue that the entire
credit facility is void because it violates the principle of mutuality of contracts (determination of interest rates were left to the sole discretion of PNB
and that the rate of interest may be unilaterally modified by PNB etc) and that the RTC was correct in piercing the corporate veil because PNB is a
mere alter ego of PNB-IFL.
The Court disagreed with their arguments. The contract was between Ritratto and PNB-IFL, not PNB. Ritratto even admits that PNB is a mere
attorney-in-fact for PNB-IFL with full power and authority to foreclose the properties. PNB is therefore an agent with limited authority and specific
duties under a special power of attorney incorporated in the real estate mortgage. The conclusion is that PNB is not privy to the loan contracts
entered into by Ritratto and PNB-IFL.
The validity of the loan contracts is a matter between PNB-IFL and Ritratto. The latter’s prayer that petitioner PNB, despite being merely an
agent, be ordered to recompute the rescheduling of the interest they had to pay cannot be granted. Since it was not a part of the contract it has no
power to recomputed the interest rates, therefore Ritratto has no cause of action against PNB.
The SC disagrees with the RTC ruling that because PNB-IFL is a subsidiary of PNB, a suit against the latter is a suit against the former, citing
Koppel Phil Inc vs Yatco. In said case, it was held that corporate entity may be discarded where a corporation is a mere alter ego of a person or
where the corporation is so organized and controlled and its affairs are so conducted as to make it merely an instrumentality, agency, conduit or
adjunct of another corporation. The SC restated that the GR is that a corporation has a personality distinct and separate from its individual
stockholders or members and is not affected by the personal rights, obligations and transactions of the latter. Just because a corporation owns all
the stocks of another corporation, by itself, is not sufficient to treat them as one entity. Koppel could not be applied in this case because Ritratto
failed to show any good reason to disregard the separate entities of PNB and PNB-IFL.
With regard to the piercing of the corporate veil, the Court held that its application is justified when the corporate fiction is used to defeat public
convenience, justify wrong, protect fraud or defend crime or when it is made as a shield to confuse the legit issues. In Concept Builders Inc v NLRC
the court laid down the test in determining its applicability: 1. Complete control or domination of not only finances but also of policy and business
practice, 2. Such control must have been used to commit fraud or wrong and 3. The control and breach of duty must proximately cause the injury or
unjust loss complained of. All three must be present in order for the doctrine to be applicable.

WPM INTERNATIONAL TRADING, INC. AND WARLITO P. MANLAPAZ v. FE CORAZON LABAYEN

G.R. No. 182770
September 17, 2014
Doctrine:
For the piercing of the corporate veil to apply it must be clearly established that the separate and distinct personality of the corporation is used
to justify a wrong, protect fraud, or perpetrate a deception. The court must be certain that the corporate fiction was misused to such an extent
that injustice, fraud, or crime was committed against another. It cannot be presumed.
Facts:
 The petitioner, WPM International Trading, Inc. (WPM), is a domestic corporation engaged in the restaurant business, while Warlito P.
Manlapaz is its president.
 Sometime in 1990, WPM entered into a management agreement with Labayen, by virtue of which the respondent was authorized to
operate, manage and rehabilitate Quickbite, a restaurant owned and operated by WPM. As part of her tasks, the respondent looked for a
contractor who would renovate the two existing Quickbite outlets in Divisoria, Manila and Lepanto St., University Belt, Manila. Pursuant to
the agreement, the respondent engaged the services of CLN Engineering Services (CLN) to renovate Quickbite-Divisoria at the cost of
P432,876.02.
 On June 13, 1990, Quickbite-Divisoria’s renovation was finally completed, and its possession was delivered to the respondent. However,
out of the P432,876.02 renovation cost, only the amount of P320,000.00 was paid to CLN, leaving a balance of P112,876.02
 On October 19, 1990, CLN filed a complaint for sum of money and damages before the RTC against the respondent and Manlapaz. The
respondent was declared in default for her failure to file a responsive pleading. The RTC found the respondent liable to pay CLN actual
damages in the amount of P112,876.02 with 12% interest per annum from June 18, 1990 (the date of first demand) and 20% attorney’s
fees.
 Respondent instituted a complaint for damages against the petitioners, WPM and Manlapaz. Respondent alleged that in the previous RTC
case, she was adjudged liable for a contract that she entered into for and in behalf of the petitioners, to which she should be entitled to
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 reimbursement. Her participation in the management agreement was limited only to introducing Manlapaz to Engineer Carmelo Neri,
CLN’s general manager. It was actually Manlapaz and Neri who agreed on the terms and conditions of the agreement and that when the
complaint for damages was filed against her. She was abroad and that she did not know of the case until she returned to the Philippines
and received a copy of the decision of the RTC.
 In his defense, Manlapaz claims that the respondent had exceeded her authority as agent of WPM, the renovation agreement should only
bind her and since WPM has a separate and distinct personality, Manlapaz cannot be made personally liable for the respondent’s claim.
 RTC held that the respondent is entitled to indemnity from Manlapaz. Based on the records, there is a clear indication that WPM is a mere
instrumentality or business conduit of Manlapaz. The RTC also found that Manlapaz had complete control over WPM considering that he is
its chairman, president and treasurer at the same time.
 CA affirmed and held that the petitioners are barred from raising as a defense the respondent’s alleged lack of authority to enter into the
renovation agreement in view of their tacit ratification of the contract.

Issue:
1. Whether or not WPM is a mere instrumentality, alter-ego, and business conduit of Manlapaz? No.
2. Whether or not Manlapaz is jointly and severally liable with WPM to the respondent for reimbursement, damages and interest? No.

Held:
Piercing the corporate veil based on the alter ego theory requires the concurrence of three elements, namely:
a) 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;
b) 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 right; and
c) The aforesaid control and breach of duty must have proximately caused the injury or unjust loss complained of.
The absence of any of these elements prevents piercing the corporate veil.

In the present case, the attendant circumstances do not establish that WPM is a mere alter ego of Manlapaz.

Aside from the fact that Manlapaz was the principal stockholder of WPM, records do not show that WPM was organized and controlled, and its
affairs conducted in a manner that made it merely an instrumentality, agency, conduit or adjunct of Manlapaz.

The respondent failed to prove that Manlapaz, acting as president, had absolute control over WPM. Even granting that he exercised a certain
degree of control over the finances, policies and practices of WPM, in view of his position as president, chairman and treasurer of the
corporation, such control does not necessarily warrant piercing the veil of corporate fiction since there was not a single proof that WPM was
formed to defraud CLN or the respondent, or that Manlapaz was guilty of bad faith or fraud.

On the contrary, the evidence establishes that CLN and the respondent knew and acted on the knowledge that they were dealing with WPM for
the renovation of the latter’s restaurant, and not with Manlapaz. That WPM later reneged on its monetary obligation to CLN, resulting to the filing
of a civil case for sum of money against the respondent, does not automatically indicate fraud, in the absence of any proof to support it.

It is emphasized that the piercing of the veil of corporate fiction is frowned upon and thus, must be done with caution. It can only be done if it
has been clearly established that the separate and distinct personality of the corporation is used to justify a wrong, protect fraud, or perpetrate a
deception. The court must be certain that the corporate fiction was misused to such an extent that injustice, fraud, or crime was committed
against another, in disregard of its rights; it cannot be presumed.

Notes:
The doctrine of piercing the corporate veil applies only in three (3) basic instances, namely:
a) when the separate and distinct corporate personality defeats public convenience, as when the corporate fiction is used as a vehicle for the
evasion of an existing obligation
b) in fraud cases, or when the corporate entity is used to justify a wrong, protect a fraud, or defend a crime; or
c) is used in alter ego cases, i.e., where a corporation is essentially a farce, since it is a mere alter ego or business conduit of a
person, or where the corporation is so organized and controlled and its affairs so conducted as to make it merely an instrumentality,
agency, conduit or adjunct of another corporation.

Lanuza Jr. vs BF Corporation

G.R. No. 174938 October 1, 2014

Facts: In 1993, BF Corporation filed a collection complaint with the Regional Trial Court against Shangri-La and the members of its board of
directors: Alfredo C. Ramos, Rufo B.Colayco, Antonio O. Olbes, Gerardo Lanuza, Jr., Maximo G. Licauco III, and Benjamin C. Ramos. BF
Corporation alleged in its complaint that on December 11, 1989 and May 30, 1991, it entered into agreements with Shangri-La wherein it undertook
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to construct for Shangri-La a mall and a multilevel parking structure along EDSA.Shangri-La had been consistent in paying BF Corporation in
accordance with its progress billing statements. However, by October 1991, Shangri-La started defaulting in payment. BF Corporation alleged that
Shangri-La induced BF Corporation to continue with the construction of the buildings using its own funds and credit despite Shangri-La’s default.
According to BF Corporation, Shangri-La misrepresented that it had funds to pay for its obligations with BF Corporation, and the delay in payment
was simply a matter of delayed processing of BF Corporation’s progress billing statements. BF Corporation eventually completed the construction of
the buildings. Shangri-La allegedly took possession of the buildings while still owing BF Corporation an outstanding balance. BF Corporation alleged
that despite repeated demands, Shangri-La refused to pay the balance owed to it.It also alleged that the Shangri-La’s directors were in bad faith in
directing Shangri-La’s affairs. Therefore, they should be held jointly and severally liable with Shangri-La for its obligations as well as for the damages
that BF Corporation incurred as a result of Shangri-La’s default. On August 3, 1993, Shangri-La, Alfredo C. Ramos, Rufo B. Colayco, Maximo G.
Licauco III, and Benjamin C. Ramos filed a motion to suspend the proceedings in view of BF Corporation’s failure to submit its dispute to arbitration,
in accordance with the arbitration clause provided in its contract. Petitioners filed their comment on Shangri-La’s and BF Corporation’s motions,
praying that they be excluded from the arbitration proceedings for being non-parties to Shangri-La’s and BF Corporation’s agreement.

Issue: Whether or not petitioners as directors of Shangri-La is personally liable for the contractual obligations entered into by the corporation.

Held: No. Because a corporation’s existence is only by fiction of law, it can only exercise its rights and powers through its directors, officers, or
agents, who are all natural persons. A corporation cannot sue or enter into contracts without them.

A consequence of a corporation’s separate personality is that consent by a corporation through its representatives is not consent of the
representative, personally. Its obligations, incurred through official acts of its representatives, are its own. A stockholder, director, or representative
does not become a party to a contract just because a corporation executed a contract through that stockholder, director or representative.

Hence, a corporation’s representatives are generally not bound by the terms of the contract executed by the corporation. They are not personally
liable for obligations and liabilities incurred on or in behalf of the corporation.

A submission to arbitration is a contract. As such, the Agreement, containing the stipulation on arbitration, binds the parties thereto, as well as their
assigns and heirs.

When there are allegations of bad faith or malice against corporate directors or representatives, it becomes the duty of courts or tribunals to
determine if these persons and the corporation should be treated as one. Without a trial, courts and tribunals have no basis for determining whether
the veil of corporate fiction should be pierced. Courts or tribunals do not have such prior knowledge. Thus, the courts or tribunals must first determine
whether circumstances exist towarrant the courts or tribunals to disregard the distinction between the corporation and the persons representing it.
The determination of these circumstances must be made by one tribunal or court in a proceeding participated in by all parties involved, including
current representatives of the corporation, and those persons whose personalities are impliedly the sameas the corporation. This is because when
the court or tribunal finds that circumstances exist warranting the piercing of the corporate veil, the corporate representatives are treated as the
corporation itself and should be held liable for corporate acts. The corporation’s distinct personality is disregarded, and the corporation is seen as a
mere aggregation of persons undertaking a business under the collective name of the corporation.

A corporation is an artificial entity created by fiction of law. This means that while it is not a person, naturally, the law gives it a distinct personality
and treats it as such. A corporation, in the legal sense, is an individual with a personality that is distinct and separate from other persons including its
stockholders, officers, directors, representatives, and other juridical entities. The law vests in corporations rights,powers, and attributes as if they
were natural persons with physical existence and capabilities to act on their own. For instance, they have the power to sue and enter into
transactions or contracts. Section 36 of the Corporation Code enumerates some of a corporation’s powers, thus:

Section 36. Corporate powers and capacity.– Every corporation incorporated under this Code has the power and capacity: 1. To sue and be sued
in its corporate name; 2. Of succession by its corporate name for the period of time stated in the articles of incorporation and the certificate
ofincorporation; 3. To adopt and use a corporate seal; 4. To amend its articles of incorporation in accordance with the provisions of this Code; 5. To
adopt by-laws, not contrary to law, morals, or public policy, and to amend or repeal the same in accordance with this Code; 6. In case of stock
corporations, to issue or sell stocks to subscribers and to sell treasury stocks in accordance with the provisions of this Code; and to admit members
to the corporation if it be a non-stock corporation; 7. To purchase, receive, take or grant, hold, convey, sell, lease, pledge, mortgage and otherwise
deal with such real and personal property, including securities and bonds of other corporations, as the transaction of the lawful business of the
corporation may reasonably and necessarily require, subject to the limitations prescribed by law and the Constitution; 8. To enter into merger or
consolidation with other corporations as provided in this Code; 9. To make reasonable donations, including those for the public welfare or for
hospital, charitable, cultural, scientific, civic, or similar purposes: Provided, That no corporation, domestic or foreign, shall give donations in aid of any
political party or candidate or for purposes of partisan political activity; 10. To establish pension, retirement, and other plans for the benefit of its
directors, trustees, officers and employees; and 11. To exercise such other powers as may be essential or necessary to carry out its purpose or
purposes as stated in its articles of incorporation.

Abbott Laboratories Phil. et.al. v. Pearlie Ann F. Alcaraz [G.R. No. 192571, July 23, 2013]
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 Subject: Labor Law – Probationary employees – Standards to qualify as a regular employee
Decision (Perlas-Bernarbe, J.)
Dissent (Brion, J.)
FACTS:
On June 27, 2004, Abbott Laboratories, Philippines (Abbott) caused the publication in a major broadsheet newspaper of its need for a Medical
and Regulatory Affairs Manager who would: (a) be responsible for drug safety surveillance operations, staffing, and budget; (b) lead the
development and implementation of standard operating procedures/policies for drug safety surveillance and vigilance; and (c) act as the primary
interface with internal and external customers regarding safety operations and queries.
Alcaraz – who was then a Regulatory Affairs and Information Manager at Aventis Pasteur Philippines, Incorporated (another
pharmaceutical company like Abbott) – showed interest and submitted her application on October 4, 2004.
On December 7, 2004, Abbott formally offered Alcaraz the above-mentioned position which was an item under the company’s Hospira Affiliate Local
Surveillance Unit (ALSU) department.

In Abbott’s offer sheet, it was stated that Alcaraz was to be employed on a probationary basis.
Later that day, she accepted the said offer and received an electronic mail (e-mail) from Abbott’s Recruitment Officer, Teresita C. Bernardo
(Bernardo), confirming the same. Attached to Bernardo’s e-mail were Abbott’s organizational chart and a job description of Alcaraz’s work.
On February 12, 2005, Alcaraz signed an employment contract which stated that she was to be placed on probation for a period of six (6)
months beginning February 15, 2005 to August 14, 2005.
During Alcaraz’s pre-employment orientation, Allan G. Almazar, Hospira’s Country Transition Manager, briefed her on her duties and
responsibilities as Regulatory Affairs Manager:
(a) she will handle the staff of Hospira ALSU and will directly report to Almazar on matters regarding Hopira’s local operations, operational budget,
and performance evaluation of the Hospira ALSU Staff who are on probationary status;

(b) she must implement Abbott’s Code of Good Corporate Conduct (Code of Conduct), office policies on human resources and finance, and ensure
that Abbott will hire people who are fit in the organizational discipline;

(c) Kelly Walsh, Manager of the Literature Drug Surveillance Drug Safety of Hospira, will be her immediate supervisor;

(d) she should always coordinate with Abbott’s human resource officers in the management and discipline of the staff;

(e) Hospira ALSU will spin off from Abbott in early 2006 and will be officially incorporated and known as Hospira, Philippines; and

(f) the processing of information and/or raw material data subject of Hospira ALSU operations will be strictly confined and controlled under the
computer system and network being maintained and operated from the United States. For this purpose, all those involved in Hospira ALSU are
required to use two identification cards: one, to identify them as Abbott’s employees and another, to identify them as Hospira employees.

On March 3, 2005, Maria Olivia T. Yabut-Misa, Abbott’s Human Resources (HR) Director, sent Alcaraz an e-mail which contained an
explanation of the procedure for evaluating the performance of probationary employees and further indicated that Abbott had only one
evaluation system for all of its employees. Alcaraz was also given copies of Abbott’s Code of Conduct and Probationary Performance
Standards and Evaluation (PPSE) and Performance Excellence Orientation Modules (Performance Modules) which she had to apply in line
with her task of evaluating the Hospira ALSU staff.
Abbott’s PPSE procedure mandates that the job performance of a probationary employee should be formally reviewed and discussed with
the employee at least twice: first on the third month and second on the fifth month from the date of employment. The necessary Performance
Improvement Plan should also be made during the third-month review in case of a gap between the employee’s performance and the
standards set. These performance standards should be discussed in detail with the employee within the first two (2) weeks on the job. It
was equally required that a signed copy of the PPSE form must be submitted to Abbott’s Human Resources Department (HRD) and shall
serve as documentation of the employee’s performance during his/her probationary period. This shall form the basis for recommending the
confirmation or termination of the probationary employment.
On April 20, 2005, Alcaraz had a meeting with Cecille Terrible, Abbott’s former HR Director, to discuss certain issues regarding staff
performance standards. In the course thereof, Alcaraz accidentally saw a printed copy of an e-mail sent by Walsh to some staff members
which essentially contained queries regarding the former’s job performance. Alcaraz asked if Walsh’s action was the normal process of
evaluation. Terrible said that it was not.
On May 16, 2005, Alcaraz was called to a meeting with Walsh and Terrible where she was informed that she failed to meet the
regularization standards for the position of Regulatory Affairs Manager. Thereafter, Walsh and Terrible requested Alcaraz to tender her
resignation, else they be forced to terminate her services. She was also told that, regardless of her choice, she should no longer report for
work and was asked to surrender her office identification cards. She requested to be given one week to decide on the same, but to no avail.

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On May 17, 2005, Alcaraz told her administrative assistant, Claude Gonzales (Gonzales), that she would be on leave for that day. However,
Gonzales told her that Walsh and Terrible already announced to the whole Hospira ALSU staff that Alcaraz already resigned due to health
reasons.
On May 23, 2005, Walsh, Almazar, and Bernardo personally handed to Alcaraz a letter stating that her services had been terminated
effective May 19, 2005. The letter detailed the reasons for Alcaraz’s termination – particularly, that Alcaraz:
(a) did not manage her time effectively;

(b) failed to gain the trust of her staff and to build an effective rapport with them;

(c) failed to train her staff effectively; and

(d) was not able to obtain the knowledge and ability to make sound judgments on case processing and article review which were necessary for the
proper performance of her duties.

Alcaraz felt that she was unjustly terminated from her employment and thus, filed a complaint for illegal dismissal and damages against Abbott
and its officers, namely, Misa, Bernardo, Almazar, Walsh, Terrible, and Feist. She claimed that she should have already been considered as a
regular and not a probationary employee given Abbott’s failure to inform her of the reasonable standards for her regularization upon her
engagement as required under Article 295 of the Labor Code. In this relation, she contended that while her employment contract stated that she
was to be engaged on a probationary status, the same did not indicate the standards on which her regularization would be based. She further
averred that the individual petitioners maliciously connived to illegally dismiss her when:
(a) they threatened her with termination;

(b) she was ordered not to enter company premises even if she was still an employee thereof; and

(c) they publicly announced that she already resigned in order to humiliate her.

Abbott maintained that Alcaraz was validly terminated from her probationary employment given her failure to satisfy the prescribed standards for her
regularization which were made known to her at the time of her engagement.

The Labor Arbiter ruled in Abbott’s favor. The NLRC reversed, upholding Alcaraz’s allegations. The CA affirmed the NLRC decision.

ISSUES:
1) WON Alcaraz was sufficiently informed of the reasonable standards to qualify her as a regular employee
MAJORITY: YES. Abbott clearly conveyed to Alcaraz her duties and responsibilities as Regulatory Affairs Manager prior to, during the time of her
engagement, and the incipient stages of her employment. On this score, the Court finds it apt to detail not only the incidents which point out to the
efforts made by Abbott but also those circumstances which would show that Alcaraz was well-apprised of her employer’s expectations that
would, in turn, determine her regularization:
(a) On June 27, 2004, Abbott caused the publication in a major broadsheet newspaper of its need for a Regulatory Affairs Manager, indicating
therein the job description for as well as the duties and responsibilities attendant to the aforesaid position; this prompted Alcaraz to submit her
application to Abbott on October 4, 2004;

(b) In Abbott’s December 7, 2004 offer sheet, it was stated that Alcaraz was to be employed on a probationary status;

(c) On February 12, 2005, Alcaraz signed an employment contract which specifically stated, inter alia, that she was to be placed on probation for a
period of six (6) months beginning February 15, 2005 to August 14, 2005;

(d) On the day Alcaraz accepted Abbott’s employment offer, Bernardo sent her (d) On the day Alcaraz accepted Abbott’s employment offer,
Bernardo sent her copies of Abbott’s organizational structure and her job description through e-mail;

(e) Alcaraz was made to undergo a pre-employment orientation where Almazar informed her that she had to implement Abbott’s Code of Conduct
and office policies on human resources and finance and that she would be reporting directly to Walsh;

(f) Alcaraz was also required to undergo a training program as part of her orientation;

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(g) Alcaraz received copies of Abbott’s Code of Conduct and Performance Modules from Misa who explained to her the procedure for evaluating the
performance of probationary employees; she was further notified that Abbott had only one evaluation system for all of its employees; and

(h) Moreover, Alcaraz had previously worked for another pharmaceutical company and had admitted to have an “extensive training and background”
to acquire the necessary skills for her job.

Considering the totality of the above-stated circumstances, Alcaraz was well-aware that her regularization would depend on her ability and capacity
to fulfill the requirements of her position as Regulatory Affairs Manager and that her failure to perform such would give Abbott a valid cause to
terminate her probationary employment. Verily, basic knowledge and common sense dictate that the adequate performance of one’s duties
is, by and of itself, an inherent and implied standard for a probationary employee to be regularized; such is a regularization standard
which need not be literally spelled out or mapped into technical indicators in every case.
DISSENT (Brion, J.): NO. The Offer Sheet was designed to inform Alcaraz of the compensation and benefits package offered to her by
Abbott and can in no way be read as a statement of the applicable probationary employment standard. It was communicated even prior to
engagement when the parties were negotiating, not at the point of engagement as the law requires.
The pre-employment orientation on Alcaraz’s duty to implement Abbott’s Code of Conduct, office policies and training program likewise cannot
be characterized as performance standards; they simply related to activities aimed at acquainting and training Alcaraz on her duties and
not for the purpose of informing her of the performance standards applicable to her. What stands out is that they do not pertain specifically
to Alcaraz and the required performance standard applicable for her qualification for regular employment; they related to the staff Alcaraz
managed and supervised. Additionally, these were all relayed prior to or after Alcaraz was engaged by Abbott.
An important distinction to remember at this point is that Alcaraz’s knowledge of the duties that her work entailed, and her knowledge of the
employer’s performance standard, are two distinct matters separately requiring the presentation of independent proof.
MAJORITY: Keeping with [the Omnibus Rules Implementing the Labor Code], an employer is deemed to have made known the standards that
would qualify a probationary employee to be a regular employee when it has exerted reasonable efforts to apprise the employee of what
he is expected to do to accomplish during the trial of probation.This goes without saying that the employee is sufficiently made aware of his
probationary status as well as the length of time of the probation.
The exception to the foregoing is when the job is self-descriptive in nature, for instance, in the case of maids, cooks, drivers, or
messengers. Also in Aberdeen Court, Inc v. Agustin, it has been held that the rule on notifying a probationary employee of the standards of
regularization should not be used to exculpate an employee in a manner contrary to basic knowledge and common sense in regard to
which there is no need to spell out a policy or standard to be met. In the same light, an employee’s failure to perform the duties and
responsibilities which have been clearly made known to him constitutes a justifiable basis for a probationary employee’s non-
regularization.
DISSENT (Brion, J.): Based on these premises, the ponencia then deftly argues that because the duties and responsibilities of the position
have been explained to Alcaraz, an experienced human resource specialist, she should have known what was expected for her to attain
regular status. The ponencia’s reasoning, however, is badly flawed.
1st. The ponencia impliedly admits that no performance standards were expressly given but argues that because Alcaraz had been informed of her
duties and responsibilities (a fact that was and is not disputed), she should be deemed to know what was expected of her for purposes of
regularization. This is a major flaw that the ponencia satisfies only via an assumption. The ponencia apparently forgets that knowledge of
duties and responsibilities is different from the measure of how these duties and responsibilities should be delivered. They are separate
elements and the latter element is missing in the present case.
2nd. The ponencia glosses over the communication aspect. Not only must there be express performance standards; there must be effective
communication. If no standards were provided, what would be communicated?
3rd. The ponencia badly contradicts itself in claiming that actual communication of specific standards might not be necessary “when the job is self-
descriptive in nature, for instance, in the case of maids, cooks, drivers, or messengers.” Alcaraz, in the first place, was never a maid, cook, driver
or a messenger and cannot be placed under this classification; she was hired and employed as a human resources manager, in short, a
managerial employee. Plain and common sense reasoning by one who ever had been in an employment situation dictates that the job of a
manager cannot be self-explanatory, in the way the ponencia implied; the complexity of a managerial job must necessarily require that the level of
performance to be delivered must be specified and cannot simply be assumed based on the communication of the manager’s duties and
responsibilities.
4th. The ponencia also forgets that what these “performance standards” or measures cannot simply be assumed because they are critically
important in this case, or for that matter, in any case involving jobs whose duties and responsibilities are not simple or self-descriptive. If
Alcaraz had been evaluated or assessed in the manner that the company’s internal rules require, these standards would have been the basis for her
performance or lack of it. Last but not the least, Alcaraz’s services were terminated on the basis of the performance standards that, by law, the
employer set or prescribed at the time of the employee’s engagement. If none had been prescribed in the first place, under what basis could
the employee then be assessed for purposes of termination or regularization?
2) WON Alcaraz was validly terminated from her employment
MAJORITY: NO. Abbott failed to follow the above-stated procedure in evaluating Alcaraz. For one, there lies a hiatus of evidence that a signed
copy of Alcaraz’s PPSE form was submitted to the HRD. It was not even shown that a PPSE form was completed to formally assess her
performance. Neither was the performance evaluation discussed with her during the third and fifth months of her employment. Nor did Abbott come
up with the necessary Performance Improvement Plan to properly gauge Alcaraz’s performance with the set company standards.

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The Court modified Agabon v. NLRC in the case of Jaka Food Processing Corporation v. Pacot where it created a distinction between procedurally
defective dismissals due to a just cause, on one hand, and those due to an authorized cause, on the other.
If the dismissal is based on a just cause under Article 296 of the Labor Code but the employer failed to comply with the notice requirement,
the sanction to be imposed upon him should be tempered because the dismissal process was, in effect, initiated by an act imputable to
the employee
If the dismissal is based on an authorized cause under Article 297 but the employer failed to comply with the notice requirement, the sanction
should be stiffer because the dismissal process was initiated by the employer’s exercise of his management prerogative.
Alcaraz’s dismissal proceeded from her failure to comply with the standards required for her regularization. As such, it is undeniable that
the dismissal process was, in effect, initiated by an act imputable to the employee, akin to dismissals due to just causesunder Article 296 of
the Labor Code. Therefore, the Court deems it appropriate to fix the amount of nominal damages at the amount of P30,000.00, consistent with its
rulings in both Agabon and Jaka.
DISSENT (Brion, J.): YES. Alcaraz was dismissed as she “failed to qualify as regular employee in accordance with the prescribed standards set by
the Company.” Even granting for the sake of argument that Abbott had apprised Alcaraz of an applicable performance standard, the evidence failed
to show that Alcaraz did not meet this standard in a manner and to the extent equivalent to the “just cause” that the law requires.
In defense of Abbott’s failure to observe the two-notice requirement, the ponencia argues that a different procedure applies when terminating a
probationary employee; the usual two-notice requirement does not govern, citing for this purpose Section 2, Rule I, Book VI of the Implementing
Rules of the Labor Code. The ponencia, however, forgets that the single notice rule applies only if the employee is validly on probationary
basis; it does not apply where the employee is deemed a regular employee for the company’s failure to provide and to communicate a
prescribed performance standard applicable to the probationary employee.
3) WON the individual petitioners herein are liable
MAJORITY: NO. Other than her unfounded assertions on the matter, there is no evidence to support the fact that the individual petitioners herein,
in their capacity as Abbott’s officers and employees, acted in bad faith or were motivated by ill will in terminating Alcaraz’s services. The fact that
Alcaraz was made to resign and not allowed to enter the workplace does not necessarily indicate bad faith on Abbott’s part since a sufficient ground
existed for the latter to actually proceed with her termination. On the alleged loss of her personal belongings, records are bereft of any showing that
the same could be attributed to Abbott or any of its officers.
DISSENT (Brion, J.): YES. The NLRC exhaustively discussed Abbott’s bad faith, as demonstrated by the actions of the individual petitioners:
First, Alcaraz was pressured to resign:

(1) she was threatened with termination, which will surely damage her reputation in the pharmaceutical industry;

(2) she was asked to evacuate her Commission and ordered not to enter the Company’s premises even if she was still an Abbott employee; and

(3) Terrible and Walsh made a public announcement to the staff that Alcaraz already resigned even if in reality she did not.

The CA also described in detail the abrupt and oppressive manner in which Alcaraz’s employment was dismissed by Abbott:

On May 23, 2005, Alcaraz still reported for work since Abbott had not yet handed the termination notice to her. However, the security guard did
not allow her to enter the Hospira ALSU office pursuant to Walsh[’s] instruction. She requested Walsh that she be allowed to enter the
company premises to retrieve her last remaining things in her office which are mostly her personal belongings. She was allowed to enter.
However, she was surprised to see her drawers already unlocked and, when she opened the same, she discovered that her small brown
envelope x x x, white pouch containing the duplicate keys, and the staff’s final evaluation sheets were missing.Alcaraz informed Bernardo
about the incident. The latter responded by saying she was no longer an employee of the company since May 19, 2005.
Alcaraz reported the matter to the Pasig Police Station and asked for help regarding the theft of her properties. The Pasig Police incident
report stated as follows:
x x x x When confronted by the suspect, in the presence of one SOCO officer and staff, named Christian Perez, Kelly Walsh allegedly admitted that
she was the one who opened the drawer and got the green folders containing the staff evaluations. The Reportee was told by Kelly Walsh that her
Rolex wristwatch will be returned to her provided that she will immediately vacate her office.

On the same date, Alcaraz’s termination letter dated May 19, 2005 was handed to her by Walsh, Almazar and Bernardo.

RESULT: CA reversed. In favor of Abbott.

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