085. Indophil Textile Mill Workers Union‐PTGWO v.

Calica
INDOPHIL TEXTILE MILL WORKERS UNION-PTGWO (PETITIONER) VS. VOLUNTARY ARBITRATOR
TEODORICO P. CALICA AND INDOPHIL TEXTILE MILLS, INC. (RESPONDENTS)
FEBRUARY 3, 1992
J. MEDIALDEA
the corporation as an entity – exception: doctrine of piercing the veil of corporate fiction – when not applicable

SUMMARY: Union sought to pierce corporate veil of Acrylic, alleging that the creation of Acrylic was
Indophil’s devise to evade the application of its CBA with them. Court held that there was no need to pierce
Acrylic’s corporate veil. The legal corporate entity is disregarded only if it is sought to hold the officers and
stockholders directly liable for a corporate debt or obligation. Union did not seek to impose such claim against
Acrylic. The mere fact that businesses were related, that some of the employees of Indophil were the same
persons manning and providing for auxiliary services to the other company, and that physical plants, officers
and facilities are situated in the same compound – were not sufficient to apply the doctrine. The doctrine of
piercing the veil of corporate entity applies when 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 legitimate issues or where a
corporation is the 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.
NATURE: Petition for certiorari
FACTS:
Indophil Textile Mill Workers Union-PTGWO is a legitimate labor organization and the exclusive bargaining
agent of all the rank-and-file employees of Indophil Textile Mills, Incorporated. Teodorico P. Calica is the
Voluntary Arbitrator of the National Conciliation and Mediation Board of the Department of Labor and
Employment, while Indophil Textile Mills, Inc. is a corporation engaged in the manufacture, sale and export of
yarns of various counts and kinds and of materials of kindred character.

Indophil Textile Mill Workers Union-PTGWO and Indophil Textile Mills, Inc. executed a collective
bargaining agreement.

7 months later, Indophil Acrylic Manufacturing Corporation was formed and registered with the Securities and
Exchange Commission (different from above Indophil Textile). Acrylic applied for registration with the Board
of Investments for incentives under the 1987 Omnibus Investments Code. The application was approved on a
preferred non-pioneer status.

Acrylic became operational and hired workers according to its own criteria and standards. The workers of
Acrylic unionized and a duly certified collective bargaining agreement was executed. A year after, the union
claimed that the plant facilities built and set up by Acrylic should be considered as an extension or expansion of
the facilities of Indophil Textile Mills pursuant to Section 1(c), Article I of the CBA. In other words, it is the
Union's contention that Acrylic is part of the Indophil bargaining unit. The union alleged that:
1. Both corporations are engaged in the same line of business.
2. Both have their physical plants, offices and facilities in the same compound.
3. Many of Indophil Textile’s machines were transferred and installed and were being used in Acrylic.
4. Services of a number of units, departments and sections were being provided to Acrylic.
5. Employees of Indophil Textile were the same persons manning and servicing Acrylic.

Indophil Textile opposed, saying it was a juridical entity separate and distinct from Acrylic. It argued
through the SolGen that Acrylic was not an alter ego or an adjunct or business conduit of Indophil Textile
Mills because it had a separate business purpose. Indophil Textile engaged in the business of manufacturing
yarns of various counts and kinds and textiles., while Acrylic manufactured, bough, sold, at wholesale basis,
bartered, imported, exported and otherwise dealt in yarns of various counts and kinds. Acrylic cannot
manufacture textiles while Indophil cannot buy or import yarns.

The existing impasse led the parties to enter into a submission agreement. The parties jointly requested Calica to
act as voluntary arbitrator in the resolution of the pending labor dispute pertaining to the proper interpretation of
the CBA provision. Calica ruled that the proper interpretation and application of Sec. 1, (c), Art. I of the 1987
CBA does not extend to the employees of Acrylic as an extension or expansion of Indophil Textile Mills,
Inc.

ISSUE: Were the operations in Indophil Acrylic Corporation an extension or expansion of Indophil Textile
Mills? NO, they were separate corporations. The CBA did not apply to Acrylic.
 Under the doctrine of piercing the veil of corporate entity, when valid grounds therefore exist, the legal
fiction that a corporation is an entity with a juridical personality separate and distinct from its members or
stockholders may be disregarded.
o In such cases, the corporation will be considered as a mere association of persons.
o The members or stockholders or the corporation will be considered as the corporation, that is, liability
will attach directly to the officers and stockholders.
o The doctrine applies 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 legitimate issues, or where a
corporation is the 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 the case at bar, the union 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 CBA between the Union and Indophil Textile.
While the Court does not discount the possibility of the similarities of the businesses of Indophil Textile
Mills and Acrylic, neither is it inclined to apply the doctrine invoked by the union in granting the relief
sought.
 The fact that the businesses of Indophil Textile and Acrylic are related, that some of the employees of
Indophil Textile are the same persons manning and providing for auxiliary services to the units of
Acrylic, and that the physical plants, offices and facilities are situated in the same compound, it is the
Court’s opinion that these facts are not sufficient to justify the piercing of the corporate veil of
Acrylic.
 Although it was shown that the two corporations’ businesses are related, that some of the employees
of the two corporations are interchanged, and that the physical plants, offices, and facilities, are
situated in the same compound, were not considered sufficient bases to pierce the veil in order to treat
the two corporations as one bargaining unit. The legal corporate entity is disregarded only if it is
sought to hold the officers and stockholders directly liable for a corporate debt or obligation.

DISPOSITION: Petition denied. Award of arbitrator affirmed.

-BETTINA