Corpo Case Digest

SOL LAGUIO vs. NATIONAL LABOR RELATIONS COMMISSION

G.R. No. 108936

FACTS OF THE CASE

April Toy Inc. is a domestic corporation engaged in the manufacturing, exporting and dealing at wholesale and retail, in stuffed toys. After a year of operation, April Toy ceased operations because of its dire financial condition. Hence the petitioners filed a complaint for illegal shutdown, retrenchment, dismissal and unfair labor practice. Thereafter they amended their complaint to implead Well World Toy Inc. In their complaint, petitioners alleged that they were originally probationary employees of Well World Toy Inc. but were later laid off for starting to organize themselves into a union. They applied and were hired by April Toy. They won as the exclusive bargaining agent for the workers and when they submitted their CBA proposal, April Toy rejected in view of its cessation of operations. The closure, petitioners alleged, is April Toy's clever ploy to defeat their right to self-organization. Petitioners further allege that the incorporators and principal officers of April Toy are also the incorporators of Well World Toy, thus both should be treated as one corporation liable for their claims. The Labor Arbiter and NLRC both recognized said corporations as two distinct corporations and the closure of April Toy valid. Thus this petition.

ISSUE

Whether April Toy and Well World Toy should be treated as one corporation liable for the grievances of the petitioners

RULING

No. It is basic that a corporation is invested by law with a personality separate and distinct from those of the persons composing it as well as from that of any other legal entity to which it may be related.  Mere substantial identity of the incorporators of the two corporations does not necessarily imply fraud nor warrant the piercing of the veil of corporation fiction.  In the absence of clear and convincing evidence that April and Well World’s corporate personalities were used to perpetuate fraud, or circumvent the law said corporations were rightly treated as distinct and separate from each other. In this case, with the facts and circumstances showing that the owners of April Toy are different from those of Well-World, the management of one being different from the other, and the office of April Toy is situated more than ten kilometers away from Well-World, plus the fact that the closure of April Toy was for valid reasons, the Labor Arbiter likewise correctly opined that the two corporations are separate and distinct from each other, and that there is no basis for piercing the veil of corporate fiction. Thus April Toy and Well World Toy should not be treated as one corporation liable for the grievances of the petitioners.