Concept Builders, Inc. v. NLRC

Concept Builders, Inc., a construction company at 355 Maysan Road, Valenzuela, dismissed its laborers, carpenters and riggers in November 1981, stating that their contracts had expired and the project was completed; the project was in fact unfinished. The Labor Arbiter ordered reinstatement and one year's backwages, and the decision became final. After partial satisfaction through garnishment, alias writs were issued for the P117,414.76 balance. The sheriff found that everyone at the Maysan Road premises claimed to work for Hydro Pipes Philippines, Inc. (HPPI); armed guards prevented removal of the levied property, and HPPI's vice-president filed a third-party claim. The workers sought a break-open order, showing through SEC General Information Sheets that both corporations had the same address, president, board, officers and substantially the same subscribers, and that HPPI was petitioner's largest subscriber. The Labor Arbiter denied the motion; the NLRC set that order aside, issued a break-open order, and dismissed HPPI's third-party claim. Concept Builders brought certiorari, arguing that no showing was made that it created HPPI to evade liability and that the two firms were in different businesses.

1. 1Whether the separate personality of HPPI may be disregarded so that property found in its premises may answer for petitioner's judgment debt to its dismissed employees.
2. 2Whether the NLRC committed grave abuse of discretion in issuing the break-open order despite HPPI's third-party claim.

No grave abuse of discretion; the veil was properly pierced. The separate personality of a corporation is a fiction created for convenience and to promote justice; it may be disregarded when used to defeat public convenience, justify wrong, protect fraud, defend crime, or defeat the labor laws, or when the corporation is merely an adjunct, business conduit or alter ego of another. No hard and fast rule exists, but probative factors of identity include common stock ownership, identity of directors and officers, the manner of keeping books and records, and methods of conducting business. The Court quoted the instrumentality test: (1) control amounting to complete domination of finances, policy and business practice as to the transaction attacked; (2) use of that control to commit fraud or wrong or violate a legal duty; and (3) proximate causation of the injury or unjust loss. The absence of any one element prevents piercing, and whether a corporation is an alter ego is purely a question of fact. The NLRC found that both corporations filed information sheets the same day through the same corporate secretary, listing the same address, president, board and officers. The Court held that petitioner ceased operations to evade backwages and reinstatement and that HPPI was its business conduit, likening the case to Claparols v. Court of Industrial Relations. The break-open order was proper under Section 3, Rule VII of the NLRC Manual of Execution of Judgment, and notice and hearing were observed. Factual findings of quasi-judicial agencies supported by substantial evidence bind the Court absent grave abuse of discretion. The petition was dismissed and the NLRC resolutions of April 23, 1992 and December 3, 1992 were affirmed.