CASE DIGEST : PRINCE TRANSPORT INC VS GARCIA

G.R. No. 167291 January 12, 2011

PRINCE TRANSPORT, INC. and MR. RENATO CLAROS, Petitioners, vs

DIOSDADO GARCIA, LUISITO GARCIA, RODANTE ROMERO, REX BARTOLOME, FELICIANO GASCO, JR., DANILO ROJO, EDGAR SANFUEGO, AMADO GALANTO, EUTIQUIO LUGTU, JOEL GRAMATICA, MIEL CERVANTES, TERESITA CABANES, ROE DELA CRUZ, RICHELO BALIDOY, VILMA PORRAS, MIGUELITO SALCEDO, CRISTINA GARCIA, MARIO NAZARENO, DINDO TORRES, ESMAEL RAMBOYONG, ROBETO*MANO, ROGELIO BAGAWISAN, ARIEL SNACHEZ, ESTAQULO VILLAREAL, NELSON MONTERO, GLORIA ORANTE, HARRY TOCA, PABLITO MACASAET and RONALD GARCITA, Respondents.

FACTS: Respondents were hired either as drivers, conductors, mechanics or inspectors, except for respondent Diosdado Garcia (Garcia), who was assigned as Operations Manager. in addition to their regular monthly income, respondents also received commissions equivalent to 8 to 10% of their wages; sometime in October 1997, the said commissions were reduced to 7 to 9%; this led respondents and other employees of PTI to hold a series of meetings to discuss the protection of their interests as employees; these meetings led petitioner Renato Claros, who is the president of PTI, to suspect that respondents are about to form a union; in order to block the continued formation of the union, PTI caused the transfer of all union members and sympathizers to one of its sub-companies, Lubas Transport (Lubas)

Petitioners, on the other hand, denied the material allegations of the complaints contending that herein respondents were no longer their employees, since they all transferred to Lubas at their own request; petitioners have nothing to do with the management and operations of Lubas as well as the control and supervision of the latter's employees; Subsequently, the complaints filed by respondents were consolidated. On October 25, 2000, the Labor Arbiter rendered a Decision. The Labor Arbiter ruled that petitioners are not guilty of unfair labor practice. Respondents filed a Partial Appeal with the NLRC. NLRC modified the decision of the labor arbiter. Respondents filed a Motion for Reconsideration, but the NLRC denied it in its Resolution. Respondents then filed a special civil action for certiorari with the CA assailing the Decision and Resolution of the NLRC. On December 20, 2004, the CA rendered the herein assailed Decision which granted respondents' petition. The CA ruled that petitioners are guilty of unfair labor practice; that Lubas is a mere instrumentality, agent conduit or adjunct of PTI. Petitioners filed a Motion for Reconsideration, but the CA denied it via its Resolution. Hence, the instant petition for review on certiorari.

ISSUE : WON THE COURT OF APPEALS SERIOUSLY ERRED IN DECLARING THAT PETITIONERS PRINCE TRANSPORT, INC. AND MR. RENATO CLAROS AND LUBAS TRANSPORT ARE ONE AND THE SAME CORPORATION AND THUS, LIABLE IN SOLIDUM TO RESPONDENTS

HELD: The Court agrees with the CA that Lubas is a mere agent, conduit or adjunct of PTI. A settled formulation of the doctrine of piercing the corporate veil is that 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 these two entities are distinct and treat them as identical or as one and the same. In the present case, it may be true that Lubas is a single proprietorship and not a corporation. However, petitioners attempt to isolate themselves from and hide behind the supposed separate and distinct personality of Lubas so as to evade their liabilities is precisely what the classical doctrine of piercing the veil of corporate entity seeks to prevent and remedy. What is telling is the fact that in a memorandum issued by PTI, dated January 22, 1998, petitioner company admitted that Lubas is one of its sub-companies. Moreover, petitioners failed to refute the contention of respondents that despite the latters transfer to Lubas of their daily time records, reports, daily income remittances of conductors, schedule of drivers and conductors were all made, performed, filed and kept at the office of PTI. In fact, respondents identification cards bear the name of PTI. It may not be amiss to point out at this juncture that in two separate illegal dismissal cases involving different groups of employees transferred by PTI to other companies, the Labor Arbiter handling the cases found that these companies and PTI are one and the same entity; thus, making them solidarily liable for the payment of backwages and other money claims awarded to the complainants therein.