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Maricalum Mining Corp. vs. Florentino, et al.

THIRD DIVISION

[G.R. No. 221813. July 23, 2018]

MARICALUM MINING CORPORATION, petitioner, vs.

ELY G. FLORENTINO, GLENN BUENVIAJE, RUDY
J. GOMEZ, represented by his heir THELMA GOMEZ,
ALEJANDRO H. SITCHON, NENET ARITA,
FERNANDO SIGUAN, DENNIS ABELIDA, NOEL S.
ACCOLADOR, WILFREDO TAGANILE, SR.,
MARTIR S. AGSOY, SR., MELCHOR APUCAY,
DOMINGO LAVIDA, JESUS MOSQUEDA, RUELITO
A. VILLARMIA, SOFRONIO M. AYON, EFREN T.
GENISE, ALQUIN A. FRANCO, PABLO L. ALEMAN,
PEPITO G. HEPRIANA, ELIAS S. TRESPECES,
EDGAR SOBRINO, respondents.

[G.R. No. 222723. July 23, 2018]

ELY FLORENTINO, GLENN BUENVIAJE, RUDY J.

GOMEZ, represented by his heir THELMA GOMEZ,
FERNANDO SIGUAN, DENNIS ABELIDA, NOEL S.
ACCOLADOR, WILFREDO TAGANILE, SR.,
MARTIR S. AGSOY, SR., MELCHOR APUCAY,
DOMINGO LAVIDA, JESUS MOSQUEDA, RUELITO
A. VILLARMIA, SOFRONIO M. AYON, EFREN T.
GENISE, ALQUIN A. FRANCO, PABLO L. ALEMAN,
PEPITO G. HEPRIANA, ELIAS S. TRESPECES,
EDGAR SOBRINO, ALEJANDRO H. SITCHON,
NENET ARITA, WELILMO T. NERI, ERLINDA
FERNANDEZ, and EDGARDO PEÑAFLORIDA,
petitioners, vs. NATIONAL LABOR RELATIONS
COMMISSION - 7th DIVISION, CEBU CITY, “G”
HOLDINGS, INC., and TEODORO G. BERNARDINO,
ROLANDO DEGOJAS, MARICALUM MINING
CORPORATION, respondents.
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SYLLABUS

1. REMEDIAL LAW; APPEALS; PETITION FOR REVIEW ON

CERTIORARI; IN LABOR CASES, THE COURT HAS TO
EXAMINE THE COURT OF APPEALS’ DECISION FROM
THE PRISM OF WHETHER THE LATTER HAD
CORRECTLY DETERMINED THE PRESENCE OR
ABSENCE OF GRAVE ABUSE OF DISCRETION IN THE
NATIONAL LABOR RELATIONS COMMISSION’S
(NLRC) DECISIONS; CASE AT BAR.— It is basic that only
pure questions of law should be raised in petitions for review
on certiorari under Rule 45 of the Rules of Court. It will not
entertain questions of fact as the factual findings of appellate
courts are final, binding or conclusive on the parties and upon
this court when supported by substantial evidence. In labor
cases, however, the Court has to examine the CA’s Decision
from the prism of whether the latter had correctly determined
the presence or absence of grave abuse of discretion in the
NLRC’s Decision. In this case, the principle that this Court is
not a trier of facts applies with greater force in labor cases.
Grave abuse must have attended the evaluation of the facts and
evidence presented by the parties. This Court is keenly aware
that the CA undertook a Rule 65 review—not a review on
appeal—of the NLRC decision challenged before it. It follows
that this Court will not re-examine conflicting evidence, reevaluate
the credibility of witnesses, or substitute the findings of fact of
the NLRC, an administrative body that has expertise in its
specialized field. It may only examine the facts only for the
purpose of resolving allegations and determining the existence
of grave abuse of discretion. Accordingly, with these procedural
guidelines, the Court will now proceed to determine whether
or not the CA had committed any reversible error in affirming
the NLRC’s Decision.
2. ID.; ID.; ID.; REMAND OF THE CASE TO THE LOWER
COURTS OR APPROPRIATE TRIBUNALS; A REMAND
IS ONLY NECESSARY WHEN THE PROCEEDINGS
BELOW ARE GROSSLY INADEQUATE TO SETTLE
FACTUAL ISSUES; NOT PROPER IN CASE AT BAR.—
Ordinarily, when there is sufficient evidence before the Court
to enable it to resolve fundamental issues, it will dispense with
the regular procedure of remanding the case to the lower court
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or appropriate tribunal in order to avoid a further delay in the

resolution of the case. A remand is only necessary when the
proceedings below are grossly inadequate to settle factual issue.
This is in line with the Court’s power to issue a process in order
to enforce its own decrees and thus avoid circuitous actions
and vexatious litigation. In the case at bench, Maricalum Mining
is seeking to have the case remanded because the LA allegedly
miscomputed the amount of the monetary awards. However, it
failed to offer any reasonable argument or explanation why
the proceedings conducted before the NLRC or LA were
“grossly inadequate to settle factual issues,” especially as
regards the computation of monetary awards. Its bare allegations
— that the monetary awards were improperly computed because
prescribed claims have been granted, that the net surpluses of
the manpower cooperative were not properly distributed, and
that the awards in favor of some of the complainants were
improbable — do not warrant the invocation of this Court’s
power to have the case remanded back to the LA. Bare and
unsubstantiated allegations do not constitute substantial evidence
and have no probative value.
3. ID.; CIVIL PROCEDURE; INTERVENTION; A MOTION
TO INTERVENE MAY BE ENTERTAINED OR ALLOWED
EVEN IF FILED AFTER JUDGMENT WAS RENDERED
BY THE TRIAL COURT, ESPECIALLY IN CASES
WHERE THE INTERVENORS ARE INDISPENSABLE
PARTIES.— Intervention is a remedy by which a third party,
who is not originally impleaded in a proceeding, becomes a
litigant for purposes of protecting his or her right or interest
that may be affected by the proceedings. The factors that should
be reckoned in determining whether or not to allow intervention
are whether intervention will unduly delay or prejudice the
adjudication of the rights of the original parties and whether
the intervenors rights may be fully protected in a separate
proceeding. A motion to intervene may be entertained or allowed
even if filed after judgment was rendered by the trial court,
especially in cases where the intervenors are indispensable parties.
Parties may be added by order of the court on motion of the
party or on its own initiative at any stage of the action and/or
at such times as are just.
4. MERCANTILE LAW; CORPORATION CODE; DOCTRINE
OF PIERCING THE CORPORATE VEIL; BASIC AREAS
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WHEN THE DOCTRINE IS APPLICABLE;

ENUMERATED.— The doctrine of piercing the corporate veil
applies only in three (3) basic areas, namely: (a) defeat of public
convenience as when the corporate fiction is used as a vehicle
for the evasion of an existing obligation; (b) fraud cases or when
the corporate entity is used to justify a wrong, protect fraud, or
defend a crime; or (c) 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. This principle is basically applied only to determine
established liability. However, piercing of the veil of corporate
fiction is frowned upon and must be done with caution. This is
because 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.
5. ID.; ID.; ID.; PARENT OR HOLDING COMPANY,
CONSTRUED; WHILE THE VEIL OF CORPORATE
FICTION MAY BE PIERCED UNDER CERTAIN
CIRCUMSTANCES, MERE OWNERSHIP OF A
SUBSIDIARY DOES NOT JUSTIFY THE IMPOSITION
OF LIABILITY ON THE PARENT COMPANY.— A parent
or holding company is a corporation which owns or is organized
to own a substantial portion of another company’s voting shares
of stock enough to control or influence the latter’s management,
policies or affairs thru election of the latter’s board of directors
or otherwise. However, the term “holding company” is
customarily used interchangeably with the term “investment
company” which, in turn, is defined by Section 4 (a) of Republic
Act (R.A.) No. 2629 as “any issuer (corporation) which is or
holds itself out as being engaged primarily, or proposes to engage
primarily, in the business of investing, reinvesting, or trading
in securities.” In other words, a “holding company” is organized
and is basically conducting its business by investing substantially
in the equity securities of another company for the purposes of
controlling their policies (as opposed to directly engaging in
operating activities) and “holding” them in a conglomerate or
umbrella structure along with other subsidiaries. Significantly,
the holding company itself—being a separate entity—does not
own the assets of and does not answer for the liabilities of the
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subsidiary or affiliate. The management of the subsidiary or

affiliate still rests in the hands of its own board of directors
and corporate officers. It is in keeping with the basic rule 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. The
corporate form was created to allow shareholders to invest without
incurring personal liability for the acts of the corporation. While
the veil of corporate fiction may be pierced under certain
instances, mere ownership of a subsidiary does not justify the
imposition of liability on the parent company. It must further
appear that to recognize a parent and a subsidiary as separate
entities would aid in the consummation of a wrong. Thus,
a holding corporation has a separate corporate existence
and is to be treated as a separate entity; unless the facts
show that such separate corporate existence is a mere sham,
or has been used as an instrument for concealing the truth.
6. ID.; ID.; ID.; ALTER EGO THEORY, ELEMENTS; ALL THE
THREE ELEMENTS OF THE ALTER EGO THEORY
MUST CONCUR BEFORE THE CORPORATE VEIL MAY
BE PIERCED.— The elements of the alter ego theory were
discussed in Philippine National Bank v. Hydro Resources
Contractors Corporation, to wit: The first prong is the
“instrumentality” or “control” test. This test requires that
the subsidiary be completely under the control and domination
of the parent. It examines the parent corporation’s relationship
with the subsidiary. x x x The second prong is the “fraud”
test. This test requires that the parent corporation’s conduct in
using the subsidiary corporation be unjust, fraudulent or wrongful.
It examines the relationship of the plaintiff to the corporation.
x x x The third prong is the “harm” test. This test requires the
plaintiff to show that the defendant’s control, exerted in a
fraudulent, illegal or otherwise unfair manner toward it, caused
the harm suffered. A causal connection between the fraudulent
conduct committed through the instrumentality of the subsidiary
and the injury suffered or the damage incurred by the plaintiff
should be established. x x x To summarize, 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
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any of these elements prevents piercing the corporate veil.

x x x Again, all these three elements must concur before the
corporate veil may be pierced under the alter ego theory.
7. REMEDIAL LAW; CIVIL PROCEDURE; ACTIONS; CAUSE
OF ACTIONS; PROXIMATE CAUSE; DEFINED; FOR AN
ACT OR EVENT TO BE CONSIDERED AS PROXIMATE
LEGAL CAUSE, IT SHOULD BE SHOWN THAT SUCH
ACT OR EVENT HAD INDEED CAUSED INJURY TO
ANOTHER.— Proximate cause is defined as that cause, which,
in natural and continuous sequence, unbroken by any efficient
intervening cause, produces the injury, and without which the
result would not have occurred. More comprehensively, the
proximate legal cause is that “acting first and producing the
injury, either immediately or by setting other events in motion,
all constituting a natural and continuous chain of events, each
having a close causal connection with its immediate predecessor,
the final event in the chain immediately effecting the injury as
a natural and probable result of the cause which first acted,
under such circumstances that the person responsible for the
first event should, as an ordinary prudent and intelligent person,
have reasonable ground to expect at the moment of his act or
default that an injury to some person might probably result
therefrom.” Hence, for an act or event to be considered as
proximate legal cause, it should be shown that such act or event
had indeed caused injury to another.
8. LABOR AND SOCIAL LEGISLATION; EMPLOYER-
EMPLOYEE RELATIONSHIP; FOUR-FOLD TEST TO
DETERMINE EMPLOYER-EMPLOYEE RELATIONSHIP,
EXPLAINED.— Under the four-fold test, the employer-
employee relationship is determined if the following are present:
a) the selection and engagement of the employee; b) the payment
of wages; c) the power of dismissal; and d) the power to control
the employee’s conduct, or the so-called “control test.” Here,
the “control test” is the most important and crucial among the
four tests. However, in cases where there is no written agreement
to base the relationship on and where the various tasks performed
by the worker bring complexity to the relationship with the
employer, the better approach would therefore be to adopt a
two-tiered test involving: a) the putative employer’s power to
control the employee with respect to the means and methods
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by which the work is to be accomplished; and b) the underlying

economic realities of the activity or relationship. In applying
the second tier, the determination of the relationship between
employer and employee depends upon the circumstances of the
whole economic activity (economic reality or multi-factor test),
such as: a) the extent to which the services performed are an
integral part of the employer’s business; b) the extent of the
worker’s investment in equipment and facilities; c) the nature
and degree of control exercised by the employer; d) the worker’s
opportunity for profit and loss; e) the amount of initiative, skill,
judgment or foresight required for the success of the claimed
independent enterprise; f) the permanency and duration of the
relationship between the worker and the employer; and g) the
degree of dependency of the worker upon the employer for his
continued employment in that line of business. Under all of
these tests, the burden to prove by substantial evidence all of
the elements or factors is incumbent on the employee for he or
she is the one claiming the existence of an employment
relationship. x x x Under the control test, an employer-employee
relationship exists where the person for whom the services are
performed reserves the right to control not only the end achieved,
but also the manner and means to be used in reaching that end.
As applied in the healthcare industry, an employment relationship
exists between a physician and a hospital if the hospital controls
both the means and the details of the process by which the
physician is to accomplish his task. But where a person who
works for another performs his job more or less at his own
pleasure, in the manner he sees fit, not subject to definite hours
or conditions of work, and is compensated according to the
result of his efforts and not the amount thereof, no employer-
employee relationship exists. A corporation may only exercise
its powers within the definitions provided by law and its articles
of incorporation.

LEONEN, J., dissenting opinion:

1. MERCANTILE LAW; CORPORATION CODE;

CORPORATIONS; A CORPORATION HAS A SEPARATE
AND DISTINCT PERSONALITY FROM THAT OF ITS
STOCKHOLDERS, OFFICERS, OR ANY OTHER LEGAL
ENTITY TO WHICH IT IS RELATED; EXCEPTION,
EXPLAINED.— A corporation has a separate and distinct
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personality from that of its stockholders, officers, or any other

legal entity to which it is related. It is presumed to be a bona
fide legal entity that has its own powers and attributes. Its assets
and properties are its own, and it is liable for its own acts and
obligations. x x x The exception to this rule is when the separate
personality of the corporation is used to “defeat public
convenience, justify wrong, protect fraud or defend crime.” It
is done when the separate personality of the corporation is being
abused or used for wrongful purposes, such as a shield for fraud,
illegality, or inequity committed against third persons. It applies
when it is used in defrauding creditors or evading obligations
and liabilities. The corporation’s separate personality is “a fiction
created by law for convenience and to prevent injustice.” Thus,
when it is used in such a way that injustice prevails, the corporate
veil is instead pierced to protect the rights of innocent third
persons. It is an equitable remedy, done in the interest of justice
and to protect public policy.
2. ID.; ID.; ID.; DOCTRINE OF PIERCING THE CORPORATE
VEIL; THREE (3) INSTANCES WHEN THE DOCTRINE
OF PIERCING THE CORPORATE VEIL APPLIES,
ENUMERATED.— The party alleging that the corporate veil
must be pierced has the burden to prove it by clear and convincing
evidence. The wrongdoing alleged is never presumed. x x x
When the separate personality of the corporation is pierced,
the corporation is not seen as one (1) entity. Instead, its acts,
assets, and liabilities become the direct responsibility of the
individuals owning, controlling, and conducting its business. x
x x The doctrine of piercing the corporate veil applies in three
(3) instances: (i) When the corporation’s separate personality
is being used to defeat public convenience, such as in evading
existing obligations; (ii) In fraud cases, when it is used to justify
a wrong, protect fraud, or defend a crime; and (iii) In alter-ego
cases, where the corporation’s separate personality is not bona
fide, such that it is only a conduit of another person, or its business
is controlled or maintained as a mere agency or adjunct of another,
that it has no mind or will of its own. In all instances, malice
and bad faith are necessary to pierce the corporate veil. x x x
Thus, it is not enough that there is dominance over the subsidiary
company. The rule is there must be “a fraud or a wrong to
perpetuate the violation of a statutory or other positive legal
duty, or a dishonest and an unjust act in contravention of plaintiff’s
legal right.”
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3. ID.; ID.; ID.; ID.; THE COURT HAS APPLIED THE

DOCTRINE OF PIERCING THE CORPORATE VEIL IN
CASES WHEN A CORPORATION DENIES EXISTENCE
OF AN EMPLOYER-EMPLOYEE RELATIONSHIP TO
AVOID PAYING RETIREMENT BENEFITS OR TO
AVOID ANY LIABILITY FOR ILLEGAL DISMISSAL;
APPLICATION IN CASE AT BAR.— It must be emphasized,
however, that fraud is not the only basis for the piercing of the
corporate veil. Any act which involves the commission of a
wrong or the evasion of a duty may be a ground to apply the
doctrine. Thus, this Court has applied the doctrine of piercing
the corporate veil in cases when a corporation denies the existence
of an employer-employee relationship to avoid paying retirement
benefits or to avoid any liability for illegal dismissal. x x x
Thus, the corporate veil may be pierced when it is used to evade
obligations or perpetrate a social injustice. x x x Thus, while
the corporate veil cannot be pierced as to the mortgage and
transfer of Maricalum Mining’s properties to G Holdings, the
corporate veil may still be pierced for other acts in which the
elements for the application of the doctrine are present. It is
my position that it cannot be said that G Holdings had no
participation in the labor-only contracting arrangement with the
complainants. x x x G Holdings did not merely own Maricalum
Mining as a holding company. It had a say in its processes and
procedures. Thus, it cannot claim to be innocent. It cannot
participate in the illegal dismissal of employees and thereafter
hide behind its separate corporate personality to avoid the liability
arising from it. It likewise cannot be said that no injury arose
from the arrangement. While the ponencia found that there is
no monetary injury to the employees, it still held that the
employees were illegally dismissed. Thus, it cannot be denied
that they suffered an injury, albeit not a monetary one. The
elements of control, bad faith, and injury are present in the case
at bar. Moreover, assuming that the case does not fall within
the purview of fraud or alter-ego cases, the doctrine of piercing
the corporate veil still applies when the separate personality of
the corporation is being used to “defeat . . . public convenience
as when the corporate fiction is used as a vehicle for the evasion
of an existing obligation.” Likewise, it applies when recognizing
a parent company and its subsidiary as separate entities would
aid in the consummation of a wrong, such as illegal dismissal
and avoiding labor claims.
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APPEARANCES OF COUNSEL
Mario B. Espirito Jr. for Maricalum Mining Corporation.
Manlapao and Manlapao Law Office for Ely Florentino,
et al.
Dennis P. Ancheta for respondent “G” Holdings, Inc.

DECISION

GESMUNDO, J.:

A subsidiary company’s separate corporate personality may

be disregarded only when the evidence shows that such separate
personality was being used by its parent or holding corporation
to perpetrate a fraud or evade an existing obligation.
Concomitantly, employees of a corporation have no cause of
action for labor-related claims against another unaffiliated
corporation, which does not exercise control over them.
The subjects of the instant consolidated cases are two (2)
petitions for appeal by certiorari filed by the following
petitioners:
1) Maricalum Mining Corporation (Maricalum Mining)
in G.R. No. 221813; and
2) Ely Florentino, Glenn Buenviaje, Rudy J. Gomez, 1
Fernando Siguan, Dennis Abelida, Noel S. Acollador,
Wilfredo C. Taganile, Sr., Martir S. Agsoy, Sr., Melchor
B. Apucay, Domingo Lavida, Jesus Mosqueda, Ruelito
A. Villarmia, Sofronio M. Ayon, Efren T. Genise, Alquin
A. Franco, Pabio L. Aleman, Pepito G. Hepriana, Elias
S. Trespeces, Edgar M. Sobrino, Alejandro H. Sitchon,
Nenet Arita, Dr. Welilmo T. Neri, Erlinda L. Fernandez,
and Edgardo S. Peñaflorida (complainants) in G.R.
No. 222723.

1
Rollo (G.R. No. 222723) p. 12, represented by his heir Thelma G.
Gomez, et al.
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Both of these petitions are assailing the propriety of the

October 29, 2014 Decision2 of the Court of Appeals (CA) in
CA-G.R. SP No. 06835. The CA upheld the November 29, 2011
Decision3 and January 31, 2012 Resolution4 of the National
Labor Relations Commission (NLRC) in NLRC Case No. VAC-
05-000412-11. In the present petitions, complainants seek to
reinstate the April 20, 2011 Decision5 of the Labor Arbiter
(LA) in consolidated cases NLRC RAB VI CASE No. 09-
10755-10, NLRC RAB VI CASE No. 12-10915-10, NLRC RAB
VI CASE No. 12-10916-10 and NLRC RAB VI CASE No. 12-
10917-10, which granted their joint complaints for monetary
claims against G Holdings, Inc. (G Holdings) ; while
Maricalum Mining seeks to have the case remanded to the
LA for proper computation of its total monetary liability to
the complainants.
The Antecedents
The dispute traces its roots back to when the Philippine
National Bank (PNB, a former government-owned-and-controlled
corporation) and the Development Bank of the Philippines (DBP)
transferred its ownership of Maricalum Mining to the National
Government for disposition or privatization because it had
become a non-performing asset. 6
On October 2, 1992, the National Government thru the Asset
Privatization Trust (APT) executed a Purchase and Sale

2
Id. (G.R. No. 221813, Vol. 1) at 67-80; penned by Associate Justice
Marie Christine Azcarraga-Jacob and concurred by Associate Justices Ramon
Paul L. Hernando and Ma. Luisa C. Quijano-Padilla.
3
Id. at 381; penned by Presiding Commissioner Violeta Ortiz-Bantug
and concurred by Commissioner Julie C. Rendoque.
4
Id. at 440.
5
Id. at 250; penned by Labor Arbiter Romulo P. Sumalinog.
6
See “G” Holdings, Inc. v. National Mines and Allied Workers Union
Local 103 (NAMAWU), et al., 619 Phil. 69, 78 (2009).
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Agreement (PSA) with G Holdings, a domestic corporation

primarily engaged in the business of owning and holding shares
of stock of different companies. G Holding bought 90% of
Maricalum Mining’s shares and financial claims in the form
of company notes. In exchange, the PSA obliged G Holdings
to pay APT the amount of P673,161,280.00, with a down payment
of P98,704,000.00 and with the balance divided into four tranches
payable in installment over a period of ten years.7 Concomitantly,
G Holdings also assumed Maricalum Mining’s liabilities in
the form of company notes. The said financial liabilities were
converted into three (3) Promissory Notes (PNs) totaling
P550,000,000.00 (P114,715,360.00, P186,550,560.00 and
P248,734,080.00), which were secured by mortgages over some
of Maricalum Mining’s properties. 8 These PNs obliged
Maricalum Mining to pay G Holdings the stipulated amount
of P550,000,000.00.
Upon the signing of the PSA and paying the stipulated down
payment, G Holdings immediately took physical possession
of Maricalum Mining’s Sipalay Mining Complex, as well as
its facilities, and took full control of the latter’s management
and operations. 9
On January 26, 1999, the Sipalay General Hospital, Inc.
(Sipalay Hospital) was duly incorporated to provide medical
services and facilities to the general public. 10
Afterwards, some of Maricalum Mining’s employees retired
and formed several manpower cooperatives, 11 as follow:

7
See Republic of the Philippines v. “G” Holdings, Inc., 512 Phil. 253,
258 (2005).
8
Supra note 5.
9
Id.
10
Rollo (G.R. No. 222723), pp. 437, 447.
11
Id. (G.R. No. 221813, Vol. II), pp. 553, 557.
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COOPERATIVE DATE OF
REGISTRATION

San Jose Multi-Purpose Cooperative (SJMPC) December 8, 1998

Centennial Multi-Purpose Cooperative (CeMPC) April 5, 1999
Sipalay Integrated Multi-Purpose Cooperative April 5, 1999
(SIMPC)
Allied Services Multi-Purpose Cooperative July 23, 1999
(ASMPC)
Cansibit Multi-Purpose Cooperative (CaMPC) September 16, 1999

In 2000, each of the said cooperatives executed identical

sets of Memorandum of Agreement12 with Maricalum Mining
wherein they undertook, among others, to provide the latter
with a steady supply of workers, machinery and equipment for
a monthly fee.
On June 1, 2001, Maricalum Mining’s Vice President and
Resident Manager Jesus H. Bermejo wrote a Memorandum13
to the cooperatives informing them that Maricalum Mining has
decided to stop its mining and milling operations effective July 1,
2001 in order to avert continuing losses brought about by the
low metal prices and high cost of production.
In July 2001, the properties of Maricalum Mining, which
had been mortgaged to secure the PNs, were extrajudicially
foreclosed and eventually sold to G Holdings as the highest
bidder on December 3, 2001.14
On September 23, 2010, some of Maricalum Mining’s
workers, including complainants, and some of Sipalay General
Hospital’s employees jointly filed a Complaint15 with the LA

12
Id. at 527-552.
13
Id. (G.R. No. 222723) at 112.
14
Supra note 5.
15
Rollo (G.R. No. 221813, Vol. I), pp. 500-504.
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against G Holdings, its president, and officer-in-charge, and

the cooperatives and its officers for illegal dismissal,
underpayment and nonpayment of salaries, underpayment of
overtime pay, underpayment of premium pay for holiday,
nonpayment of separation pay, underpayment of holiday pay,
nonpayment of service incentive leave pay, nonpayment of
vacation and sick leave, nonpayment of 13th month pay, moral
and exemplary damages, and attorneys fees.
On December 2, 2010, complainants and CeMPC Chairman
Alejandro H. Sitchon surprisingly filed his complaint for illegal
dismissal and corresponding monetary claims with the LA
against G Holdings, its officer-in-charge and CeMPC. 16
Thereafter, the complaints were consolidated by the LA.
During the hearings, complainants presented the affidavits
of Alejandro H. Sitchon and Dennis Abelida which attested
that, prior to the formation of the manpower cooperatives, their
services were terminated by Maricalum Mining as part of its
retrenchment program. 17 They claimed that, in 1999, they were
called by the top executives of Maricalum Mining and G Holdings
and informed that they will have to form a cooperative for the
purpose of providing manpower services in view of the
retrenchment program. Thus, they were “rehired” only after
their respective manpower cooperative services were formed.
Moreover, they also submitted the following documents: (a) Cash
Vouchers 18 representing payments to the manpower cooperatives;
(b) a Payment Schedule19 representing G Holdings’ payment
of social security contributions in favor of some Sipalay Hospital
employees (c) Termination Letters20 written by representatives
of G Holdings, which were addressed to complainants including

16
Id. at 508-509; rollo (G.R. No. 221813, Vol. II), pp. 510-511.
17
Id. (G.R. No. 222723) at 171-175.
18
Id. at 154-166; 233-245, 251-297, 308-314.
19
Id. at 167.
20
Id. at 168-169.
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those employed by Sipalay Hospital; and (d) Caretaker

Schedules21 prepared by G Holdings to prove the existence of
employment relations.
After the hearings were concluded, complainants presented
their Position Paper 22 claiming that: they have not received
any increase in wages since they were allegedly rehired; except
for Sipalay Hospital’s employees, they worked as an
augmentation force to the security guards charged with securing
Maricalum Mining’s assets which were acquired by G Holdings;
Maricalum Mining’s assets have been exposed to pilferage by
some of its rank-and-file employees whose claims for collective
bargaining benefits were undergoing litigation; the Sipalay
Hospital is purportedly “among the assets” of Maricalum Mining
acquired by G Holdings; the payrolls for their wages were supposedly
prepared by G Holdings’ accounting department; since the second
half of April 2007, they have not been paid their salary; and
some of their services were dismissed without any due process.
Based on these factual claims, complainants posited that:
the manpower cooperatives were mere alter egos of G Holdings
organized to subvert the “tenurial rights” of the complainants;
G Holdings implemented a retrenchment scheme to dismiss
the caretakers it hired before the foreclosure of Maricalum
Mining’s assets; and G Holdings was their employer because
it allegedly had the power to hire, pay wages, control working
methods and dismiss them.
Correspondingly, G Holdings filed its Position Paper 23
maintaining that: it was Maricalum Mining who entered into
an agreement with the manpower corporations for the
employment of complainants’ services for auxiliary or seasonal
mining activities; the manpower cooperatives were the ones
who paid the wages, deducted social security contributions,
withheld taxes, provided medical benefits and had control over

21
Id. at 207-232.
22
Id. at 175-190.
23
Id. (G.R. No. 221813, Vol. 1) at 143-159.
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the working means and methods of complainants; despite Maricalum

Mining’s decision to stop its mining and milling operations,
complainants still continued to render their services for the orderly
winding down of the mines’ operations; Maricalum Mining
should have been impleaded because it is supposed to be the
indispensable party in the present suit; (e) Maricalum Mining,
as well as the manpower cooperatives, each have distinct legal
personalities and that their individual corporate liabilities cannot
be imposed upon each other; and there was no employer-
employee relationship between G Holdings and complainants.
Likewise, the manpower cooperatives jointly filed their
Position Paper 24 arguing that: complainants had exhibited a
favorable response when they were properly briefed of the nature
and benefits of working under a cooperative setup; complainants
received their fair share of benefits; complainants were entitled
to cast their respective votes in deciding the affairs of their
respective cooperatives; complainants, as member of the
cooperatives, are also co-owners of the said cooperative and
they cannot bargain for higher labor benefits with other co-
owners; and the LA has no jurisdiction over the case because
there is no employer-employee relationship between a
cooperative and its members.
The LA Ruling
In its decision dated April 28, 2011, the LA ruled in favor
of complainants. It held that G Holdings is guilty of labor-
only contracting with the manpower cooperatives thereby making
all of them solidarily and directly liable to complainants. The
LA reasoned that: G Holdings connived with Marcalum Mining
in orchestrating the formation of manpower cooperatives to
circumvent complainants’ labor standards rights; it is highly
unlikely that complainants (except Sipalay Hospital’s employees)
would spontaneously form manpower cooperatives on their own
and in unison without the guidance of G Holdings and Maricalum
Mining; and complainants effectively became the employees

24
Id. at 162-173.
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of G Holdings because their work had changed from assisting

in the mining operations to safeguarding the properties in the
Sipalay Mining Complex, which had already been acquired by
G Holding. On the other hand, the LA denied the claims of
complainants Nenet Arita and Domingo Lavida for lack of factual
basis. The fallo of the LA decision reads:
WHEREFORE, premises considered, judgment is hereby rendered
DIRECTING respondent “G” HOLDINGS, INC. to pay complainants
as follows:
Unpaid Salaries/Wages 13 th Month Pay
(1) Salvador Arceo P81,418.08 P 6,784.84
(2) Sofronio Ayon 79,158.50 6,596.54
(3) Glenn Buenviaje 105,558.40 8,796.53
(4) Ely Florentino 102,325.28 8,527.11
(5) Rogelio Fulo 99,352.23 8,279.35
(6) Efren Genise 161,149.18 13,429.10
(7) Rudy Gomez 72,133.41 6,011.12
(8) Jessie Magallanes 239,251.94 19,937.66
(9) Freddie Masicampo 143,415.85 11,951.32
(10) Edgardo Penaflorida 146,483.60 12,206.97
(11) Noel Acollador 89,163.46 7,430.29
(12) Gorgonio Baladhay 220,956.10 18,413.01
(13) Jesus Mosqueda 48,303.22 4,025.27
(14) Alquin Franco 180,281.25 15,023.44
(15) Fabio Aleman 30,000.00 2,500.00
(16) Elias Trespeces 180,000.00 15,000.00
(17) Pepito Hedriana 18,000.00 1,500.00
(18) Dennis Abelida 149,941.00 12,945.08
(19) Melchor Apucay 371,587.01 30,965.58
(20) Martin Agsoy 128,945.08 10,745.42
(21) Ruelito Villarmia 224,486.95 18,707.25
(22) Fernando Siguan 417,039.32 34,753.28
(23) Alejandro Sitchon 380,423.16 31,701.93
(24) Welilmo Neri 456,502.36 38,041.86
(25) Erlinda Fernandez 125,553.88 10,462.82
(26) Edgardo Sobrino 112,521.40 9,376.78
(27) Wildredo Taganile 52,386.82 4,365.57
(28) Bartholomew Jamboy 68,000.00 5,666.67

P4,484,337.48 P373,694.79
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and the amount of P485,803.23 as attorney’s fees, or the total amount

of FIVE MILLION THREE HUNDRED FORTY-THREE
THOUSAND EIGHT HUNDRED THIRTY-FIVE and 50/100 PESOS
(P5,343,835.50).

The other claims are DISMISSED for lack of merit.

Further, the complaints against respondents SIPALAY
INTEGRATED MULTI-PURPOSE COOPERATIVE, ALLIED
SERVICES MULTI-COOPERATIVE, SAN JOSE MULTI-PURPOSE
COOPERATIVE, CANSIBIT MULTI-PURPOSE COOPERATIVE,
and CENTENNIAL MULTI-PURPOSE COOPERATIVE, being mere
agents of respondent “G” HOLDINGS, INC., are hereby DISMISSED.
SO ORDERED. 25
The parties filed their respective appeals to the NLRC.
On July 18, 2011, Maricalum Mining filed its Appeal-in-
Intervention26 seeking to: (a) reverse and set aside the Labor
Arbiter’s Decision; (b) declare Maricalum Mining as the true
and proper party-in-interest; (c) remand the case back to the
Labor Arbiter for proper computation of the money claims of
the complainants; and (d) give Maricalum Mining the opportunity
to settle with the complainants.
The NLRC Ruling
In its decision dated November 29, 2011, the NLRC modified
the LA ruling. It held that Dr. Welilmo T. Neri, Erlinda L.
Fernandez and Edgar M. Sobrino are not entitled to the monetary
awards because they were not able to establish the fact of their
employment relationship with G Holdings or Maricalum Mining
because Sipalay Hospital has a separate and distinct corporate
personality. As to the remaining complainants, it found that
no evidence was adduced to prove that the salaries/wages and
the 13th month pay had been paid.

25
Id. at 277-278.
26
Rollo (G.R. No. 221813, Vol. I), pp. 284-325.
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However, the NLRC imposed the liability of paying the

monetary awards imposed by the LA against Maricalum Mining,
instead of G Holdings, based on the following observations
that: it was Maricalum Mining—not G Holdings—who entered
into service contracts by way of a Memorandum of Agreement
with each of the manpower cooperatives; complainants continued
rendering their services at the insistence of Maricalum Mining
through their cooperatives; Maricalum Mining never relinquished
possession over the Sipalay Mining Complex; Maricalum Mining
continuously availed of the services of complainants through
their respective manpower cooperatives; in G Holdings, Inc.
v. National Mines and Allied Workers Union Local 103
(NAMAWU), et al.27 (NAMAWU Case), the Court already held
that G Holdings and Maricalum Mining have separate and distinct
corporate personalities. The dispositive portion of the NLRC
ruling states:
WHEREFORE, premises considered, the Decision rendered by the
Labor Arbiter on 20 April 2011 is hereby MODIFIED, to wit:
1) the monetary award adjudged to complainants Jessie
Magallanes, Rogelio E. Fulo, Salvador J. Arceo, Freddie
Masicampo, Welilmo Neri, Erlinda Fernandez and Edgar
Sobrino are CANCELLED;
2) the award of ten percent (10%) attorney’s fees is ADJUSTED
commensurate to the award of unpaid salaries/wages and 13th
month pay of the remaining complainants;
3) the directive for respondent “G” Holdings, Inc. to pay
complainants the monetary awards adjudged by the Labor
Arbiter is CANCELLED;
4) it is intervenor that is, accordingly, directed to pay the
remaining complainants their respective monetary awards.
In all other respects the Decision STANDS.
SO ORDERED. 28

27
619 Phil. 69, 78 (2009).
28
Rollo (G.R. No. 221813, Vol. I), pp. 405-406.
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Complainants and Maricalum Mining filed their respective

motions for reconsideration before the NLRC. On January 31,
2012, it issued a resolution modifying its previous decision.
The dispositive portion of the NLRC resolution state:
WHEREFORE, premises considered, intervenor’s Motion for
Reconsideration is only PARTIALLY GRANTED. The Decision
promulgated by the Commission on 29 November 2011 modifying
the Labor Arbiter’s decision as stated therein, is further MODIFIED
to the effect that the monetary awards adjudged in favor of complainants
Wilfredo Taganile and Bartholomew T. Jamboy are CANCELLED.
SO ORDERED. 29
Undaunted, the parties filed their respective petitions for
certiorari before the CA.
The CA Ruling
In its decision dated October 29, 2014, the CA denied the
petitions and affirmed the decision of the NLRC. It ratiocinated
that factual issues are not fit subjects for review via the
extraordinary remedy of certiorari. The CA emphasized that
the NLRC’s factual findings are conclusive and binding on
the appellate courts when they are supported by substantial
evidence. Thus, it maintained that it cannot review and re-
evaluate the evidence all over again because there was no
showing that the NLRC’s findings of facts were reached
arbitrarily. The decretal portion of the CA decision states:
WHEREFORE, premises considered, the instant petition for
certiorari is DENIED, and the assailed Decision dated 29 December
2011 and two Resolutions both dated 31 January 2012 of the National
Labor Relations Commission are hereby AFFIRMED in all respects.
Costs against petitioners.
SO ORDERED. 30

29
Id. at 451.
30
Id. at 27.
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Hence, these consolidated petitions essentially raising the

following issues:
I
WHETHER THE COURT OF APPEALS ERRED IN REFUSING
TO RE-EVALUATE THE FACTS AND IN FINDING NO GRAVE
ABUSE OF DISCRETION ON THE PART OF THE NLRC;
II
WHETHER THE COURT OF APPEALS ERRED IN AFFIRMING
THE NLRC’S FINDING OF SUBSTANTIAL EVIDENCE IN
GRANTING THE COMPLAINANTS’ MONETARY AWARD AS
WELL AS ITS REFUSAL TO REMAND THE CASE BACK TO
THE LABOR ARBITER FOR RE-COMPUTATION OF SUCH
AWARD;
III
WHETHER THE COURT OF APPEALS ERRED IN
DISREGARDING THAT THE NLRC ALLOWED MARICALUM
MINING TO INTERVENE IN THE CASE ONLY ON APPEAL;
IV
WHETHER THE COURT OF APPEALS ERRED IN AFFIRMING
THE NLRC’S RULING WHICH ALLOWED THE PIERCING OF
THE CORPORATE VEIL AGAINST MARICALUM MINING BUT
NOT AGAINST SIPALAY HOSPITAL.
Complainants argue that the CA committed several reversible
errors because: (a) it refused to re-evaluate the facts of the
case even if the factual findings of the NLRC and the LA were
conflicting; (b) it failed to consider that G Holdings had already
acquired all of Maricalum Mining’s assets and that Teodoro
G. Bernardino (Bernardino) was now the president and
controlling stockholder of both corporations; (c) it failed to
take into account that Maricalum Mining was allowed to
intervene only on appeal even though it was not a real party-
in-interest; (d) it failed to appreciate the LA’s findings that
Maricalum Mining could not have hired complainants because
G Holdings had already acquired in an auction sale all the assets
in the Sipalay Mining Complex; (e) it failed to consider that
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all resident managers of the Sipalay Mining Complex were

employed by G Holdings; (f) the foreclosure of the assets in
the Sipalay Mining Complex was intended to bring the said
properties outside the reach of complainants; (g) the Sipalay
Hospital had been existing as a hospital for Maricalum Mining’s
employees long before G Holdings arrived; (h) Dr. Welilmo
T. Neri, Erlinda L. Fernandez, Edgar M. Sobrino and Wilfredo
C. Taganile, Sr. were all hired by Maricalum Mining but were
dismissed by G Holdings; (i) Sipalay Hospital existed without
a board of directors and its employees were receiving orders
from Maricalum Mining and, later on, replaced by G Holdings’
officer-in-charge; and (j) Maricalum Mining and G Holdings
controlled the affairs of Sipalay Hospital.
Maricalum Mining contends that the CA committed grave
abuse of discretion because the monetary awards were improperly
computed. It claims that complainants had stopped rendering
their services since September 23, 2010, hence, their monetary
claims covering the second half of April 2007 up to July 2007
have already prescribed as provided pursuant to Article 291 of
the Labor Code. Moreover, it also stressed that the NLRC
should have remanded the case to the LA for the determination
of the manpower cooperatives’ net surpluses and how these
amounts were distributed to their members to aid the proper
determination of the total amount of the monetary award. Finally,
Maricalum Mining avers that the awards in favor of some of
the complainants are “improbable” and completely unfounded.
On the other hand, G Holdings argues that piercing the
corporate veil of Maricalum Mining is not proper because: (a)
it did not acquire all of Maricalum Mining’s assets; (b) it is
primarily engaged in the business of owning and holding shares
of stocks of different companies—not participating in the
operations of its subsidiaries; (c) Maricalum Mining, the actual
employers of complainants, had already manifested its
willingness to settle the correct money claims; (d) Bernardino
is not a controlling stockholder of Maricalum Mining because
the latter’s corporate records show that almost all of its shares
of stock are owned by the APT; (e) Joost Pekelharing—not
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Bernardino—is G Holdings’ president; (f) in the NAMAWU

Case, it was already held that control over Maricalum Mining
was exercised by the APT and not G Holdings; (g) the NLRC
did not commit any grave abuse of discretion when it allowed
Maricalum Mining to intervene after the LA’s decision was
promulgated; (h) the cash vouchers, payment schedule,
termination letters and caretaker schedules presented by
complainants do not prove the employment relationship with
G Holdings because the signatories thereto were either from
Maricalum Mining or the manpower cooperatives; (i) this Court’s
pronouncements in the NAMAWU Case and in Republic v.
G Holdings, Inc. 31 prove that Maricalum Mining never
relinquished possession of the Sipalay Mining Complex in favor
of G Holdings; and (j) Dr. Welilmo T. Neri, Erlinda L. Fernandez,
Edgar M. Sobrino and Wilfredo C. Taganile, Sr. were employees
of the Sipalay Hospital, which is a separate business entity,
and were not members in any of the manpower cooperatives,
which entered into a labor-only arrangement with Maricalum
Mining.
The Court’s Ruling
It is basic that only pure questions of law should be raised
in petitions for review on certiorari under Rule 45 of the Rules
of Court. 32 It will not entertain questions of fact as the factual
findings of appellate courts are final, binding or conclusive on
the parties and upon this court when supported by substantial
evidence.33 In labor cases, however, the Court has to examine
the CA’s Decision from the prism of whether the latter had
correctly determined the presence or absence of grave abuse
of discretion in the NLRC’s Decision. 34

31
Supra note 7.
32
Far Eastern Surety and Insurance Co., Inc. v. People, 721 Phil. 760,
770 (2013), citations omitted.
33
Villarama v. Atty. De Jesus, G.R. No. 217004, April 17, 2017, citations
omitted.
34
Quebral, et al. v. Angbus Construction, Inc., et al., G.R. No. 221897,
November 7, 2016, citations omitted.
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In this case, the principle that this Court is not a trier of

facts applies with greater force in labor cases. 35 Grave abuse
must have attended the evaluation of the facts and evidence
presented by the parties. 36 This Court is keenly aware that the
CA undertook a Rule 65 review—not a review on appeal—of
the NLRC decision challenged before it. 37 It follows that this
Court will not re-examine conflicting evidence, reevaluate the
credibility of witnesses, or substitute the findings of fact of
the NLRC, an administrative body that has expertise in its
specialized field. 38 It may only examine the facts only for the
purpose of resolving allegations and determining the existence
of grave abuse of discretion. 39 Accordingly, with these
procedural guidelines, the Court will now proceed to determine
whether or not the CA had committed any reversible error in
affirming the NLRC’s Decision.
Propriety of the Monetary Awards
Ordinarily, when there is sufficient evidence before the Court
to enable it to resolve fundamental issues, it will dispense with
the regular procedure of remanding the case to the lower court
or appropriate tribunal in order to avoid a further delay in the
resolution of the case. 40 A remand is only necessary when the
proceedings below are grossly inadequate to settle factual
issues. 41 This is in line with the Court’s power to issue a process

35
Noblado, et al. v. Alfonso, 773 Phil. 271, 279 (2015), citations omitted.
36
Pascual v. Burgos, et al., 776 Phil. 167, 186 (2016), citations omitted.
37
Philippine National Bank v. Gregorio, G.R. No. 194944, September
18, 2017, citations omitted.
38
Protective Maximum Security Agency, Inc. v. Fuentes, 753 Phil. 482,
504 (2015), citations omitted.
39
United Coconut Planters Bank v. Looyuko, et al., 560 Phil. 581, 590
(2007), citations omitted.
40
Simon, et al. v. Canlas, 521 Phil. 558, 575 (2006), citations omitted.
41
Tacloban II Neighborhood Association, Inc. v. Office of the President,
et al., 588 Phil. 177, 195 (2008), citations omitted.
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in order to enforce its own decrees and thus avoid circuitous

actions and vexatious litigation. 42
In the case at bench, Maricalum Mining is seeking to have
the case remanded because the LA allegedly miscomputed the
amount of the monetary awards. However, it failed to offer
any reasonable argument or explanation why the proceedings
conducted before the NLRC or LA were “grossly inadequate
to settle factual issues,” especially as regards the computation
of monetary awards. Its bare allegations – that the monetary
awards were improperly computed because prescribed claims
have been granted, that the net surpluses of the manpower
cooperative were not properly distributed, and that the awards
in favor of some of the complainants were improbable – do
not warrant the invocation of this Court’s power to have the
case remanded back to the LA. Bare and unsubstantiated
allegations do not constitute substantial evidence and have no
probative value. 43
Besides, it is not imperative for the Court to remand the
case to the LA for the determination of the amounts of net
surpluses that each of the manpower cooperatives had received
from Maricalum Mining. The records show that Maricalum Mining
was guilty of entering into a labor-only contracting arrangement
with the manpower cooperatives, thus, all of them are solidarily
liable to the complainants by virtue of Article 10644 of the

42
Cf. De Ortega v. Natividad, etc., et al., 71 Phil. 340, 342 (1941),
citations omitted.
43
LNS International Manpower Services v. Padua, Jr., 628 Phil. 223,
224 (2010).
44
Article 106. Contractor or subcontractor. Whenever an employer
enters into a contract with another person for the performance of the former’s
work, the employees of the contractor and of the latter’s subcontractor, if
any, shall be paid in accordance with the provisions of this Code.
In the event that the contractor or subcontractor fails to pay the wages of
his employees in accordance with this Code, the employer shall be jointly
and severally liable with his contractor or subcontractor to such employees
to the extent of the work performed under the contract, in the same manner
and extent that he is liable to employees directly employed by him.
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Labor Code. In DOLE Philippines, Inc. v. Esteva, et al.45 it

was ruled that a cooperative, despite having a personality separate
from its members, 46 is engaged in a labor-only contracting
arrangement based on the following indicators:
1) The cooperative had a measly paid-up capital of P6,600.00
and had only managed to increase the same by continually
engaging in labor-only contracting with its client;
2) The cooperative did not carry out an independent business
from its client and its own office and equipment were mainly
used for administrative purposes;
3) The cooperative’s members had to undergo instructions and
pass the training provided by the client’s personnel before
they could start working alongside regular employees;
4) The cooperative was not engaged to perform a specific and
special job or service; and
5) The cooperative’s members performed activities directly
related and vital to the principal business of its client.

Here, the virtually identical sets of memorandum of agreement

with the manpower cooperatives state among others that:
(a) the services covered shall consist of operating loading, drilling
and various auxiliary equipments; and (b) the cooperative
members shall abide by the norms and standards of the Maricalum
Mining. These services and guidelines are essential to the
operations of Maricalum Mining. Thus, since the cooperative

xx x xxx xxx
There is “labor-only“ contracting where the person supplying workers to
an employer does not have substantial capital or investment in the form of
tools, equipment, machineries, work premises, among others, and the workers
recruited and placed by such person are performing activities which are
directly related to the principal business of such employer. In such cases,
the person or intermediary shall be considered merely as an agent of the
employer who shall be responsible to the workers in the same manner and
extent as if the latter were directly employed by him. (emphasis supplied)
45
538 Phil. 817, 867-869 (2006).
46
See Republic v. Asiapro Cooperative, 563 Phil. 979, 1002 (2007).
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members perform the work vital to the operation of the Sipalay

Mining Complex, they were being contracted in a labor-only
arrangement. Moreover, the burden of proving the supposed
status of the contractor rests on the principal47 and Maricalum
Mining, being the principal, also failed to present any evidence
before the NLRC that each of the manpower cooperatives had
an independent viable business.
Propriety of Maricalum Mining’s Intervention
Intervention is a remedy by which a third party, who is not
originally impleaded in a proceeding, becomes a litigant for
purposes of protecting his or her right or interest that may be
affected by the proceedings. 48 The factors that should be reckoned
in determining whether or not to allow intervention are whether
intervention will unduly delay or prejudice the adjudication
of the rights of the original parties and whether the intervenors
rights may be fully protected in a separate proceeding. 49 A
motion to intervene may be entertained or allowed even if filed
after judgment was rendered by the trial court, especially in
cases where the intervenors are indispensable parties. 50 Parties
may be added by order of the court on motion of the party or
on its own initiative at any stage of the action and/or at such
times as are just. 51
In this case, it was never contested by complainants that it
was Maricalum Mining—not G Holdings—who executed several
sets of memorandum of agreement with the manpower
cooperatives. The contractual connection between Maricalum

47
Petron Corporation v. Caberte, et al., 759 Phil. 353, 367 (2015),
citations omitted.
48
Neptune Metal Scrap Recycling, Inc. v. Manila Electric Company, et
al., 789 Phil. 30, 37 (2016), citations omitted.
49
Salandanan v. Spouses Mendez, 600 Phil. 229, 241.
50
Galicia, et al. v. Manliquez vda. de Mindo, et al., 549 Phil. 595, 605
(2007), citations omitted.
51
Plasabas, et al. v. Court of Appeals, et al., 601 Phil. 669, 675-676
(2009).
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Mining and the manpower cooperatives is crucial to the

determination of labor-related liabilities especially when it
involves a labor-only contracting arrangement. Accordingly,
Maricalum Mining will eventually be held solidarily liable with
the manpower cooperatives. In other words, it stands to be
injured by the incontrovertible fact that it entered into a labor-
only arrangement with the manpower cooperatives. Thus,
Maricalum Mining is an indispensable party and worthy of being
allowed to intervene in this case. 52
In order to properly analyze G Holdings’s role in the instant
dispute, the Court must discuss its peculiar relationship (or
lack thereof) with Maricalum Mining and Sipalay Hospital.
G Holdings and Maricalum Mining
The doctrine of piercing the corporate veil applies only in
three (3) basic areas, namely: (a) defeat of public convenience
as when the corporate fiction is used as a vehicle for the evasion
of an existing obligation; (b) fraud cases or when the corporate
entity is used to justify a wrong, protect fraud, or defend a
crime; or (c) 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. 53 This
principle is basically applied only to determine established
liability. 54 However, piercing of the veil of corporate fiction
is frowned upon and must be done with caution. 55 This is because
a corporation is invested by law with a personality separate

52
Cf. In the Matter of the Heirship (Intestate Estates) of the Late
Hermogenes Rodriguez, et al. v. Robles, 653 Phil. 396, 404-405 (2010),
citations omitted.
53
General Credit Corporation v. Alsons Development and Investment
Corporation, et al., 542 Phil. 219, 232 (2007), citations omitted.
54
Kukan International Corporation v. Reyes, et al., 646 Phil. 210, 234
(2010), citations omitted.
55
Reynoso, IV v. Court of Appeals, et al., 399 Phil. 38, 50 (2000).
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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. 56
A parent57 or holding company58 is a corporation which owns
or is organized to own a substantial portion of another company’s
voting59 shares of stock enough to control60 or influence the
latter’s management, policies or affairs thru election of the
latter’s board of directors or otherwise. However, the term
“holding company” is customarily used interchangeably with
the term “investment company” which, in turn, is defined by
Section 4 (a) of Republic Act (R.A.) No. 262961 as “any issuer
(corporation) which is or holds itself out as being engaged
primarily, or proposes to engage primarily, in the business of
investing, reinvesting, or trading in securities.”
In other words, a “holding company” is organized and is
basically conducting its business by investing substantially in
the equity securities62 of another company for the purposes of
controlling their policies (as opposed to directly engaging in
operating activities) and “holding” them in a conglomerate or
umbrella structure along with other subsidiaries. Significantly,
the holding company itself—being a separate entity—does not
own the assets of and does not answer for the liabilities of the

56
Ever Electrical Manufacturing, Inc., et al. v. Samahang Manggagawa
ng Ever Electrical, et al., 687 Phil. 529, 538 (2012).
57
See Section 3 (x) of Republic Act No. 9856 (The Real Estate Investment
Trust Act of 2009).
58
See Section 3 (g) of Republic Act No. 2629 (Investment Company
Act).
59
See Section 3 (ff) of Republic Act No. 2629 (Investment Company
Act).
60
See Section 3 (h) of Republic Act No. 2629 (Investment Company
Act); supra note 58.
61
The Investment Company Act (June 18, 1960).
62
Equity securities represent ownership in a company (Stice, et al.,
Intermediate Accounting, 17 th Ed. [2010], p. 839).
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subsidiary63 or affiliate. 64 The management of the subsidiary

or affiliate still rests in the hands of its own board of directors
and corporate officers. It is in keeping with the basic rule 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. 65 The
corporate form was created to allow shareholders to invest
without incurring personal liability for the acts of the
corporation.66
While the veil of corporate fiction may be pierced under
certain instances, mere ownership of a subsidiary does not justify
the imposition of liability on the parent company. 67 It must
further appear that to recognize a parent and a subsidiary
as separate entities would aid in the consummation of a
wrong. 68 Thus, a holding corporation has a separate
corporate existence and is to be treated as a separate entity;
unless the facts show that such separate corporate existence
is a mere sham, or has been used as an instrument for
concealing the truth. 69
In the case at bench, complainants mainly harp their cause
on the alter ego theory. Under this theory, piercing the veil of

63
Section 3 (kk) of Republic Act No. 9856 (The Real Estate Investment
Trust Act of 2009).
64
See Section 3 (b) of Republic Act No. 9856 (The Real Estate Investment
Trust Act of 2009); cf. Section 3 (c) of Republic Act No. 2629 (Investment
Company Act).
65
Aratea, et al. v. Suico, et al., 547 Phil. 407, 415 (2007), citations
omitted.
66
Pearson, et al. v. Component Technology Corporation, et al., 247
F.3d 471 (2001), citations omitted.
67
Parkinson, et al. v. Guidant Corporation, et al., 315 F.Supp.2d 741
(2004), citations omitted.
68
Cf. Pacific Rehouse Corporation v. Court of Appeals, et al., 730 Phil.
325, 351 (2014), citations omitted.
69
18 C.J.S. Corporations § 5 (1939).
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corporate fiction may be allowed only if the following elements

concur:
1) Control—not mere stock control, but complete domination—
not only of finances, but of policy and business practice in
respect to the transaction attacked, must have been such 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
a fraud or a wrong, to perpetuate the violation of a statutory
or other positive legal duty, or a dishonest and an unjust act
in contravention of plaintiffs legal right; and
3) The said control and breach of duty must have proximately
caused the injury or unjust loss complained of. 70
The elements of the alter ego theory were discussed in
Philippine National Bank v. Hydro Resources Contractors
Corporation,71 to wit:
The first prong is the “instrumentality” or “control” test. This
test requires that the subsidiary be completely under the control and
domination of the parent. It examines the parent corporation’s
relationship with the subsidiary. It inquires whether a subsidiary
corporation is so organized and controlled and its affairs are so
conducted as to make it a mere instrumentality or agent of the parent
corporation such that its separate existence as a distinct corporate
entity will be ignored. It seeks to establish whether the subsidiary
corporation has no autonomy and the parent corporation, though acting
through the subsidiary in form and appearance, “is operating the
business directly for itself.”
The second prong is the “fraud” test. This test requires that the
parent corporation’s conduct in using the subsidiary corporation be
unjust, fraudulent or wrongful. It examines the relationship of the
plaintiff to the corporation. It recognizes that piercing is appropriate
only if the parent corporation uses the subsidiary in a way that harms

70
Philippine National Bank, et al. v. Andrada Electric & Engineering
Company, 430 Phil. 882, 895 (2002), citations omitted.
71
706 Phil. 297, 310-312 (2013), citations omitted.
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the plaintiff creditor. As such, it requires a showing of “an element

of injustice or fundamental unfairness.”
The third prong is the “harm” test. This test requires the plaintiff
to show that the defendant’s control, exerted in a fraudulent, illegal
or otherwise unfair manner toward it, caused the harm suffered. A
causal connection between the fraudulent conduct committed through
the instrumentality of the subsidiary and the injury suffered or the
damage incurred by the plaintiff should be established. The plaintiff
must prove that, unless the corporate veil is pierced, it will have been
treated unjustly by the defendant’s exercise of control and improper
use of the corporate form and, thereby, suffer damages.
To summarize, 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. (emphases and underscoring supplied)
Again, all these three elements must concur before the
corporate veil may be pierced under the alter ego theory. Keeping
in mind the parameters, guidelines and indicators for proper
piercing of the corporate veil, the Court now proceeds to
determine whether Maricalum Mining’s corporate veil may be
pierced in order to allow complainants to enforce their monetary
awards against G Holdings.
I. Control or Instrumentality Test
In Concept Builders, Inc. v. National Labor Relations
Commission, et al., 72 the Court first laid down the first set of
probative factors of identity that will justify the application of
the doctrine of piercing the corporate veil, viz:
1) Stock ownership by one or common ownership of both
corporations.
2) Identity of directors and officers.

72
326 Phil. 955, 965 (1996), citations omitted.
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3) The manner of keeping corporate books and records.

4) Methods of conducting the business.
Later, in Philippine National Bank v. Ritratto Group Inc.,
et al., 73 the Court expanded the aforementioned probative factors
and enumerated a combination of any of the following common
circumstances that may also render a subsidiary an
instrumentality, to wit:
1) The parent corporation owns all or most of the capital stock
of the subsidiary;
2) The parent and subsidiary corporations have common directors
or officers;
3) The parent corporation finances the subsidiary;
4) The parent corporation subscribes to all the capital stock of
the subsidiary or otherwise causes its incorporation;
5) The subsidiary has grossly inadequate capital;
6) The parent corporation pays the salaries and other
expenses or losses of the subsidiary;
7) The subsidiary has substantially no business except with the
parent corporation or no assets except those conveyed to or
by the parent corporation;
8) In the papers of the parent corporation or in the statements
of its officers, the subsidiary is described as a department or
division of the parent corporation, or its business or financial
responsibility is referred to as the parent corporation’s own;
9) The parent corporation uses the property of the subsidiary
as its own;
10) The directors or executives of the subsidiary do not act
independently in the interest of the subsidiary but take their
orders from the parent corporation; and
11) The formal legal requirements of the subsidiary are not
observed.

73
414 Phil. 494, 504-505 (2001).
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In the instant case, there is no doubt that G Holdings—being

the majority and controlling stockholder—had been exercising
significant control over Maricalum Mining. This is because
this Court had already upheld the validity and enforceability
of the PSA between the APT and G Holdings. It was stipulated
in the PSA that APT shall transfer 90% of Maricalum Mining’s
equity securities to G Holdings and it establishes the presence
of absolute control of a subsidiary’s corporate affairs. Moreover,
the Court evinces its observation that Maricalum Mining’s
corporate name appearing on the heading of the cash vouchers
issued in payment of the services rendered by the manpower
cooperatives is being superimposed with G Holding’s corporate
name. Due to this observation, it can be reasonably inferred
that G Holdings is paying for Maricalum Mining’s salary
expenses. Hence, the presence of both circumstances of dominant
equity ownership and provision for salary expenses may
adequately establish that Maricalum Mining is an instrumentality
of G Holdings.
However, mere presence of control and full ownership of a
parent over a subsidiary is not enough to pierce the veil of
corporate fiction. It has been reiterated by this Court time and
again that mere ownership by a single stockholder or by
another corporation of all or nearly all of the capital stock
of a corporation is not of itself sufficient ground for
disregarding the separate corporate personality. 74
II. Fraud Test
The corporate veil may be lifted only if it has been used to
shield fraud, defend crime, justify a wrong, defeat public
convenience, insulate bad faith or perpetuate injustice. 75 To

74
Zambrano, et al. v. Philippine Carpet Manufacturing Corporation,
et al., G.R. No. 224099, June 21, 2017, citations omitted; Francisco, et al.
v. Mejia, et al., 415 Phil. 153, 170 (2001).
75
See San Juan Structural and Steel Fabricators, Inc. v. Court of Appeals,
et al., 357 Phil. 631, 648-649 (1998).
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aid in the determination of the presence or absence of fraud,

the following factors in the “Totality of Circumstances Test”76
may be considered, viz:
1) Commingling of funds and other assets of the corporation
with those of the individual shareholders;
2) Diversion of the corporation’s funds or assets to non-corporate
uses (to the personal uses of the corporation’s shareholders);
3) Failure to maintain the corporate formalities necessary for
the issuance of or subscription to the corporation’s stock,
such as formal approval of the stock issue by the board of
directors;
4) An individual shareholder representing to persons outside
the corporation that he or she is personally liable for the
debts or other obligations of the corporation;
5) Failure to maintain corporate minutes or adequate corporate
records;
6) Identical equitable ownership in two entities;
7) Identity of the directors and officers of two entities who are
responsible for supervision and management (a partnership
or sole proprietorship and a corporation owned and managed
by the same parties);
8) Failure to adequately capitalize a corporation for the
reasonable risks of the corporate undertaking;
9) Absence of separately held corporate assets;
10) Use of a corporation as a mere shell or conduit to operate a
single venture or some particular aspect of the business of
an individual or another corporation;
11) Sole ownership of all the stock by one individual or members
of a single family;
12) Use of the same office or business location by the
corporation and its individual shareholder(s);

76
Laya v. Erin Homes, Inc., et al., 352 S.E.2d 93 (1986), cited in: Kinney
Shoe Corporation v. Polan, 939 F.2d 209 (1991).
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13) Employment of the same employees or attorney by the

corporation and its shareholder(s);
14) Concealment or misrepresentation of the identity of the
ownership, management or financial interests in the
corporation, and concealment of personal business activities
of the shareholders (sole shareholders do not reveal the
association with a corporation, which makes loans to them
without adequate security);
15) Disregard of legal formalities and failure to maintain proper
arm’s length relationships among related entities;
16) Use of a corporate entity as a conduit to procure labor, services
or merchandise for another person or entity;
17) Diversion of corporate assets from the corporation by or
to a stockholder or other person or entity to the detriment
of creditors, or the manipulation of assets and liabilities
between entities to concentrate the assets in one and the
liabilities in another;
18) Contracting by the corporation with another person with
the intent to avoid the risk of nonperformance by use of
the corporate entity; or the use of a corporation as a
subterfuge for illegal transactions; and
19) The formation and use of the corporation to assume the existing
liabilities of another person or entity.
Aside from the aforementioned circumstances, it must be
determined whether the transfer of assets from Maricalum Mining
to G Holdings is enough to invoke the equitable remedy of
piercing the corporate veil. The same issue was resolved in Y-
I Leisure Phils., Inc., et al. v. Yu77 where this Court applied
the “Nell Doctrine”78 regarding the transfer of all the assets
of one corporation to another. It was discussed in that case
that as a general rule that where one corporation sells or otherwise

77
769 Phil. 279, 293 (2015).
78
The Edward J. Nell Company v. Pacific Farms, Inc., 122 Phil. 825,
827 (1965), citations omitted.
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transfers all of its assets to another corporation, the latter is

not liable for the debts and liabilities of the transferor, except:
1) Where the purchaser expressly or impliedly agrees to assume
such debts;
2) Where the transaction amounts to a consolidation or merger
of the corporations;
3) Where the purchasing corporation is merely a continuation
of the selling corporation; and
4) Where the transaction is entered into fraudulently in order
to escape liability for such debts.
If any of the above-cited exceptions are present, then the
transferee corporation shall assume the liabilities of the
transferor. 79
In this case, G Holdings cannot be held liable for the
satisfaction of labor-related claims against Maricalum Mining
under the fraud test for the following reasons:
First, the transfer of some Maricalum Mining’s assets in
favor G Holdings was by virtue of the PSA as part of an official
measure to dispose of the government’s non-performing assets—
not to evade its monetary obligations to the complainants. Even
before complainants’ monetary claims supposedly existed in
2007, some of Maricalum Mining’s assets had already been
validly extrajudicially foreclosed and eventually sold to G
Holdings in 2001. Thus, G Holdings could not have devised
a scheme to avoid a non-existent obligation. No fraud could
be attributed to G Holdings because the transfer of assets was
pursuant to a previously perfected valid contract.
Settled is the rule that where one corporation sells or otherwise
transfers all its assets to another corporation for value, the latter
is not, by that fact alone, liable for the debts and liabilities of
the transferor. 80 In other words, control or ownership of

79
Supra note 77 at 293.
80
Pantranco Employees Association, et al. v. National Labor Relations
Commission, et al., 600 Phil. 645, 660 (2009).
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substantially all of a subsidiary’s assets is not by itself an

indication of a holding company’s fraudulent intent to alienate
these assets in evading labor-related claims or liabilities. As
discussed earlier, the PSA was not designed to evade the
monetary claims of the complainants. Although there was proof
that G Holdings has an office in Maricalum Mining’s premises
and that that some of their assets have been commingled due
to the PSA’s unavoidable consequences, there was no fraudulent
diversion of corporate assets to another corporation for the
sole purpose of evading complainants’ claim.
Besides, it is evident that the alleged continuing depletion
of Maricalum Mining’s assets is due to its disgruntled employees’
own acts of pilferage, which was beyond the control of G
Holdings. More so, complainants also failed to present any
clear and convincing evidence that G Holdings was grossly
negligent and failed to exercise the required degree of diligence
in ensuring that Maricalum Mining’s assets would be protected
from pilferage. 81 Hence, no fraud can be imputed against G
Holdings considering that there is no evidence in the records
that establishes it systematically tried to alienate Maricalum
Mining’s assets to escape the liabilities to complainants.
Second, it was not proven that all of Maricalum Mining’s
assets were transferred to G Holdings or were totally depleted.
Complainants never offered any evidence to establish that
Maricalum Mining had absolutely no substantial assets to cover
for their monetary claims. Their allegation that their claims
will be reduced to a mere “paper victory” has not confirmed
with concrete proof. At the very least, substantial evidence should
be adduced that the subsidiary company’s “net realizable value”82

81
See Heirs of Fe Tan Uy v. International Exchange Bank, 703 Phil.
477, 486 (2013).
82
Net realizable value is the estimated selling price in the ordinary course
of business less the estimated costs of completion and the estimated costs
necessary to make the sale (International Financial Reporting Standards
No. 2.6).
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of “current assets”83 and “fair value”84 of “non-current assets”85

are collectively insufficient to cover the whole amount of its
liability subject in the instant litigation.
Third, G Holdings purchased Maricalum Mining’s shares
from the APT not for the purpose of continuing the latter’s
existence and operations but for the purpose of investing in
the mining industry without having to directly engage in the
management and operation of mining. As discussed earlier, a
holding company’s primary business is merely to invest in the
equity of another corporation for the purpose of earning from
the latter’s endeavors. It generally does not undertake to engage
in the daily operating activities of its subsidiaries that, in turn,
have their own separate sets of directors and officers. Thus,
there should be proof that a holding company had indeed
fraudulently used the separate corporate personality of its
subsidiary to evade an obligation before it can be held liable.
Since G Holdings is a holding company, the corporate veil of
its subsidiaries may only be pierced based on fraud or gross
negligence amounting to bad faith.
Lastly, no clear and convincing evidence was presented by
the complainants to conclusively prove the presence of fraud
on the part of G Holdings. Although the quantum of evidence
needed to establish a claim for illegal dismissal in labor cases
is substantial evidence, 86 the quantum need to establish the

83
Current assets are assets that a company expects to convert to cash
or use up within one year or its operating cycle, whichever is longer (Weygandt,
et al., Accounting Principles, 10 th Ed. [2012], p. 172).
84
Fair value is the price that would be received to sell an asset or paid
to transfer a liability in an orderly transaction in the principal (or most
advantageous) market at the measurement date under current market conditions
(i.e. an exit price) regardless of whether that price is directly observable or
estimated using another valuation technique (International Financial Reporting
Standards No. 19.24).
85
Non-current assets are those which are not likely to be converted
into unrestricted cash within a year of the balance sheet date (see: https:/
/www.accountingcoach.com/blog/what-is-a-noncurrent-asset [last visited:
May 28, 2018]).
86
Functional, Inc. v. Granfil, 676 Phil. 279, 287 (2011).
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presence of fraud is clear and convincing evidence. 87 Thus, to

disregard the separate juridical personality of a corporation,
the wrongdoing must be established clearly and convincingly—
it cannot be presumed. 88
Here, the complainants did not satisfy the requisite quantum
of evidence to prove fraud on the part of G Holdings. They
merely offered allegations and suppositions that, since Maricalum
Mining’s assets appear to be continuously depleting and that
the same corporation is a subsidiary, G Holdings could have
been guilty of fraud. As emphasized earlier, bare allegations
do not prove anything. There must be proof that fraud—not
the inevitable effects of a previously executed and valid contract
such as the PSA—was the cause of the latter’s total asset
depletion. To be clear, the presence of control per se is not
enough to justify the piercing of the corporate veil.
III. Harm or Casual Connection Test
In WPM International Trading, Inc., et al. v. Labayen,89 the
Court laid down the criteria for the harm or casual connection
test, to wit:
In this connection, we stress that the control necessary to invoke
the instrumentality or alter ego rule is not majority or even complete
stock control but such domination of finances, 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.
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. (emphases and underscoring supplied)
Proximate cause is defined as that cause, which, in natural
and continuous sequence, unbroken by any efficient intervening

87
Republic v. Guerrero, 520 Phil. 296, 311 (2006).
88
McLeod v. National Labor Relations Commission, et al., 541 Phil.
214, 239 (2007).
89
743 Phil. 192, 201-202 (2014).
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cause, produces the injury, and without which the result would
not have occurred. 90 More comprehensively, the proximate
legal cause is that “acting first and producing the injury, either
immediately or by setting other events in motion, all constituting
a natural and continuous chain of events, each having a close
causal connection with its immediate predecessor, the final event
in the chain immediately effecting the injury as a natural and
probable result of the cause which first acted, under such
circumstances that the person responsible for the first event
should, as an ordinary prudent and intelligent person, have
reasonable ground to expect at the moment of his act or default
that an injury to some person might probably result therefrom.”91
Hence, for an act or event to be considered as proximate legal
cause, it should be shown that such act or event had indeed
caused injury to another.
In the case at bench, complainants have not yet even suffered
any monetary injury. They have yet to enforce their claims
against Maricalum Mining. It is apparent that complainants
are merely anxious that their monetary awards will not be
satisfied because the assets of Maricalum Mining were allegedly
transferred surreptitiously to G Holdings. However, as discussed
earlier, since complainants failed to show that G Holdings’s
mere exercise of control had a clear hand in the depletion of
Maricalum Mining’s assets, no proximate cause was successfully
established. The transfer of assets was pursuant to a valid and
legal PSA between G Holdings and APT.
Accordingly, complainants failed to satisfy the second and
third tests to justify the application of the alter ego theory.
This inevitably shows that the CA committed no reversible
error in upholding the NLRC’s Decision declaring Maricalum
Mining as the proper party liable to pay the monetary awards
in favor of complainants.

90
Mendoza, et al. v. Spouses Gomez, 736 Phil. 460, 475 (2014).
91
Ramos v. C.O.L. Realty Corporation, 614 Phil. 169, 177 (2009).
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G Holdings and Sipalay Hospital

Sipalay Hospital was incorporated by Romulo G. Zafra,
Eleanore B. Gutierrez, Helen Grace B. Fernandez, Evelyn B.
Badajos and Helen Grace L. Arbolario. 92 However, there is
absence of indication that G Holdings subsequently acquired
the controlling interests of Sipalay Hospital. There is also no
evidence that G Holdings entered into a contract with Sipalay
Hospital to provide medical services for its officers and
employees. This lack of stockholding or contractual connection
signifies that Sipalay Hospital is not affiliated93 with G Holdings.
Thus, due to this absence of affiliation, the Court must apply
the tests used to determine the existence of an employee-employer
relationship; rather than piercing the corporate veil.
Under the four-fold test, the employer-employee relationship
is determined if the following are present: a) the selection and
engagement of the employee; b) the payment of wages; c) the
power of dismissal; and d) the power to control the employee’s
conduct, or the so-called “control test.”94 Here, the “control
test” is the most important and crucial among the four tests. 95
However, in cases where there is no written agreement to base

92
Rollo (G.R. No. 222723), p. 441.
93
See Section 3 (c) of Republic Act No. 2629 (Investment Company
Act).
(c) “Affiliated person“ of another person means (1) any person directly
or indirectly owning, controlling or holding with power to vote, ten per
centum or more of the outstanding voting securities of such other person;
(2) any person ten per centum or more of whose outstanding voting securities
are directly or indirectly owned, controlled, or held with power to vote, by
such other person; (3) any person directly or indirectly controlling, controlled
by, or under common control with, such other person; (4) any officer, director,
partner, copartner, or employee of such other person; and (5) if such other
person is an investment company, any investment adviser thereof or any
member of an advisory board thereof. (emphasis supplied)
94
South East International Rattan, Inc., et al. v. Coming, 729 Phil.
298, 306 (2014).
95
Alba v. Espinosa, et al., G.R. No. 227734, August 9, 2017, citations
omitted.
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the relationship on and where the various tasks performed by

the worker bring complexity to the relationship with the
employer, the better approach would therefore be to adopt a
two-tiered test involving: a) the putative employer’s power
to control the employee with respect to the means and methods
by which the work is to be accomplished; and b) the underlying
economic realities of the activity or relationship. 96
In applying the second tier, the determination of the
relationship between employer and employee depends upon
the circumstances of the whole economic activity (economic
reality or multi-factor test), such as: a) the extent to which
the services performed are an integral part of the employer’s
business; b) the extent of the worker’s investment in equipment
and facilities; c) the nature and degree of control exercised by
the employer; d) the worker’s opportunity for profit and loss;
e) the amount of initiative, skill, judgment or foresight required
for the success of the claimed independent enterprise; f) the
permanency and duration of the relationship between the worker
and the employer; and g) the degree of dependency of the worker
upon the employer for his continued employment in that line
of business. 97 Under all of these tests, the burden to prove by
substantial evidence all of the elements or factors is incumbent
on the employee for he or she is the one claiming the existence
of an employment relationship. 98
In light of the present circumstances, the Court must apply
the four-fold test for lack of relevant data in the case records
relating to the underlying economic realities of the activity or
relationship of Sipalay Hospital’s employees.
To prove the existence of their employment relationship with
G Holdings, complainants Dr. Welilmo T. Neri, Erlinda L.

96
Valeroso, et al. v. Skycable Corporation, 790 Phil. 93, 103 (2016).
97
Francisco v. National Labor Relations Commission, et al., 532 Phil.
399, 408-409 (2006).
98
See Valencia v. Classique Vinyl Products Corporation, et al., G.R.
No. 206390, January 30, 2017, 816 SCRA 144, 156, citations omitted.
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Fernandez, Edgar M. Sobrino and Wilfredo C. Taganile, Sr.

presented the following documents:
1) Affidavit 99 of Dr. Welilmo T. Neri attesting among others
that he was the Medical Director of Sipalay Hospital which
is allegedly owned and operated by G Holdings/Maricalum
Mining;
2) Several cash vouchers100 issued by G Holdings/Maricalum
Mining representing Dr. Welilmo T. Neri’s payment for
services rendered to “various” personnel;
3) Schedules of social security premium payments101 in favor
of Dr. Welilmo T. Neri, Edgar M. Sobrino and Wilfredo C.
Taganile, Sr. stamped paid by G Holdings;
4) Notice of termination 102 dated July 3, 2010 issued by Rolando
G. Degojas (OIC of G-Holdings Inc.) issued to Dr. Welilmo
T. Neri and some of his companions who are not complainants
in this case;
5) Notice of termination 103 addressed to Dr. Welilmo T. Neri,
Erlinda L. Fernandez, Edgar M. Sobrino and some of their
co-employees who are not complainants in this case with a
collatilla stating that the services of Dr. Welilmo T. Neri
and nurse Erlinda L. Fernandez will be engaged on per call
basis; and
6) A “Statement of Unpaid Salaries of Employees of G Holdings,
Inc. Assigned to the Sipalay General Hospital” 104 prepared
by Dr. Welilmo T. Neri which included his own along with
complainants Erlinda L. Fernandez, Wilfredo C. Taganile,
[Sr.] and Edgar M. [Sobrino].

99
Rollo (G.R. No. 222723), p. 153.
100
Id. at 154-165.
101
Id. at 166-167.
102
Id. at 168.
103
Id. at 169.
104
Id. at 170.
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A perusal of the aforementioned documents fails to show

that the services of complainants Dr. Welilmo T. Neri, Erlinda
L. Fernandez, Edgar M. Sobrino and Wilfredo C. Taganile,
Sr. were indeed selected and engaged by either Maricalum
Mining or G Holdings. This gap in evidence clearly shows
that the first factor of the four-fold test, or the selection
and engagement of the employee, was not satisfied and not
supported by substantial evidence.
However, the same cannot be said as to the second and third
factors of the four-fold test (the payment of wages and the
power of dismissal). Since substantial evidence is defined as
that amount of relevant evidence which a reasonable mind might
accept as adequate to justify a conclusion, 105 the cash vouchers,
social security payments and notices of termination are
reasonable enough to draw an inference that G Holdings and
Maricalum Mining may have had a hand in the complainants’
payment of salaries and dismissal.
Notwithstanding the absence of the first factor and the presence
of the second and third factors of the four-fold test, the Court
still deems it best to examine the fourth factor—the presence
of control—in order to determine the employment connection
of complainants Dr. Welilmo T. Neri, Erlinda L. Fernandez, Edgar
M. Sobrino and Wilfredo C. Taganile, Sr. with G Holdings.
Under the control test, an employer-employee relationship
exists where the person for whom the services are performed
reserves the right to control not only the end achieved, but
also the manner and means to be used in reaching that end. 106
As applied in the healthcare industry, an employment relationship
exists between a physician and a hospital if the hospital controls
both the means and the details of the process by which the
physician is to accomplish his task. 107 But where a person who

105
Skippers United Pacific, Inc. v. National Labor Relations Commission,
et al., 527 Phil. 248, 257 (2006).
106
Atok Big Wedge Company, Inc. v. Gison, 670 Phil. 615, 627 (2011).
107
Calamba Medical Center, Inc. v. National Labor Relations
Commission, et al., 592 Phil. 318, 326 (2008).
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works for another performs his job more or less at his own
pleasure, in the manner he sees fit, not subject to definite hours
or conditions of work, and is compensated according to the
result of his efforts and not the amount thereof, no employer-
employee relationship exists. 108
A corporation may only exercise its powers within the
definitions provided by law and its articles of incorporation. 109
Accordingly, in order to determine the presence or absence of
an employment relationship between G Holdings and the
employees of Sipalay Hospital by using the control test, the
Court deems it essential to examine the salient portion of Sipalay
Hospital’s Articles of Incorporation imparting its ‘primary
purpose,’110 to wit:
To own, manage, lease or operate hospitals or clinics offering and
providing medical services and facilities to the general public, provided
that purely professional, medical or surgical services shall be performed
by duly qualified physicians or surgeons who may or may not be
connected with the corporation and who shall be freely and individually
contracted by patients. (emphasis supplied)
It is immediately apparent that Sipalay Hospital, even if its
facilities are located inside the Sipalay Mining Complex, does
not limit its medical services only to the employees and officers
of Maricalum Mining and/or G Holdings. Its act of holding
out services to the public reinforces the fact of its independence
from either Maricalum Mining or G Holdings because it is free
to deal with any client without any legal or contractual restriction.
Moreover, G Holdings is a holding company primarily engaged
in investing substantially in the stocks of another company—
not in directing and managing the latter’s daily business
operations. Because of this corporate attribute, the Court can
reasonably draw an inference that G Holdings does not have

108
Orozco v. Court of Appeals, et al., 584 Phil. 35, 52 (2008).
109
See University of Mindanao, Inc. v. Bangko Sentral ng Pilipinas, et
al., 776 Phil. 401, 428 (2016).
110
Rollo (G.R. No. 222723), p. 438.
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a considerable ability to control means and methods of work

of Sipalay Hospital employees. Markedly, the records are
simply bereft of any evidence that G Holdings had, in fact,
used its ownership to control the daily operations of Sipalay
Hospital as well as the working methods of the latter’s employees.
There is no evidence showing any subsequent transfer of shares
from the original incorporators of Sipalay Hospital to G Holdings.
Worse, it appears that complainants Dr. Welilmo T. Neri, Erlinda
L. Fernandez, Wilfredo C. Taganile, Sr. and Edgar M. Sobrino
are trying to derive their employment connection with G Holdings
merely on an assumed premise that the latter owns the controlling
stocks of Maricalum Mining.
On this score, the CA committed no reversible error in
allowing the NLRC to delete the monetary awards of Dr. Welilmo
T. Neri, Erlinda L. Fernandez, Wilfredo C. Taganile, Sr. and
Edgar M. Sobrino imposed by the Labor Arbiter against G
Holdings.
Conclusion
A holding company may be held liable for the acts of its
subsidiary only when it is adequately proven that: a) there was
control over the subsidiary; (b) such control was used to protect
a fraud (or gross negligence amounting to bad faith) or evade
an obligation; and c) fraud was the proximate cause of another’s
existing injury. Further, an employee is duly-burdened to prove
the crucial test or factor of control thru substantial evidence in
order to establish the existence of an employment relationship—
especially as against an unaffiliated corporation alleged to be
exercising control.
In this case, complainants have not successfully proven that
G Holdings fraudulently exercised its control over Maricalum
Mining to fraudulently evade any obligation. They also fell
short of proving that G Holdings had exercised operational
control over the employees of Sipalay Hospital. Due to these
findings, the Court sees no reversible error on the part of the
CA, which found no grave abuse of discretion and affirmed in
toto the factual findings and legal conclusions of the NLRC.
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WHEREFORE, the Court AFFIRMS in toto the October

29, 2014 Decision of the Court of Appeals in CA-G.R. SP
No. 06835.
No pronouncement as to costs.
SO ORDERED.
Velasco, Jr. (Chairperson), Bersamin, and Martires, JJ.,
concur.
Leonen, J., dissents, see dissenting opinion.

DISSENTING OPINION

LEONEN, J.:

This case involves two (2) Petitions for Review questioning

the Court of Appeals October 29, 2014 Decision in CA-G.R.
SP No. 06835.
In G.R. No. 221813, Maricalum Mining Corporation
(Maricalum Mining) is questioning the computation of its total
monetary liability.
In G.R. No. 222723, Ely G. Florentino, Glenn Buenviaje,
Rudy J. Gomez, represented by his heir Thelma Gomez, Fernando
Siguan, Dennis Abelida, Noel S. Accolador, Wilfreda Taganile,
Sr., Martir S. Agsoy, Sr., Melchor Apucay, Domingo Lavida,
Jesus Mosqueda, Ruelito A. Villarmia, Sofronio M. Ayon, Efren
T. Genise, Alquin A. Franco, Pablo L. Aleman, Pepito G.
Hepriana, Elias S. Trespeces, Edgar Sobrino, Alejandro H.
Sitchon, Nenet Arita, Welilmo T. Neri, Erlinda Fernandez, and
Edgardo Peñaflorida (collectively, complainants) are insisting
that G Holdings, Inc. (G Holdings) should be held liable with
Maricalum Mining for their labor claims.
The following are the antecedent facts:
The Philippine National Bank and the Development Bank
of the Philippines previously owned Maricalum Mining. When
Maricalum Mining became a non-performing asset, both banks
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transferred their ownership of Maricalum Mining to the National

Government for disposition or privatization. 1
On October 2, 1992, the National Government, through the
Asset Privatization Trust, sold 90% of Maricalum Mining’s
shares and financial claims to G Holdings, a domestic corporation
engaged in owning and holding shares of stock of different
companies. 2
The Asset Privatization Trust and G Holdings executed a
Purchase and Sale Agreement. It provided for the purchase price
for Maricalum Mining’s shares. As for the value of Maricalum
Mining’s financial claims, Maricalum Mining executed
promissory notes in favor of G Holdings. The notes were secured
by Maricalum Mining’s properties. 3
When G Holdings had paid the down payment, it immediately
took possession of Maricalum Mining’s mine site, facilities,
and took full control of the latter’s management and operations. 4
In 1999, several Maricalum Mining employees retired and
formed manpower cooperatives. 5
In 2000, the cooperatives executed separate but identical
Memoranda of Agreement with Maricalum Mining, undertaking
to supply the latter with workers, machinery, and equipment
in exchange for a monthly fee. 6
On June 1, 2001, Maricalum Mining informed the cooperatives
that it was undergoing continuing losses because of high cost
of production and low metal prices. Consequently, it would
cease its mining and milling operations beginning July 1, 2001. 7

1
Ponencia, p. 3.
2
Id. at 4.
3
Id.
4
Id.
5
Id.
6
Id. at 5.
7
Id.
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In July 2001, Maricalum Mining’s properties mortgaged in

favor of G Holdings were extra-judicially foreclosed. On
December 3, 2001, the properties were sold to G Holdings as
the highest bidder. 8
On September 23, 2010, the complainants filed an illegal
dismissal case against G Holdings and the cooperatives. They
also sought payment for several money claims, damages, and
attorney’s fees. 9
The Labor Arbiter ruled that G Holdings, Maricalum Mining,
and the manpower cooperatives were guilty of labor-only
contracting, and thus, are liable for the money claims and
attorney’s fees. 10
On appeal, the National Labor Relations Commission modified
the ruling. It found that only Maricalum Mining was liable to
the employees because Maricalum Mining and G Holdings had
separate and distinct corporate personalities. 11
The Court of Appeals affirmed the ruling of the National
Labor Relations Commission. 12
The complainants filed a Petition for Review with this Court,
asserting that G Holdings should be held liable for their claims
because the doctrine of piercing the corporate veil applies.
The ponencia affirmed the Court of Appeals’ ruling. It held
that the corporate veil should not be pierced because there is
no evidence of fraud on the part of G Holdings. 13

8
Id.
9
Id.
10
Id. at 8.
11
Id. at 10.
12
Id. at 11.
13
Id. at 30.
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It explained that the corporate veil must be lifted only if it

was used to shield fraud, defend crime, justify a wrong, defeat
public convenience, insulate bad faith, or perpetuate injustice.14
Control and ownership of all assets of another corporation is
not an indication of a fraudulent intent to evade labor claims
and liabilities. 15 The ponencia ruled that the employees must
present clear and convincing evidence to prove that the holding
company is guilty of fraud or gross negligence amounting to
bad faith to evade the obligation. 16
It held that the transfer of Maricalum Mining’s assets to G
Holdings does not indicate fraud, as it was done pursuant to
the Purchase and Sale Agreement executed in 1992. It noted
that some of the assets had been foreclosed as early as 2001,
even before the labor claims existed, and thus, there was no
evidence that the transfer was done to evade their obligations. 17
The ponencia also lent credence to the allegation that the
continuing depletion of Maricalum Mining’s assets is due to
its employees’ pilferage, and that there is no evidence that G
Holdings was negligent in that aspect. 18
It further ruled that there is no showing that all of Maricalum
Mining’s assets have been depleted such that it is insufficient
to meet the employees’ claims. 19
It also concluded that G Holdings is a holding company that
merely purchased Maricalum Mining’s shares to invest in the
mining industry, not to continue its existence and operations. 20

14
Id. at 25.
15
Id. at 28.
16
Id. at 30.
17
Id. at 28.
18
Id.
19
Id. at 28-29.
20
Id. at 29.
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Moreover, it ruled that there is no showing that the employees

have suffered any monetary injury, as they have yet to enforce
their claims against Maricalum Mining. 21
I dissent. I opine that the corporate veil should be pierced
and that G Holdings should be held solidarily liable with
Maricalum Mining.
A corporation has a separate and distinct personality from
that of its stockholders, officers, or any other legal entity to
which it is related.22 It is presumed to be a bona fide legal entity
that has its own powers and attributes. Its assets and properties
are its own, and it is liable for its own acts and obligations.
A corporation is an artificial being 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 the persons composing
it, as well as from any other legal entity to which it may be related.
This is basic. 23
This is the rule even if a single stockholder or a single
corporation wholly owns all the capital stock of the corporation. 24
In MR Holdings, Ltd. v. Bajar:25
[T]he mere fact that a corporation owns all of the stocks of another
corporation, taken alone is not sufficient to justify their being treated

21
Id. at 31.
22
CIVIL CODE, Art. 44 provides:
Article 44. The following are juridical persons:
.. . ... ...
(3) Corporations, partnerships and associations for private interest or purpose
to which the law grants a juridical personality, separate and distinct from
that of each shareholder, partner or member.
23
Philippine National Bank v. Andrada Electric & Engineering Co.,
430 Phil. 882, 894 (2002) [Per J. Panganiban, Third Division].
24
See Sunio v. National Labor Relations Commission, 212 Phil. 355
(1984) [Per J. Melencio-Herrerra, First Division].
25
430 Phil. 443 (2002) [Per J. Sandoval-Gutierrez, Third Division].
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as one entity. If used to perform legitimate functions, a subsidiary’s

separate existence shall be respected, and the liability of the parent
corporation as well as the subsidiary will be confined to those
arising in their respective business. 26 (Emphasis in the original,
citation omitted)

The exception to this rule is when the separate personality

of the corporation is used to “defeat public convenience, justify
wrong, protect fraud or defend crime.”27 It is done when the
separate personality of the corporation is being abused or used
for wrongful purposes,28 such as a shield for fraud, illegality,
or inequity committed against third persons. 29 It applies when
it is used in defrauding creditors or evading obligations and
liabilities.
The corporation’s separate personality is “a fiction created
by law for convenience and to prevent injustice.”30 Thus, when
it is used in such a way that injustice prevails, the corporate
veil is instead pierced to protect the rights of innocent third
persons. 31 It is an equitable remedy, done in the interest of
justice and to protect public policy. 32

26
Id. at 469-470.
27
Philippine National Bank v. Ritratto Group Inc., 414 Phil. 494, 505
(2001) [Per J. Kapunan, First Division].
28
Id. at 503.
29
Philippine National Bank v. Andrada Electric & Engineering Co.,
430 Phil. 882, 895 (2002) [Per J. Panganiban, Third Division].
30
Pantranco Employees Association v. National Labor Relations
Commission, 600 Phil. 645, 660 (2009) [Per J. Nachura, Third Division].
31
See Pantranco Employees Association v. National Labor Relations
Commission, 600 Phil. 645 (2009) [Per J. Nachura, Third Division] and
Traders Royal Bank v. Court of Appeals, 336 Phil. 15 (1997) [Per J. Torres,
Jr., Second Division].
32
See Philippine National Bank v. Andrada Electric & Engineering
Co., 430 Phil. 882 (2002) [Per J. Panganiban, Third Division]; Philippine
National Bank v. Ritratto Group Inc., 414 Phil. 494 (2001) [Per J. Kapunan,
First Division]; Traders Royal Bank v. Court of Appeals, 336 Phil. 15 (1997)
[Per J. Torres, Jr., Second Division].
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The party alleging that the corporate veil must be pierced

has the burden to prove it by clear and convincing evidence. 33
The wrongdoing alleged is never presumed. 34 In Philippine
National Bank v. Andrada Electric & Engineering Co.:35
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.
Hence, any 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.
This Court has pierced the corporate veil to ward off a judgment
credit, to avoid inclusion of corporate assets as part of the estate of
the decedent, to escape liability arising from a debt, or to perpetuate
fraud and/or confuse legitimate issues either to promote or to shield
unfair objectives or to cover up an otherwise blatant violation of the
prohibition against forum-shopping. Only in these and similar instances
may the veil be pierced and disregarded. 36 (Citations omitted)
When the separate personality of the corporation is pierced,
the corporation is not seen as one (1) entity. Instead, its acts,
assets, and liabilities become the direct responsibility of the
individuals owning, controlling, and conducting its business.

33
Philippine National Bank v. Andrada Electric & Engineering Co.,
430 Phil. 882 (2002) [Per J. Panganiban, Third Division]; Luxuria Homes,
Inc. v. Court of Appeals, 361 Phil. 989 (1999) [Per J. Martinez, First Division].
34
Luxuria Homes, Inc. v. Court of Appeals, 361 Phil. 989 (1999) [Per
J. Martinez, First Division].
35
430 Phil. 882 (2002) [Per J. Panganiban, Third Division].
36
Id. at 894-895.
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In Pantranco Employees Association v. National Labor Relations

Commission:37
The general rule is that a corporation has a personality separate
and distinct from those of its stockholders and other corporations to
which it may be connected. This is a fiction created by law for
convenience and to prevent injustice . . .
Under the doctrine of “piercing the veil of corporate fiction”, the
court looks at the corporation as a mere collection of individuals or
an aggregation of persons undertaking business as a group, disregarding
the separate juridical personality of the corporation unifying the group.
Another formulation of this doctrine 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 two corporations are distinct
entities and treat them as identical or as one and the same.
Whether the separate personality of the corporation should be pierced
hinges on obtaining facts appropriately pleaded or proved. However,
any piercing of the corporate veil has to be done with caution, albeit
the Court will not hesitate to disregard the corporate veil when it is
misused or when necessary in the interest of justice. After all, the
concept of corporate entity was not meant to promote unfair objectives.38
(Citations omitted)
The doctrine of piercing the corporate veil applies in three
(3) instances:
(i) When the corporation’s separate personality is being used
to defeat public convenience, such as in evading existing
obligations;
(ii) In fraud cases, when it is used to justify a wrong, protect
fraud, or defend a crime; and
(iii) In alter-ego cases, where the corporation’s separate
personality is not bona fide, such that it is only a conduit of
another person, or its business is controlled or maintained as

37
600 Phil. 645 (2009) [Per J. Nachura, Third Division].
38
Id. at 660-661.
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a mere agency or adjunct of another, that it has no mind or

will of its own.
In all instances, malice and bad faith are necessary to pierce
the corporate veil. Thus, in Pantranco Employees Association
v. National Labor Relations Commission:39
Clearly, what can be inferred from the earlier cases is that 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 the absence of malice, bad faith, or a specific provision of law
making a corporate officer liable, such corporate officer cannot be
made personally liable for corporate liabilities. 40 (Citations omitted)
In Philippine National Bank v. Andrada Electric &
Engineering Co., 41 the elements of piercing the corporate veil
were enumerated as follows:
(1) [C]ontrol — not mere stock control, but complete domination —
not only of finances, but of policy and business practice in respect
to the transaction attacked, must have been such 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 a fraud or a wrong to perpetuate the violation
of a statutory or other positive legal duty, or a dishonest and an unjust
act in contravention of plaintiff’s legal right; and (3) the said control
and breach of duty must have proximately caused the injury or unjust
loss complained of.42 (Citation omitted)

39
600 Phil. 645 (2009) [Per J. Nachura, Third Division].
40
Id. at 663.
41
430 Phil. 882 (2002) [Per J. Panganiban, Third Division].
42
Id. at 895.
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Thus, the elements are control, the commission of a wrong,

and injury.
Control is particularly relevant in alter-ego cases. In Philippine
National Bank v. Ritratto Group Inc., 43 this Court laid down
several indicators of full control:
(a) The parent corporation owns all or most of the capital stock
of the subsidiary.
(b) The parent and subsidiary corporations have common directors
or officers.
(c) The parent corporation finances the subsidiary.
(d) The parent corporation subscribes to all the capital stock of
the subsidiary or otherwise causes its incorporation.
(e) The subsidiary has grossly inadequate capital.
(f) The parent corporation pays the salaries and other expenses
or losses of the subsidiary.
(g) The subsidiary has substantially no business except with the
parent corporation or no assets except those conveyed to or
by the parent corporation.
(h) In the papers of the parent corporation or in the statements
of its officers, the subsidiary is described as a department or
division of the parent corporation, or its business or financial
responsibility is referred to as the parent corporation’s own.

(i) The parent corporation uses the property of the subsidiary

as its own.
(j) The directors or executives of the subsidiary do not act
independently in the interest of the subsidiary but take their
orders from the parent corporation.
(k) The formal legal requirements of the subsidiary are not
observed. 44

43
414 Phil. 494 (2001) [Per J. Kapunan, First Division].
44
Id. at 504-505.
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However, there is particular emphasis in the element of fraud

or commission of a wrong.
Previously, the piercing of the veil was allowed whenever
there is a similarity in the personnel, officers, resources, and
place of work of two (2) entities. Ownership and control of
two (2) entities by the same parties is sufficient to disregard
the legal fiction. Thus, in Sibagat Timber Corp. v. Garcia:45
The circumstances that: (1) petitioner and Del Rosario & Sons
Logging Enterprises, Inc. hold office in the same building; (2) the
officers and directors of both corporations are practically the same;
and (3) the Del Rosarios assumed management and control of Sibagat
and have been acting for and managing its business . . ., bolster the
conclusion that petitioner is an alter ego of the Del Rosario & Sons
Logging Enterprises, Inc.
The rule is that the veil of corporate fiction may be pierced when
made as a shield to perpetrate fraud and/or confuse legitimate issues
. . . The theory of corporate entity was not meant to promote unfair
objectives or otherwise, to shield them . . . Likewise, where it appears
that 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 persons, disregard the legal fiction that two
corporations are distinct entities, and treat them as identical . . .
... ... ...
Assuming arguendo that this Court in G.R. No. 84497 held that
petitioner is the owner of the properties levied under execution, that
circumstance will not be a legal obstacle to the piercing of the corporate
fiction. As found by both the trial and appellate courts, petitioner is
just a conduit, if not an adjunct of Del Rosario & Sons Logging
Enterprises, Inc. In such a case, the real ownership becomes unimportant
and may be disregard for the two entities may/can be treated as only
one agency or instrumentality.
The corporate entity is disregarded 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

45
290-A Phil. 241 (1992) [Per J. Griño-Aquino, First Division].
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conducted, as to make it merely an instrumentality, agency,

conduit or adjunct of another corporation. 46 (Citations omitted)
Likewise, the corporate veil was pierced in Philippine Bank
of Communications v. Court of Appeals, 47 where a parcel of
land could not be levied upon because the property had already
been transferred to another corporation controlled by the liable
person.
The well settled principle is that a corporation “is invested by law
with a separate personality, separate and distinct from that of the
person composing it as well as from any other legal entity to which
it may be related.” . . . However, the separate personality of the
corporation may be disregarded, or the veil of corporate fiction pierced
when the corporation is used “as a cloak or cover for fraud or illegality,
or to work an injustice, or where necessary to achieve equity or when
necessary for the protection of creditors.” . . .
In the instant case, the evidence clearly shows that Chua and his
immediate family control JALECO. The Deed of Exchange executed
by Chua and JALECO had for its subject matter the sale of the only
property of Chua at the time when Chua’s financial obligations became
due and demandable. The records also show that despite the “sale”,
respondent Chua continued to stay in the property, subject matter of
the Deed of Exchange.
These circumstances tend to show that the Deed of Exchange was
not what it purports to be. Instead, they tend to show that the Deed
of Exchange was executed with the sole intention to defraud Chua’s
creditor - the petitioner. It was not a bona fide transaction between
JALECO and Chua. Chua entered a sham or simulated transaction
with JALECO for the sole purpose of transferring the title of the
property to JALECO without really divesting himself of the title and
control of the said property.
Hence, JALECO’s separate personality should be disregarded and
the corporation veil pierced. In this regard, the transaction leading
to the execution of the Deed of Exchange between Chua and JALECO
must be considered a transaction between Chua and himself and not

46
Id. at 245-247.
47
272-A Phil. 565 (1991) [Per J. Gutierrez, Jr., Third Division].
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between Chua and JALECO. Indeed, Chua took advantage of his control
over JALECO to execute the Deed of Exchange to defraud his creditor,
the petitioner herein. JALECO was but a mere alter ego of Chua. 48
(Citations omitted)
In Tomas Lao Construction v. National Labor Relations
Commission, 49 the veils of corporate fiction of three (3)
Companies owned, controlled, and managed by one (1) family
were pierced to hold them all liable for monetary awards granted
to illegally dismissed Workers.
Finally, public respondent NLRC did not err in disregarding the
veil of separate corporate personality and holding petitioners jointly
and severally liable for private respondents’ back wages and separation
pay. The records disclose that the three (3) corporations were in fact
substantially owned and controlled by members of the Lao family
composed of Lao Hian Beng alias Tomas Lao, Chiu Siok Lian (wife
of Tomas Lao), Andrew C. Lao, Lao Y. Heng, Vicente Lao Chua,
Lao E. Tin, Emmanuel Lao and Ismaelita Maluto. A majority of the
outstanding shares of stock in LVM and T&J is owned by the Lao
family. T&J is 100% owned by the Laos as reflected in its Articles
of Incorporation. The Lao Group of Companies therefore is a closed
corporation where the incorporators and directors belong to a single
family. Lao Hian Beng is the same Tomas Lao who owns Tomas Lao
Corporation and is the majority stockholder of T&J. Andrew C. Lao
is the Managing Director of LVM Construction, and President and
Managing Director of the Lao Group of Companies. Petitioners are
engaged in the same line of business under one management and use
the same equipment including manpower services. Where it appears
that [three] business enterprises are owned, conducted and controlled
by the same parties, both law and equity will, when necessary to protect
the rights of third persons, disregard the legal fiction that the [three]
corporations are distinct entities, and treat them as identical.
Consonant with our earlier ruling, we hold that the liability of
petitioners extends to the responsible officers acting in the interest
of the corporations. In view of the peculiar circumstances of this
case, we disregard the separate personalities of the three (3) corporations

48
Id. at 578-579.
49
344 Phil. 268 (1997) [Per J. Bellosillo, First Division].
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and at the same time declare the members of the corporations jointly
and severally liable with the corporations for the monetary awards
due to private respondents. It should always be borne in mind that
the fiction of law that a corporation as a juridical entity has a distinct
and separate personality was envisaged for convenience and to serve
justice; therefore it should not be used as a subterfuge to commit
injustice and circumvent labor laws. 50 (Citations omitted)
Later, this Court became stricter in the application of the
instrumentality rule. It laid down requisites before the corporate
veil may be pierced in alter-ego cases. It required that the control
must have been used “to commit a fraud or a wrong to perpetuate
the violation of a statutory or other positive legal duty, or a
dishonest and an unjust act in contravention of plaintiff’s legal
right.”51 In Philippine National Bank v. Andrada Electric &
Engineering Co.:52
The question of whether a corporation is a mere alter ego is one
of fact. Piercing the veil of corporate fiction may be allowed only if
the following elements concur: (1) control — not mere stock control,
but complete domination — not only of finances, but of policy and
business practice in respect to the transaction attacked, must have
been such 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 a fraud or a wrong
to perpetuate the violation of a statutory or other positive legal duty,
or a dishonest and an unjust act in contravention of plaintiff’s legal
right; and (3) the said control and breach of duty must have proximately
caused the injury or unjust loss complained of.
We believe that the absence of the foregoing elements in the present
case precludes the piercing of the corporate veil. First, other than
the fact that petitioners acquired the assets of [Pampanga Sugar Mill],
there is no showing that their control over it warrants the disregard
of corporate personalities. Second, there is no evidence that their

50
Id. at 286-287.
51
Philippine National Bank v. Andrada Electric & Engineering Co.,
430 Phil. 882, 895 (2002) [Per J. Panganiban, Third Division].
52
430 Phil. 882 (2002) [Per J. Panganiban, Third Division].
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juridical personality was used to commit a fraud or to do a wrong;

or that the separate corporate entity was farcically used as a mere
alter ego, business conduit or instrumentality of another entity or
person. Third, respondent was not defrauded or injured when petitioners
acquired the assets of [Pampanga Sugar Mill].
Being the party that asked for the piercing of the corporate veil,
respondent had the burden of presenting clear and convincing evidence
to justify the setting aside of the separate corporate personality rule.
However, it utterly failed to discharge this burden; it failed to establish
by competent evidence that petitioner’s separate corporate veil had
been used to conceal fraud, illegality or inequity. 53 (Citations omitted)

This Court further ruled that similarities are not sufficient

to pierce the corporate veil, especially if there is a plausible
business purpose for the existence of the corporate fiction. In
Padilla v. Court of Appeals, 54 respondent Susana Realty, Inc.
sought to enforce an alias writ of execution against the properties
of petitioner Phoenix-Omega Development and Management
Corporation to satisfy a monetary award, based on the finding
that Phoenix-Omega Development and Management Corporation
was the sister company of the liable corporation, PKA
Development and Management Corporation. This Court ruled
that it was not proper to pierce the corporate veil as there was
no showing that it was used to defeat public convenience, justify
wrong, protect fraud, or defend crime:
This veil of corporate fiction may only be disregarded in cases
where the corporate vehicle is being used to defeat public convenience,
justify wrong, protect fraud, or defend crime. (PKA Development
and Management Corporation) and Phoenix-Omega are admittedly
sister companies, and may be sharing personnel and resources, but
we find in the present case no allegation, much less positive proof,
that their separate corporate personalities are being used to defeat
public convenience, justify wrong, protect fraud, or defend crime.
“For the separate juridical personality of a corporation to be disregarded,
the wrongdoing must be clearly and convincingly established. It cannot

53
Id. at 895-896.
54
421 Phil. 883 (2001) [Per J. Quisumbing, Second Division].
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be presumed.” We find no reason to justify piercing the corporate

veil in this instance. 55 (Citations omitted)
In Development Bank of the Philippines v. Court of Appeals,56
Remington Corporation (Remington) sought payment for
construction materials purchased by Marinduque Mining and
Industrial Corporation (Marinduque Mining). The Philippine
National Bank and the Development Bank of the Philippines
foreclosed and acquired the mortgaged properties of Marinduque
Mining, and assigned their rights to the properties to three (3)
newly created mining corporations. Remington then filed a
collection case against Marinduque Mining, and impleaded the
Philippine National Bank, the Development Bank of the
Philippines, and the three (3) mining companies. It argued that
the transfer of Marinduque Mining’s properties to the three
(3) mining corporations were made in fraud of creditors
considering that the Philippine National Bank and the
Development Bank of the Philippines practically wholly own
the three (3) newly created entities. This Court ruled that the
piercing of the corporate veil is not warranted because the transfer
was done in good faith and in accordance with law and sound
business practice:
[T]his Court has disregarded the separate personality of the corporation
where the corporate entity was used to escape liability to third parties.
In this case, however, we do not find any fraud on the part of Marinduque
Mining and its transferees to warrant the piercing of the corporate
veil.
It bears stressing that [the Philippine National Bank] and [the
Development Bank of the Philippines] are mandated to foreclose on
the mortgage when the past due account had incurred arrearages of
more than 20% of the total outstanding obligation . . .
Thus, [the Philippine National Bank] and [the Development Bank
of the Philippines] did not only have a right, but the duty under said
law, to foreclose upon the subject properties. The banks had no choice
but to obey the statutory command.

55
Id. at 895.
56
415 Phil. 538 (2001) [Per J. Kapunan, First Division].
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... ... ...

Neither do we discern any bad faith on the part of [the Development
Bank of the Philippines] by its creation of Nonoc Mining, Maricalum
and Island Cement. As Remington itself concedes, [the Development
Bank of the Philippines] is not authorized by its charter to engage in
the mining business. The creation of the three corporations was
necessary to manage and operate the assets acquired in the foreclosure
sale lest they deteriorate from non-use and lose their value. In the
absence of any entity willing to purchase these assets from the bank,
what else would it do with these properties in the meantime? Sound
business practice required that they be utilized for the purposes for
which they were intended.
Remington also asserted in its third amended complaint that the
use of Nonoc Mining, Maricalum and Island Cement of the premises
of Marinduque Mining and the hiring of the latter’s officers and
personnel also constitute badges of bad faith.
Assuming that the premises of Marinduque Mining were not among
those acquired by [the Development Bank of the Philippines] in the
foreclosure sale, convenience and practicality dictated that the
corporations so created occupy the premises where these assets were
found instead of relocating them. No doubt, many of these assets are
heavy equipment and it may have been impossible to move them.
The same reasons of convenience and practicality, not to mention
efficiency, justified the hiring by Nonoc Mining, Maricalum and Island
Cement of Marinduque Mining’s personnel to manage and operate
the properties and to maintain the continuity of the mining operations.
To reiterate, the doctrine of piercing the veil of corporate fiction
applies only when such corporate fiction is used to defeat public
convenience, justify wrong, protect fraud or defend crime. To disregard
the separate juridical personality of a corporation, the wrongdoing
must be clearly and convincingly established. It cannot be presumed.
In this case, the Court finds that Remington failed to discharge its
burden of proving bad faith on the part of Marinduque Mining and
its transferees in the mortgage and foreclosure of the subject properties
to justify the piercing of the corporate veil. 57 (Citations omitted)

57
Id. at 546-549.
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In Jardine Davies, Inc. v. JRB Realty, Inc., 58 respondent JRB

Realty, Inc. filed an action against the parent corporation, Jardine
Davies, Inc. for the replacement of air-conditioning units
purchased from its subsidiary, Aircon and Refrigeration
Industries, Inc. (Aircon). This Court refused to pierce the
corporate veil:
The rationale behind piercing a corporation’s identity is to remove
the barrier between the corporation from the persons comprising it
to thwart the fraudulent and illegal schemes of those who use the
corporate personality as a shield for undertaking certain proscribed
activities.
While it is true that Aircon is a subsidiary of the petitioner, it
does not necessarily follow that Aircon’s corporate legal existence
can just be disregarded. In Velarde v. Lopez, Inc., the Court categorically
held that a subsidiary has an independent and separate juridical
personality, distinct from that of its parent company; hence, any claim
or suit against the latter does not bind the former, and vice versa. In
applying the doctrine, the following requisites must be established:
(1) control, not merely majority or complete stock control; (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 acts 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 records bear out that Aircon is a subsidiary of the petitioner
only because the latter acquired Aircon’s majority of capital stock.
It, however, does not exercise complete control over Aircon; nowhere
can it be gathered that the petitioner manages the business affairs of
Aircon. Indeed, no management agreement exists between the petitioner
and Aircon, and the latter is an entirely different entity from the
petitioner.
Jardine Davies, Inc., incorporated as early as June 28, 1946, is
primarily a financial and trading company . . .
On the other hand, Aircon, incorporated on December 27, 1952,
is a manufacturing firm. Its Articles of Incorporation states that its
purpose is mainly —

58
502 Phil. 129 (2005) [Per J. Callejo, Sr., Second Division].
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To carry on the business of manufacturers of commercial

and household appliances and accessories of any form,
particularly to manufacture, purchase, sell or deal in air
conditioning and refrigeration products of every class and
description as well as accessories and parts thereof, or other
kindred articles; and to erect, or buy, lease, manage, or otherwise
acquire manufactories, warehouses, and depots for manufacturing,
assemblage, repair and storing, buying, selling, and dealing in
the aforesaid appliances, accessories and products . . .
The existence of interlocking directors, corporate officers and
shareholders . . . is not enough justification to pierce the veil of corporate
fiction, in the absence of fraud or other public policy considerations.
But even when there is dominance over the affairs of the subsidiary,
the doctrine of piercing the veil of corporate fiction applies only
when such fiction is used to defeat public convenience, justify wrong,
protect fraud or defend crime. To warrant resort to this extraordinary
remedy, there must be proof that the corporation is being used as a
cloak or cover for fraud or illegality, or to work injustice. Any piercing
of the corporate veil has to be done with caution. The wrongdoing
must be clearly and convincingly established. It cannot just be
presumed.
In the instant case, there is no evidence that Aircon was formed
or utilized with the intention of defrauding its creditors or evading
its contracts and obligations. There was nothing fraudulent in the
acts of Aircon in this case. Aircon, as a manufacturing firm of air
conditioners, complied with its obligation of providing two air
conditioning units for the second floor of the Blanco Center in good
faith, pursuant to its contract with the respondent.59 (Emphasis supplied,
citations omitted)
Thus, it is not enough that there is dominance over the
subsidiary company. The rule is there must be “a fraud or a
wrong to perpetuate the violation of a statutory or other positive
legal duty, or a dishonest and an unjust act in contravention of
plaintiff’s legal right.”60

59
Id. at 138-140.
60
Philippine National Bank v. Andrada Electric & Engineering Co.,
430 Phil. 882, 895 (2002) [Per J. Panganiban, Third Division].
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It must be emphasized, however, that fraud is not the only

basis for the piercing of the corporate veil. Any act which
involves the commission of a wrong or the evasion of a duty
may be a ground to apply the doctrine. Thus, this Court has
applied the doctrine of piercing the corporate veil in cases when
a corporation denies the existence of an employer-employee
relationship to avoid paying retirement benefits or to avoid
any liability for illegal dismissal.
In Enriquez Security Services, Inc. v. Cabotaje, 61 respondent
Victor A. Cabotaje was a security guard in Enriquez Security
and Investigation Agency since 1979. In 1985, Enriquez Security
Services, Inc. was incorporated and respondent continued to
work for it. Both Enriquez Security and Investigation Agency
and Enriquez Security Services, Inc. were owned by the Enriquez
family and the latter held office where the former used to
previously hold office. Respondent’s employment with both
security agencies was continuous and uninterrupted. When he
reached the age of 60, he applied for retirement benefits. Enriquez
Security Services, Inc. claimed that his benefits may only be
reckoned from 1985, when it was incorporated. This Court ruled
to pierce the corporate veil, finding that “[t]he attempt to make
the security agencies appear as two separate entities, when in
reality they were but one, was a devise to defeat the law.”62 It
ruled that the separate entity of a corporation may be disregarded
when it is used as a means to perpetrate a social injustice or
as a vehicle to evade obligations.
In Azcor Manufacturing, Inc. v. National Labor Relations
Commission,63 this Court found that employee Candido Capulso
(Capulso) was led into believing that while he was working
with Filipinas Paso, his real employer was Azcor Manufacturing,
Inc. (AZCOR), which never dealt with him openly or in good
faith. It found that Capulso was not informed of the developments

61
528 Phil. 603 (2006) [Per J. Corona, Second Division].
62
Id. at 609.
63
362 Phil. 370 (1999) [Per J. Bellosillo, Second Division].
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within the company, his transfer from AZCOR to Filipinas Paso,

or the closure of AZCOR’s manufacturing operations effective
March 1, 1990. He continued to retain his AZCOR Identification
Card, his pay slips contained the name of AZCOR, and he was
paid the same salary. He likewise performed the same duties,
worked in the same location and area under the same supervisor,
and used the same tools. He worked from his hiring date until
his last day of work. His employment contract was signed by
an AZCOR personnel officer, and stated that he was being hired
by AZCOR to do jobs for Filipinas Paso for a certain period.
This Court ruled, thus:
The doctrine that a corporation is a legal entity or a person in law
distinct from the persons composing it is merely a legal fiction for
purposes of convenience and to subserve the ends of justice. This
fiction cannot be extended to a point beyond its reason and policy.
Where, as in this case, the corporate fiction was used as a means to
perpetrate a social injustice or as a vehicle to evade obligations or
confuse the legitimate issues, it would be discarded and the two (2)
corporations would be merged as one, the first being merely considered
as the instrumentality, agency, conduit or adjunct of the other.
... ... ...
In fine, we see in the totality of the evidence a veiled attempt by
petitioners to deprive Capulso of what he had earned through hard
labor by taking advantage of his low level of education and confusing
him as to who really was his true employer — such a callous and
despicable treatment of a worker who had rendered faithful service
to their company. 64 (Citations omitted)
In De Leon v. National Labor Relations Commission,65 Fortune
Tobacco Corporation (Fortune Tobacco) contracted Fortune
Integrated Services, Inc. (Fortune Integrated) to provide security
guards. Around 11 years later, Fortune Integrated’s incorporators
and stockholders sold out their shares lock, stock, and barrel.
Fortune Integrated’s corporate name in the Articles of

64
Id. at 380-382.
65
410 Phil. 523 (2001) [Per J. Puno, First Division].
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Incorporation was amended to read as Magnum Integrated

Services, Inc. (Magnum Integrated). Fortune Tobacco then
terminated its contract for security services with Fortune
Integrated and engaged the services of two (2) other security
agencies, thus, displacing 582 security guards who were
originally assigned to it. Several security guards, through their
labor union, filed a complaint for illegal dismissal and unfair
labor practice, alleging that they were regular employees of
Fortune Tobacco, which also used the corporate names Fortune
Integrated and Magnum Integrated. In this case, this Court pierced
the corporate veil:
We are not persuaded by the argument of respondent [Fortune
Tobacco] denying the presence of an employer-employee relationship.
We find that the Labor Arbiter correctly applied the doctrine of piercing
the corporate veil to hold all respondents liable for unfair labor practice
and illegal termination of petitioners’ employment. It is a fundamental
principle in corporation law that a corporation is an entity separate
and distinct from its stockholders and from other corporations to which
it is connected. However, when the concept of separate legal entity
is used to defeat public convenience, justify wrong, protect fraud or
defend crime, the law will regard the corporation as an association
of persons, or in case of two corporations, merge them into one. The
separate juridical personality of a corporation may also be disregarded
when such corporation is a mere alter ego or business conduit of
another person. In the case at bar, it was shown that [Fortune Integrated]
was a mere adjunct of [Fortune Tobacco]. [Fortune Integrated], by
virtue of a contract for security services, provided [Fortune Tobacco]
with security guards to safeguard its premises. However, records show
that [Fortune Integrated] and [Fortune Tobacco] have the same owners
and business address, and [Fortune Integrated] provided security
services only to [Fortune Tobacco] and other companies belonging
to the Lucio Tan group of companies. The purported sale of the shares
of the former stockholders to a new set of stockholders who changed
the name of the corporation to Magnum Integrated Services, Inc. appears
to be part of a scheme to terminate the services of [Fortune Integrated]’s
security guards posted at the premises of [Fortune Tobacco] and bust
their newly-organized union which was then beginning to become
active in demanding the company’s compliance with Labor Standards
laws. Under these circumstances, the Court cannot allow [Fortune
Tobacco] to use its separate corporate personality to shield itself
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from liability for illegal acts committed against its employees.66

(Citation omitted)
In Reynoso IV v. Court of Appeals, 67 a former resident manager
employee sought the enforcement of an alias writ of execution
against the mother corporation of a subsidiary:
The defense of separateness will be disregarded where the business
affairs of a subsidiary corporation are so controlled by the mother
corporation to the extent that it becomes an instrument or agent of its
parent. But even when there is dominance over the affairs of the
subsidiary, the doctrine of piercing the veil of corporate fiction applies
only when such fiction is used to defeat public convenience, justify
wrong, protect fraud or defend crime.
... ... ...
Factually and legally, the [Commercial Credit Corporation] had
dominant control of the business operations of CCC-QC. The exclusive
management contract insured that [Commercial Credit Corporation-
Quezon City] would be managed and controlled by [Commercial Credit
Corporation] and would not deviate from the commands of the mother
corporation. In addition to the exclusive management contract,
[Commercial Credit Corporation] appointed its own employee,
petitioner, as the resident manager of [Commercial Credit Corporation-
Quezon City].
... ... ...
There are other indications in the record which attest to the
applicability of the identity rule in this case, namely: the unity of
interests, management, and control; the transfer of funds to suit their
individual corporate conveniences; and the dominance of policy and
practice by the mother corporation insure that [Commercial Credit
Corporation-Quezon City] was an instrumentality or agency of
[Commercial Credit Corporation].
... ... ...
A court judgment becomes useless and ineffective if the employer,
in this case [Commercial Credit Corporation] as a mother corporation,

66
Id. at 533-534.
67
399 Phil. 38 (2000) [Per J. Ynares-Santiago, First Division].
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is placed beyond the legal reach of the judgment creditor[.]68 (Citation

omitted)
Thus, the corporate veil may be pierced when it is used to
evade obligations or perpetrate a social injustice.
In the case at bar, it is correct that this Court already ruled
on the validity of the acquisition by G Holdings of Maricalum
Mining’s properties in G Holdings, Inc. v. National Mines and
Allied Workers Union Local 103. 69 This Court ruled that the
transfer pursuant to the Purchase and Sale Agreement was valid,
considering it was entered into by the Philippine government,
thus, giving rise to the presumption of its regularity. Moreover,
the mortgages had existed since 1992, and thus, cannot be said
to have been executed to evade labor claims, which arose later
on:
It may be remembered that [the Asset Privatization Trust] acquired
the [Maricalum Mining] from the [the Philippine National Bank] and
the [the Development Bank of the Philippines]. Then, in compliance
with its mandate to privatize government assets, [the Asset Privatization
Trust] sold the aforesaid [Maricalum Mining] shares and notes to [G
Holdings]. To repeat, this Court has recognized this Purchase and
Sale Agreement in Republic, etc., v. “G” Holdings, Inc.
The participation of the Government, through [the Asset Privatization
Trust], in this transaction is significant. Because the Government had
actively negotiated and, eventually, executed the agreement, then the
transaction is imbued with an aura of official authority, giving rise
to the presumption of regularity in its execution. This presumption
would cover all related transactional acts and documents needed to
consummate the privatization sale, inclusive of the Promissory Notes.
It is obvious, then, that the Government, through [the Asset Privatization
Trust], consented to the “establishment and constitution” of the
mortgages on the assets of [Maricalum Mining] in favor of [G Holdings],
as provided in the notes. Accordingly, the notes (and the stipulations
therein) enjoy the benefit of the same presumption of regularity accorded
to government actions. Given the Government consent thereto, and

68
Id. at 39.
69
619 Phil. 69 (2009) [Per J. Nachura, Third Division].
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clothed with the presumption of regularity, the mortgages cannot be

characterized as sham, fictitious or fraudulent.
... ... ...
It is difficult to conceive that these mortgages, already existing in
1992, almost four (4) years before [the National Mines and Allied
Workers Union Local 103] filed its notice of strike, were a “fictitious”
arrangement intended to defraud [the National Mines and Allied
Workers Union Local 103]. After all, they were agreed upon long
before the seeds of the labor dispute germinated.
While it is true that the Deed of Real Estate and Chattel Mortgage
was executed only on September 5, 1996, it is beyond cavil that this
formal document of mortgage was merely a derivative of the original
mortgage stipulations contained in the Promissory Notes of
October 2, 1992. The execution of this Deed in 1996 does not detract
from, but instead reinforces, the manifest intention of the parties to
“establish and constitute” the mortgages on [Maricalum Mining]’s
real and personal properties.
... ... ...
The execution of the subsequent Deed of Real Estate and Chattel
Mortgage on September 5, 1996 was simply the formal documentation
of what had already been agreed in the seminal transaction (the Purchase
and Sale Agreement) between [the Asset Privatization Trust] and [G
Holdings]. It should not be viewed in isolation, apart from the original
agreement of October 2, 1992. And it cannot be denied that this original
agreement was supported by an adequate consideration. The [Asset
Privatization Trust] was even ordered by the court to deliver the shares
and financial notes of [Maricalum Mining] in exchange for the payments
that [G Holdings] had made.
It was also about this time, in 1996, that [the National Mines and
Allied Workers Union Local 103] filed a notice of strike to protest
non-payment of its rightful labor claims. But, as already mentioned,
the outcome of that labor dispute was yet unascertainable at that time,
and [the National Mines and Allied Workers Union Local 103] could
only have hoped for, or speculated about, a favorable ruling. To
paraphrase MR Holdings, we cannot see how [the National Mines
and Allied Workers Union Local 103]’s right was prejudiced by the
Deed of Real Estate and Chattel Mortgage, or by its delayed registration,
when substantially all of the properties of [Maricalum Mining] were
already mortgaged to [G Holdings] as early as October 2, 1992. Given
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this reality, the Court of Appeals had no basis to conclude that this
Deed of Real Estate and Chattel Mortgage, by reason of its late
registration, was a simulated or fictitious contract.
... ... ...
Under the Torrens system, registration is the operative act which
gives validity to the transfer or creates a lien upon the land. Further,
entrenched in our jurisdiction is the doctrine that registration in a
public registry creates constructive notice to the whole world . . .
But, there is nothing in Act No. 496, as amended by P.D. No. 1529,
that imposes a period within which to register annotations of
“conveyance, mortgage, lease, lien, attachment, order, judgment,
instrument or entry affecting registered land.” If liens were not so
registered, then it “shall operate only as a contract between the parties
and as evidence of authority to the Registry of Deeds to make
registration.” If registered, it “shall be the operative act to convey or
affect the land insofar as third persons are concerned.” The mere
lapse of time from the execution of the mortgage document to the
moment of its registration does not affect the rights of a mortgagee.
Neither will the circumstance of [G Holdings]’s foreclosure of
[Maricalum Mining]’s properties on July 31, 2001, or after the
[Department of Labor and Employment] had already issued a Partial
Writ of Execution on May 9, 2001 against [Maricalum Mining], support
the conclusion of the [Court of Appeals] that [G Holdings]’s act of
foreclosing on [Maricalum Mining]’s properties was “effected to prevent
satisfaction of the judgment award.” [G Holdings]’s mortgage rights,
constituted in 1992, antedated the Partial Writ of Execution by nearly
ten (10) years. [G Holdings]’s resort to foreclosure was a legitimate
enforcement of a right to liquidate a bona fide debt. It was a reasonable
option open to a mortgagee which, not being a party to the labor
dispute between [the National Mines and Allied Workers Union
Local 103] and [Maricalum Mining], stood to suffer a loss if it did
not avail itself of the remedy of foreclosure.
The well-settled rule is that a mortgage lien is inseparable from
the property mortgaged. While it is true that [G Holdings]’s foreclosure
of [Maricalum Mining]’s mortgaged properties may have had the “effect
to prevent satisfaction of the judgment award against the specific
mortgaged property that first answers for a mortgage obligation ahead
of any subsequent creditors,” that same foreclosure does not necessarily
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translate to having been “effected to prevent satisfaction of the judgment

award” against [Maricalum Mining].
... ... ...
We also observe the error in the [Court of Appeals]’s finding that
the 1996 Deed of Real Estate and Chattel Mortgage was not supported
by any consideration since at the time the deed was executed, “all
the real and personal property of [Maricalum Mining] had already
been transferred in the hands of G Holdings”. It should be remembered
that the Purchase and Sale Agreement between [G Holdings] and [the
Asset Privatization Trust] involved large amounts (P550M) and even
spawned a subsequent court action (Civil Case No. 95-76132, RTC
of Manila). Yet, nowhere in the Agreement or in the RTC decision
is there any mention of real and personal properties of [Maricalum
Mining] being included in the sale to [G Holdings] in 1992. These
properties simply served as mortgaged collateral for the 1992
Promissory Notes. The Purchase and Sale Agreement and the
Promissory Notes themselves are the best evidence that there was
ample consideration for the mortgage.
Thus, we must reject the conclusion of the [Court of Appeals] that
the Deed of Real Estate and Chattel Mortgage executed in 1996 was
a simulated transaction.70 (Emphasis in the original, citations omitted)
In the same case, the separate and distinct personalities of
Maricalum Mining and G Holdings in relation to the mortgage
and transfer of the properties were also ruled on:
The negotiations between the [G Holdings] and the Government
— through [the Asset Privatization Trust], dating back to 1992 —
culminating in the Purchase and Sale Agreement, cannot be depicted
as a contrived transaction. In fact, in the said Republic, etc. v. “G”
Holdings, Inc., this Court adjudged that [G Holdings] was entitled to
its rightful claims — not just to the shares of [Maricalum Mining]
itself, or just to the financial notes that already contained the mortgage
clauses over [Maricalum Mining’s] disputed assets, but also to the
delivery of those instruments. Certainly, we cannot impute to this
Court’s findings on the case any badge of fraud. Thus, we reject the
[Court of Appeals]’s conclusion that it was right to pierce the veil of
corporate fiction, because the foregoing circumstances belie such an

70
Id. at 88-100.
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inference. Furthermore, we cannot ascribe to the Government, or the

[Asset Privatization Trust] in particular, any undue motive to participate
in a transaction designed to perpetrate fraud. Accordingly, we consider
the [Court of Appeals] interpretation unwarranted.
We also cannot agree that the presumption of fraud in Article 1387
of the Civil Code relative to property conveyances, when there was
already a judgment rendered or a writ of attachment issued, authorizes
piercing the veil of corporate identity in this case. We find that Article
1387 finds less application to an involuntary alienation such as the
foreclosure of mortgage made before any final judgment of a court.
We thus hold that when the alienation is involuntary, and the foreclosure
is not fraudulent because the mortgage deed has been previously
executed in accordance with formalities of law, and the foreclosure
is resorted to in order to liquidate a bona fide debt, it is not the alienation
by onerous title contemplated in Article 1387 of the Civil Code wherein
fraud is presumed.
Since the factual antecedents of this case do not warrant a finding
that the mortgage and loan agreements between [Maricalum Mining]
and [G Holdings] were simulated, then their separate personalities
must be recognized. To pierce the veil of corporate fiction would
require that their personalities as creditor and debtor be conjoined,
resulting in a merger of the personalities of the creditor ([G Holdings])
and the debtor ([Maricalum Mining]) in one person, such that the
debt of one to the other is thereby extinguished. But the debt embodied
in the 1992 Financial Notes has been established, and even made
subject of court litigation (Civil Case No. 95-76132, RTC Manila).
This can only mean that [G Holdings] and [Maricalum Mining] have
separate corporate personalities.
Neither was [Maricalum Mining] used merely as an alter ego, adjunct,
or business conduit for the sole benefit of [G Holdings], to justify
piercing the former’s veil of corporate fiction so that the latter could
be held liable to claims of third-party judgment creditors, like [the
National Mines and Allied Workers Union Local 103]. In this regard,
we find American jurisprudence persuasive. In a decision by the
Supreme Court of New York bearing upon similar facts, the Court
denied piercing the veil of corporate fiction to favor a judgment creditor
who sued the parent corporation of the debtor, alleging fraudulent
corporate asset-shifting effected after a prior final judgment. Under
a factual background largely resembling this case at bar, viz.:
... ... ...
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This doctrine is good law under Philippine jurisdiction.

In Concept Builders, Inc.v. National Labor Relations Commission,
we laid down the test in determining the applicability of the doctrine
of piercing the veil of corporate fiction, to wit:
1. Control, not mere majority or complete 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 plaintiffs legal rights; and,
3. The aforesaid control and breach of duty must proximately
cause the injury or unjust loss complained of.
... ... ...
Time and again, we have reiterated that mere ownership by a single
stockholder or by another corporation of all or nearly all of the capital
stock of a corporation is not, by itself, a sufficient ground for
disregarding a separate corporate personality. It is basic that a
corporation has a personality separate and distinct from that composing
it as well as from that of any other legal entity to which it may be
related. Clear and convincing evidence is needed to pierce the veil
of corporate fiction.
In this case, the mere interlocking of directors and officers does
not warrant piercing the separate corporate personalities of [Maricalum
Mining] and [G Holdings]. Not only must there be a showing that
there was majority or complete 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. The
mortgage deed transaction attacked as a basis for piercing the corporate
veil was a transaction that was an offshoot, a derivative, of the mortgages
earlier constituted in the Promissory Notes dated October 2, 1992.
But these Promissory Notes with mortgage were executed by [G
Holdings] with [the Asset Privatization Trust] in the name of
[Maricalum Mining], in a full privatization process. It appears that
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if there was any control or domination exercised over [Maricalum

Mining], it was [the Asset Privatization Trust], not [G Holdings],
that wielded it. Neither can we conclude that the constitution of the
loan nearly four (4) years prior to [the National Mines and Allied
Workers Union Local 103]’s notice of strike could have been the
proximate cause of the injury of [the National Mines and Allied Workers
Union Local 103] for having been deprived of [Maricalum Mining]’s
corporate assets. 71 (Citations omitted)
However, I maintain that the application or non-application
of the doctrine of piercing the corporate veil in a particular
case is not a fixed and permanent ruling on the subject
corporations’ legal personalities. The ruling applies only to
the particular instance for which that doctrine was applied.
Thus, in Koppel (Phils.), Inc. v. Yatco, 72
I. In its first assignment of error appellant submits that the trial
court erred in not holding that it is a domestic corporation distinct
and separate from and not a mere branch of Koppel Industrial Car
and Equipment Company. It contends that its corporate existence as
a Philippine corporation [cannot] be collaterally attacked and that
the Government is estopped from so doing. As stated above, the lower
court did not deny legal personality to appellant for any and all purposes,
but held in effect that in the transactions involved in this case the
public interest and convenience would be defeated and what would
amount to tax evasion perpetrated, unless resort is had to the doctrine
of “disregard of the corporate fiction.” In other words, in looking
through the corporate form to the ultimate person or corporation behind
that form, in the particular transactions which were involved in the
case submitted to its determination and judgment, the court did so in
order to prevent the contravention of the local internal revenue laws,
and the perpetration of what would to a play evasion, inasmuch as it
considered — and in our opinion, correctly — that appellant Koppel
(Philippines) Inc. . . . as a mere branch or agency or dummy (“hechura”)
of Koppel Industrial Car and Equipment Co. The court did not hold
that the corporate personality of Koppel (Philippines), Inc., would
also be disregarded in other cases or for other purposes. It would
have had no power to so hold. The courts’ action in this regard must

71
Id. at 104-110.
72
77 Phil. 496 (1946) [Per J. Hilado, En Banc].
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be confined to the transactions involved in the case at bar “for the

purpose of adjudging the rights and liabilities of the parties in the
case. They have no jurisdiction to do more.” . . .
A leading and much cited case puts it as follows:
“If any general rule can be laid down, in the present state of
authority, it is that a corporation will be looked upon as a legal
entity as a general rule, and until sufficient reason to the contrary
appears, but, when the notion of legal entity is used to defeat
public convenience, justify wrong, protect fraud, or defend crime,
the law will regard the corporation as an association of persons.”73
(Citations omitted, emphasis supplied)
Thus, while the corporate veil cannot be pierced as to the
mortgage and transfer of Maricalum Mining’s properties to G
Holdings, the corporate veil may still be pierced for other acts
in which the elements for the application of the doctrine are
present.
It is my position that it cannot be said that G Holdings had
no participation in the labor-only contracting arrangement with
the complainants.
As the ponencia stated, G Holdings immediately took physical
possession of Maricalum Mining’s mine site and facilities, and
took full control of its management and operations upon signing
the Purchase and Sale Agreement and fully paying the down
payment for the shares. 74
It also found that G Holdings exercised absolute control over
Maricalum Mining since it held 90% of its equity securities,
and paid for the latter’s salary expenses. It noted that Maricalum
Mining’s corporate name is superimposed with G Holding’s
corporate name on the heading of the cash vouchers issued in
payment of the services rendered by the manpower
cooperatives. 75

73
Id. at 504-505.
74
Ponencia, p. 4.
75
Id. at 24.
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It also recognized that there is proof that G Holdings has an

office in Maricalum Mining’s premises and some of its assets
have commingled due to the Purchase and Sale Agreement. 76
There is even an allegation by the employees that their payrolls
were prepared by the accounting department of G Holdings.
Likewise, they asserted that it was both Maricalum Mining
and G Holdings that advised the employees to form the manpower
cooperatives after the retrenchment program.
Moreover, as stated by the ponencia, the Labor Arbiter also
ruled in favor of the employees on the following grounds:
(a) G Holdings connived with Mar[i]calum Mining in orchestrating
the formation of manpower cooperatives to circumvent the
complainants’ labor standards rights; (b) it is highly unlikely that
complainants (except Sipalay Hospital’s employees) would
spontaneously form manpower cooperatives on their own and in unison
without the guidance of G Holdings and Maricalum Mining; and (c)
the complainants effectively became the employees of G Holdings
because their work had changed from assisting in the mining and
milling operations to caretaking and safeguarding the properties in
the Sipalay Mining Complex which had already been acquired from
Maricalum Mining. Additionally it denied the claims of complainants
Nenet Arita and Domingo Lavida for lack of factual basis. 77
G Holdings did not merely own Maricalum Mining as a
holding company. It had a say in its processes and procedures.
Thus, it cannot claim to be innocent. It cannot participate in
the illegal dismissal of employees and thereafter hide behind
its separate corporate personality to avoid the liability arising
from it.
It likewise cannot be said that no injury arose from the
arrangement. While the ponencia found that there is no monetary
injury to the employees, it still held that the employees were
illegally dismissed. Thus, it cannot be denied that they suffered
an injury, albeit not a monetary one.

76
Id. at 28.
77
Id. at 9.
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The elements of control, bad faith, and injury are present in

the case at bar.
Moreover, assuming that the case does not fall within the
purview of fraud or alter-ego cases, the doctrine of piercing
the corporate veil still applies when the separate personality
of the corporation is being used to “defeat . . . public convenience
as when the corporate fiction is used as a vehicle for the evasion
of an existing obligation.”78 Likewise, it applies when recognizing
a parent company and its subsidiary as separate entities would
aid in the consummation of a wrong, such as illegal dismissal
and avoiding labor claims.
Labor contracts operate on a higher plane in light of the social
justice provisions in the Constitution. The State’s social justice
policy mandates a compassionate attitude toward the working
class and strives for the full protection of labor. 79 It is established

78
Pantranco Employees Association v. National Labor Relations
Commission, 600 Phil. 645, 663 (2009) [Per J. Nachura, Third Division].
79
CONST., Art. II, Sec. 18 provides:
Section 18. The State affirms labor as a primary social economic force. It
shall protect the rights of workers and promote their welfare.
CONST., Art. XIII, Sec. 3 provides:
Section 3. The State shall afford full protection to labor, local and overseas,
organized and unorganized, and promote full employment and equality of
employment opportunities for all.
It shall guarantee the rights of all workers to self-organization, collective
bargaining and negotiations, and peaceful concerted activities, including
the right to strike in accordance with law. They shall be entitled to security
of tenure, humane conditions of work, and a living wage. They shall also
participate in policy and decision-making processes affecting their rights
and benefits as may be provided by law.
The State shall promote the principle of shared responsibility between workers
and employers and the preferential use of voluntary modes in settling disputes,
including conciliation, and shall enforce their mutual compliance therewith
to foster industrial peace.
The State shall regulate the relations between workers and employers,
recognizing the right of labor to its just share in the fruits of production
and the right of enterprises to reasonable returns on investments, and to
expansion and growth.
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that the relations between capital and labor are impressed with
public interest, with the working class usually at a disadvantage.
Thus, in case of doubt, courts rule in favor of labor.
It must be underscored that no less than our Constitution looks
with compassion on the workingman and protects his rights not only
under a general statement of a state policy, but under the Article on
Social Justice and Human Rights, thus placing labor contracts on a
higher plane and with greater safeguards. Verily, relations between
capital and labor are not merely contractual. They are impressed with
public interest and labor contracts must, perforce, yield to the common
good. 80 (Citations omitted)
Thus, I DISSENT as to the ruling that the corporate veil
should not be pierced. I maintain that the doctrine of piercing
the corporate veil properly applies and that G Holdings, Inc.
should be held liable with Maricalum Mining Corporation.

FIRST DIVISION

[G.R. No. 222337. July 23, 2018]

PEOPLE OF THE PHILIPPINES, plaintiff-appellee, vs.

SHERNIEL UNGRIANO ASCARRAGA a.k.a.
SERGIO ONGRIANO ASCARRAGA, accused-
appellant.

SYLLABUS

1. REMEDIAL LAW; EVIDENCE; TESTIMONY OF WITNESSES;

THE POSITIVE IDENTIFICATION OF THE ASSAILANT,

80
Brew Master International Inc. v. National Federation of Labor Unions,
337 Phil. 728, 737 (1997) [Per J. Davide, Jr., Third Division].