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CONCEPT BUILDERS v. NLRC

FACTS:

Petitioner Concept Builders, Inc. (CBI) is a construction company engaged in the construction business. Private respondents were employed by CBI as laborers. CBI terminated the employment of private respondents, stating that their contracts had expired and the project they were hired for had been completed. However, it was found that the project had not yet been finished at the time of termination and CBI had engaged the services of subcontractors.

Private respondents filed a complaint for illegal dismissal, unfair labor practice, and non-payment of benefits against CBI. The Labor Arbiter ruled in favor of private respondents and ordered CBI to reinstate them and pay back wages equivalent to a year or 300 working days. The decision became final and executory.

A writ of execution was issued, but CBI claimed to no longer occupy the premises and the sheriff was unable to enforce the order. Private respondents filed a motion for a break-open order, alleging that CBI and Hydro Pipes Philippines, Inc. (HPPI) were owned by the same incorporators and stockholders. They also presented documents showing the common ownership between CBI and HPPI. HPPI opposed the motion, claiming that it is a separate and distinct corporation engaged in manufacturing while CBI is in construction.

ISSUES:

  1. Whether the National Labor Relations Commission (NLRC) committed grave abuse of discretion when it issued a break-open order to the sheriff to be enforced against personal property found on the premises of petitioner's sister company.

  2. Whether the doctrine of piercing the corporate veil should have been applied in this case, given the absence of evidence showing that petitioner created Hydro Pipes Philippines, Inc. (HPPI) to evade liability.

RULING:

  1. No, the NLRC did not commit grave abuse of discretion. The break-open order issued by the NLRC was appropriate and in consonance with Section 3, Rule VII of the NLRC Manual of Execution of Judgment, allowing a break-open order when entry to the premises is refused or prohibited, and this action was supported by due notice and hearing.

  2. Yes, the doctrine of piercing the corporate veil was correctly applied. The Supreme Court found that petitioner corporation and HPPI shared significant factors of identity such as common stock ownership, directors, officers, and business premises. These indicated that HPPI was a mere business conduit of Concept Builders, Inc., created to evade financial liability to private respondents.

PRINCIPLES:

  1. The doctrine of piercing the corporate veil.

  2. Control and domination in corporate fraud cases.

  3. Conditions justifying the lifting of the corporate veil.

  4. The instrumentality rule in disregarding corporate personality.

  5. Importance of factual findings by quasi-judicial agencies and their binding nature when supported by substantial evidence.