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.

Both of these petitions are assailing the propriety of the October 29, 2014 Decision^[2] of the Court of Appeals (CA) in CA-G.R. SP No. 06835. The CA upheld the November 29, 2011 Decision^[3] and January 31, 2012 Resolution^[4] 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 Decision^[5] 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 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:

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

In 2000, each of the said cooperatives executed identical sets of Memorandum of Agreement^[12] 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 Memorandum^[13] 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 Complaint^[15] with the LA 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 13^th 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 Schedule^[19] representing G Holdings' payment of social security contributions in favor of some Sipalay Hospital employees (c) Termination Letters^[20] written by representatives of G Holdings, which were addressed to complainants including those employed by Sipalay Hospital; and (d) Caretaker Schedules^[21] 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 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 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	13th Month Pay
(1)	Salvador Arceo	P81,418.08	P6,784.84
(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

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-Intervention^[26] seeking to: (a) reverse and set aside the Labor Arbiter's Decision; (b) declare Maricalum Mining as the true and proper party-in­interest; (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 13^th month pay had been paid.

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]

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]

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 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 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]

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 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 106^[44] of the 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 members perform the work vital to the operation of the Sipalay Mining Complex, the they were being contracted in a labor-only arrangement. Moreover, the burden of proving the supposed status of the contractor rests on the principal^[47] 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 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 solidarity 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 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 parent^[57] or holding company^[58] is a corporation which owns or is organized to own a substantial portion of another company's voting^[59] shares of stock enough to control^[60] 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^[61] 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^[62] 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 subsidiary^[63] 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 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 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.
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.

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 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);
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. Yu^[77] 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 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 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] 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 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 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.

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 affiliated^[93] 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 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 four­fold 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. Fernandez, Edgar M. Sobrino and Wilfreda 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 vouchers[100] 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 payments[101] 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].

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 Wilfreda 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 Wilfreda 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 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 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, Wilfreda 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, Wilfreda 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 duly­burdened to prove the crucial test or factor of control thru substantial evidence in order to establish the existence of an employment relationship­especially 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.

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., I dissent. See separate opinion.

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NOTICE OF JUDGMENT

Sirs / Mesdames:

Please take notice that on July 23, 2018 a Decision, copy attached hereto, was rendered by the Supreme Court in the above-entitled cases, the original of which was received by this Office on August 9, 2018 at 11:02 a.m.

	Very truly yours,
	(SGD)
	WILFREDO V. LAPITAN
	Division Clerk of Court

---

^[1] Rollo (G.R. No. 222723) p. 12, represented by his heir Thelma G. Gomez, et al.

^[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).

^[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.

^[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.

^[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.

^[21] Id. at 207-232.

^[22] Id. at 175-190.

^[23] Id. (G.R. No. 221813, Vol. 1) at 143-159.

^[24] Id. at 162-173.

^[25] Id. at 277-278.

^[26] Rollo (G.R. No. 221813, Vol. 1), pp. 284-325.

^[27] 619 Phil. 69, 78 (2009).

^[28] Rollo (G.R. No. 221813, Vol. I), pp. 405-406.

^[29] Id. at 451.

^[30] Id. at 27.

^[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.

^[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.

^[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.

x x x x

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).

^[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).

^[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).

^[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).

^[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).

^[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.

^[72] 326 Phil. 955, 965 (1996), citations omitted.

^[73] 414 Phil. 494, 504-505 (2001).

^[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).

^[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).

^[77] 769 Phil. 279, 293 (2015).

^[78] The Edward J. Nell Company v. Pacific Farms, Inc., 122 Phil. 825, 827 (1965), citations omitted.

^[79] Supra note 77 at 293.

^[80] Pantranco Employees Association, et al. v. National Labor Relations Commission, et al., 600 Phil. 645, 660 (2009).

^[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).

^[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 (ie 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/bloglwhat-is-a-noncurrent-asset [last visited: May 28, 2018]).

^[86] Functional, Inc. v. Granfil, 676 Phil. 279, 287 (2011).

^[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).

^[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).

^[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, oontrolled 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.

^[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.

^[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.

^[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).

^[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.

---

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 Pefiaflorida (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 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]

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]

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]

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 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]

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. 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 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 ofilcer 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)

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]

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 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 tran ferred 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 IChua and his immediate family control JALECO. The Deed of Exchangy 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 betame 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 ALECO 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 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 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 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 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.

. . . .

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)

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 -

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]

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 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 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 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, is placed beyond the legal reach of the judgment creditor[.]^[68] (Citation omitted)

Thus, the corporate veil may be pierced when it ts 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 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 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 translate to having been "effected to prevent sati faction 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 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 tactual 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.:

. . . .

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 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 detennination 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 he 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]

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 sa holding company. It had a say in its processes and procedures. Thus, it cannot claim to be innocent. It cannot participate in the illegal disn;issal 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."^[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 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.

---

^[1] Ponencia, p. 3.

^[2] Id. at 4.

^[3] Id.

^[4] Id.

^[5] Id.

^[6] Id. at 5.

^[7] Id.

^[8] Id.

^[9] Id.

^[10] Id. at 8.

^[11] Id. at 10.

^[12] Id. at 11.

^[13] Id. at 30.

^[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.

^[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].

^[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].

^[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.

^[37] 600 Phil. 645 (2009) [Per J. Nachura, Third Division].

^[38] Id. at 660-661.

^[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.

^[41] 414 Phil. 494 (2001) [Per J. Kapunan, First Division].

^[44] Id. at 504-505.

^[45] 290-A Phil. 241 (1992) [Per J. Grino Aquino, First Division].

^[46] Id. at 245-247.

^[47] 272-A Phil. 565 (1991) [Per J. Gutierrez, Jr., Third Division].

^[48] Id. at 578-579.

^[40] 344 Phil. 268 (1997) [Per J. Belosillo, First Division].

^[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].

^[53] Id. at 895-896.

^[54] 421 Phil. 883 (2001) [Per J. Quisimbing, Second Division].

^[55] Id. at 895.

^[56] 415 Phil. 538 (2001) [Per J. Kapunan, First Division].

^[57] Id. at 546-549.

^[58] 502 Phil. 129 (2005) [Per J. Callejo, Sr., Second Division].

^[59] Id. at 138-140.

^[60] Philippine National Bank v. Andrada Electric & Engineering Co., 430 Phil. 882, 895 (2002) [Per J. Panganiban, Third Division].

^[61] 528 Phil. 603 (2006) [Per J. Corona, Second Division].

^[62] Id. at 609.

^[63] 362 Phil. 370 (1999) [Per J. Belosillo, Second Division].

^[64] Id. at 380-382.

^[65] 410 Phil. 523 (2001) [Per J. Puno, First Division].

^[66] Id. at 533 534.

^[67] 399 Phil. 38 (2000) [Per J. Ynares-Santiago, First Division].

^[68] Id. at 39.

^[69] 619 Phil. 69 (2009) [Per J. Nachura, Third Division].

^[70] Id. at 88-100.

^[71] Id. at 104-110.

^[72] 77 Phil. 496 (1946) [Per J. Hilado, En Banc].

^[73] Id. at 504-505.

^[74] Ponencia, p. 4.

^[75] Id. at 24.

^[76] Id. at 28.

^[77] Id. at 9.

^[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.

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