YU vs. NLRC, LA Cueto, Tanduay Distillery Inc.

, Duran, Paliwan, Estoce, Santos

GR 111810-11 / 16 June 1995 / J. Melo
Petition for certiorari to review a decision of the NLRC.

FACTS
Employees of TDI received a Memo terminating their services for reasons of retrenchment.
The 22 employees filed a TRO against their retrenchment. LA issued the TRO. After 20 days,
the retrenchment pushed through and the 22 employees were retrenched.
Twin Ace Holdings bought and took over TDI and assumed the business name Tanduay
Distillers.
The employees filed a motion to implead Yu and Young as respondents in the retrenchment
case.
Yu and Young filed an opposition saying that they are representatives of Tanduay Distillers, an
entity distinct and separate from TDI, the previous owner and that there is no E-E relationship
between Tanduay Distillers and the employees.
Labor Arbiter: declared the retrenchment illegal and ordered Tanduay Distillers to reinstate the
complainants and pay backwages (pay separation pay in the event of change in management).
TDI appealed. NLRC affirmed LA decision. TDIs MR was likewise denied
The employees filed a Motion for Execution. But Yu and Young opposed on the ground that the
issuance of the writ is against Tanduay Distillers is without any basis because Tanduay Distillers
is an entity distinct and separate from TDI. So the employees filed their rejoinder.
TDI agreed to pay the companys liability. However, NLRC issued a Writ of Execution against
Tanduay Distillers, Young, and Yu.
Yu and Young filed a Petition for Certiorari before the NLRC. The NLRC dismissed Yu and
Youngs petition for lack of merit.

ISSUE: WON Yu and Young should be held personally liable to the retrenched employees NO.

WON TDI and Tanduay Distillers are one and the same NO.

DISPOSITIVE: PETITION IS GRANTED. The order of the Labor Arbiter and the decision of the NLRC
are set aside as null and void.

RATIO
The corporation has a personality separate and distinct from those of the persons composing it.
o It is basic that 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.
Twin Ace/Tanduay Distillers and TDI are distinct and separate corporations.
o In fine, the fiction of separate and distinct corporate entities cannot, in the instant case,
be disregarded and brushed aside, there being not the least indication that the second
corporation is a dummy or serves as a client of the first corporate entity.
o Employees have not presented any proof as to communality of ownership and
management to support their contention that the two companies are one firm or closely
related. The doctrine of piercing the veil of corporate entity applies when the corporate
fiction is used to defeat public convenience, justify wrong, protect fraud, or defend crime
or where a corporation is the mere alter ego or business conduit of a person. To disregard
the separate juridical personality of a corporation, the wrong-doing must be clearly and
convincingly established. It cannot be presumed.