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    Concept Builders, Inc. Vs NLRC

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    Don Amboy
    This case involved Concept Builders, Inc., a construction company that illegally dismissed employees. When the employees were awarded back wages and reinstatement by the Labor Arbiter, Concept Builders claimed the employees now worked for a different company, Hydro Pipes Philippines, Inc. The NLRC issued an order to pierce the corporate veil between the two companies. The Supreme Court upheld this, finding that piercing the corporate veil was proper because Hydro Pipes was being used as Concept Builders' alter ego to avoid paying the required back wages. The Court provided a three-part test for determining when piercing the corporate veil is allowed.

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    Concept Builders, Inc. Vs NLRC

    Uploaded by

    Don Amboy
    57 views2 pages
    This case involved Concept Builders, Inc., a construction company that illegally dismissed employees. When the employees were awarded back wages and reinstatement by the Labor Arbiter, Concept Builders claimed the employees now worked for a different company, Hydro Pipes Philippines, Inc. The NLRC issued an order to pierce the corporate veil between the two companies. The Supreme Court upheld this, finding that piercing the corporate veil was proper because Hydro Pipes was being used as Concept Builders' alter ego to avoid paying the required back wages. The Court provided a three-part test for determining when piercing the corporate veil is allowed.

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    25. Concept Builders, Inc. vs NLRC

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    This case involved Concept Builders, Inc., a construction company that illegally dismissed employees. When the employees were awarded back wages and reinstatement by the Labor Arbiter, Concept Builders claimed the employees now worked for a different company, Hydro Pipes Philippines, Inc. The NLRC issued an order to pierce the corporate veil between the two companies. The Supreme Court upheld this, finding that piercing the corporate veil was proper because Hydro Pipes was being used as Concept Builders' alter ego to avoid paying the required back wages. The Court provided a three-part test for determining when piercing the corporate veil is allowed.

    Copyright:

    © All Rights Reserved
    Download as DOCX, PDF, TXT or read online from Scribd
    Download as docx, pdf, or txt
    57 views2 pages

    Concept Builders, Inc. Vs NLRC

    Uploaded by

    Don Amboy
    This case involved Concept Builders, Inc., a construction company that illegally dismissed employees. When the employees were awarded back wages and reinstatement by the Labor Arbiter, Concept Builders claimed the employees now worked for a different company, Hydro Pipes Philippines, Inc. The NLRC issued an order to pierce the corporate veil between the two companies. The Supreme Court upheld this, finding that piercing the corporate veil was proper because Hydro Pipes was being used as Concept Builders' alter ego to avoid paying the required back wages. The Court provided a three-part test for determining when piercing the corporate veil is allowed.

    Copyright:

    © All Rights Reserved
    Download as DOCX, PDF, TXT or read online from Scribd
    Download as docx, pdf, or txt
    of 2

    Concept Builders, Inc. vs.

    NLRC

    G.R. 108734

    29 May 1996

    FACTS: Petitioner Concept Builders, Inc., a domestic corporation engaged in


    the construction business. Private respondents were employed by said
    company as laborers, carpenters and riggers. However, they were illegally
    dismissed.

    Aggrieved, private respondents filed a complaint for illegal dismissal. The


    Labor Arbiter rendered judgment ordering petitioner to reinstate private
    respondents and to pay them back wages. It became final and executory.

    The alias Writ of Execution cannot be enforced by the sheriff because all the
    employees inside petitioner’s premises at 355 Maysan Road, Valenzuela,
    Metro Manila, claimed that they were employees of Hydro Pipes Philippines,
    Inc. (HPPI) and not by petitioner. Thus, NLRC issued a break-open order
    against Concept Builders and HPPI.

    ISSUE/S: Whether or not the piercing the veil of corporate entity is proper?

    HELD: YES. The separate and distinct personality of a corporation is merely a


    fiction created by law for convenience and to promote justice. So, when the
    notion of separate juridical personality is used to defeat public convenience,
    justify wrong, protect fraud or defend a crime, or is used as a device to defeat
    the labor laws, this separate personality of the corporation may be
    disregarded or the veil of corporate fiction pierced. This is true likewise when
    the corporation is merely an adjunct, a business conduit or an alter ego of
    another corporation.

    The SEC en banc explained the “instrumentality rule” which the courts have
    applied in disregarding the separate juridical personality of corporation, and
    the test which determines the applicability of the docrine of piercing the veil
    of corporate fiction is as follows:

    1) Control, not mere majority or complete stock 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 plaintiff’s legal
    rights; and
    3) The aforesaid control and breach of duty must proximately cause the
    injury or unjust loss complained of.

    The absence of any one of these elements prevents “piercing the corporate
    veil” In applying the “instrumentality” or “Alter ego” doctrine, the courts are
    concerned with reality and not form, with how the corporation operated and
    the individual defendant’s relationship to that operation.

    Clearly, petitioner ceased its business operations in order to evade the


    payment to private respondents of back wages and to bar their reinstatement
    to their former positions. HPPI is obviously a business conduit of petitioner
    corporation and its emergence was skillfully orchestrated to avoid the
    financial liability that already attached to petitioner corporation.

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