De Leon et al. v. NLRC

Posted: May 1, 2015 in case digests, labor relations
Tags: , ,

De Leon et al. v. NLRC

2001 May 30

Facts: Petitioners are security guards assigned in the premises of Fortune Tobacco Services, Inc. (FTC) pursuant to a contract for security services with Fortune Integrated Services Inc. (FISI). Sometime after, FISI stockholders executed a “Deed of Sale of Shares of Stock” in favor of a group of new stockholders, it also amended its Articles of Incorporation changing its name to Magnum Integrated Services, Inc. (MISI). FTC terminated the contract with FISI which resulted in the displacement of some 582 security guards assigned to FTC, including petitioners herein.

FTC Labor Union which is an affiliate of NAFLU, sent a Notice of Strike which resulted in the picketing of the premises of FTC, however, RTC of Pasig, issued a writ of injunction to enjoin the picket. Petitioners then filed the instant case to the Arbitration branch of the NLRC.

Petitioners that they were regular employees of FTC which was also using the corporate names FISI and MISI, averring that they work under the control and supervision of FTC’s security supervisors, and that, they were dismissed without just cause and due process. They also claimed that their dismissal was the design of their employer to bust their newly organized union. Respondent FTC, on the other hand, maintained that there was no EE-ER relationship, that petitioners were employee of MISI a separate and distinct corporation from FTC.

LA ruled for respondents. NLRC reversed.

Issue: WON respondents are guilty of ULP.

Held: Yes, respondents are guilty of ULP.

Ratio:   Respondents  were  guilty  of  interfering  with  the  right  of  petitioners  to  self-organization  which  constitutes  unfair  labor practice under Article 248 of the  Labor  Code. Petitioners have been employed with FISI since the 1980s and have since been posted at the premises of FTC (main factory plant, tobacco re-drying plant and warehouse).  FISI,  while having its  own corporate  identity,  was a  mere  instrumentality  of  FTC,  tasked  to  provide protection  and  security  in  the  company  premises.  The 2 corporations had identical stockholders and the same business address. FISI also had no other clients except FTC and other companies belonging to the Lucio Tan group of companies.  Moreover, the early payslips of petitioners show that their salaries were initially paid by FTC. To enforce their rightful benefits under the laws on Labor Standards, petitioners formed a union which was later  certified  as  bargaining  agent  of  all  the  security  guards.  On  February  1,  1991,  the stockholders  of  FISI  sold  all  their  participations  in  the  corporation  to  a  new  set  of stockholders which renamed the corporation Magnum Integrated Services, Inc. On October 15, 1991, FTC, without any reason, pre-terminated its contract of security services with MISI and contracted 2 other agencies to provide security services for its premises. This resulted in the displacement of petitioners.  As  MISI  had  no  other  clients,  it  failed  to  give  new assignments  to  petitioners.  Petitioners have remained unemployed since then.  All  these facts indicate a concerted effort on the part of respondents to remove petitioners from the company  and  thus  abate  the  growth  of  the  union  and  block  its  actions  to  enforce  their demands in accordance with the Labor Standards laws.

The  test  of  whether  an  employer  has  interfered  with  and  coerced  employees within  the  meaning  of  section  (a)  (1)  is  whether  the  employer  has  engaged  in  conduct which  it  may  reasonably  be  said  tends  to  interfere  with  the  free  exercise  of  employees’ rights under section 3 of the Act, and it is not necessary that there be direct evidence that any employee was in fact intimidated or coerced by statements of threats of the employer if there  is  a  reasonable  inference  that  anti-union  conduct  of  the  employer  does  have  an adverse effect on self-organization and collective bargaining.”

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. FISI was a mere adjunct of FTC. FISI, by virtue of a contract for security services, provided FTC with security guards to safeguard its premises. However, records show  that FISI  and  FTC  have  the  same  owners  and  business  address,  and  FISI  provided  security services only to FTC 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  FISI’s  security  guards  posted  at  the premises of FTC 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  FTC  to  use  its  separate  corporate  personality  to shield itself from liability for illegal acts committed against its employees.

IN VIEW WHEREOF, petition is GRANTED. The assailed resolutions of the NLRC are SET ASIDE. Respondents are hereby ordered to pay petitioners their full backwages, and to reinstate them to their former position without loss of seniority rights and privileges, or to  award them separation pay in case reinstatement is no longer possible.



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