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Case Name: Prince Transport, Inc. v. Garcia et al.

will, when necessary to protect the rights of third parties, disregard the legal
G.R. Number: 167291 fiction that these two entities are distinct and treat them as identical or as one
Topic: Consequences of Dismissal Author: Yron Quiroz and the same.
 In the present case, while Lubas is a single proprietorship and not a corporation,
Doctrine: Doctrine of piercing the corporate veil applies when an employer hides behind
petitioners attempted to hide behind the supposed separate and distinct
another company which is really a mere instrumentality, agent conduit or adjunct of said
personality of Lubas to evade their liabilities.
employer in order to evade its responsibilities to its employees.
 SC also notes that if Lubas is indeed an entity separate and independent from PTI,
why is it that PTI decides which employees shall work in the Lubas?
 Various complaints filed by respondents charging petitioners with illegal
 PTI also guilty of unfair labor practice, respondents transfer of work assignments
dismissal, unfair labor practice and illegal deductions and praying for the award
to Lubas was designed by PTI as a subterfuge to foil the formers right to organize
of premium pay for holiday and rest day, holiday pay, service leave pay, 13th
themselves into a union.
month pay, moral and exemplary damages and attorney's fees.
 Under Article 248 (a) and (e) of the Labor Code, an employer is guilty of unfair
 Respondents were employees of Prince Transport respondents as drivers,
labor practice if it interferes with, restrains or coerces its employees in the
conductors, mechanics or inspectors, except for Garcia who was assigned as
exercise of their right to self-organization or if it discriminates in regard to wages,
Operations Manager.
hours of work and other terms and conditions of employment in order to
 In addition to their regular monthly income, respondents also received encourage or discourage membership in any labor organization.
commissions equivalent to 8 to 10% of their wages.
 To add insult to injury, PTI withheld from Lubas the necessary financial and logistic
 Commissions were reduced to 7 to 9%; this led respondents and other employees support such as spare parts, and repair and maintenance of the transferred buses
of PTI to hold a series of meetings to discuss the protection of their interests as until only two units remained in running condition. This left respondents virtually
employees. jobless.
 These meetings led petitioner Renato Claros, who is the president of PTI, to
suspect that respondents are about to form a union; he made known to Garcia
his objection to the formation of a union;
 PTI employees requested for a cash advance, but the same was denied by
management which resulted in demoralization on the employees' ranks; later, PTI
acceded to the request of some, but not all, of the employees;
 The foregoing circumstances led respondents to form a union for their mutual aid
and protection.
 In order to block the continued formation of the union, PTI caused the transfer of
all union members and sympathizers to one of its sub-companies, Lubas
Transport (Lubas);.
 Despite such transfer, PTI was still the office that handled the affairs relating to
 The business of Lubas deteriorated because of the refusal of PTI to maintain and
repair the units being used therein, which resulted in the virtual stoppage of its
operations and respondents' loss of employment.
 LA ruled in favor of respondents but held Lubas and not PTI as the one liable for
unfair labor practices.
 NLRC affirmed LA with slight modification only as to monetary awards.
 CA ruled in favor of respondents holding that it is PTI that is liable and not Lubas
since Lubas is a mere instrumentality, agent conduit or adjunct of PTI; and that
petitioners act of transferring respondents employment to Lubas is indicative of
their intent to frustrate the efforts of respondents to organize themselves into a
Issue: WON PTI is liable for the alleged illegal dismissal of respondents
Held/Ratio: YES. Lubas is a mere instrumentality, agent conduit or adjunct of PTI.
 Doctrine of piercing the corporate veil is applied when two business enterprises
are owned, conducted and controlled by the same parties; both law and equity