Good Earth Emporium Inc and Lim Ka Ping, petitioners

v.
CA and Roces-Reyes Realty Inc., respondents
This is a petition for review on certiorari of the decision CA reversing the decision of respondent Judge RTC
of Manila, which reversed the resolution of the Metropolitan Trial Court Of Manila denying herein GEEs
motion to quash the alias writ of execution issued against them.
Facts:
A lease contract was entered into between ROCES and GEE. A five-storey building was the subject of
which, upon failure of the latter to pay its rentals, ROCES filed an ejectment case against the petitioner.
The MTC of Mla rendered a decision ordering GEE and all persons under him to vacate the premises and
surrender the same to ROCES and pay the plaintiffs the rental.
GEE filed a motion to quash the writ of execution but the same was denied by the MTC for lack of merit. In
1987 the RTC of Manila reversed the decision of the MTC finding that the amount of P1 million evidenced
by Exhibit "I" and another P1 million evidenced by the pacto de retro sale instrument were in full
satisfaction of the judgment obligation.
On further appeal, the CA reversed the decision of the RTC and reinstated the Resolution of the MTC of
Manila. GEEs m/r was denied, hence this petition.
Issue:
Whether or not there was full satisfaction of the judgment debt in favor of respondent corporation which
would justify the quashing of the Writ of Execution
Ruling:
The fact that at the time payment was made to the two Roces brothers, GEE was also indebted to
respondent corporation for a larger amount, is not supportive of the Regional Trial Court's conclusions that
the payment was in favor of the latter, especially where the amount was not receipted for by respondent
corporation and there is absolutely no indication in the receipt from which it can be reasonably inferred,
that said payment was in satisfaction of the judgment debt. Likewise, no such inference can be made from
the execution of the pacto de retro sale which was not made in favor of respondent corporation but in
favor of the two Roces brothers in their individual capacities without any reference to the judgment
obligation in favor of respondent corporation.
Respondent court was correct in stating that it "cannot go beyond what appears in the documents
submitted by petitioners themselves in the absence of clear and convincing evidence" that would support
its claim that the judgment obligation has indeed been fully satisfied which would warrant the quashal of
the Alias Writ of Execution.
It has been an established rule that when the existence of a debt is fully established by the evidence
(which has been done in this case), the burden of proving that it has been extinguished by payment
devolves upon the debtor who offers such a defense to the claim of the plaintiff creditor.

CRUZ VS DALISAY

In 1984, the National Labor Relations Commission issued an order against Qualitrans Limousine
Service, Inc. (QLSI) ordering the latter to reinstate the employees it terminated and to pay them
backwages. Quiterio Dalisay, Deputy Sheriff of the court, to satisfy the backwages, then
garnished the bank account of Adelio Cruz. Dalisay justified his act by averring that Cruz was the
owner and president of QLSI. Further, he claimed that the counsel for the discharged employees
advised him to garnish the account of Cruz.
ISSUE: Whether or not the action of Dalisay is correct.

HELD: No. What Dalisay did is tantamount to piercing the veil of corporate fiction. He actually
usurped the power of the court. He also overstepped his duty as a deputy sheriff. His duty is
merely ministerial and it is incumbent upon him to execute the decision of the court according to
its tenor and only against the persons obliged to comply. In this case, the person judicially named
to comply was QLSI and not Cruz. It is a well-settled doctrine both in law and in equity that as a
legal entity, a corporation has a personality distinct and separate from its individual stockholders
or members. The mere fact that one is president of a corporation does not render the property
he owns or possesses the property of the corporation, since the president, as individual, and the
corporation are separate entities.

AVON DALE GARMENTS, INC., petitioner,

vs.
NATIONAL LABOR RELATIONS COMMISSION, LILIA DUMANTAY, ET AL., respondents.
RESOLUTION

FRANCISCO, J.:
This special civil action for certiorari seeks to set aside the decision of the National Labor
Relations Commission, dated August 31, 1994, in NLRC CA 005068-93, for allegedly having been
rendered with grave abuse of discretion.
Private respondents were employees of petitioner Avon Dale Garments, Inc. and its predecessorin-interest, Avon Dale Shirt Factory. Following a dispute brought about by the rotation of workers,
a compromise agreement was entered into between petitioner and private respondents wherein
the latter were terminated from service and given their corresponding separation pay.
However, upon refusal of the petitioner to include in the computation of private respondents'
separation pay the period during which the latter were employed by Avon Dale Shirt Factory,
private respondents filed a complaint with the labor arbiter claiming a deficiency in their
separation pay (docketed as NLRC-NCR-00-02-00810-93). According to private respondents, their
previous employment with petitioner's predecessor-in-interest, Avon Dale Shirt Factory, should be
credited in computing their separation pay considering that Avon Dale Shirt factory was not
dissolved and they were not in turn hired as new employees by Avon Dale Garments, Inc.
In its decision dated May 14, 1993, the labor arbiter dismissed private respondents' complaint
and held that Avon Dale Shirt Factory and Avon Dale Garments, Inc. are not one and the same
entity as the former was in fact dissolved on December 27, 1978, when it filed its Articles of
Dissolution with the Securities and Exchange Commission. 1
Private respondents appealed to the NLRC and the latter reversed the decision of the labor
arbiter after finding that upon dissolution of Avon Dale Shirt Factory, Inc., there was no showing
that its terminated employees, as creditors insofar as their separation pay were concerned, were
ever paid. Thus, petitioner Avon Dale Garments, Inc., as successor-in-interest, was held liable for
private respondents' unpaid claim. 2

The instant petition is now brought before us by petitioner Avon Dale Garments, Inc., anchored
on the sole ground that, as a separate and distinct entity, it should not be held liable for private
respondents' separation pay from Avon Dale Shirt Factory.
Pending resolution of the instant petition, counsel for private respondents, instead of filing a
comment to the petition, filed a Manifestation indicating that the parties have already reached
an amicable settlement on December 27, 1994, wherein private respondents were paid their
corresponding separation pay, after which, they executed a waiver and quitclaim. 3 It appeared
however, upon verification by the Office of the Solicitor General, that the aforementioned
compromise agreement was executed between the parties without the knowledge and
participation of the NLRC. 4
The established rule is that compromise agreements involving labor standard cases, like the one
entered into by the parties herein, must be reduced in writing and signed in the presence of the
Regional Director or his duly authorized representative. Otherwise, they are not deemed to be
duly executed. 5 For this reason, the compromise agreement submitted by private respondents'
counsel cannot be recognized by this court for being improperly executed.
Nevertheless, we find the petition to be without merit as the assailed decision is in complete
accord with the law and evidence on record.
Petitioner failed to establish that Avon Dale Garments, Inc., is a separate and distinct entity from
Avon Dale Shirt Factory, absent any showing that there was indeed an actual closure and
cessation of the operations of the latter. The mere filing of the Articles of Dissolution with the
Securities and Exchange Commission, without more, is not enough to support the conclusion that
actual dissolution of an entity in fact took place.
On the contrary, the prevailing circumstances in this case indicated that petitioner company is
not distinct from its predecessor Avon Dale Shirt Factory, but in fact merely continued the
operations of the latter under the same owners, the same business venture, at same address 6,
and even continued to hire the same employees (herein private respondents).
Thus, conformably with established jurisprudence, the two entities cannot be deemed as
separate and distinct where there is a showing that one is merely the continuation of the
other. 7 In fact, even a change in the corporate name does not make a new corporation, whether
effected by a special act or under a general law, it has no effect on the identity of the
corporation, or on its property, rights, or liabilities. 8 Respondent NLRC therefore, did not commit
any grave abuse of discretion in holding that petitioner should likewise include private
respondents' employment with Avon Dale Shirt Factory in computing private respondents'
separation pay as petitioner failed to substantiate its claim that it is a distinct entity.
ACCORDINGLY, the instant petition is hereby DISMISSED.
SO ORDERED.
Concept Builders Inc. vs. NLRC Case Digest
Concept Builders Inc. vs. National Labor Relations Commission
[GR 108734, 29 May 1996]

Facts: Concept Builders, Inc., (CBI) a domestic corporation, with principal office at 355 Maysan
Road, Valenzuela, Metro Manila, is engaged in the construction business while Norberto Marabe;
Rodolfo Raquel, Cristobal Riego, Manuel Gillego, Palcronio Giducos, Pedro Aboigar, Norberto
Comendador, Rogelio Salut, Emilio Garcia, Jr., Mariano Rio, Paulina Basea, Alfredo Albera, Paquito
Salut, Domingo Guarino, Romeo Galve, Dominador Sabina, Felipe Radiana, Gavino Sualibio,
Moreno Escares, Ferdinand Torres, Felipe Basilan, and Ruben Robalos were employed by said
company as laborers, carpenters and riggers. On November 1981, Marabe, et. al. were served
individual written notices of termination of employment by CBI, effective on 30 November 1981.
It was stated in the individual notices that their contracts of employment had expired and the
project in which they were hired had been completed. The National Labor Relations Commission
(NLRC) found it to be, the fact, however, that at the time of the termination of Marabe, et.al.'s
employment, the project in which they were hired had not yet been finished and completed. CBI
had to engage the services of sub-contractors whose workers performed the functions of Marabe,
et. al. Aggrieved, Marabe, et. al. filed a complaint for illegal dismissal, unfair labor practice and
non-payment of their legal holiday pay, overtime pay and thirteenth-month pay against CBI. On
19 December 1984, the Labor Arbiter rendered judgment ordering CBI to reinstate Marabe et. al.
and to pay them back wages equivalent to 1 year or 300 working days. On 27 November 1985,
the NLRC dismissed the motion for reconsideration filed by CBI on the ground that the said
decision had already become final and executory.

On 16 October 1986, the NLRC Research and Information Department made the finding that
Marabe, et. al.'s back wages amounted to P199,800.00. On 29 October 1986, the Labor Arbiter
issued a writ of execution directing the sheriff to execute the Decision, dated 19 December 1984.
The writ was partially satisfied through garnishment of sums from CBI's debtor, the Metropolitan
Waterworks and Sewerage Authority, in the amount of P81,385.34. Said amount was turned over
to the cashier of the NLRC. On 1 February 1989, an Alias Writ of Execution was issued by the
Labor Arbiter directing the sheriff to collect from CBI the sum of P117,414.76, representing the
balance of the judgment award, and to reinstate Marabe, et. al. to their former positions. On 13
July 1989, the sheriff issued a report stating that he tried to serve the alias writ of execution on
petitioner through the security guard on duty but the service was refused on the ground that CBI
no longer occupied the premises. On 26 September 1986, upon motion of Marabe, et. al., the
Labor Arbiter issued a second alias writ of execution. The said writ had not been enforced by the
special sheriff because, as stated in his progress report dated 2 November 1989, that all the
employees inside CBI's premises claimed that they were employees of Hydro Pipes Philippines,
Inc. (HPPI) and not by CBI; that levy was made upon personal properties he found in the
premises; and that security guards with high-powered guns prevented him from removing the
properties he had levied upon. The said special sheriff recommended that a "break-open order"
be issued to enable him to enter CBI's premises so that he could proceed with the public auction
sale of the aforesaid personal properties on 7 November 1989. On 6 November 1989, a certain
Dennis Cuyegkeng filed a third-party claim with the Labor Arbiter alleging that the properties
sought to be levied upon by the sheriff were owned by HPPI, of which he is the Vice-President. On
23 November 1989, Marabe, et. al. filed a "Motion for Issuance of a Break-Open Order," alleging
that HPPI and CBI were owned by the same incorporator/stockholders. They also alleged that
petitioner temporarily suspended its business operations in order to evade its legal obligations to
them and that Marabe, et. al. were willing to post an indemnity bond to answer for any damages
which CBI and HPPI may suffer because of the issuance of the break-open order. On 2 March

1990, the Labor Arbiter issued an Order which denied Marabe, et. al.'s motion for break-open
order.

Marabe, et. al. then appealed to the NLRC. On 23 April 1992, the NLRC set aside the order of the
Labor Arbiter, issued a break-open order and directed Marabe, et. al. to file a bond. Thereafter, it
directed the sheriff to proceed with the auction sale of the properties already levied upon. It
dismissed the third-party claim for lack of merit. CBI moved for reconsideration but the motion
was denied by the NLRC in a Resolution, dated 3 December 1992. Hence, the petition.

Issue: Whether the NLRC was correct in issuing the break-open order to levy the HPPI
properties located at CBI amd/or HPPIs premises at 355 Maysan Road, Valenzuela, Metro
Manila.

Held: It is a fundamental principle of corporation law that a corporation is an entity separate and
distinct from its stockholders and from other corporations to which it may be connected. But, this
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 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 conditions under which the juridical
entity may be disregarded vary according to the peculiar facts and circumstances of each case.
No hard and fast rule can be accurately laid down, but certainly, there are some probative factors
of identity that will justify the application of the doctrine of piercing the corporate veil, to wit: (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; and (4) Methods of conducting
the business. The SEC en banc explained the "instrumentality rule" which the courts have
applied in disregarding the separate juridical personality of corporations as "Where one
corporation is so organized and controlled and its affairs are conducted so that it is, in fact, a
mere instrumentality or adjunct of the other, the fiction of the corporate entity of the
"instrumentality" may be disregarded. The control necessary to invoke the rule is not majority or
even complete stock control but such domination of instances, 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. It must be kept in mind that 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." The test
in determining the applicability of the doctrine of piercing the veil of corporate fiction is as (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. Thus the question of whether a
corporation is a mere alter ego, a mere sheet or paper corporation, a sham or a subterfuge is
purely one of fact. Here, while CBI claimed that it ceased its business operations on 29 April
1986, it filed an Information Sheet with the Securities and Exchange Commission on 15 May
1987, stating that its office address is at 355 Maysan Road, Valenzuela, Metro Manila. On the
other hand, HPPI, the third-party claimant, submitted on the same day, a similar information
sheet stating that its office address is at 355 Maysan Road, Valenzuela, Metro Manila. Further,
both information sheets were filed by the same Virgilio O. Casio as the corporate secretary of
both corporations. Both corporations had the same president, the same board of directors, the
same corporate officers, and substantially the same subscribers. From the foregoing, it appears
that, among other things, the CBI and the HPPI shared the same address and/or premises. Under
these circumstances, it cannot be said that the property levied upon by the sheriff were not of
CBI's. Clearly, CBI ceased its business operations in order to evade the payment to Marabe, et.
al. of back wages and to bar their reinstatement to their former positions. HPPI is obviously a
business conduit of CBI and its emergence was skillfully orchestrated to avoid the financial
liability that already attached to CBI.