PANTRANCO EMPLOYEES ASSOCIATION v. NLRC G.R.
No. 170689. March 17, 2009
Corporation Law Case Digest by John Paul C. Ladiao (15 March 2016)
(Topic: Doctrine of Piercing the Veil of Corporate
Fiction)
FACTS:
The Gonzales
family owned two corporations, namely, the PNEI and Macris Realty Corporation
(Macris). PNEI provided transportation services to the public, and had its bus
terminal at the corner of Quezon and Roosevelt Avenues in Quezon City. The
terminal stood on four valuable pieces of real estate (known as Pantranco
properties) registered under the name of Macris. The Gonzales family later incurred huge financial
losses despite attempts of rehabilitation and loan infusion. In March 1975,
their creditors took over the management of PNEI and Macris. By 1978, full
ownership was transferred to one of their creditors, the National Investment
Development Corporation (NIDC), a subsidiary of the PNB.
In 1985,
NIDC sold PNEI to North Express Transport, Inc. (NETI), a company owned by
Gregorio Araneta III. In 1986, PNEI was among the several companies placed
under sequestration by the Presidential Commission on Good Government (PCGG)
shortly after the historic events in EDSA. In January 1988, PCGG lifted the
sequestration order to pave the way for the sale of PNEI back to the private
sector through the Asset Privatization Trust (APT). APT thus took over the
management of PNEI.
In 1992,
PNEI applied with the Securities and Exchange Commission (SEC) for suspension
of payments. A management committee was thereafter created which recommended to
the SEC the sale of the company through privatization. As a cost-saving
measure, the committee likewise suggested the retrenchment of several PNEI
employees. Eventually, PNEI ceased its operation. Along with the cessation of
business came the various labor claims commenced by the former employees of
PNEI where the latter obtained favorable decisions.
ISSUE:
Whether or
not PNEI employees can attach the properties (specifically the Pantranco
properties) of PNB, PNB-Madecor and Mega Prime to satisfy their unpaid labor
claims against PNEI?
RULING:
NO.
First, the
subject property is not owned by the judgment debtor, that is, PNEI. Nowhere in
the records was it shown that PNEI owned the Pantranco properties.
the settled
rule that the power of the court in executing judgments extends only to
properties unquestionably belonging to the judgment debtor alone. To be sure, one mans goods shall not be sold
for another mans debts. A sheriff is not
authorized to attach or levy on property not belonging to the judgment debtor,
and even incurs liability if he wrongfully levies upon the property of a third
person.
Second, PNB,
PNB-Madecor and Mega Prime are corporations with personalities separate and
distinct from that of PNEI. PNB is sought to be held liable because it acquired
PNEI through NIDC at the time when PNEI was suffering financial reverses.
PNB-Madecor is being made to answer for petitioners labor claims as the owner
of the subject Pantranco properties and as a subsidiary of PNB. Mega Prime is
also included for having acquired PNBs shares over PNB-Madecor.
The general
rule is that a corporation has a personality separate and distinct from those
of its stockholders and other corporations to which it may be connected. This is a fiction created by law for
convenience and to prevent injustice.
Obviously, PNB, PNB-Madecor, Mega Prime, and PNEI are corporations with
their own personalities.
Neither can
we merge the personality of PNEI with PNB simply because the latter acquired
the former. Settled is the rule that where one corporation sells or otherwise
transfers all its assets to another corporation for value, the latter is not,
by that fact alone, liable for the debts and liabilities of the
transferor.
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