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NACHURA, J.: The court ordered that the proceedings be held in abeyance,
ratiocinating that petitioners certificate of live birth was no proof of his
Upon the death of a stockholder, the heirs do not automatically paternity and relation to Carlos L. Puno.
become stockholders of the corporation; neither are they mandatorily
entitled to the rights and privileges of a stockholder. This, we declare Petitioner submitted the corrected birth certificate with the name
in this petition for review on certiorari of the Court of Appeals (CA) Joselito M. Puno, certified by the Civil Registrar of the City of Manila,
Decision[1] dated October 11, 2006 and Resolution dated March 6, 2007 and the Certificate of Finality thereof. To hasten the disposition of the
in CA-G.R. CV No. 86137. case, the court conditionally admitted the corrected birth certificate as
genuine and authentic and ordered respondent to file its answer within
The facts of the case follow: fifteen days from the order and set the case for pretrial.[3]
On October 11, 2005, the court rendered a Decision, the
dispositive portion of which reads: In this petition, petitioner raises the following issues:
Anent the first assignment of error, a reading of the records would The second assignment of error must likewise fail. The issue is raised
reveal that petitioner raises for the first time the alleged failure of the for the first time via this petition for certiorari. Petitioner submitted
Islamic Bank [AIIBP] to promulgate rules of procedure governing the himself to the jurisdiction of the CSC. Although he could have raised
adjudication and disposition of administrative cases involving its the alleged lack of jurisdiction in his Motion for Reconsideration of
personnel. It is a rule that issues not properly brought and ventilated Resolution No. 94-4483 of the CSC, he did not do so. By filing the
below may not be raised for the first time on appeal, save in Motion for Reconsideration, he is estopped from denying the CSCs
exceptional circumstances (Casolita, Sr. v. Court of Appeals, 275 SCRA jurisdiction over him, as it is settled rule that a party who asks for an
257) none of which, however, obtain in this case. affirmative relief cannot later on impugn the action of the tribunal as
Granting arguendo that the issue is of such exceptional character that without jurisdiction after an adverse result was meted to him.
the Court may take cognizance of the same, still, it must fail. Section Although jurisdiction over the subject matter of a case may be
26 of Republic Act No. 6848 (1990) provides: objected to at any stage of the proceedings even on appeal, this
particular rule, however, means that jurisdictional issues in a case
Section 26. Powers of the Board. The Board of Directors shall have can be raised only during the proceedings in said case and during the
the broadest powers to manage the Islamic Bank, x x x The Board appeal of said case (Aragon v. Court of Appeals, 270 SCRA 603). The
shall adopt policy guidelines necessary to carry out effectively the case at bar is a petition [for] certiorari and not an appeal.
provisions of this Charter as well as internal rules and
regulations necessary for the conduct of its Islamic banking business But even on the merits the argument must falter. Item No. 1 of CSC
and all matters related to personnel organization, office functions and Resolution No. 93-2387 dated 29 June 1993, provides:
salary administration. (Italics ours)
Decisions in administrative cases involving officials and employees of
On the other hand, Item No. 2 of Executive Order No. 26 (1992) the civil service appealable to the Commission pursuant to Section 47
entitled Prescribing Procedure and Sanctions to Ensure Speedy of Book V of the Code (i.e., Administrative Code of 1987) including
Disposition of Administrative Cases directs, all administrative personnel actions such as contested appointments shall now be
agencies to adopt and include in their respective Rules of Procedure appealed directly to the Commission and not to the MSPB.
provisions designed to abbreviate administrative proceedings.
In Rubenecia v. Civil Service Commission, 244 SCRA 640, 651, it was nature of the act as dishonest. What is apparent is he stated
categorically held: something to be a fact, when he really was not sure that it was so.
. . . The functions of the MSPB relating to the determination of WHEREFORE, above premises considered, the instant Petition is
administrative disciplinary cases were, in other words, re-allocated to DISMISSED, and the assailed Resolutions of the Civil Service
the Commission itself. Commission are hereby AFFIRMED.
Be that as it may, (i)t is hornbook doctrine that in order `(t)o ascertain On 24 March 1999, Sawadjaans counsel notified the court a quo of
whether a court (in this case, administrative agency) has jurisdiction his change of address,[11] but apparently neglected to notify his client
or not, the provisions of the law should be inquired into. Furthermore, of this fact. Thus, on 23 July 1999, Sawadjaan, by himself, filed a
`the jurisdiction of the court must appear clearly from the statute law Motion for New Trial[12] in the Court of Appeals based on the following
or it will not be held to exist.(Azarcon v. Sandiganbayan, 268 SCRA grounds: fraud, accident, mistake or excusable negligence and newly
747, 757) From the provision of law abovecited, the Civil Service discovered evidence. He claimed that he had recently discovered that
Commission clearly has jurisdiction over the Administrative Case at the time his employment was terminated, the AIIBP had not yet
against petitioner. adopted its corporate by-laws. He attached a Certification[13] by the
Securities and Exchange Commission (SEC) that it was only on 27 May
Anent the third assignment of error, we likewise do not find merit in 1992 that the AIIBP submitted its draft by-laws to the SEC, and that
petitioners proposition that he should not be liable, as in the first its registration was being held in abeyance pending certain corrections
place, he was not qualified to perform the functions of being made thereon. Sawadjaan argued that since the AIIBP failed to
appraiser/investigator because he lacked the necessary training and file its by-laws within 60 days from the passage of Rep. Act No. 6848,
expertise, and therefore, should not have been found dishonest by the as required by Sec. 51 of the said law, the bank and its stockholders
Board of Directors of Islamic Bank [AIIBP] and the CSC. Petitioner had already forfeited its franchise or charter, including its license to
himself admits that the position of appraiser/inspector is one of the exist and operate as a corporation,[14] and thus no longer have the legal
most serious [and] sensitive job in the banking operations. He should standing and personality to initiate an administrative case.
have been aware that accepting such a designation, he is obliged to
Sawadjaans counsel subsequently adopted his motion, but
perform the task at hand by the exercise of more than ordinary
requested that it be treated as a motion for reconsideration.[15] This
prudence. As appraiser/investigator, he is expected, among others, to
motion was denied by the court a quo in its Resolution of 15 December
check the authenticity of the documents presented by the borrower by
1999.[16]
comparing them with the originals on file with the proper government
office. He should have made it sure that the technical descriptions in Still disheartened, Sawadjaan filed the present petition
the location plan on file with the Bureau of Lands of Marikina, jibe for certiorari under Rule 65 of the Rules of Court challenging the above
with that indicated in the TCT of the collateral offered by CAMEC, and Decision and Resolution of the Court of Appeals on the ground that the
that the mortgage in favor of the Islamic Bank was duly annotated at court a quo erred: i) in ignoring the facts and evidences that the alleged
the back of the copy of the TCT kept by the Register of Deeds of Islamic Bank has no valid by-laws; ii) in ignoring the facts and
Marikina. This, petitioner failed to do, for which he must be held evidences that the Islamic Bank lost its juridical personality as a
liable. That he did not profit from his false report is of no moment. corporation on 16 April 1990; iii) in ignoring the facts and evidences
Neither the fact that it was not deliberate or willful, detracts from the that the alleged Islamic Bank and its alleged Board of Directors have
no jurisdiction to act in the manner they did in the absence of a valid
by-laws; iv) in not correcting the acts of the Civil Service Commission Arrest; and Opposition to their Alleged Manifestation and Motion Dated
who erroneously rendered the assailed Resolutions No. 94-4483 and February 5, 2002);[30] 12) Motion for Reconsideration of Item (a) of
No. 95-2754 as a result of fraud, falsification and/or Resolution dated 5 February 2002 with Supplemental Motion for
misrepresentations committed by Farouk A. Carpizo and his group, Contempt of Court;[31] 13) Motion for Reconsideration of Portion of
including Roberto F. de Ocampo; v) in affirming an unconscionably Resolution Dated 12 March 2002;[32] 14) Ex-Parte Urgent Motion for
harsh and/or excessive penalty; and vi) in failing to consider newly Extension of Time to File Reply Memorandum (To: CSC and AIIBPs
discovered evidence and reverse its decision accordingly. Memorandum);[33] 15) Reply Memorandum (To: CSCs Memorandum)
With Ex-Parte Urgent Motion for Additional Extension of time to File
Subsequently, petitioner Sawadjaan filed an Ex-parte Urgent
Reply Memorandum (To: AIIBPs Memorandum);[34] and 16) Reply
Motion for Additional Extension of Time to File a Reply (to the
Memorandum (To: OGCCs Memorandum for Respondent AIIBP).[35]
Comments of Respondent Al-Amanah Investment Bank of the
Philippines),[17] Reply (to Respondents Consolidated Comment,)[18] and Petitioners efforts are unavailing, and we deny his petition for its
Reply (to the Alleged Comments of Respondent Al-Amanah Islamic procedural and substantive flaws.
Bank of the Philippines).[19] On 13 October 2000, he informed this
The general rule is that the remedy to obtain reversal or
Court that he had terminated his lawyers services, and, by himself,
modification of the judgment on the merits is appeal. This is true even
prepared and filed the following: 1) Motion for New Trial;[20] 2) Motion
if the error, or one of the errors, ascribed to the court rendering the
to Declare Respondents in Default and/or Having Waived their Rights
judgment is its lack of jurisdiction over the subject matter, or the
to Interpose Objection to Petitioners Motion for New Trial;[21] 3) Ex-
exercise of power in excess thereof, or grave abuse of discretion in the
Parte Urgent Motions to Punish Attorneys Amado D. Valdez, Elpidio J.
findings of fact or of law set out in the decision.[36]
Vega, Alda G. Reyes, Dominador R. Isidoro, Jr., and Odilon A. Diaz for
Being in Contempt of Court & to Inhibit them from Appearing in this The records show that petitioners counsel received the Resolution
Case Until they Can Present Valid Evidence of Legal Authority;[22] 4) of the Court of Appeals denying his motion for reconsideration on 27
Opposition/Reply (to Respondent AIIBPs Alleged Comment);[23] 5) Ex- December 1999. The fifteen day reglamentary period to appeal under
Parte Urgent Motion to Punish Atty. Reynaldo A. Pineda for Contempt Rule 45 of the Rules of Court therefore lapsed on 11 January 2000. On
of Court and the Issuance of a Commitment Order/Warrant for His 23 February 2000, over a month after receipt of the resolution denying
Arrest;[24] 6) Reply/Opposition (To the Formal Notice of Withdrawal of his motion for reconsideration, the petitioner filed his petition
Undersigned Counsel as Legal Counsel for the Respondent Islamic for certiorari under Rule 65.
Bank with Opposition to Petitioners Motion to Punish Undersigned
It is settled that a special civil action for certiorari will not lie as a
Counsel for Contempt of Court for the Issuance of a Warrant of
substitute for the lost remedy of appeal,[37] and though there are
Arrest);[25] 7) Memorandum for Petitioner;[26] 8) Opposition to SolGens
instances[38] where the extraordinary remedy of certiorari may be
Motion for Clarification with Motion for Default and/or Waiver of
resorted to despite the availability of an appeal,[39] we find no special
Respondents to File their Memorandum;[27] 9) Motion for Contempt of
reasons for making out an exception in this case.
Court and Inhibition/Disqualification with Opposition to OGCCs
Motion for Extension of Time to File Memorandum;[28] 10) Motion for Even if we were to overlook this fact in the broader interests of
Enforcement (In Defense of the Rule of Law);[29] 11) Motion and justice and treat this as a special civil action for certiorari under Rule
Opposition (Motion to Punish OGCCs Attorneys Amado D. Valdez, Efren 65,[40] the petition would nevertheless be dismissed for failure of the
B. Gonzales, Alda G. Reyes, Odilon A. Diaz and Dominador R. Isidoro, petitioner to show grave abuse of discretion. Petitioners recurrent
Jr., for Contempt of Court and the Issuance of a Warrant for their argument, tenuous at its very best, is premised on the fact that since
respondent AIIBP failed to file its by-laws within the designated 60 days exercise corporate powers may not be inquired into collaterally in any
from the effectivity of Rep. Act No. 6848, all proceedings initiated by private suit to which such corporations may be a party.[44]
AIIBP and all actions resulting therefrom are a patent nullity. Or, in his
Moreover, a corporation which has failed to file its by-laws within
words, the AIIBP and its officers and Board of Directors,
the prescribed period does not ipso facto lose its powers as such. The
SEC Rules on Suspension/Revocation of the Certificate of Registration
. . . [H]ave no legal authority nor jurisdiction to manage much less
of Corporations,[45] details the procedures and remedies that may be
operate the Islamic Bank, file administrative charges and investigate
availed of before an order of revocation can be issued. There is no
petitioner in the manner they did and allegedly passed Board
showing that such a procedure has been initiated in this case.
Resolution No. 2309 on December 13, 1993 which is null and
void for lack of an (sic) authorized and valid by-laws. The CIVIL In any case, petitioners argument is irrelevant because this case is
SERVICE COMMISSION was therefore affirming, erroneously, a null not a corporate controversy, but a labor dispute; and it is an employers
and void Resolution No. 2309 dated December 13, 1993 of the Board basic right to freely select or discharge its employees, if only as a
of Directors of Al-Amanah Islamic Investment Bank of the Philippines measure of self-protection against acts inimical to its
in CSC Resolution No. 94-4483 dated August 11, 1994. A motion for interest.[46] Regardless of whether AIIBP is a corporation, a partnership,
reconsideration thereof was denied by the CSC in its Resolution No. a sole proprietorship, or a sari-saristore, it is an undisputed fact that
95-2754 dated April 11, 1995. Both acts/resolutions of the CSC are AIIBP is the petitioners employer. AIIBP chose to retain his services
erroneous, resulting from fraud, falsifications and misrepresentations during its reorganization, controlled the means and methods by which
of the alleged Chairman and CEO Roberto F. de Ocampo and the his work was to be performed, paid his wages, and, eventually,
alleged Director Farouk A. Carpizo and his group at the alleged terminated his services.[47]
Islamic Bank.[41]
And though he has had ample opportunity to do so, the petitioner
has not alleged that he is anything other than an employee of AIIBP. He
Nowhere in petitioners voluminous pleadings is there a showing
has neither claimed, nor shown, that he is a stockholder or an officer
that the court a quo committed grave abuse of discretion amounting to
of the corporation. Having accepted employment from AIIBP, and
lack or excess of jurisdiction reversible by a petition for certiorari.
rendered his services to the said bank, received his salary, and accepted
Petitioner already raised the question of AIIBPs corporate existence and
the promotion given him, it is now too late in the day for petitioner to
lack of jurisdiction in his Motion for New Trial/Motion for
question its existence and its power to terminate his services. One who
Reconsideration of 27 May 1997 and was denied by the Court of
assumes an obligation to an ostensible corporation as such, cannot
Appeals. Despite the volume of pleadings he has submitted thus far, he
resist performance thereof on the ground that there was in fact no
has added nothing substantial to his arguments.
corporation.[48]
The AIIBP was created by Rep. Act No. 6848. It has a main office
Even if we were to consider the facts behind petitioner Sawadjaans
where it conducts business, has shareholders, corporate officers, a
dismissal from service, we would be hard pressed to find error in the
board of directors, assets, and personnel. It is, in fact, here represented
decision of the AIIBP.
by the Office of the Government Corporate Counsel, the principal law
office of government-owned corporations, one of which is respondent As appraiser/investigator, the petitioner was expected to conduct
bank.[42] At the very least, by its failure to submit its by-laws on time, an ocular inspection of the properties offered by CAMEC as collaterals
the AIIBP may be considered a de facto corporation[43] whose right to and check the copies of the certificates of title against those on file with
the Registry of Deeds. Not only did he fail to conduct these routine
checks, but he also deliberately misrepresented in his appraisal report Marikina the authenticity of the property located at Mayamot,
that after reviewing the documents and conducting a site inspection, Antipolo, Rizal covered by TCT No. N-130671 and which is one of the
he found the CAMEC loan application to be in order. Despite the properties offered as collateral by CAMEC for its P5 Million loan in
number of pleadings he has filed, he has failed to offer an alternative 1988. If he only visited and verified with the Register of Deeds of
explanation for his actions. Marikina the authenticity of TCT No. N-130671 he could have easily
discovered that TCT No. N-130671 is fake and the property described
When he was informed of the charges against him and directed to
therein non-existent.
appear and present his side on the matter, the petitioner sent instead
a memorandum questioning the fairness and impartiality of the
...
members of the investigating committee and refusing to recognize their
jurisdiction over him. Nevertheless, the investigating committee
This notwithstanding, respondent cannot escape liability. As adverted
rescheduled the hearing to give the petitioner another chance, but he
to earlier, his failure to perform his official duties resulted to the
still refused to appear before it.
prejudice and substantial damage to the ISLAMIC BANK for which he
Thereafter, witnesses were presented, and a decision was rendered should be held liable for the administrative offense of CONDUCT
finding him guilty of dishonesty and dismissing him from service. He PREJUDICIAL TO THE BEST INTEREST OF THE SERVICE.[49]
sought a reconsideration of this decision and the same committee
whose impartiality he questioned reduced their recommended penalty From the foregoing, we find that the CSC and the court a
to suspension for six months and one day. The board of directors, quo committed no grave abuse of discretion when they sustained
however, opted to dismiss him from service. Sawadjaans dismissal from service. Grave abuse of discretion implies
such capricious and whimsical exercise of judgment as equivalent to
On appeal to the CSC, the Commission found that Sawadjaans
lack of jurisdiction, or, in other words, where the power is exercised in
failure to perform his official duties greatly prejudiced the AIIBP, for
an arbitrary or despotic manner by reason of passion or personal
which he should be held accountable. It held that:
hostility, and it must be so patent and gross as to amount to an evasion
of positive duty or to a virtual refusal to perform the duty enjoined or
. . . (I)t is crystal clear that respondent SAPPARI SAWADJAAN was
to act at all in contemplation of law.[50] The records show that the
remiss in the performance of his duties as appraiser/inspector. Had
respondents did none of these; they acted in accordance with the law.
respondent performed his duties as appraiser/inspector, he could
have easily noticed that the property located at Balintawak, Caloocan WHEREFORE, the petition is DISMISSED. The Decision of the
City covered by TCT No. C-52576 and which is one of the properties Court of Appeals of 30 March 1999 affirming Resolutions No. 94-4483
offered as collateral by CAMEC is encumbered to Divina Pablico. Had and No. 95-2754 of the Civil Service Commission, and its Resolution of
respondent reflected such fact in his appraisal/inspection report on 15 December 1999 are hereby AFFIRMED. Costs against the petitioner.
said property the ISLAMIC BANK would not have approved CAMECs
SO ORDERED.
loan of P500,000.00 in 1987 and CAMECs P5 Million loan in 1988,
respondent knowing fully well the Banks policy of not accepting Davide, Jr., C.J., Panganiban, Quisumbing, Ynares-Santiago,
encumbered properties as collateral. Sandoval-Gutierrez, Carpio, Austria-Martinez, Corona, Carpio-Morales,
Callejo, Sr., Azcuna, Tinga, and Garcia, JJ., concur.
Respondent SAWADJAANs reprehensible act is further aggravated Puno, J., on official leave.
when he failed to check and verify from the Registry of Deeds of
EN BANC
Petitioner,
Present:
- versus -
CORONA, C.J.,
Respondents.
DECISION
CARPIO, J.:
The Case
Petitioner raises the following issues: (1) whether the consummation This Court is not a trier of facts. Factual questions such as those
of the then impending sale of 111,415 PTIC shares to First Pacific raised by petitioner,9 which indisputably demand a thorough
violates the constitutional limit on foreign ownership of a public examination of the evidence of the parties, are generally beyond this
utility; (2) whether public respondents committed grave abuse of Courts jurisdiction. Adhering to this well-settled principle, the Court
discretion in allowing the sale of the 111,415 PTIC shares to First shall confine the resolution of the instant controversy solely on
Pacific; and (3) whether the sale of common shares to foreigners in the threshold and purely legal issue of whether the term capital in
excess of 40 percent of the entire subscribed common capital stock Section 11, Article XII of the Constitution refers to the total common
violates the constitutional limit on foreign ownership of a public shares only or to the total outstanding capital stock (combined total of
utility.8 common and non-voting preferred shares) of PLDT, a public utility.
The Ruling of the Court In Salvacion v. Central Bank of the Philippines,13 the Court treated the
petition for declaratory relief as one for mandamus considering the
grave injustice that would result in the interpretation of a banking
law. In that case, which involved the crime of rape committed by a
The petition is partly meritorious. foreign tourist against a Filipino minor and the execution of the final
judgment in the civil case for damages on the tourists dollar deposit
with a local bank, the Court declared Section 113 of Central Bank
Circular No. 960, exempting foreign currency deposits from
Petition for declaratory relief treated as petition for mandamus attachment, garnishment or any other order or process of any court,
inapplicable due to the peculiar circumstances of the case. The Court
held that injustice would result especially to a citizen aggrieved by a
foreign guest like accused x x x that would negate Article 10 of the
At the outset, petitioner is faced with a procedural barrier. Among the Civil Code which provides that in case of doubt in the interpretation
remedies petitioner seeks, only the petition for prohibition is within or application of laws, it is presumed that the lawmaking body
the original jurisdiction of this court, which however is not exclusive intended right and justice to prevail. The Court therefore required
but is concurrent with the Regional Trial Court and the Court of respondents Central Bank of the Philippines, the local bank, and the
Appeals. The actions for declaratory relief,10 injunction, and accused to comply with the writ of execution issued in the civil case
annulment of sale are not embraced within the original jurisdiction of for damages and to release the dollar deposit of the accused to satisfy
the Supreme Court. On this ground alone, the petition could have the judgment.
been dismissed outright.
The forty percent (40%) foreign equity limitation in public Clearly, therefore, the forty percent (40%) foreign equity
utilities prescribed by the Constitution refers to ownership of limitation in public utilities prescribed by the Constitution
shares of stock entitled to vote, i.e., common shares, refers to ownership of shares of stock entitled to vote, i.e.,
considering that it is through voting that control is being common shares. Furthermore, ownership of record of shares
exercised. x x x will not suffice but it must be shown that the legal and
beneficial ownership rests in the hands of Filipino citizens.
Consequently, in the case of petitioner PLDT, since it is already
admitted that the voting interests of foreigners which would
Obviously, the intent of the framers of the Constitution in gain entry to petitioner PLDT by the acquisition of SMART
imposing limitations and restrictions on fully nationalized and shares through the Questioned Transactions is equivalent to
partially nationalized activities is for Filipino nationals to be 82.99%, and the nominee arrangements between the foreign
always in control of the corporation undertaking said activities. principals and the Filipino owners is likewise admitted, there is,
Otherwise, if the Trial Courts ruling upholding respondents therefore, a violation of Section 11, Article XII of the
arguments were to be given credence, it would be possible for Constitution.
the ownership structure of a public utility corporation to be
Parenthetically, the Opinions dated February 15, 1988 and 16. The Constitution applies its foreign ownership limitation on
April 14, 1987 cited by the Trial Court to support the the corporations capital, without distinction as to classes of
proposition that the meaning of the word capital as used in shares. x x x
Section 11, Article XII of the Constitution allegedly refers to the
sum total of the shares subscribed and paid-in by the
shareholder and it allegedly is immaterial how the stock is
classified, whether as common or preferred, cannot stand in the In this connection, the Corporation Code which was already in
face of a clear legislative policy as stated in the FIA which took force at the time the present (1987) Constitution was drafted
effect in 1991 or way after said opinions were rendered, and as defined outstanding capital stock as follows:
clarified by the above-quoted Amendments. In this regard,
suffice it to state that as between the law and an opinion
rendered by an administrative agency, the law indubitably
prevails. Moreover, said Opinions are merely advisory and Section 137. Outstanding capital stock defined. The term
cannot prevail over the clear intent of the framers of the outstanding capital stock, as used in this Code, means the total
Constitution. shares of stock issued under binding subscription agreements
to subscribers or stockholders, whether or not fully or partially
paid, except treasury shares.
Sec. 6. Classification of shares. - The shares of stock of stock A corporation may, furthermore, classify its shares for the
corporations may be divided into classes or series of shares, or purpose of insuring compliance with constitutional or legal
both, any of which classes or series of shares may have such requirements.
rights, privileges or restrictions as may be stated in the articles
of incorporation: Provided, That no share may be deprived of
voting rights except those classified and issued as preferred
Except as otherwise provided in the articles of incorporation Indisputably, one of the rights of a stockholder is the right to
and stated in the certificate of stock, each share shall be equal participate in the control or management of the corporation.43 This is
in all respects to every other share. exercised through his vote in the election of directors because it is the
board of directors that controls or manages the corporation.44 In the
Where the articles of incorporation provide for non-voting absence of provisions in the articles of incorporation denying voting
shares in the cases allowed by this Code, the holders of such rights to preferred shares, preferred shares have the same voting
shares shall nevertheless be entitled to vote on the following rights as common shares. However, preferred shareholders are often
matters: excluded from any control, that is, deprived of the right to vote in the
election of directors and on other matters, on the theory that the
1. Amendment of the articles of incorporation; preferred shareholders are merely investors in the corporation for
income in the same manner as bondholders.45 In fact, under the
2. Adoption and amendment of by-laws; Corporation Code only preferred or redeemable shares can be
deprived of the right to vote.46 Common shares cannot be deprived of
3. Sale, lease, exchange, mortgage, pledge or other the right to vote in any corporate meeting, and any provision in the
disposition of all or substantially all of the corporate articles of incorporation restricting the right of common shareholders
property; to vote is invalid.47
5. Increase or decrease of capital stock; Considering that common shares have voting rights which translate to
control, as opposed to preferred shares which usually have no voting
6. Merger or consolidation of the corporation with another rights, the term capital in Section 11, Article XII of the Constitution
corporation or other corporations; refers only to common shares. However, if the preferred shares also
have the right to vote in the election of directors, then the term capital
7. Investment of corporate funds in another corporation shall include such preferred shares because the right to participate in
or business in accordance with this Code; and the control or management of the corporation is exercised through the
right to vote in the election of directors. In short, the term capital in
8. Dissolution of the corporation. Section 11, Article XII of the Constitution refers only to shares of
stock that can vote in the election of directors.
Except as provided in the immediately preceding paragraph, the
vote necessary to approve a particular corporate act as provided
in this Code shall be deemed to refer only to stocks with voting
rights. This interpretation is consistent with the intent of the framers of the
Constitution to place in the hands of Filipino citizens the control and
management of public utilities. As revealed in the deliberations of the
Constitutional Commission, capital refers to the voting stock
or controlling interest of a corporation, to wit:
MR. NOLLEDO. In Sections 3, 9 and 15, the Committee stated With respect to an investment by one corporation in another
local or Filipino equity and foreign equity; namely, 60-40 in corporation, say, a corporation with 60-40 percent equity
Section 3, 60-40 in Section 9 and 2/3-1/3 in Section 15. invests in another corporation which is permitted by the
Corporation Code, does the Committee adopt the grandfather
rule?
MR. AZCUNA. But the control can be with the foreigners SEC. 3. Definitions. - As used in this Act:
even if they are the minority. Let us say 40 percent of the
capital is owned by them, but it is the voting capital,
whereas, the Filipinos own the nonvoting shares. So we can
have a situation where the corporation is controlled by a. The term Philippine national shall mean a citizen of the
foreigners despite being the minority because they have the Philippines; or a domestic partnership or association wholly
voting capital. That is the anomaly that would result here. owned by citizens of the Philippines; or a corporation
organized under the laws of the Philippines of which at
least sixty percent (60%) of the capital stock
outstanding and entitled to vote is owned and held by
MR. BENGZON. No, the reason we eliminated the word stock citizens of the Philippines; or a corporation organized abroad
as stated in the 1973 and 1935 Constitutions is that and registered as doing business in the Philippines under the
according to Commissioner Rodrigo, there are associations Corporation Code of which one hundred percent (100%) of the
that do not have stocks. That is why we say CAPITAL. capital stock outstanding and entitled to vote is wholly owned
by Filipinos or a trustee of funds for pension or other employee
retirement or separation benefits, where the trustee is a
Philippine national and at least sixty percent (60%) of the fund
MR. AZCUNA. We should not eliminate the phrase will accrue to the benefit of Philippine nationals: Provided, That
controlling interest. where a corporation and its non-Filipino stockholders own
stocks in a Securities and Exchange Commission (SEC)
registered enterprise, at least sixty percent (60%) of the capital
stock outstanding and entitled to vote of each of both
corporations must be owned and held by citizens of the
Philippines and at least sixty percent (60%) of the members of
the Board of Directors of each of both corporations must be
citizens of the Philippines, in order that the corporation, shall For stocks to be deemed owned and held by Philippine
be considered a Philippine national. (Emphasis supplied) citizens or Philippine nationals, mere legal title is not
enough to meet the required Filipino equity. Full beneficial
ownership of the stocks, coupled with appropriate voting
rights is essential. Thus, stocks, the voting rights of which
In explaining the definition of a Philippine national, the Implementing have been assigned or transferred to aliens cannot be
Rules and Regulations of the Foreign Investments Act of 1991 provide: considered held by Philippine citizens or Philippine
nationals.
The example given is not theoretical but can be found in the real
To construe broadly the term capital as the total outstanding capital world, and in fact exists in the present case.
stock, including both common and non-voting preferred shares,
grossly contravenes the intent and letter of the Constitution that the
State shall develop a self-reliant and independent national
economy effectively controlled by Filipinos. A broad definition Holders of PLDT preferred shares are explicitly denied of the right to
unjustifiably disregards who owns the all-important voting stock, vote in the election of directors. PLDTs Articles of Incorporation
which necessarily equates to control of the public utility. expressly state that the holders of Serial Preferred Stock shall not
be entitled to vote at any meeting of the stockholders for the
election of directors or for any other purpose or otherwise
participate in any action taken by the corporation or its stockholders,
We shall illustrate the glaring anomaly in giving a broad definition to or to receive notice of any meeting of stockholders.51
the term capital. Let us assume that a corporation has 100 common
shares owned by foreigners and 1,000,000 non-voting preferred
shares owned by Filipinos, with both classes of share having a par
value of one peso (P1.00) per share. Under the broad definition of the On the other hand, holders of common shares are granted the
term capital, such corporation would be considered compliant with exclusive right to vote in the election of directors. PLDTs Articles of
the 40 percent constitutional limit on foreign equity of public utilities Incorporation52 state that each holder of Common Capital Stock shall
since the overwhelming majority, or more than 99.999 percent, of the have one vote in respect of each share of such stock held by him on
total outstanding capital stock is Filipino owned. This is obviously all matters voted upon by the stockholders, and the holders of
absurd. Common Capital Stock shall have the exclusive right to vote for
the election of directors and for all other purposes.53
In the example given, only the foreigners holding the common shares
have voting rights in the election of directors, even if they hold only
In short, only holders of common shares can vote in the election of As shown in PLDTs 2010 GIS,60 as submitted to the SEC, the par
directors, meaning only common shareholders exercise control over value of PLDT common shares is P5.00 per share, whereas the par
PLDT. Conversely, holders of preferred shares, who have no voting value of preferred shares is P10.00 per share. In other words,
rights in the election of directors, do not have any control over PLDT. preferred shares have twice the par value of common shares but
In fact, under PLDTs Articles of Incorporation, holders of common cannot elect directors and have only 1/70 of the dividends of common
shares have voting rights for all purposes, while holders of preferred shares. Moreover, 99.44% of the preferred shares are owned by
shares have no voting right for any purpose whatsoever. Filipinos while foreigners own only a minuscule 0.56% of the preferred
shares.61 Worse, preferred shares constitute 77.85% of the authorized
capital stock of PLDT while common shares constitute only
22.15%.62 This undeniably shows that beneficial interest in PLDT is
It must be stressed, and respondents do not dispute, that foreigners not with the non-voting preferred shares but with the common shares,
hold a majority of the common shares of PLDT. In fact, based on blatantly violating the constitutional requirement of 60 percent
PLDTs 2010 General Information Sheet (GIS),54which is a document Filipino control and Filipino beneficial ownership in a public utility.
required to be submitted annually to the Securities and Exchange
Commission,55 foreigners hold 120,046,690 common shares of PLDT
whereas Filipinos hold only 66,750,622 common shares.56 In other
words, foreigners hold 64.27% of the total number of PLDTs common The legal and beneficial ownership of 60 percent of the outstanding
shares, while Filipinos hold only 35.73%. Since holding a majority of capital stock must rest in the hands of Filipinos in accordance with
the common shares equates to control, it is clear that foreigners the constitutional mandate. Full beneficial ownership of 60 percent of
exercise control over PLDT. Such amount of control unmistakably the outstanding capital stock, coupled with 60 percent of the voting
exceeds the allowable 40 percent limit on foreign ownership of public rights, is constitutionally required for the States grant of authority to
utilities expressly mandated in Section 11, Article XII of the operate a public utility. The undisputed fact that the PLDT preferred
Constitution. shares, 99.44% owned by Filipinos, are non-voting and earn only
1/70 of the dividends that PLDT common shares earn, grossly violates
the constitutional requirement of 60 percent Filipino control and
Filipino beneficial ownership of a public utility.
Moreover, the Dividend Declarations of PLDT for 2009,57 as submitted
to the SEC, shows that per share the SIP58 preferred shares earn a In short, Filipinos hold less than 60 percent of the voting stock,
pittance in dividends compared to the common shares. PLDT declared and earn less than 60 percent of the dividends, of PLDT. This
dividends for the common shares at P70.00 per share, while the directly contravenes the express command in Section 11, Article XII of
declared dividends for the preferred shares amounted to a the Constitution that [n]o franchise, certificate, or any other form of
measly P1.00 per share.59 So the preferred shares not only cannot authorization for the operation of a public utility shall be granted
vote in the election of directors, they also have very little and except to x x xcorporations x x x organized under the laws of the
obviously negligible dividend earning capacity compared to common Philippines, at least sixty per centum of whose capital is owned by
shares. such citizens x x x.
To repeat, (1) foreigners own 64.27% of the common shares of PLDT, letter of the Constitution to ensure, in the words of the Constitution, a
which class of shares exercises the sole right to vote in the election of self-reliant and independent national economy effectively controlled by
directors, and thus exercise control over PLDT; (2) Filipinos own only Filipinos.
35.73% of PLDTs common shares, constituting a minority of the
voting stock, and thus do not exercise control over PLDT; (3) preferred
shares, 99.44% owned by Filipinos, have no voting rights; (4)
preferred shares earn only 1/70 of the dividends that common shares Section 11, Article XII of the Constitution, like other provisions of the
earn;63 (5) preferred shares have twice the par value of common Constitution expressly reserving to Filipinos specific areas of
shares; and (6) preferred shares constitute 77.85% of the authorized investment, such as the development of natural resources and
capital stock of PLDT and common shares only 22.15%. This kind of ownership of land, educational institutions and advertising business,
ownership and control of a public utility is a mockery of the is self-executing. There is no need for legislation to implement these
Constitution. self-executing provisions of the Constitution. The rationale why these
constitutional provisions are self-executing was explained in Manila
Prince Hotel v. GSIS,66 thus:
Incidentally, the fact that PLDT common shares with a par value x x x Hence, unless it is expressly provided that a legislative act
of P5.00 have a current stock market value of P2,328.00 per is necessary to enforce a constitutional mandate, the
share,64 while PLDT preferred shares with a par value of P10.00 per presumption now is that all provisions of the constitution are
share have a current stock market value ranging from only P10.92 self-executing. If the constitutional provisions are treated as
to P11.06 per share,65 is a glaring confirmation by the market that requiring legislation instead of self-executing, the legislature
control and beneficial ownership of PLDT rest with the common would have the power to ignore and practically nullify the
shares, not with the preferred shares. mandate of the fundamental law. This can be cataclysmic. That
is why the prevailing view is, as it has always been, that
SECOND DIVISION
In its 30 July 2002 Decision, the Labor Arbiter (LA) found that
Mar Fishing had necessarily closed its operations, considering that Aggrieved, petitioners pursued the action before the NLRC, which
Miramar had already bought the tuna canning plant.[8] By reason of the modified the LAs Decision. Noting that Mar Fishing notified the DOLE
closure, petitioners were legally dismissed for authorized cause.[9] In only two days before the business closed, the labor court considered
petitioners dismissal as ineffectual.[12] Hence, it awarded, apart from petitioners[18]signed the Verification and Certification against forum
separation pay, full back wages to petitioners from the time they were shopping, the CA instantly dismissed the action for certiorari against
terminated on 31 October 2001 until the date when the LA upheld the the 225 other petitioners without ruling on the substantive aspects of
validity of their dismissal on 30 July 2002.[13] the case.[19]
Additionally, the NLRC pierced the veil of corporate fiction and By means of a Manifestation with Omnibus Motion,[20] petitioners
ruled that Mar Fishing and Miramar were one and the same entity, submitted a Verification and Certification against forum shopping
since their officers were the same.[14]Hence, both companies were executed by 161 signatories. In the said pleading, petitioners asked the
ordered to solidarily pay the monetary claims.[15] CA to reconsider by invoking the rule that technical rules do not strictly
apply to labor cases.[21] Still, the CA denied petitioners contentions and
On reconsideration, the NLRC modified its ruling by imposing held thus:[22]
liability only on Mar Fishing. The labor court held that petitioners had
no cause of action against Miramar, since labor contracts cannot be Anent the liberality in application of the rules, as
enforced against the transferee of an enterprise in the absence of a alleged by petitioners, the same deserves scant
consideration. x x x.
stipulation in the contract that the transferee assumes the obligation
of the transferor.[16] Hence, the dispositive portion reads:[17] xxx. While litigation is not a game of technicalities,
and that the rules of procedure should not be enforced
WHEREFORE, foregoing premises considered, the strictly at the cost of substantial justice, still it does not
assailed resolution is MODIFIED in that only Mar Fishing follow that the Rules of Court may be ignored at will and
Company, Inc. through its responsible officers, is ordered at random to the prejudice of the orderly presentation,
to pay complainants their separation pay, and full assessment and just resolution of the issues. xxx.
backwages from the date they were terminated from
employment until 30 July 2002, subject to computation
during execution stage of proceedings at the appropriate Before this Court, 124 petitioners raise the issue of whether the
Regional Arbitration Branch. CA gravely erred in dismissing their Petition for Review on the ground
that their pleading lacked a Verification and Certification against forum
SO ORDERED. shopping.[23]
Despite the award of separation pay and back wages, petitioners The Rules of Court provide that a petition for certiorari must be
filed a Rule 65 Petition before the CA. This time, they argued that both verified and accompanied by a sworn certification of non-forum
Mar Fishing and Miramar should be made liable for their separation shopping.[24] Failure to comply with these mandatory requirements
pay, and that their back wages should be up to the time of their actual shall be sufficient ground for the dismissal of the
reinstatement. However, finding that only 3 of the 228 petition.[25] Considering that only 3 of the 228 named petitioners signed
the requirement, the CA dismissed the case against them, as they did the solidary liability of Mar Fishing and Miramar to pay petitioners
not execute a Verification and Certification against forum shopping. monetary claims and (2) the reckoning period for the award of back
wages.
Petitioners invoke substantial compliance with procedural rules
when their Manifestation already contains a Verification and For a dismissal based on the closure of business to be valid, three
Certification against forum shopping executed by 161 signatories. They (3) requirements must be established. Firstly, the cessation of or
heavily rely on Jaro v. Court of Appeals,[26] citing Piglas-Kamao v. withdrawal from business operations must be bona fide in character.
National Labor Relations Commission and Cusi-Hernandez v. Diaz, in Secondly, there must be payment to the employees of termination pay
which we discussed that the subsequent submission of the missing amounting to at least one-half (1/2) month pay for each year of service,
documentary attachments with the Motion for Reconsideration or one (1) month pay, whichever is higher. Thirdly, the company must
amounted to substantial compliance. serve a written notice on the employees and on the DOLE at least one
(1) month before the intended termination.[32]
However, this very case does not involve a failure to attach the
Annexes. Rather, the procedural infirmity consists of omission the In their Petition for Review on Certiorari, petitioners did not
failure to sign a Verification and Certification against forum shopping. dispute the conclusion of the LA and the NLRC that Mar Fishing had
Addressing this defect squarely, we have already resolved that because an authorized cause to dismiss its workers. Neither did petitioners
of noncompliance with the requirements governing the certification of challenge the computation of their separation pay.
non-forum shopping, no error could be validly attributed to the CA
when it ordered the dismissal of the special civil action for Rather, they questioned the holding that only Mar Fishing was
certiorari.[27] The lack of certification against forum shopping is not liable for their monetary claims.[33]
curable by mere amendment of a complaint, but shall be a cause for
the dismissal of the case without prejudice.[28] Indeed, the general rule Basing their conclusion on the Memorandum of Agreement and
is that subsequent compliance with the requirements will not Supplemental Agreement between Miramar and Mar Fishings labor
excuse a party's failure to comply in the first instance.[29] Thus, on union, as well as the General Information Sheets and Company Profiles
procedural aspects, the appellate court correctly dismissed the case. of the two companies, petitioners assert that Miramar simply took over
the operations of Mar Fishing. In addition, they assert that these
However, this Court has recognized that the merit of a case is a companies are one and the same entity, given the commonality of their
special circumstance or compelling reason that justifies the relaxation directors and the similarity of their business venture in tuna canning
of the rule requiring verification and certification of non-forum plant operations.[34]
shopping.[30] In order to fully resolve the issue, it is thus necessary to
determine whether technical rules were brushed aside at the expense At the fore, the question of whether one corporation is merely an
of substantial justice.[31] This Court will then delve into the issue on (1) alter ego of another is purely one of fact generally beyond the
jurisdiction of this Court.[35] In any case, given only these bare and that the physical plants, offices and facilities are
reiterations, this Court sustains the ruling of the LA as affirmed by the situated in the same compound, it is our considered
opinion that these facts are not sufficient to justify
NLRC that Miramar and Mar Fishing are separate and distinct entities,
the piercing of the corporate veil of Acrylic. (Emphasis
based on the marked differences in their stock ownership.[36] Also, the supplied.)
fact that Mar Fishings officers remained as such in Miramar does not
by itself warrant a conclusion that the two companies are one and the
same. As this Court held in Sesbreo v. Court of Appeals, the mere Having been found by the trial courts to be a separate entity, Mar
showing that the corporations had a common director sitting in all the Fishing and not Miramar is required to compensate petitioners. Indeed,
boards without more does not authorize disregarding their separate the back wages and retirement pay earned from the former employer
juridical personalities.[37] cannot be filed against the new owners or operators of an enterprise.[40]
Neither can the veil of corporate fiction between the two Evidently, the assertions of petitioners fail on both procedural
companies be pierced by the rest of petitioners submissions, namely, and substantive aspects. Therefore, no special reasons exist to reverse
the alleged take-over by Miramar of Mar Fishings operations and the the CAs dismissal of the case due to their failure to abide by the
evident similarity of their businesses. At this point, it bears mandatory procedure for filing a petition for review on certiorari. Given
emphasizing that since piercing the veil of corporate fiction is frowned the correctness of the appellate courts ruling and the lack of
upon, those who seek to pierce the veil must clearly establish that the appropriate remedies, this Court will no longer dwell on the exact
separate and distinct personalities of the corporations are set up to computation of petitioners claims for back wages, which have been
justify a wrong, protect a fraud, or perpetrate a deception.[38] This, sufficiently threshed out by the LA and the NLRC. Judicial review of
unfortunately, petitioners have failed to do. In Indophil Textile Mill labor cases does not go beyond an evaluation of the sufficiency of the
Workers Union vs. Calica, we ruled thus:[39] evidence upon which labor officials' findings rest.[41]
In the case at bar, petitioner seeks to pierce the veil While we sympathize with the situation of the workers in this
of corporate entity of Acrylic, alleging that the creation of
the corporation is a devi[c]e to evade the application of the case, we cannot disregard, absent compelling reasons, the factual
CBA between petitioner Union and private respondent determinations and the legal doctrines that support the findings of the
company. While we do not discount the possibility of the courts a quo. Generally, the findings of fact and the conclusion of the
similarities of the businesses of private respondent and labor courts are not only accorded great weight and respect, but are
Acrylic, neither are we inclined to apply the doctrine even clothed with finality and deemed binding on this Court, as long as
invoked by petitioner in granting the relief sought. The
they are supported by substantial evidence.[42]
fact that the businesses of private respondent and
Acrylic are related, that some of the employees of the
private respondent are the same persons manning and On a final note, this Court reminds the parties seeking the
providing for auxiliary services to the units of Acrylic, ultimate relief of certiorari to observe the rules, since nonobservance
thereof cannot be brushed aside as a mere technicality.[43] Procedural ABAD, and
rules are not to be belittled or simply disregarded, for these prescribed _____________,** JJ.
procedures ensure an orderly and speedy administration of justice.[44]
IN VIEW THEREOF, the assailed 19 March 2004 and 12 May DIOSDADO GARCIA, LUISITO GARCIA,
2005 Resolutions of the Court of Appeals in CA-GR SP NO. 82651 RODANTE ROMERO, REX BARTOLOME,
Promulgated:
are AFFIRMED. Hence, the 04 July 2005 Petition for Review filed by FELICIANO GASCO, JR., DANILO ROJO,
EDGAR SANFUEGO, AMADO GALANTO,
petitioners is hereby DENIED for lack of merit. SO ORDERED.
EUTIQUIO LUGTU, JOEL GRAMATICA,
MIEL CERVANTES, TERESITA CABANES,
ROE DELA CRUZ, RICHELO BALIDOY,
VILMA PORRAS, MIGUELITO SALCEDO,
CRISTINA GARCIA, MARIO NAZARENO, January 12, 2011
Republic of the Philippines
DINDO TORRES, ESMAEL RAMBOYONG,
Supreme Court ROBETO*MANO, ROGELIO BAGAWISAN,
ARIEL SNACHEZ, ESTAQULO VILLAREAL,
Manila
NELSON MONTERO, GLORIA ORANTE,
HARRY TOCA, PABLITO MACASAET and
RONALD GARCITA
Respondents.
SECOND DIVISION
x-----------------------------------------------------------------------------------------x
Petitioners,
Present:
PERALTA, J.:
Complainants Backwages Separation Pay With respect to the portion ordering the inclusion of Danilo
41. Danilo Rojo P355,560.00 P48,000.00 Rojo and Danilo Laurel in the computation of petitioner's
42. Danilo Laurel P357,960.00 P72,000.00 claim for backwages and with respect to the portion
ordering the refund of Edgardo Belda's boundary-hulog in
As regards all other aspects, the Decision appealed from the amount of P446,862.00, the NLRC decision is affirmed
is SUSTAINED. and maintained.
SO ORDERED.[9]
SO ORDERED.[7]
However, equally settled is the rule that factual findings of labor Firstly, petitioners posit that the petition filed with the CA is fatally
officials, who are deemed to have acquired expertise in matters within defective, because the attached verification and certificate against
their jurisdiction, are generally accorded not only respect but forum shopping was signed only by respondent Garcia.
even finality by the courts when supported by substantial evidence, i.e.,
the amount of relevant evidence which a reasonable mind might accept The Court does not agree.
as adequate to justify a conclusion.[14] But these findings are not
infallible. When there is a showing that they were arrived at arbitrarily While the general rule is that the certificate of non-forum shopping
or in disregard of the evidence on record, they may be examined by the must be signed by all the plaintiffs in a case and the signature of only
courts.[15] The CA can grant the petition for certiorari if it finds that the one of them is insufficient, the Court has stressed that the rules on
NLRC, in its assailed decision or resolution, made a factual finding not forum shopping, which were designed to promote and facilitate the
orderly administration of justice, should not be interpreted with such
absolute literalness as to subvert its own ultimate and legitimate With respect to the absence of some of the workers signatures in the
objective.[19] Strict compliance with the provision regarding the verification, the verification requirement is deemed substantially
certificate of non-forum shopping underscores its mandatory nature in complied with when some of the parties who undoubtedly have
that the certification cannot be altogether dispensed with or its sufficient knowledge and belief to swear to the truth of the allegations
requirements completely disregarded.[20] It does not, however, prohibit in the petition had signed the same. Such verification is deemed a
substantial compliance therewith under justifiable circumstances, sufficient assurance that the matters alleged in the petition have been
considering especially that although it is obligatory, it is not made in good faith or are true and correct, and not merely speculative.
jurisdictional.[21] Moreover, respondents' Partial Appeal shows that the appeal stipulated
as complainants-appellants Rizal Beato, et al., meaning that there were
In a number of cases, the Court has consistently held that when all the more than one appellant who were all workers of petitioners.
petitioners share a common interest and invoke a common cause of
action or defense, the signature of only one of them in the certification In any case, the settled rule is that a pleading which is required by the
against forum shopping substantially complies with the rules.[22] In the Rules of Court to be verified, may be given due course even without a
present case, there is no question that respondents share a common verification if the circumstances warrant the suspension of the rules in
interest and invoke a common cause of action. Hence, the signature of the interest of justice.[24] Indeed, the absence of a verification is not
respondent Garcia is a sufficient compliance with the rule governing jurisdictional, but only a formal defect, which does not of itself justify
certificates of non-forum shopping. In the first place, some of the a court in refusing to allow and act on a case.[25] Hence, the failure of
respondents actually executed a Special Power of Attorney authorizing some of the respondents to sign the verification attached to their
Garcia as their attorney-in-fact in filing a petition for certiorari with the Memorandum of Appeal filed with the NLRC is not fatal to their cause
CA.[23] of action.
The Court, likewise, does not agree with petitioners' argument that the Petitioners also contend that the CA erred in applying the doctrine of
CA should not have given due course to the petition filed before it with piercing the corporate veil with respect to Lubas, because the said
respect to some of the respondents, considering that these respondents doctrine is applicable only to corporations and Lubas is not a
did not sign the verification attached to the Memorandum of Partial corporation but a single proprietorship; that Lubas had been found by
Appeal earlier filed with the NLRC. Petitioners assert that the decision the Labor Arbiter and the NLRC to have a personality which is separate
of the Labor Arbiter has become final and executory with respect to and distinct from that of PTI; that PTI had no hand in the management
these respondents and, as a consequence, they are barred from filing a and operation as well as control and supervision of the employees of
petition for certiorari with the CA. Lubas.
The Court is not persuaded. The Court also agrees with respondents that if Lubas is indeed an entity
separate and independent from PTI why is it that the latter decides
On the contrary, the Court agrees with the CA that Lubas is a mere which employees shall work in the former?
agent, conduit or adjunct of PTI. A settled formulation of the doctrine
of piercing the corporate veil is that when two business enterprises are What is telling is the fact that in a memorandum issued by PTI,
owned, conducted and controlled by the same parties, both law and dated January 22, 1998, petitioner company admitted that Lubas is
equity will, when necessary to protect the rights of third parties, one of its sub-companies.[28] In addition, PTI, in its letters to its
disregard the legal fiction that these two entities are distinct and treat employees who were transferred to Lubas, referred to the latter as its
them as identical or as one and the same.[26] In the present case, it may New City Operations Bus.[29]
be true that Lubas is a single proprietorship and not a
corporation. However, petitioners attempt to isolate themselves from Moreover, petitioners failed to refute the contention of respondents that
and hide behind the supposed separate and distinct personality of despite the latters transfer to Lubas of their daily time records, reports,
Lubas so as to evade their liabilities is precisely what the classical daily income remittances of conductors, schedule of drivers and
doctrine of piercing the veil of corporate entity seeks to prevent and conductors were all made, performed, filed and kept at the office of PTI.
remedy. In fact, respondents identification cards bear the name of PTI.
Thus, the Court agrees with the observations of the CA, to wit: It may not be amiss to point out at this juncture that in two separate
illegal dismissal cases involving different groups of employees
As correctly pointed out by petitioners, if Lubas were truly transferred by PTI to other companies, the Labor Arbiter handling the
a separate entity, how come that it was Prince Transport
cases found that these companies and PTI are one and the same entity;
who made the decision to transfer its employees to the
former? Besides, Prince Transport never regarded Lubas thus, making them solidarily liable for the payment of backwages and
Transport as a separate entity. In the aforesaid letter, it other money claims awarded to the complainants therein.[30]
referred to said entity as Lubas operations. Moreover, in
said letter, it did not transfer the employees; it assigned
them. Lastly, the existing funds and 201 file of the Petitioners likewise aver that the CA erred and committed grave abuse
employees were turned over not to a new company but a of discretion when it ordered petitioners to reinstate respondents to
new management.[27] their former positions, considering that the issue of reinstatement was
never brought up before it and respondents never questioned the award
of separation pay to them.