GR 163786; (February, 2005) (Digest)
G.R. No. 163786; February 16, 2005
TIMES TRANSPORTATION COMPANY, INC., petitioner, vs. SANTOS SOTELO, ET AL., respondents.
FACTS
Petitioner Times Transportation Company, Inc. (Times) was engaged in land transportation. The Times Employees Union (TEU) was formed and later certified as the sole bargaining agent. A labor dispute ensued, leading to a strike in October 1997. Times declared the strike illegal and terminated 123 employees, including the respondents. Concurrently, Times implemented a retrenchment program in September 1997, notifying respondents and others of their termination.
During the pendency of the labor cases, Times sold its Certificates of Public Convenience and bus units to Mencorp Transport Systems, Inc., a company controlled by the daughter of Times’ majority stockholder. Times eventually ceased operations. The dismissed employees filed complaints for illegal dismissal and unfair labor practice. The Labor Arbiter ruled in favor of the employees, declaring the dismissals illegal and the sale to Mencorp as simulated and in bad faith.
ISSUE
The primary issue is whether the Court of Appeals erred in affirming the Labor Arbiter’s decision which found Times guilty of unfair labor practice and declared the sale of its assets to Mencorp as simulated.
RULING
The Supreme Court denied the petition and affirmed the Court of Appeals. The legal logic centers on the doctrine of piercing the corporate veil and the substantive findings of unfair labor practice. The Court upheld the concurrent findings of the Labor Arbiter, NLRC, and the Court of Appeals that the dismissals constituted unfair labor practice under Article 248(a) and (e) of the Labor Code. The retrenchment was not justified by genuine financial losses but was implemented to rid the company of union members amidst a bargaining dispute, rendering it illegal.
Crucially, the Court affirmed the finding that the sale of assets to Mencorp was a fraudulent transaction designed to evade legal obligations to the employees. Mencorp was not an innocent purchaser but an alter ego of Times, controlled by the same family interests. The timing of the sale, in the midst of a heated labor dispute, and the transfer to a closely related corporation warranted the piercing of the corporate veil. This made Mencorp jointly and severally liable with Times for the employees’ rightful claims. The Supreme Court found no reason to disturb these factual conclusions, which were supported by substantial evidence.