G.R. No. 170689 & G.R. No. 170705, March 17, 2009.
Pantranco Employees Association (PEA-PTGWO) and Pantranco Retrenched Employees Association (PANREA), Petitioners, vs. National Labor Relations Commission (NLRC), Pantranco North Express, Inc. (PNEI), Philippine National Bank (PNB), Philippine National Bank-Management and Development Corporation (PNB-MADECOR), and Mega Prime Realty and Holdings Corporation (Mega Prime), Respondents. / Philippine National Bank, Petitioner, vs. Pantranco Employees Association, Inc. (PEA-PTGWO), Pantranco Retrenched Employees Association (PANREA) and Pantranco Association of Concerned Employees (PACE), ET AL., Philippine National Bank-Management Development Corporation (PNB-MADECOR), and Mega Prime Realty Holdings, Inc., Respondents.

FACTS

Pantranco North Express, Inc. (PNEI) was a bus company owned by the Gonzales family. Its bus terminal stood on four valuable real estate properties (Pantranco properties) registered under the name of a separate family corporation, Macris Realty Corporation (later renamed National Realty Development Corporation/Naredeco). Due to financial losses, creditors took over, and by 1978, ownership of PNEI and Macris was transferred to National Investment Development Corporation (NIDC), a subsidiary of Philippine National Bank (PNB). Naredeco eventually merged with another corporation to form PNB-Madecor. In 1985, NIDC sold PNEI to a private company. PNEI later ceased operations, leading to labor claims by its former employees, who obtained a judgment award of ₱722,727,150.22. To satisfy this judgment, the Labor Arbiter issued a writ of execution. The sheriffs levied upon the four Pantranco properties, which were registered under PNB-Madecor’s name. PNB-Madecor and Mega Prime (its successor-in-interest) filed motions to quash the writ, asserting ownership. PNB also filed a third-party claim, alleging it was a creditor of PNB-Madecor and had an interest in the properties. The Labor Arbiter ruled that the properties belonged to PNB-Madecor, a separate entity from PNEI, and thus could not answer for PNEI’s liabilities, except to the extent of a ₱7,884,000.00 promissory note debt PNB-Madecor owed to PNEI. PNB’s claim was denied for having only an inchoate interest. The NLRC affirmed. The Court of Appeals also affirmed, upholding the separate corporate personalities of PNB, PNB-Madecor, and Mega Prime from PNEI, and the registered ownership of the properties by PNB-Madecor. An auction sale of the properties was subsequently conducted to satisfy the ₱7.8 million debt.

ISSUE

Whether the corporate veil of PNB, PNB-Madecor, and Mega Prime should be pierced to hold them jointly and severally liable for the labor claims of PNEI’s former employees.

RULING

No. The Supreme Court denied the petitions and affirmed the Court of Appeals’ decision. The Court held that the separate corporate personalities of PNEI, PNB, PNB-Madecor, and Mega Prime must be respected. Piercing the corporate veil is an exception and requires proof that the corporation was used as a mere alter ego, instrumentality, or conduit of another entity or person to perpetuate fraud or injustice. The petitioners failed to present clear and convincing evidence to justify piercing the veil. The fact that PNB, through its subsidiary NIDC, acquired PNEI and Macris, and that PNB-Madecor (the successor of Macris) owned the properties where PNEI operated, does not by itself warrant disregarding their separate juridical identities. The Pantranco properties were never registered in PNEI’s name but were always under Macris/PNB-Madecor. There was no evidence that PNB, PNB-Madecor, or Mega Prime controlled PNEI’s operations to evade labor obligations. The legal distinction between the corporations must be upheld; the liabilities of PNEI cannot be enforced against the assets of the other distinct corporate entities.