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Mcleod vs NLRC

On February 2, 1995, John F. McLeod filed a complaint for retirement benefits, vacation and sick
leave benefits and other benefits against Filipinas Synthetic Corporation (Filsyn), Far Eastern
Textile Mills, Inc., Sta. Rosa Textiles, Inc., Complainant was the former VP and Plant Manager of
Peggy Mills, Inc.; that he was hired in June 1980 and Peggy Mills closed operations due to
irreversible losses but its assets were acquired by Sta. Rosa Textile Corporation complainant was
hired by Sta. Rosa Textile but he resigned and that while complainant was Vice President and
Plant Manager of Peggy Mills, the union staged a strike up to July 1992 resulting in closure of
operations due to irreversible losses as per Notice .The complainant was relied upon to settle the
labor problem but due to his lack of attention and absence the strike continued resulting in closure
of the company. Mcleod contends that the corporations are solidarily liable. McLeod also claims
that "for purposes of determining employer liability, all private respondents are one and the same
employer" because: (1) they have the same address; (2) they are all engaged in the same business;
and (3) they have interlocking directors and officers.On 3 April 1998, the Labor Arbiter rendered
his decision in favor of Mcleod The NLRC Reversed decision CA- Modified the NLRCs
decision. Lim was solidarily liable

ISSUE: Whether or not the corporation is solidariy liable to apply the doctrine of
piercing the veil of the corporate fiction.

No. The assertion is untenable. A corporation is an artificial being invested by law with a
personality separate and distinct from that of its stockholders and from that of other corporations
to which it may be connected.
While a corporation may exist for any lawful purpose, the law will regard it as an association of
persons or, in case of two corporations, merge them into one, when its corporate legal entity is
used as a cloak for fraud or illegality. This is the doctrine of piercing the veil of corporate fiction.
The doctrine applies only when such corporate fiction is used to defeat public convenience, justify
wrong, protect fraud, or defend crime,37 or when it is made as a shield to confuse the legitimate
issues, or where a corporation is the mere alter ego or business conduit of a person, or where the
corporation is so organized and controlled and its affairs are so conducted as to make it merely an
instrumentality, agency, conduit or adjunct of another corporation.
To disregard the separate juridical personality of a corporation, the wrongdoing must be
established clearly and convincingly. It cannot be presumed.
Here, we do not find any of the evils sought to be prevented by the doctrine of piercing the
corporate veil.
Respondent corporations may be engaged in the same business as that of PMI, but this fact alone
is not enough reason to pierce the veil of corporate fiction.
At any rate, the existence of interlocking incorporators, directors, and officers is not enough
justification to pierce the veil of corporate fiction, in the absence of fraud or other public policy

In light of the foregoing, and there being no proof of employer-employee relationship between
McLeod and respondent corporations and Eric Hu, McLeods cause of action is only against his
former employer, PMI.
On Patricios personal liability, it is settled that in the absence of malice, bad faith, or specific
provision of law, a stockholder or an officer of a corporation cannot be made personally liable for
corporate liabilities.