INDOPHIL TEXTILE MILL WORKERS UNION-PTGWO vs.

CALICA
R. No. 96490
February 3, 1992

Facts:

Respondent Indophil Textile Mills is a corporation engaged in the manufacture, sale and
export of yarns. Petitioner Indophil Union and respondent Indophil Textile executed a
collective bargaining agreement. Indophil Acrylic was formed and became operational and
hired workers according to its own criteria and standards.

The workers of Acrylic unionized and a duly certified collective bargaining agreement was
executed. The petitioner Indophil Union claimed that the plant facilities built and set up by
Acrylic should be considered as an extension or expansion of the facilities of Indophil
Company. Petitioner Indophil Union seeks to pierce the veil of corporate entity of Acrylic,
alleging that its creation is a devise to evade the application of the CBA between the
Indophil union and the Indophil Textile.

Indophil Textile submits that it is a juridical entity separate and distinct from Indophil
Acrylic.

Issue: Is Indophil Acrylic separate and distinct entity from Indophil Textile for purposes of
union representation?

Ruling: Yes.

Acrylic is not an alter ego or an adjunct or a business conduit of Indophil Textile because it
has a separate legitimate business purpose. Indophil Textile engages in the manufacture
yarns while Indophil Acrylic is to manufacture, buy, sell at wholesale basis, barter, import,
export and otherwise deal in yarns of various counts and kinds. Two corporations cannot
be treated as a single bargaining unit just because they have related business.

The Indophil Union seeks to pierce the veil of Acrylic alleging that the corporation is a
devise to evade the application of the CBA. However, the said doctrine is only used on the
existence of valid grounds. The doctrine applies when the corporate fiction is used to
defeat public convenience, justify wrong, protect fraud, or defend crime, 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.

In this case, the 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 providing for auxilliary services to the units of Acrylic, and that the
physical plants, offices and facilities are situated in the same compound, these facts
are not sufficient to justify the piercing of the corporate veil of Acrylic.

Further, the legal entity is disregarded only if sought to hold officers and stockholders
liable. In this case, the union does not seek relief from Indophil.