FILOIL REFINERY CORP. VS.

FILOIL SUPERVISORY & CONFIDENTIAL EMPLOYEES

ASSOCIATION AND COURT OF INDUSTRIAL RELATIONS
G.R. No. L-26736 August 18, 1972

FACTS:

Respondent association is a labor organization duly registered with the Department of Labor. It is
composed exclusively of the supervisory and confidential employees of petitioner corporation. There exists another
entirely distinct labor association composed of the corporation’s rank-and-file employees, the Filoil Employees &
Workers Association (FEWA) with which petitioner executed a collective bargaining agreement. This collective
bargaining agreement expressly excluded from its coverage petitioner’s supervisory and confidential employees,
who in turn organized their own labor association, respondent herein.

Respondent association filed on February 18, 1965 with the industrial court its petition for certification as
the sole and exclusive collective bargaining agent of all of petitioner’s supervisory and confidential employees
working at its refinery in Rosario, Cavite.

Petitioner corporation filed a motion to dismiss the petition claiming that supervisors are not employees
within the meaning of Republic Act 875, the Industrial Peace Act, and that since they are part of management, they
do not have the right to bargain collectively although they may organize an organization of their own and that
supervisors form part of management and are not considered as employees entitled to bargain collectively, arguing
that “as supervisors form part and parcel of management, it is absurd for management to bargain collectively with
itself.”

Respondent court denied the dismissal motion. It ruled that under the express provisions of section 3 of the
Industrial Peace Act, “(I)ndividuals employed as supervisors shall not be eligible for membership in a labor
organization of employees under their supervision but may form separate organizations their own.”

ISSUE: Whether the respondent Supervisors (and confidential employees) may form a labor organization and enjoy
right to collective bargaining?

HELD:

Yes. Supervisors (and confidential employees), even though they may exercise the prerogatives of
management as regards the rank and file employees are indeed employees in relation to their employer, the company
which is owned by the stockholders and bondholders (capital) and should therefore be entitled under the law to
bargain collectively with the top management with respect to their terms and conditions of employment.

As stated for the SC in AG & P Co. of Manila, Inc. vs. C.I.R., section 3 of the Industrial Peace Act
“explicitly provides that “employees” — and this term includes supervisors — “shall have the right to self-
organization, and to form, join or assist labor organizations of their own choosing for the purpose of collective
bargaining through representations of their own choosing and to engage in concerted activities for the purpose of
collective bargaining and other mutual aid or protection” and that “individuals employed as supervisors … may
form separate organizations of their own”. For this reason, supervisors are entitled to engage in union activities and
any discrimination against them by reason thereof constitutes an unfair labor practice.
 INDOPHIL TEXTILE MILL WORKERS UNION-PTGWO VS. VOLUNTARY ARBITRATOR
TEODORICO P. CALICA AND INDOPHIL TEXTILE MILLS, INC.
February 3, 1992
FACTS:

Indophil Textile Mill Workers Union-PTGWO is a legitimate labor organization and the exclusive
bargaining agent of all the rank-and-file employees of Indophil Textile Mills, Incorporated. Teodorico P. Calica is
the Voluntary Arbitrator of the National Conciliation and Mediation Board of the Department of Labor and
Employment, while Indophil Textile Mills, Inc. is a corporation engaged in the manufacture, sale and export of
yarns of various counts and kinds and of materials of kindred character.

Indophil Textile Mill Workers Union-PTGWO and Indophil Textile Mills, Inc. executed a collective
bargaining agreement.

7 months later, Indophil Acrylic Manufacturing Corporation was formed and registered with the Securities
and Exchange Commission (different from above Indophil Textile). Acrylic applied for registration with the Board
of Investments for incentives under the 1987 Omnibus Investments Code. The application was approved on a
preferred non-pioneer status.

Acrylic 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. A year after, the 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 Textile Mills pursuant to Section 1(c), Article I of the CBA. In other words, it is the Union's
contention that Acrylic is part of the Indophil bargaining unit. The union alleged that:
1. Both corporations are engaged in the same line of business.
2. Both have their physical plants, offices and facilities in the same compound.
3. Many of Indophil Textile’s machines were transferred and installed and were being used in Acrylic.
4. Services of a number of units, departments and sections were being provided to Acrylic.
5. Employees of Indophil Textile were the same persons manning and servicing Acrylic.

Indophil Textile opposed, saying it was a juridical entity separate and distinct from Acrylic. It argued
through the SolGen that Acrylic was not an alter ego or an adjunct or business conduit of Indophil Textile Mills
because it had a separate business purpose. Indophil Textile engaged in the business of manufacturing yarns of
various counts and kinds and textiles while Acrylic manufactured, bought, sold, at wholesale basis, bartered,
imported, exported and otherwise dealt in yarns of various counts and kinds. Acrylic cannot manufacture textiles
while Indophil cannot buy or import yarns.

The existing impasse led the parties to enter into a submission agreement. The parties jointly requested
Calica to act as voluntary arbitrator in the resolution of the pending labor dispute pertaining to the proper
interpretation of the CBA provision. Calica ruled that the proper interpretation and application of Sec. 1, (c), Art. I
of the 1987 CBA does not extend to the employees of Acrylic as an extension or expansion of Indophil Textile
Mills, Inc.

ISSUE: Were the operations in Indophil Acrylic Corporation an extension or expansion of Indophil Textile Mills?

HELD:
NO, they were separate corporations. The CBA did not apply to Acrylic. Under the doctrine of piercing the
veil of corporate entity, when valid grounds therefore exist, the legal fiction that a corporation is an entity with a
juridical personality separate and distinct from its members or stockholders may be disregarded.
 o In such cases, the corporation will be considered as a mere association of persons.
o The members or stockholders or the corporation will be considered as the corporation, that is, liability will
attach directly to the officers and stockholders.
o 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 the case at bar, the union seeks to pierce the veil of corporate entity of Acrylic, alleging that the creation
of the corporation is a devise to evade the application of the CBA between the Union and Indophil Textile. While
the Court does not discount the possibility of the similarities of the businesses of Indophil Textile Mills and Acrylic,
neither is it inclined to apply the doctrine invoked by the union in granting the relief sought.

The fact that the businesses of Indophil Textile and Acrylic are related, that some of the employees of
Indophil Textile are the same persons manning and providing for auxiliary services to the units of Acrylic, and that
the physical plants, offices and facilities are situated in the same compound, it is the Court’s opinion that these facts
are not sufficient to justify the piercing of the corporate veil of Acrylic.

Although it was shown that the two corporations’ businesses are related, that some of the employees of the
two corporations are interchanged, and that the physical plants, offices, and facilities, are situated in the same
compound, were not considered sufficient bases to pierce the veil in order to treat the two corporations as one
bargaining unit. The legal corporate entity is disregarded only if it is sought to hold the officers and stockholders
directly liable for a corporate debt or obligation.