Asionics Philippines, Inc. vs. NLRC

3/7/2021 SUPREME COURT REPORTS ANNOTATED VOLUME 290
164 SUPREME COURT REPORTS ANNOTATED

Asionics Philippines, Inc. vs. NLRC
*
G.R. No. 124950. May 19, 1998.
ASIONICS PHILIPPINES, INC. and/or FRANK YIH,

petitioners, vs. NATIONAL LABOR RELATIONS
COMMISSION, YOLANDA BOAQUINA, and JUANA
GAYOLA, respondents.
Labor Law; Illegal Dismissal; Corporation Law; Piercing

the Veil of Corporate Fiction; Mere ownership by a single
stockholder or by another corporation of all or nearly all of
the capital stock of a corporation is not of itself sufficient
ground for disregarding the separate corporate personality.
—It is, instead, on the issue of joint and solidary liability of
petitioner Frank Yih with API that the Court has decided
to give due course to the instant petition. The court cannot
agree with the Solicitor-General in suggesting that even if
Frank Yih had no direct hand in the dismissal of the
respondents he should be personally liable therefor on
account alone of his being the President and majority
stockholder of the company. The disquisition by the Court
in Santos vs. NLRC is quite succinct and clear. x x x “A
review of the above exceptional cases would readily disclose
the attendance of facts and circumstances that could
rightly sanction personal liability on the part of the
company officer. In A.C. Ransom, the corporate entity was
a family corporation and execution against it could not be
implemented because of the disposition posthaste of its
leviable assets evidently in order to evade its just and due
obligations. The doctrine of ‘piercing the veil of corporate
fiction’ was thus clearly appropriate. Chua likewise
involved another family corporation, and this time the
conflict was between two brothers occupying the highest
ranking positions in the company. There were
incontrovertible facts which pointed to extreme personal
animosity that resulted, evidently in bad faith, in the
easing out from the company of one of the brothers by the
other. x x x ‘It is basic that a corporation is invested by law
with a personality separate and distinct from those of the
central.com.ph/sfsreader/session/00000178098f755e92ab12c0003600fb002c009e/t/?o=False 1/12
persons composing it as well as from that of any other legal

entity to which it may be related. Mere ownership by a
single stockholder or by another corporation of all or nearly
all of the capital stock of a corporation is not of itself
sufficient ground for disregarding the separate corporate
personality. Petitioner Sunio, therefore, should not have
been made personally answerable for the payment of
private respondents’ back salaries.’ ”
_______________
* FIRST DIVISION.
165
VOL. 290, MAY 19, 1998 165

Same; Same; Same; Where there is nothing on record to

indicate that the President and majority stockholder of a
corporation had acted in bad faith or with malice in
carrying out the retrenchment program of the company, he
cannot be held solidarily and personally liable with the
corporation.—Nothing on record is shown to indicate that
Frank Yih has acted in bad faith or with malice in carrying
out the retrenchment program of the company. His having
been held by the NLRC to be solidarily and personally
liable with API is thus legally unjustified.
SPECIAL CIVIL ACTION in the Supreme Court.

Certiorari.
The facts are stated in the resolution of the Courts.

Go, Cojuangco, Mendoza, Lizon & Castro for
petitioners.
Julio F. Andres, Jr. for private respondent.
RESOLUTION
VITUG, J.:
In this special civil action of certiorari, petitioners Asionics

Philippines, Inc. (“API”), and its President and majority
stockholder,
1
Frank Yih, seek to annul and set aside the
decision, dated 19 May 1996, of the National Labor
Relations Commission (“NLRC”) which has ordered, inter
alia, that they grant separation pay, computed at one-half
(1/2) month per year of service, to private respondents

Yolanda Boaquina and Juana Gayola. Concomitantly being 2
contested is the subsequent 16th April 1996 resolution of
the NLRC denying petitioners’ motion for reconsideration.
API is a domestic corporation engaged in the business of
assembling semi-conductor chips and other electronic
products mainly for export. Yolanda Boaquina and Juana
Gayola started working for API in 1979 and 1988,
respectively, as material control clerk and as production
operator. During the
_______________
1 Rollo, pp. 22-31.

2 Ibid., pp. 32-33.
166

third quarter of 1992, API commenced negotiations with

the duly recognized bargaining agent of its employees, the
Federation of Free Workers (“FFW”), for a Collective
Bargaining Agreement (“CBA”). A deadlock, however,
ensued and the union decided to file a notice of strike. This
event prompted the two customers of API, Indala and CP
Clare Theta J, to thereupon refrain from sending to API
additional kits or materials for assembly. API, given the
circumstance that its assembly line had to thereby grind to
a halt,
3
was forced to suspend operations pursuant to Article
286 of the Labor Code. Private respondents Boaquina and
Gayola were among the employees asked to take a leave
from work.
Upon the resolution of the bargaining deadlock in
October of 1992, a CBA was concluded between API and
FFW. The contract was signed on 30 October 1992 by the
parties. Respondent Boaquina was directed to report back
since her previous assignment pertained to the issuance of
raw materials needed for the production of electronic items
being ordered by Indala, one of API’s client which promptly
resumed its business with API. On the other hand, Juana
Gayola, among other employees, could not be recalled
forthwith because the CP Clare/Theta J account, where she
was assigned as the production operator, had yet to renew
its production orders.
Inasmuch as its business activity remained critical, API
was constrained to implement a company-wide
retrenchment affecting one hundred five (105) employees

from a work force that otherwise totalled three hundred
four (304). The selection was based on
productivity/performance standards pursuant to the CBA.
Yolanda Boaquina was one of those affected
_______________
3 “Art. 286. When employment not deemed terminated.—The bona fide

suspension of the operation of a business or undertaking for a period not
exceeding six (6) months, or the fulfillment by the employee of a military
or civic duty shall not terminate employment. In all such cases, the
employer shall reinstate the employee to his former position without loss
of seniority rights if he indicates his desire to resume his work not later
than one (1) month from the resumption of operation of his employer or
from his relief from the military or civic duty.”
167
VOL. 290, MAY 19, 1998 167

by the retrenchment and API, through its Personnel

Manager Beatriz G. Torro, advised her of such fact in its
letter of 29 December 1992. In that letter, Boaquina was
informed that her services 4
were to be dispensed with
effective 31 January 1993 although she did not have to
render any service for the month of January she being by
then already considered to be on leave with pay. While
Juana Gayola was not supposed to be affected by the
retrenchment in view of her high performance rating, her
services, nevertheless, were
5
considered to have been ended
on 04 September 1992 when she was ordered by API to
take an indefinite leave of absence. She had not since been
recalled.
Dissatisfied with their union (FFW), Boaquina and
Gayola, together with some of other co-employees, joined
the Lakas ng Manggagawa sa Pilipinas Labor Union
(“Lakas Union”) where they eventually became members of
its Board of Directors.
On 06 January 1993, Lakas Union filed a notice of strike
against API on the ground of unfair labor practice (“ULP”)
allegedly committed by the latter, specifically, for union
busting, termination of union
6
officers/members,
harassment and discrimination. A conciliation meeting
was scheduled for 08 January 1993 by the National
Conciliation and Mediation Board (“NCMB”) to address the
problem which meeting, however, was reset to 14 January
1993 for failure of any representative or member of Lakas

Union to appear. On 10 January 1993, Lakas Union staged
a strike.
Claiming that the strike staged by Lakas Union was
illegal, API on 11 January 1993, brought before the NLRC
National Capital Region Arbitration a petition, docketed
NLRC NCR Case No. 00-01-00402-93, for declaration of
illegality of the strike. Lakas Union countered that their
strike was valid and staged as a measure of self-
preservation and as self-defense against the illegal
dismissal of petitioners aimed at union busting in the guise
of a retrenchment program.
_______________
4 Rollo, p. 6.
5 Ibid., p. 25.
6 Ibid., p. 73.
168

On 23 June 1994, Labor Arbiter Villarente, Jr.,7 to whose

sala the case was raffled, promulgated a decision declaring
the strike staged by Lakas Union to be illegal. He declared:
“WHEREFORE, judgment is hereby rendered declaring that the

strike staged by respondents Federation of Free Workers and the
Lakas Manggagawa ng Pilipinas on January 10, 1993 and
thereafter, was ILLEGAL.
“Accordingly, all the registered officers of the two respondent-
Unions at the time of the strike are hereby declared to have lost
their employment status (aside from the fact that ten of them
earlier mentioned had settled their cases amicably with
petitioner).
“Insofar as the striking members are concerned and who did
not settle their cases amicably, their separation from the service
of petitioner API is hereby declared VALID under the company-
wide retrenchment program which was earlier made known to
proper authorities. 8
“SO ORDERED.”
Meanwhile, at the instance of several employees which

included private respondents Boaquina and Gayola, a
complaint for illegal dismissal, violation of labor standards
and separation pay, as well as for recovery of moral and
exemplary damages, was filed against API and/or Frank

Yih before the NLRC National Capital Region Arbitration
Branch. The illegal dismissal case, docketed NLRC NCR
Case No. 00-05-03326 and No. 00-03-01952-93, was
assigned to Labor Arbiter Potenciano S. Canizares, Jr.
On 229 June 1994, Labor Arbiter Canizares rendered his
decision holding petitioners guilty of illegal dismissal. He
ordered petitioners to pay private respondent Yolanda
Boaquina separation pay of one-half (1/2) month pay for
every year of service, plus overtime pay, and to reinstate
private respondent Juana Gayola with full backwages from
the time her
_______________
7 Ibid., pp. 54-65.

8 Rollo, p. 65.
9 Ibid., pp. 34-39.
169
VOL. 290, MAY 19, 1998 169

salaries were withheld from her until her actual

reinstatement.
The decision of Labor Arbiter Villarente, Jr., and that of
Labor Arbiter Canizares were both appealed to the NLRC.
On 20 April 1995, the 10
Third Division of NLRC
promulgated its resolution which affirmed the finding of
Labor Arbiter Villarente, Jr., that the strike staged by
Lakas Union was illegal. On 19 March 1996, the same
Third Division of NLRC,
11
in the illegal dismissal case,
rendered a decision modifying the decision of Labor
Arbiter Canizares by declaring that private respondents
were not illegally dismissed but were validly terminated
due to the retrenchment policy implemented by API.
Accordingly, private respondents were awarded separation
pay and an additional one (1) month salary in favor of
Juana Gayola by way of indemnity for petitioner API’s
failure to properly inform her of the retrenchment. The
NLRC dismissed the claim of petitioners that private
respondents should not be entitled to separation pay
because of their involvement in the strike which was
declared illegal.
On 01 April 1996, petitioners moved for a
reconsideration of the 19th March 1996 NLRC decision; the
motion, however, was denied by the NLRC in its resolution

of 16 April 1996.
In this recourse, the following issues have been raised by
petitioners; to wit:
“WHETHER OR NOT PRIVATE RESPONDENTS WHO ARE

OFFICERS OF THE UNION ARE STILL ENTITLED TO
SEPARATION PAY AND INDEMNITY DESPITE HAVING
PARTICIPATED IN A STRIKE THAT HAS BEEN DECLARED
ILLEGAL?
“WHETHER OR NOT A
STOCKHOLDER/DIRECTOR/OFFICER OF A CORPORATION
CAN BE HELD LIABLE FOR THE OBLIGATION OF THE
CORPORATION
12
ABSENT ANY PROOF AND FINDING OF BAD
FAITH?”
_______________
10 Ibid., pp. 68-89.

11 Ibid., pp. 22-31.
12 Ibid., p. 11.
170

The position advanced by petitioners on the first issue is

bereft of merit. It is quite evident that the termination of
employment of private respondents was due to the
retrenchment policy adopted by API and not because of the
former’s union activities. In a letter, dated 29 December
1992, API itself advised respondent Boaquina that she was
one of those affected by the retrenchment program of the
company and that her services were to be deemed
terminated effective 31 January 1993. In their pleadings
submitted to Labor Arbiter Canizares, Jr., in connection
with the illegal dismissal case, petitioners firmly averred
that the services of private respondents were being
dispensed with not by reason of their union activities but in
view of the retrenchment policy of the company. The
Solicitor-General correctly pointed out the admissions
made by petitioners; thus:
“The fact is, complainant Boaquina was in fact part of the first
batch of retrenchees. She was duly notified of her retrenchment,
as well as the proper labor authorities. Ms. Boaquina alleged in
her position paper/affidavit that:
“[O]n September 12, 1992, I was illegally laid-off for no reason that I
know other than my union activities. I was recalled on October 6, 1992
and again I was laid-off in a memorandum of January 4, 1993 effective
the end of said month.
“Complainant Boaquina of course failed, obvious wittingly, to

tell her story truthfully. In the first place, she was never
terminated for her union activities. Asionics just concluded its
CBA with the employees’ bargaining representative. Asionics
were also too preoccupied with more earthshaking and exigent
problems, principally that of getting the business back on its feet,
to concern themselves with potential (whether real or imagined)
entanglements/ complications with the union, much less of one
individual member. Moreover, for academic discussion, let us say
that indeed complainant Boaquina was targeted for termination
due to union activities. Under the circumstances, she would have
just been terminated outright, without recall. The truth of the
matter is, Boaquina was made to go on leave in September 1992
precisely because of the pull-out of CP Clare Theta-J which
resulted in work shortage. If she was recalled before she was
finally retrenched, it only shows that the company had been
trying its best to accommodate the most possible
171
VOL. 290, MAY 19, 1998 171

number of employees in its payroll, even given that it was in dire

financial straits. Of course, the company cannot just let the
workers go to work and pay them their dues even though there is
nothing to do.
“Complainant Gayola on the other hand was separated from
service owing to the fact that production totally ceased by virtue
of the blockade caused by the strike and the pull-out of Asionics’
last customer. In short, the strike aggravated a bad situation by
making it worse and eventually, the worst possible nightmare for
any business enterprise. There being no work whatsoever to do,
complainant Gayola, 13like the other employees, had to be
terminated from work.” (italicized portions found in the text)
The decision of Labor Arbiter Villarente, Jr., declaring

private respondents to have lost their employment status
due to their participation in an illegal strike is of no really
significance to petitioners. It should suffice to say, as so
aptly observed by the NLRC, that the retrenchment of
private respondents has, in fact, preceded the declaration
of strike.
It is, instead, on the issue of joint and solidary liability

of petitioner Frank Yih with API that the Court has
decided to give due course to the instant petition. The court
cannot agree with the Solicitor-General in suggesting that
even if Frank Yih had no direct hand in the dismissal of the
respondents he should be personally liable therefor on
account alone of his being the President and majority
stockholder of the company.
14
The disquisition by the Court
in Santos vs. NLRC is quite succinct and clear. Thus—
“A corporation is a juridical entity with legal personality separate

and distinct from those acting for and in its behalf and, in
general, from the people comprising it. The rule is that obligations
incurred by the corporation, acting through its directors, officers
and employees, are its sole liabilities. Nevertheless, being a mere
fiction of law, peculiar situations or valid grounds can exist to
warrant, albeit done sparingly, the disregard of its independent
being and the lifting of the corporate veil. As a rule, this situation
might arise
_______________
13 Ibid., pp. 107-108.

14 254 SCRA 673.
172

when a corporation is used to evade a just and due obligation or to

justify a wrong, to shield or perpetrate fraud, to carry out similar
unjustifiable aims or intentions, or as a subterfuge to commit
injustice and so circumvent the law.”
“x x x x x x x x x”
“It is true, there were various cases when corporate officers
were themselves held by the Court to be personally accountable
for the payment of wages and money claims to its employees. In
A.C. Ransom Labor Union-CCLU vs. NLRC, for instance, the
Court ruled that under the Minimum Wage Law, the responsible
officer of an employer corporation could be held personally liable
for nonpayment of backwages for ‘(i)f the policy of the law were
otherwise, the corporation employee (would) have devious ways
for evading payment of back wages.’ In the absence of a clear
identification of the officer directly responsible for failure to pay
the backwages, the Court considered the President of the
corporation as such officer. The case was cited in Chua vs. NLRC
in holding personally liable the vice-president of the company,
being the highest and most ranking official of the corporation next
to the President who was dismissed, for the latter’s claim for
unpaid wages.
“A review of the above exceptional cases would readily disclose
the attendance of facts and circumstances that could rightly
sanction personal liability on the part of the company officer. In
A.C. Ransom, the corporate entity was a family corporation and
execution against it could not be implemented because of the
disposition posthaste of its leviable assets evidently in order to
evade its just and due obligations. The doctrine of ‘piercing the
veil of corporate fiction’ was thus clearly appropriate. Chua
likewise involved another family corporation, and this time the
conflict was between two brothers occupying the highest ranking
positions in the company. There were incontrovertible facts which
pointed to extreme personal animosity that resulted, evidently in
bad faith, in the easing out from the company
of one of the brothers by the other.
“The basic rule is still that which can deduced from the Court’s
pronouncement in Sunio vs. National Labor Relations
Commission (127 SCRA 390), thus:
‘We come now to the personal liability of petitioner, Sunio, who was made
jointly and severally responsible with petitioner company and CIPI for
the payment of the backwages of private respondents. This is reversible
error. The Assistant Regional Director’s Decision failed to disclose the rea
173
VOL. 290, MAY 19, 1998 173

son why he was made personally liable. Respondents, however, alleged as

grounds thereof, his being the owner of one-half (1/2) interest of said
corporation, and his alleged arbitrary dismissal of private respondents.
Petitioner Sunio was impleaded in the Complaint in his capacity as
General Manager of petitioner corporation. There appears to be no
evidence on record that he acted maliciously or in bad faith in
terminating the services of private respondents. His act, therefore, was
within the scope of his authority and was a corporate act.
‘It is basic that a corporation is invested by law with a personality
separate and distinct from those of the persons composing it as well as
from that of any other legal entity to which it may be related. Mere
ownership by a single stockholder or by another corporation of all or
nearly all of the capital stock of a corporation is not of itself sufficient
ground for disregarding the separate corporate personality. Petitioner
Sunio, therefore, should not have been made personally answerable for
the payment of private respondents’ back salaries.’
“The Court, to be sure, did appear to have deviated somewhat

in Gudez vs. NLRC (183 SCRA 644), however, it should be clear
from our recent pronouncement in Mam Realty Development

Corporation and Manuel Centeno15 vs. NLRC (244 SCRA 797), that
the Sunio doctrine still prevails.”
Nothing on record is shown to indicate that Frank Yih has

acted in bad faith or with malice in carrying out the
retrenchment program of the company. His having been
held by the NLRC to be solidarily and personally liable
with API is thus legally unjustified.
WHEREFORE, the questioned decision of the NLRC is
MODIFIED insofar as it holds herein petitioner Frank Yih
personally liable with Asionics Philippines, Inc., which
portion of the decision is SET ASIDE; in all other respects,
how-
_______________
15 At pp. 681-685; see also Businessday Information Systems and

Services, Inc. vs. NLRC, 221 SCRA 9; Garcia vs. NLRC, 153 SCRA 639.
174

ever, the questioned decision is AFFIRMED and remains

unaffected. No costs.
SO ORDERED.
Davide, Jr. (Chairman), Bellosillo, Panganiban and

Quisumbing, JJ., concur.
Judgment affirmed with modification.
Notes.—Where the employer corporation is no longer

existing and is unable to satisfy the judgment in favor of
the employee, the officer should be held liable for acting on
behalf of the corporation. (Valderama vs. National Labor
Relations Commission, 256 SCRA 466 [1996])
The separate and distinct personality of a corporation is
merely a fiction created by law for convenience and to
promote justice; When the notion of separate juridical
personality is used to defeat public convenience, justify
wrong, protect fraud or defend crime, or is used as a device
to defeat the Labor laws, this separate personality of the
corporation may be disregarded or the veil of corporate
fiction pierced. (Concept Builders, Inc. vs. National Labor
Relations Commission, 257 SCRA 149 [1996])
For the separate juridical personality of a corporation to

be disregarded, the wrongdoing must be clearly and
convincingly established—it cannot be presumed.
(Matuguina Integrated Wood Products, Inc. vs. Court of
Appeals, 263 SCRA 490 [1996])
——o0o——
175
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3/7/2021 SUPREME COURT REPORTS ANNOTATED VOLUME 290

164 SUPREME COURT REPORTS ANNOTATED

ASIONICS PHILIPPINES, INC. and/or FRANK YIH,

Labor Law; Illegal Dismissal; Corporation Law; Piercing

persons composing it as well as from that of any other legal

VOL. 290, MAY 19, 1998 165

Same; Same; Same; Where there is nothing on record to

SPECIAL CIVIL ACTION in the Supreme Court.

The facts are stated in the resolution of the Courts.

In this special civil action of certiorari, petitioners Asionics

(1/2) month per year of service, to private respondents

1 Rollo, pp. 22-31.

166 SUPREME COURT REPORTS ANNOTATED

third quarter of 1992, API commenced negotiations with

retrenchment affecting one hundred five (105) employees

3 “Art. 286. When employment not deemed terminated.—The bona fide

VOL. 290, MAY 19, 1998 167

by the retrenchment and API, through its Personnel

1993 for failure of any representative or member of Lakas

168 SUPREME COURT REPORTS ANNOTATED

On 23 June 1994, Labor Arbiter Villarente, Jr.,7 to whose

“WHEREFORE, judgment is hereby rendered declaring that the

Meanwhile, at the instance of several employees which

exemplary damages, was filed against API and/or Frank

7 Ibid., pp. 54-65.

VOL. 290, MAY 19, 1998 169

salaries were withheld from her until her actual

motion, however, was denied by the NLRC in its resolution

“WHETHER OR NOT PRIVATE RESPONDENTS WHO ARE

10 Ibid., pp. 68-89.

170 SUPREME COURT REPORTS ANNOTATED

The position advanced by petitioners on the first issue is

“Complainant Boaquina of course failed, obvious wittingly, to

VOL. 290, MAY 19, 1998 171

number of employees in its payroll, even given that it was in dire

The decision of Labor Arbiter Villarente, Jr., declaring

It is, instead, on the issue of joint and solidary liability

“A corporation is a juridical entity with legal personality separate

13 Ibid., pp. 107-108.

172 SUPREME COURT REPORTS ANNOTATED

when a corporation is used to evade a just and due obligation or to

VOL. 290, MAY 19, 1998 173

son why he was made personally liable. Respondents, however, alleged as

“The Court, to be sure, did appear to have deviated somewhat

from our recent pronouncement in Mam Realty Development

Nothing on record is shown to indicate that Frank Yih has

15 At pp. 681-685; see also Businessday Information Systems and

174 SUPREME COURT REPORTS ANNOTATED

ever, the questioned decision is AFFIRMED and remains

Davide, Jr. (Chairman), Bellosillo, Panganiban and

Judgment affirmed with modification.

Notes.—Where the employer corporation is no longer

For the separate juridical personality of a corporation to

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