Case Digest: Rivera v. United Laboratories, Inc., 586 SCRA 269, April 22, 2009

Corporation Law | Piercing the Veil of Corporate Fiction

• Januaria A. Rivera began work at United Laboratories, Inc. (UNILAB) in 1958 and held various positions, eventually becoming Director of the Manufacturing Division.
• UNILAB had a retirement plan in place since 1959, mandating compulsory retirement at age 60 or after 30 years of service.
• In 1988, Rivera completed 30 years of service and was retired under the plan. She received retirement benefits totaling ₱1,047,331.33. Rivera continued working for UNILAB even after her retirement under the plan.
• In 1992, the retirement plan was amended, increasing retirement benefits and changing the effective retirement date. Rivera requested increased retirement benefits based on the amended plan but was denied by UNILAB.
• Rivera filed a complaint against UNILAB with the NLRC for recovery of unpaid retirement pay differential.
• Labor Arbiter: Dismissed Rivera's complaint, on the ground of prescription.
• NLRC: Affirmed the Labor Arbiter's decision.
• Court of Appeals: Stated that her claim had not yet prescribed at the time of filing, however, avoided ruling on the merits of the case.
• Rivera claims continuous employment from 1958 to 1994.
• She alleges that UNILAB orchestrated a scheme using these retirements and consultancy agreements to avoid giving her rightful benefits.
• Even before her supposed 1992 retirement, Rivera had a consultancy contract with ARMCO, suggesting a continuation of her services under UNILAB's guise.
• Corporate records from SEC filings highlight common directors, officers, and shared details among UNILAB, ARMCO, and FIL-ASIA, indicating an interconnected corporate structure.

WoN it is proper to pierce the veil of the separate corporate identities of UNILAB and its affiliate corporations. NO

In considering her renewed employment period, we have not included the years 1993-1994 for three reasons.

First, based on Rivera's extra-judicial demand for the balance of her retirement pay, especially the first two letters,66 she counted thirty four (34) years of service with UNILAB starting April 7, 1958 up to December 31, 1992, thereby excluding the years 1993 to 1994 from her service record. The evidence on record shows that Rivera herself conceded these last two years as periods when she worked as a consultant. Given this concession and in the absence of evidence showing that her principals controlled her as to the means, manner and the results of her work, we cannot conclude that an employment relationship existed.

Second, that indeed there was no employer-employee relationship in her service with ARMCO in 1993 and with FIL-ASIA Business Consultants, Inc. in 1994 is supported, not only by the records we referred to in the above reason, but by the consultancy contracts Rivera herself marked as Exhibits "J" and "P" in her appeal to the NLRC.

Third, we cannot accept the Rivera’s theory that her employment service with UNILAB extended to 1994 because her last two years with ARMCO and FIL-ASIA were in fact services rendered to UNILAB as consultant. To achieve this result, Rivera asks us to pierce the veil of the separate corporate identities of UNILAB and its affiliate corporations. On this point, the case of John F. McLeod v. NLRC, G.R. No. 146667. January 23, 2007, instructively tells that:

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, 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.

As in this cited case, we see no basis in the present case to conclude that UNILAB committed any fraud or illegality in employing a retired employee whose knowledge, experience and expertise the company recognized, as an employee or as a consultant. We note that Rivera had already been an Assistant Vice President with UNILAB – an "old timer" in a senior position based on the responsibilities she carried – when she entered into the consultancy contracts. What UNILAB did, in itself, is not an illegality; on the contrary, it is a recognized practice in this country, a fact we take judicial notice of, for companies to continue to avail of the expertise and experience of their retired employees by retaining them either as employees or as consultants. Nor can Rivera claim she had been shortchanged, or in any manner prejudiced by her consultancy services and her relationship with her principals, or placed in a disadvantaged position that would merit special consideration from this Court. From the totality of the evidence presented, she appears to have openly embraced the consultancy services she was assigned, knowing fully well the conditions under which she was serving, and receiving benefits that cannot be described as negligible. Under these circumstances, we find it too late in the day for her to complain that she was given a run-around as ARMCO and FIL-ASIA were simply conduits of UNILAB, and we see no need to engage in piercing the veil of these corporate entities that she advocates.68

Thus, by the strict standards of law, we cannot grant Rivera’s petition. Interestingly, the same conclusion obtains if the case were to be viewed solely from the ordinary norms of fairness. We go out of our way to say this in light of what Rivera stated in her demand letter of January 7, 1995 to UNILAB; she felt aggrieved because the retirement benefits she received were less than what other employees – with less years of service, with lower rates of pay, or with lower rank – received.69 Apparently, Rivera failed to realize that she cannot compare herself with these other employees because she and they were not in the same situation; these other employees retired later and under retirement plan terms that, by then and for various reasons not attributable to any company wrongdoing, had been enhanced. Both in law and under the common concept of fairness, there is inequitable treatment only if persons under the same situation or circumstances are treated differently. Rivera was not so treated by UNILAB; rather, she was given her just due under the specific rules that applied to her. Hence, we cannot likewise recognize the validity of Rivera’s claim even from the point of view of justice administered according to ordinary norms of fairness.