Title
Delfin vs. Inciong
Case
G.R. No. 50661
Decision Date
Dec 10, 1990
Former Atlantic employees alleged unfair labor practices, striking in 1966. CIR ruled in their favor, but Atlantic ceased operations. Petitioners later sued Inland, claiming it was Atlantic's alter ego. SC dismissed the case due to res judicata but allowed piercing the corporate veil to enforce prior judgment.

Case Digest (G.R. No. 50661)
Expanded Legal Reasoning Model

Facts:

  • Parties and Background
    • Petitioners
      • The case involves 136 petitioners who were former employees of Atlantic Container Corporation.
      • They were organized as members of the Atlantic Container Employees Organization and affiliated with the Federation of Democratic Labor Unions (FEDLU).
    • Respondents
      • Public respondents included Deputy Minister Amado G. Inciong in his administrative capacity, and NLRC Commissioners Diego P. Atienza, Geronimo Q. Quadra, and Cleto Villatuya.
      • Private respondents comprised Atlantic Container Corporation, its General Manager Roberto Jacinto, and, later, Inland Industries, Inc. along with its incorporators and officers (Lazaro Arriola, Bienvenido Katalbas, Aurora Jereza, Goshi de Yulo, Paz Yulo).
  • Chronology and Nature of the Dispute
    • Collective Bargaining Agreement and Strike
      • On February 11, 1964, Atlantic and FEDLU executed a Collective Bargaining Agreement (CBA), later amended on August 31, 1964, which among other provisions, provided for union shop, a grievance procedure, check-off of union dues, and salary increases.
      • Petitioners alleged that Atlantic and its General Manager, Roberto Jacinto, refused to implement the provisions of the CBA and the amendment.
      • In protest of these alleged unfair labor practices, FEDLU and the union declared a strike on February 16, 1966 after a brief period of strike action initiated on February 9, 1966.
    • First Case (CIR Case No. 5195-ULP)
      • The Atlantic Container Employees Organization and FEDLU filed a verified complaint charging Atlantic, Roberto Jacinto, and another respondent (Hedy F. Jacinto) with unfair labor practices under Republic Act No. 875.
      • The Court of Industrial Relations (CIR) rendered a Decision on November 16, 1972, dismissing the complaint against one respondent but holding Atlantic and Roberto Jacinto guilty.
      • The CIR ordered the reinstatement of certain union members (six to seven employees) with back wages, without loss of seniority and other personnel privileges.
      • Subsequent motions by the union to reconsider the Decision were denied on procedural grounds.
    • Second Case (NLRC Case No. LR-4320 / Charge No. 5701-ULP)
      • Alleging that Atlantic had ceased operations—purportedly to effect a lock-out—the petitioners filed a second complaint on February 12, 1974, after learning in 1973 about allegations regarding Atlantic’s stoppage.
      • In the second instance, Inland Industries, Inc. emerged as a key respondent, alleged to have been created to absorb Atlantic’s assets and continue its business under a different name.
      • Labor Arbiter Jose T. Collado, in his Decision dated December 29, 1975, ordered the reinstatement of only 86 out of the 136 petitioners based on evidence as to who had actively testified or presented their cause.
      • The NLRC, on September 15, 1976, set aside Arbiter Collado’s Decision, dismissing the complaint on the grounds of res judicata, prescription, and the contention that Atlantic and Inland were separate entities.
      • The Secretary/Minister of Labor, through Deputy Minister Inciong, affirmed the NLRC’s dismissal on December 28, 1978. A subsequent motion for reconsideration by the petitioners was denied in May 1979.
    • Petition for Reversal and the Arguments Presented
      • On July 3, 1989, petitioners filed the instant petition charging the NLRC and Deputy Minister Inciong with grave abuse of discretion for annulling the earlier Labor Arbiter decision and dismissing the complaint.
      • Petitioners contended that the second case was founded on two causes of action: one for unfair labor practices (the same as in the first case) and another alleging fraud in the closure of Atlantic and the creation of Inland to subvert labor obligations.
      • Respondents argued that the second case is barred by res judicata, that the cause of action had prescribed, and that Atlantic and Inland Industries were distinct corporate entities.
  • Evidentiary and Procedural Points
    • Evidence Relative to Unfair Labor Practices
      • The union had previously presented both oral and documentary evidence establishing Atlantic’s refusal to implement the CBA terms and its unfair labor practices in the first case.
      • The record shows that only a subset of union members was actually reinstated in the first case due to insufficient evidence as to full participation.
    • Allegations of Corporate Fraud and Subterfuge
      • Petitioners alleged that Atlantic’s closure and the subsequent creation of Inland Industries, Inc. were designed to avoid liabilities stemming from unfair labor practices.
      • Documentary evidence, including SSS records, incorporation papers, mortgage documents, and correspondence, were cited to illustrate the continuity between Atlantic and Inland.
    • Arguments on the Doctrine of Res Judicata and Prescription
      • Petitioners argued that the second case raised a distinct cause of action by including allegations of fraud, while the Solicitor General’s Comment, siding with petitioners, maintained that the same unfair labor practice act was involved.
      • Respondents maintained that all allegations regarding Atlantic’s labor practices had already been judicially resolved in the first case, and hence, the subsequent complaint should be barred by res judicata and prescription.

Issues:

  • Res Judicata and Identity of Causes of Action
    • Whether the second complaint (NLRC Case No. LR-4320) is barred by the prior final and executory judgment rendered in CIR Case No. 5195-ULP due to the identity of parties, subject matter, and cause of action.
    • Whether the inclusion of additional allegations of fraud regarding the creation of Inland Industries, Inc. provides a separate cause of action distinct from the unfair labor practices settled in the first case.
  • Prescription of the Cause of Action
    • Whether petitioners' cause of action in the second complaint had prescribed, rendering it unenforceable.
  • Piercing the Corporate Veil
    • Whether the alleged distinct corporate personality of Inland Industries, Inc. can be pierced in order to enforce the liabilities of Atlantic Container Corporation regarding its unfair labor practices.
  • Abuse of Discretion
    • Whether the actions of the NLRC and Deputy Minister Inciong in dismissing the complaint and annulling the Labor Arbiter’s decision constitute grave abuse of discretion in the exercise of their functions.

Ruling:

  • (Subscriber-Only)

Ratio:

  • (Subscriber-Only)

Doctrine:

  • (Subscriber-Only)
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