G.R. No. 184819 - Veterans Federation of the Philippines vs. Montenejo

The petitioner, Veterans Federation of the Philippines (VFP), is a national federation of associations of Filipino war veterans, created in 1960 under Republic Act No. 2640.
VFP acquired a parcel of land in Taguig via Proclamation No. 192 in 1967, which it developed into the VFP Industrial Area (VFPIA).
The respondent, VFP Management and Development Corporation (VMDC), a private management company, was incorporated in 1990.

On January 4, 1991, VFP and VMDC entered a management agreement wherein VMDC assumed exclusive management and operation of the VFPIA in exchange for 40% of the lease rentals generated.
The agreement had a term of five (5) years, renewable once for another five (5) years, culminating in a potential maximum of ten (10) years until January 4, 2001.
Both parties extended the agreement to 1998, and thereafter, extensions were on a month-to-month basis.
In November 1999, the VFP board resolved to terminate the management agreement effective December 31, 1999. VMDC agreed to the termination and returned possession of all necessary properties to VFP.

VMDC notified its employees by a memorandum dated January 3, 2000, that their services would be terminated effective January 31, 2000, due to the termination of the management agreement.
On January 31, 2000, VMDC dismissed all its employees, including respondents Eduardo L. Montenejo, Mylene M. Bonifacio, Evangeline E. Valverde, and Deana N. Pagal (collectively "Montenejo, et al."), paying them separation pay.

Montenejo, et al. filed a complaint for illegal dismissal, money claims, and damages before the Labor Arbiter (LA), impleading VFP and VMDC as respondents.
VMDC contended that the dismissals were due to a bona fide closure of its business, an authorized cause for termination.
VFP denied employer liability, asserting it was not the employer of Montenejo, et al.

The LA ruled that Montenejo, et al. were not illegally dismissed as the termination stemmed from the closure of VMDC.
It found Montenejo, et al. to be contractual employees, with employment tied to the management agreement’s maximum term – hence, entitled to salary for the unexpired contract portion and separation pay.
VFP and VMDC were solidarily liable for the monetary awards based on VFP’s status as indirect employer.
The complaint for damages was dismissed due to lack of bad faith evidence.

The NLRC reversed the LA, declaring the dismissal illegal.
It ordered VFP and VMDC to pay separation pay in lieu of reinstatement, full backwages, 13th month pay, and service incentive leave pay (SILP).
It rejected the claim that VMDC had ceased operations, noting no formal closure or DOLE notification was filed and that VMDC’s articles of incorporation authorized business beyond management agreement.
Montenejo, et al. were ruled to be regular employees, not contractual.
VFP was held solidarily liable under the doctrine of piercing the corporate veil due to VFP’s majority ownership of VMDC.
Damages for bad faith were denied due to insufficient evidence.

The CA dismissed VFP’s certiorari petition, affirming the NLRC decision.
VFP’s motions for reconsideration were denied, leading to the present appeal before the Supreme Court.

Whether Montenejo, et al. were illegally dismissed by VMDC and/or VFP.
Whether VFP can be held solidarily liable with VMDC for the monetary awards granted to Montenejo, et al. under the doctrine of piercing the corporate veil.