Title
Maricalum Mining Corp. vs. Florentino
Case
G.R. No. 221813
Decision Date
Jul 23, 2018
Labor dispute over illegal dismissal and benefits; SC upheld separate corporate identities, dismissed claims against G Holdings, citing no fraud or control over Maricalum Mining.

Case Summary (G.R. No. 221813)

Petitioner’s Position

• Maricalum Mining: contends that the Labor Arbiter miscomputed the amounts due and that any residual liability rests with it alone, not with G Holdings.
• Complainants: argue that G Holdings must be held solidarily liable under the “piercing the corporate veil” doctrine because it exercised effective control over Maricalum Mining and orchestrated the scheme to evade labor standards.

Respondent’s Position

• G Holdings: maintains it is a bona fide holding company separate from Maricalum Mining, with no direct employer–employee relationship with complainants. It asserts that the asset acquisition and foreclosure were legitimate business dealings, not a mask to defraud employees.
• NLRC: modified the Labor Arbiter’s decision by assigning liability solely to Maricalum Mining, finding no grave abuse of discretion in treating G Holdings and Maricalum Mining as distinct corporate entities.

Key Dates

• October 2, 1992: APT–G Holdings Purchase and Sale Agreement transferring 90% of Maricalum Mining’s shares and related promissory notes secured by Maricalum property.
• July 1, 2001: Maricalum Mining ceased mining operations; mortgaged assets were extrajudicially foreclosed and sold to G Holdings by December 3, 2001.
• April 20, 2011: Labor Arbiter granted employees’ money claims against G Holdings and cooperatives as labor-only contractors.
• November 29, 2011 & January 31, 2012: NLRC decisions modified Arbiter’s ruling, placing liability on Maricalum Mining alone for most awards and canceling certain awards.
• October 29, 2014: Court of Appeals denied petitions for certiorari, affirming the NLRC.
• July 23, 2018: Supreme Court decision under the 1987 Constitution.

Applicable Law

• 1987 Constitution, Art. XIII, sec. 3 – full protection of labor.
• Labor Code, Art. 106 – joint and solidary liability of an employer and its labor-only contractors.
• Rules of Court, Rule 45 – certiorari raises pure questions of law and reviews grave abuse of discretion.
• Doctrine of Piercing the Corporate Veil – separate juridical personality may be disregarded only if there is (1) complete control exercising a separate entity as a mere alter ego; (2) use of that control to perpetrate fraud or violate positive legal duties; and (3) a proximate causal link to the injury complained of.

Antecedents

  1. 1992 PSA: APT sold Maricalum Mining shares and debt instruments to G Holdings in exchange for P673 million, with Maricalum Mining executing secured promissory notes. G Holdings took over management and physical possession immediately upon down payment.
  2. 1999–2000: Retired Maricalum employees formed five manpower cooperatives which executed identical MOAs with Maricalum Mining to supply labor for ancillary mining services.
  3. 2001: Maricalum Mining halted operations; its mortgaged properties were foreclosed and sold to G Holdings.
  4. 2010: Cooperatives’ members and some Sipalay Hospital staff filed illegal dismissal and money claims against G Holdings, its officers, and cooperatives before the Labor Arbiter.

Scope of Review

Under Rule 45, the Supreme Court does not re-evaluate facts supported by substantial evidence but examines whether the Court of Appeals committed grave abuse of discretion in affirming the NLRC’s factual findings and legal conclusions.

Piercing the Corporate Veil Doctrine

• Separate corporate personality is respected unless used to defeat public convenience, shield fraud or crime, or as an alter ego instrumentality.
• Elements to pierce:

  1. Complete domination and control over finances, policy, and operations such that the subsidiary has no independent will.
  2. Use of that control to commit fraud, violate legal duties, or engage in unjust acts.
  3. Proximate causation of injury to the complaining party.

Application to G Holdings and Maricalum Mining

• Control: G Holdings indisputably owned 90% of Maricalum Mining, paid its capital obligations, and exercised managerial oversight.
• Fraud/Wrong: Employees failed to present clear and convincing evidence that G Holdings used its control to perpetrate fraud or to evade an existing obligation. The asset transfer and foreclosure followed a valid government-sanctioned PSA; no evidence showed these transactions were designed to defeat the employees’ future claims.
• Causation: The foreclosure rights predated any labor awards by many years; employees have yet to enforce their awards against Maricalum Mining. No proximate cause was established linking G Holdings’ acts to actual monetary injury.
Conclusion: The high standard of clear and convincing proof required for fraud was not met; therefore, the corporate veil remains intact, and G Holdings remains separate from Maricalum Mining with respect to liability for the employee claims.

Employee–Sipalay Hospital Relationship

• Sipalay General Hosp


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