Philippine Scout Veterans Security and Investigation Agency (PSVSIA) vs. Secretary of Labor Ruben D. Torres

The veil of corporate fiction may be pierced to treat three separately incorporated security agencies as a single bargaining unit for purposes of a certification election where the corporations' administration, management, and operations are so intertwined that they operate as one business entity, and a single petition for certification election may validly be filed covering all their employees. An employer has no legal standing in a certification election and cannot oppose the petition or appeal the Med-Arbiter's orders related thereto, as its role is that of a mere bystander.

The petitioners are three security agencies — Philippine Scout Veterans Security and Investigation Agency (PSVSIA), GVM Security and Investigation Agency (GVM), and Abaquin Security and Detective Agency, Inc. (ASDA) — each incorporated with separate registrations with the Securities and Exchange Commission, separate Articles of Incorporation and By-Laws, and separate sets of corporate officers and directors. The private respondent is PGA Brotherhood Association-Union of Filipino Workers (UFW), a legitimate labor organization seeking to represent the rank-and-file employees of the three agencies. The case arose in the context of R.A. 6715, which amended the Labor Code to require the automatic conduct of certification elections in unorganized establishments, and R.A. 5847, as amended by P.D. 11 and P.D. 100, which prohibited security agencies from employing more than 1,000 guards.

The private respondent labor union, PGA Brotherhood Association-Union of Filipino Workers (UFW), filed on April 6, 1989 a petition for Direct Certification/Certification Election among the rank-and-file employees of Philippine Scout Veterans Security and Investigation Agency (PSVSIA), GVM Security and Investigations Agency, Inc. (GVM), and Abaquin Security and Detective Agency, Inc. (ASDA). The three agencies were collectively referred to in the petition as the "PGA Security Agency," which corresponds to the first letters of the corporate names of the agencies. On April 11, 1989, summons was issued to the management of the three agencies at 82 E. Rodriguez Avenue, Quezon City.

On April 11, 1989, the security agencies filed a single comment alleging that the three agencies have separate and distinct corporate personalities, that PGA Security Agency is not a business or corporate entity, that the petition was unclear as to whether the rank-and-file employees referred to those of the three agencies collectively, that the labor union included "security supervisors" in violation of R.A. 6715, and that there were no implementing rules for R.A. 6715. On May 4, 1989, the agencies filed a Consolidated Motion to Dismiss on the grounds that the 721 supporting signatures did not meet the 20% minimum requirement for certification election since the total number of employees was 2,374, and that there were no implementing rules yet of R.A. 6715.

On May 8, 1989, the Union filed an Omnibus Reply alleging that it was seeking a certification election in the three agencies; that the apparent separate personalities of the three agencies were used merely to circumvent the prohibition in R.A. 5847, as amended by P.D. 11 and P.D. 100, that a security agency must not have more than 1,000 guards in its employ; that the three agencies' administration, management, and operations are so intertwined that they can be deemed a single entity; and that the security supervisors cannot be deemed part of management since they do not meet the definition of "supervisory employees" under Article 212(m) of the Labor Code, as amended by Section 4 of R.A. 6715. On May 18, 1989, the agencies filed a Rejoinder claiming that there was no violation of R.A. 5487 since the three agencies were incorporated long before the decrees' issuance, that mere duplication of incorporators does not prove that the three agencies are actually one single entity, and that security guard supervisors, most especially detachment commanders, fall within the definition of "supervisors."

The Med-Arbiter issued an Order on July 6, 1989 in favor of the labor union, finding that the three agencies should be deemed a single entity and bargaining unit for purposes of union organizing and the holding of a certification election, and directing that a certification election be conducted among the rank-and-file security guards of the three agencies within twenty days from receipt of the Order. The security agencies appealed to the Secretary of Labor, who denied the appeal on December 15, 1989 and affirmed the Med-Arbiter's Order. The agencies' Motion for Reconsideration was likewise denied on January 26, 1990 by the succeeding Labor Secretary, Ruben D. Torres.

In their petition before the Supreme Court, the security agencies insisted that there are three corporations, each with a separate and distinct corporate personality, separate SEC registrations, different Articles of Incorporation and By-Laws, separate sets of corporate officers and directors, and no common business address except for GVM and ASDA which are located at 1957 España corner Craig Streets, Sampaloc, Manila. They claimed that the facts of the La Campana Coffee Factory case, which the public respondent relied upon, were distinct from the instant case, as in La Campana only one of the two businesses was a corporation while the other was a mere business name, whereas in the instant case all three agencies are incorporated. The agencies also contended that it was error to treat the three companies as one in a single bargaining unit, resulting in a violation of due process since no notice of hearing and other legal processes were served on each corporation, and consequently no jurisdiction was acquired over them by the Department of Labor and Employment.

The record showed that the three agencies were managed through the Utilities Management Corporation, with all their employees drawing salaries and wages from said entity; that the agencies had common and interlocking incorporators and officers; that the employees of the three agencies had a single Mutual Benefit System and followed a single system of compulsory retirement; that security guards of one agency could easily transfer from one agency to another by simply filling up a common pro forma slip called "Request for Transfer"; that the three agencies always held joint yearly ceremonies such as the "PGA Annual Awards Ceremony"; and that in emergencies, all PSVSIA Detachment Commanders were instructed in a memorandum dated November 10, 1988 to get in touch with the officers not only of PSVSIA but also of GVM and ASDA.

• Separate Corporate Personalities: Petitioners insisted that there are three corporations, each with a separate and distinct corporate personality of its own, with separate registrations with the Securities and Exchange Commission, different Articles of Incorporation and By-Laws, separate sets of corporate officers and directors, and no common business address except for GVM and ASDA.
• Inapplicability of La Campana: Petitioners claimed that the facts and circumstances of La Campana Coffee Factory, Inc. vs. Kaisahan Ng Mga Manggagawa sa La Campana are very distinct from the instant case, as in La Campana only one of the two businesses was a corporation while the other was a mere business name, whereas in the instant case all three agencies are incorporated, and the issue in La Campana involved the validity of a demand for wage increases rather than representation.
• Violation of Due Process: Petitioners contended that treating the three companies as one in a single bargaining unit in one petition for certification election resulted in a violation of the right to due process of each corporation, as no notice of hearing and other legal processes were served on each corporation, and consequently no jurisdiction was acquired over them by the Department of Labor and Employment.
• Insufficient Support Signatures: Petitioners alleged that the petition for certification election was defective because it merely alleged that there are only 1,000 employees when the total number of employees in the three agencies is about 2,374, thereby failing to comply with the legal requirement that at least twenty percent of the employees in the bargaining unit must support the petition.

• Single Entity Theory: The Union alleged that the apparent separate personalities of the three agencies were used merely to circumvent the prohibition in R.A. 5847, as amended by P.D. 11 and P.D. 100, that a security agency must not have more than 1,000 guards in its employ, and that the three agencies' administration, management, and operations are so intertwined that they can be deemed a single entity.
• Supervisory Employees: The Union argued that the security supervisors cannot be deemed part of management since they do not meet the definition of "supervisory employees" found in Article 212(m) of the Labor Code, as amended by Section 4 of R.A. 6715.
• Automatic Conduct of Election: The public respondent noted that under the amendments introduced by R.A. 6715, which became effective on March 21, 1989, prior to the filing of the petition for certification election on April 6, 1989, there is no need for the labor union to prove that at least 20% of the security guards supported the petition, as the Med-Arbiter has the duty to automatically conduct an election upon the filing of a petition by a legitimate labor organization.

• Single Bargaining Unit: Whether a single petition for certification election or for recognition as the sole and exclusive bargaining agent can validly or legally be filed by a labor union in three corporations each of which has a separate and distinct legal personality instead of filing three separate petitions.
• Due Process and Jurisdiction: Whether the petitioners were denied their right to due process and whether jurisdiction was not acquired over them by the labor authorities due to the alleged improper service of summons.
• Employer's Standing: Whether the three security agencies, as employers, have legal standing to oppose the petition for certification election or appeal the Med-Arbiter's orders related thereto.

• Single Bargaining Unit: Yes. A single petition for certification election may validly be filed covering the employees of three corporations where the corporations are in reality a single business entity operating as a single company, and the veil of corporate fiction should be lifted for the purpose of allowing the employees to form a single labor union.
• Due Process and Jurisdiction: No. The three security agencies voluntarily submitted themselves to the jurisdiction of the labor authorities, as the summons were clearly sent to and received by their lawyer who filed motions and pleadings on behalf of the three agencies and who always appeared as their legal counsel.
• Employer's Standing: No. An employer has no legal standing in a certification election, as its role is that of a mere bystander, and it cannot oppose the petition or appeal the Med-Arbiter's orders related thereto.

• Single Bargaining Unit: The Court found that the facts and circumstances extant in the record indicate that the Med-Arbiter and Secretaries Drilon and Torres were not mistaken in holding that the three security companies are in reality a single business entity operating as a single company called the "PGA Security Group" or "PGA Security Services Group." The Court noted that factual findings of labor officials are conclusive and binding on the Court when supported by substantial evidence. The three agencies failed to rebut the fact that they are managed through the Utilities Management Corporation with all of their employees drawing their salaries and wages from said entity; that the agencies have common and interlocking incorporators and officers; and that the employees of the three agencies have a single Mutual Benefit System and followed a single system of compulsory retirement. No explanation was given why the security guards of one agency could easily transfer from one agency to another by simply filling up a common pro forma slip called "Request for Transfer." The agencies always held joint yearly ceremonies such as the "PGA Annual Awards Ceremony," and in emergencies, all PSVSIA Detachment Commanders were instructed to get in touch with the officers not only of PSVSIA but also of GVM and ASDA. The Court held that all the cross-linking of the three agencies' command, control, and communication systems indicate their unitary corporate personality, and accordingly, the veil of corporate fiction of the three agencies should be lifted for the purpose of allowing the employees of the three agencies to form a single labor union. As a single bargaining unit, the employees therein need not file three separate petitions for certification election, as all of these could be covered in a single petition. The Court distinguished the petitioners' argument regarding La Campana, noting that the fact that one of the businesses in that case was not incorporated was not the decisive factor that led the Court to consider the two factories as one, and that there is no materiality in the fact that La Campana involved a demand for wage increases while the instant case involves recognition as the sole bargaining agent, since if businesses operating under one management are treated as one for bargaining purposes, there is not much difference in treating such businesses also as one for the preliminary purpose of labor organizing.
• Due Process and Jurisdiction: The Court held that the designation of the three agencies collectively as "PGA Security Agency" and the service of summons to the management thereof at 82 E. Rodriguez Avenue, Quezon City did not render the petition defective. The Court noted that the affidavits executed separately and under oath by the three managers of the three security agencies indicated their office address to be at PSVSIA Center II, E. Rodriguez Sr. Blvd., Quezon City. Even if there was improper service of summons by the Med-Arbiter, the three security agencies voluntarily submitted themselves to the jurisdiction of the labor authorities, as the summons were clearly sent to and received by their lawyer who filed motions and pleadings on behalf of the three security agencies and who always appeared as their legal counsel. The Court expressed puzzlement as to why petitioners, who claim to be separate entities, continue to be represented by one counsel even in the instant petition.
• Employer's Standing: The Court held that except where the employer has to file a petition for certification election pursuant to Article 258 of the Labor Code because of a request to bargain collectively, it has nothing to do with a certification election which is the sole concern of the workers. Citing Trade Unions of the Philippines and Allied Services (TUPAS) vs. Trajano, the Court described the employer's role in a certification election as that of a mere bystander, with no legal standing to oppose the petition or appeal the Med-Arbiter's orders related thereto. The Court further cited Consolidated Farms, Inc. vs. Noriel, where it was held that on a matter that should be the exclusive concern of labor — the choice of a collective bargaining representative — the employer is definitely an intruder, and his participation deserves no encouragement. The Court noted with disapproval the title given to the petition for certification election naming the three security agencies as respondents, stating that while employers may rightfully be notified or informed of petitions of such nature, they should not be considered parties thereto with concomitant right to oppose it, as sound policy dictates that they should maintain a strictly hands-off policy.

• Piercing the Veil of Corporate Fiction in Labor Cases — The doctrine allows the disregard of separate corporate personalities where the corporation is used to defeat public convenience, justify wrong, protect fraud, or defend crime, or where the corporation is a mere alter ego or business conduit of another. The Court applied this doctrine to treat three separately incorporated security agencies as a single bargaining unit for purposes of a certification election, finding that the agencies' administration, management, and operations were so intertwined — through common management by Utilities Management Corporation, common and interlocking incorporators and officers, a single Mutual Benefit System, interchangeable employees, and unified command structures — that they operated as a single business entity called the "PGA Security Group."
• Employer as Mere Bystander in Certification Elections — An employer has no legal standing in a certification election, as it is the sole concern of the workers. The employer cannot oppose the petition or appeal the Med-Arbiter's orders related thereto, and its participation lends suspicion that it wants to create a company union. The Court applied this doctrine to hold that the three security agencies should not even be adverse parties in the certification election itself, and that naming them as respondents was an error.
• Automatic Conduct of Certification Election Under R.A. 6715 — Under Article 257 of the Labor Code, as amended by Section 24 of R.A. 6715, in any establishment where there is no certified bargaining agent, a certification election shall automatically be conducted by the Med-Arbiter upon the filing of a petition by a legitimate labor organization. The Court applied this provision to reject the petitioners' claim that the petition was defective for failing to show 20% support, holding that there is no need for the labor union to prove that at least 20% of the employees supported the petition, as the Med-Arbiter has no discretion on the matter and must automatically conduct an election.

• "The facts and circumstances extant in the record indicate that the Med-Arbiter and Secretaries Drilon and Torres were not mistaken in holding that the three security companies are in reality a single business entity operating as a single company called the 'PGA Security Group' or 'PGA Security Services Group.' Factual findings of labor officials are conclusive and binding on the Court when supported by substantial evidence." — This passage establishes the standard of review applied to labor officials' factual findings and affirms the single-entity determination that formed the basis for treating the three agencies as one bargaining unit.
• "All of these goes to show that the security agencies concerned do not exist and operate separately and distinctly from each other with different corporate directions and goals. On the contrary, all the cross-linking of the three agencies' command, control and communication systems indicate their unitary corporate personality. Accordingly, the veil of corporate fiction of the three agencies should be lifted for the purpose of allowing the employees of the three agencies to form a single labor union." — This passage articulates the Court's application of the piercing doctrine to the facts, identifying the specific indicators of unitary corporate personality that justified treating the three agencies as a single bargaining unit.
• "It has no legal standing in a certification election as it cannot oppose the petition or appeal the Med-Arbiter's orders related thereto. An employer that involves itself in a certification election lends suspicion to the fact that it wants to create a company union." — This passage states the employer's role as a mere bystander in certification elections and the policy rationale for excluding employer participation, which formed the basis for dismissing the petition.
• "On a matter that should be the exclusive concern of labor, the choice of a collective bargaining representative, the employer is definitely an intruder. His participation, to say the least, deserves no encouragement. This Court should be the last agency to lend support to such an attempt at interference with a purely internal affair of labor." — This passage, quoted from Consolidated Farms, Inc. v. Noriel, articulates the policy against employer interference in the choice of a collective bargaining representative and was adopted by the Court in dismissing the petition.

• La Campana Coffee Factory, Inc. vs. Kaisahan Ng Mga Manggagawa sa La Campana, 93 Phil. 160 (1968) — Controlling precedent on piercing the veil of corporate fiction in labor cases. The Court applied its reasoning to the instant case, noting that the fact that one of the businesses in La Campana was not incorporated was not the decisive factor, and that businesses operating under one management may be treated as one for bargaining purposes.
• Aboitiz Shipping Corporation vs. De la Serna, G.R. No. 88538, 199 SCRA 568 (1991) — Cited for the rule that factual findings of labor officials are conclusive and binding on the Court when supported by substantial evidence.
• Trade Unions of the Philippines and Allied Services (TUPAS) vs. Trajano, G.R. 61153, 120 SCRA 64 (1983) — Cited for the doctrine that the employer's role in a certification election is that of a mere bystander with no legal standing to oppose the petition or appeal the Med-Arbiter's orders.
• Consolidated Farms, Inc. vs. Noriel, L-47752, 84 SCRA 469 (1978) — Cited for the proposition that the employer is an intruder in matters concerning the choice of a collective bargaining representative, and that employer participation deserves no encouragement.

• Article 257, Labor Code, as amended by Section 24 of R.A. 6715 — Provides that in any establishment where there is no certified bargaining agent, a certification election shall automatically be conducted by the Med-Arbiter upon the filing of a petition by a legitimate labor organization. The Court applied this provision to reject the petitioners' claim that the petition was defective for failing to show 20% support, holding that the Med-Arbiter has no discretion on the matter.
• Article 258, Labor Code — Referenced by the Court as the provision under which an employer may file a petition for certification election because of a request to bargain collectively, which is the exception to the general rule that employers have nothing to do with certification elections.
• Article 212(m), Labor Code, as amended by Section 4 of R.A. 6715 — Cited by the Union in arguing that security supervisors cannot be deemed part of management since they do not meet the definition of "supervisory employees" under this provision.
• R.A. 5847, as amended by P.D. 11 and P.D. 100 — Cited by the Union in alleging that the apparent separate personalities of the three agencies were used merely to circumvent the prohibition that a security agency must not have more than 1,000 guards in its employ.
• R.A. 5487, as amended by P.D. 11 and P.D. 100 — Cited by the petitioners in claiming that there was no violation of this law since the three agencies were incorporated long before the decrees' issuance.

Narvasa, C.J., Padilla, and Regalado, JJ., concurred. Puno, J., took no part.