R & E Transport, Inc. vs. Latag

The corporate veil may not be pierced absent clear and convincing evidence of complete domination and the use of such control to commit fraud or wrong, and a quitclaim is invalid where the consideration is scandalously low and inequitable, justifying the relaxation of the mandatory appeal bond requirement to serve substantial justice when the labor arbiter's factual findings are seriously erroneous.

Pedro M. Latag was employed as a taxi driver by La Mallorca Taxi for 23 years. When La Mallorca ceased operations, he transferred to R & E Transport, Inc., where he worked for 14 years. After falling ill and recovering, Latag was no longer allowed to work due to old age. He demanded retirement pay, which was ignored, prompting him to file a case before the NLRC. Following Latag's death, his wife, Avelina P. Latag, substituted him.

• Employment History: Pedro Latag worked for La Mallorca Taxi from 1961 until it ceased operations, then transferred to R & E Transport, Inc. in 1978, working there for 14 years under a "boundary" system, earning an average of ₱500 daily.
• Claim for Retirement: After falling ill in 1995 and being denied re-employment in 1998 due to age, Latag demanded retirement pay under Republic Act No. 7641. Upon being ignored, he filed a complaint on December 21, 1998. Latag died on April 30, 1999, and was substituted by his wife, Avelina.
• Labor Arbiter Decision: On January 10, 2000, the Labor Arbiter awarded ₱277,500 in retirement pay, crediting Latag with 37 years of service by treating La Mallorca and R & E Transport as a single entity owned by the Enriquez family.
• Quitclaim and Subsequent Motions: On January 21, 2000, before receiving the decision, respondent accepted ₱38,850 and signed a quitclaim and joint motion to dismiss. Upon receiving the decision, respondent filed a Manifestation and Motion to Set Aside the Motion to Dismiss, arguing the amount was unconscionable.
• Labor Arbiter's Order: On May 23, 2000, the Labor Arbiter directed the issuance of a writ of execution, effectively setting aside the quitclaim and reinstating the monetary award.
• Appeal to NLRC: Petitioners appealed to the NLRC without posting the required cash or surety bond. The NLRC initially dismissed the appeal but, upon reconsideration, gave due course and ruled on the merits, finding only 14 years of service and upholding the quitclaim.
• Court of Appeals: The CA reversed the NLRC, holding the appeal was not perfected due to the lack of a bond, thereby reinstating the Labor Arbiter's original decision.

• Factual Findings of the NLRC: Petitioners argued that the CA erred in disregarding the NLRC's factual findings, which were supported by substantial evidence, and should have limited its review to issues of jurisdiction or grave abuse of discretion.
• Forum Shopping: Petitioners contended that respondent violated the rule against forum shopping by filing two separate appeals before the CA through different lawyers.
• Monetary Award: Petitioners maintained that the Labor Arbiter's May 23, 2000 Order did not involve a monetary award, thereby negating the necessity of posting an appeal bond.

• Perfection of Appeal: Respondent countered that under Article 223 of the Labor Code, an employer's appeal involving a monetary award may be perfected only upon posting an adequate cash or surety bond, which petitioners failed to do, rendering the Labor Arbiter's decision final and executory.
• Forum Shopping Excuse: Respondent argued that the filing of two appeals was adequately explained by the change in counsel and the desire to ensure her case was heard, not an attempt to seek a favorable opinion in another forum.

• Review of Factual Findings: Whether the Court of Appeals acted properly in overturning the NLRC's factual findings.
• Piercing the Corporate Veil: Whether La Mallorca Taxi and R & E Transport, Inc. are a single entity such that the corporate veil should be pierced to credit Latag with 37 years of service.
• Validity of Quitclaim: Whether the quitclaim signed by the respondent is valid and binding.
• Forum Shopping: Whether the respondent violated the rule on forum shopping.
• Monetary Award: Whether the Labor Arbiter's May 23, 2000 Order involved a monetary award requiring the posting of an appeal bond.

• Review of Factual Findings: The appellate court properly overturned the NLRC's factual findings. When the factual findings of the NLRC conflict with those of the labor arbiter, the CA is empowered to review the evidentiary facts pursuant to its certiorari jurisdiction under Batas Pambansa Blg. 129, as amended by Republic Act No. 7902. By the same token, the Supreme Court may review the factual conclusions of the CA when they contradict those of the NLRC or the labor arbiter.
• Piercing the Corporate Veil: The corporate veil cannot be pierced absent clear and convincing evidence of complete domination used to commit fraud or wrong. Documentary evidence showed that R & E Transport was established in 1978, its president was not a stockholder of La Mallorca, and none of La Mallorca's stockholders held stocks in R & E Transport. The labor arbiter's conclusion of a single entity was based on mere surmises and self-serving assertions, further negated by the seven-year gap between the closure of La Mallorca and the establishment of R & E Transport.
• Validity of Quitclaim: The quitclaim was invalid because the consideration was scandalously low and inequitable. Latag was legally entitled to ₱105,000 (₱500 x 15 days x 14 years), making the ₱38,850 received unconscionable, as it represented just over one-third of the legally due amount.
• Forum Shopping: There was no forum shopping. The filing of two appeals was adequately explained by the respondent's change of counsel and her tenacity to ensure her case was heard. Labor laws shun highly technical procedural rules in the higher interest of justice.
• Monetary Award: The Labor Arbiter's May 23, 2000 Order involved a monetary award because it reinstated the original decision's monetary award by reference. Consequently, the appeal to the NLRC required the posting of a bond under Article 223 of the Labor Code. However, the mandatory appeal bond requirement was relaxed in this case due to fundamental considerations of substantial justice and the serious errors in the labor arbiter's factual conclusions regarding the award of retirement benefits.

• Piercing the Corporate Veil — The corporate veil may be pierced only if the following elements concur: (1) complete domination of finances, policy, and business practice such that the corporate entity had no separate mind, will, or existence; (2) such control was used to commit fraud or a wrong, or a violation of a statutory or positive legal duty; and (3) the control and breach of duty proximately caused the injury or unjust loss complained of. The wrongdoing must be clearly and convincingly established, not presumed. In this case, the doctrine did not apply because the respondent failed to show stock control or complete domination by one company over the other, and the seven-year gap between the closure of La Mallorca and the establishment of R & E Transport negated any intention to commit a wrong.
• Invalidity of Unconscionable Quitclaims — Quitclaims and waivers that bargain away workers' rights and benefits are looked upon with disfavor and are ineffective in barring the recovery of the full measure of a worker's rights, especially when the consideration is scandalously low and inequitable. Acceptance of such benefits does not amount to estoppel.
• Relaxation of Appeal Bond Requirement — While the perfection of an appeal in the manner and within the period prescribed by law is mandatory and jurisdictional, procedural lapses may be disregarded due to fundamental considerations of substantial justice, or because of special circumstances combined with legal merits. The requirement to post a bond to perfect an appeal may be relaxed when serious errors exist in the factual conclusions of the labor arbiter.

• "Basic is the rule that the corporate veil may be pierced only if it becomes a shield for fraud, illegality or inequity committed against a third person. We have thus cautioned against the inordinate application of this doctrine."
• "A quitclaim in which the consideration is ‘scandalously low and inequitable’ cannot be an obstacle to the pursuit of a worker’s legitimate claim."
• "Nonetheless, procedural lapses may be disregarded because of fundamental considerations of substantial justice; or because of the special circumstances of the case combined with its legal merits or the amount and the issue involved."

• St. Martin Funeral Homes v. NLRC, 356 Phil. 811 (1998) — Followed as controlling precedent establishing that the proper remedy to review an NLRC decision is a special civil action for certiorari under Rule 65 filed with the Court of Appeals.
• Philippine National Bank v. Andrada Electric & Engineering Company, 381 SCRA 244 (2002) — Followed for the three-part test on piercing the corporate veil, emphasizing that the wrongdoing must be clearly and convincingly established.
• Periquet v. NLRC, 186 SCRA 724 (1990) — Followed for the doctrine that quitclaims are invalid when wangled from unsuspecting persons or when unconscionable on their face.

• Article 223, Labor Code — Governs the perfection of appeals in labor cases, requiring the posting of a cash or surety bond equivalent to the monetary award for an employer's appeal to be perfected. Applied to determine that the May 23, 2000 Order involved a monetary award, though the bond requirement was ultimately relaxed.
• Article 287, Labor Code (as amended by Republic Act No. 7641) — Provides the formula for retirement pay: at least one-half (1/2) month salary for every year of service, with a fraction of at least six (6) months considered as one whole year. Applied to compute Latag's retirement pay, excluding the 13th-month pay and service incentive leave due to his "boundary" system of compensation.
• Section 9, Batas Pambansa Blg. 129 (as amended by Republic Act No. 7902) — Grants the Court of Appeals the power to pass upon evidence to resolve factual issues in the exercise of its original jurisdiction over petitions for certiorari. Applied to justify the CA's review of the NLRC's factual findings.

Davide, Jr., C.J. (Chairman), Ynares-Santiago, Carpio, and Azcuna, JJ.