A CORPORATE OFFICER CAN BE HELD SOLIDARILY LIABLE FOR LABOR JUDGMENT EVEN IF NOT ORIGINALLY IMPLDEADED IN THE CASE

Guillermo vs. Uson

G.R. No. 198967, March 7, 2016

Facts:

Respondent Crisan to P. Uson (Uson) began his employment with Royal Class Venture Phils., Inc. (Royal Class Venture) as an accounting clerk. Eventually, he was promoted to the position of accounting supervisor, until he was allegedly dismissed from employment. On March 2, 2001, Uson filed with the Sub-Regional Arbitration Branch No. 1, Dagupan City, of the NLRC a Complaint for Illegal Dismissal, with prayers for backwages, reinstatement, among others, against Royal Class Venture. Royal Class Venture did not make an appearance in the case despite its receipt of summons.

LA Ruling:

The LA rendered a Decision in favor of the complainant Uson and ordering therein respondent Royal Class Venture to reinstate him to his former position and pay his backwages, month pay as well as moral and exemplary damages and attorney’s fees.

Royal Class Venture, as the losing party, did not file an appeal of the decision. Consequently, upon Uson’s motion, a Writ of Execution was issued to implement the Labor Arbiter’s decision. Despite issuance of alias writs, the judgment remained “unsatisfied.” Thus, Uson filed a Motion for Alias Writ of Execution and to Hold Directors and Officers of Respondent Liable for Satisfaction of the Decision.

The Sheriff found out that the establishment erected in the business office address of respondent is not [in] the respondent’s name but JOEL and SONS CORPORATION, a family corporation owned by the Guillermos of which, Jose Emmanuel F. Guillermo the General Manager of the respondent, is one of the stockholders who received the writ using his nickname “Joey,” [and who] concealed his real identity and pretended that he [was] the brother of Jose, which [was] contrary to the statement of the guard-on-duty that Jose and Joey [were] one and the same person. The former also informed the Sheriff that the respondent’s (sic) corporation has been dissolved.

The LA issued an Order granting the motion filed by Uson. The order held that officers of a corporation are jointly and severally liable for the obligations of the corporation to the employees and there is no denial of due process in holding them so even if the said officers were not parties to the case when the judgment in favor of the employees was rendered. Thus, the Labor Arbiter pierced the veil of corporate fiction of Royal Class Venture and held herein petitioner Jose Emmanuel Guillermo (Guillermo), in his personal capacity, jointly and severally liable with the corporation for the enforcement of the claims of Uson. Guillermo filed, by way of special appearance, a Motion for Reconsideration/To Set Aside the Order of December 26, 2002. The same, however, was not granted as, this time, in an Order dated November 24, 2003, Labor Arbiter Nifia Fe S. Lazaga-Rafols sustained the findings of the labor arbiters before her and even castigated Guillermo for his unexplained absence in the prior proceedings despite notice, effectively putting responsibility on Guillermo for the case’s outcome against him. Guillermo filed a Motion for Reconsideration of the above Order, but the same was promptly denied.

NLRC Ruling:

Guillermo elevated the matter to the NLRC by filing a Memorandum of Appeal with Prayer for a (Writ of) Preliminary Injunction. The NLRC dismissed Guillermo’s appeal and denied his prayers for injunction. Guillermo filed a Petition for Certiorari before the Court of Appeals.

CA Ruling:

The Court of Appeals rendered its assailed Decision which denied Guillermo’s petition and upheld all the findings of the NLRC. The appellate court found that summons was in fact served on Guillermo as President and General Manager of Royal Class Venture, which was how the Labor Arbiter acquired jurisdiction over the company. But Guillermo subsequently refused to receive all notices of hearings and conferences as well as the order to file Royal Class Venture’s position paper. Then, it was learned during execution that Royal Class Venture had been disso]ved. However, the Court of Appeals held that although the judgment had become final and executory, it may be modified or altered “as when its execution becomes impossible or unjust.” It also noted that the motion to hold officers and directors like Guillermo personally liable, as well as the notices to hear the same, was sent to them by registered mail, but no pleadings were submitted and no appearances were made by anyone of them during the said motion’s pendency. Thus, the court held Guillermo liable, citing jurisprudence that hold the president of the corporation liable for the latter’s obligation to illegally dismissed employees. Finally, the court dismissed Guillermo’s allegation that the case is an intra-corporate controversy, stating that jurisdiction is determined by the allegations in the complaint and the character of the relief sought. Guillermo filed a motion for reconsideration but the same was denied. Hence, the petition.

Issue/s:

Whether or not the officer of a corporation may be held solidarily for the liability of the latter, even if not originally impleaded in the case.

SC Ruling:

The SC denied the petition.

The SC held that the veil of corporate fiction can be pierced, and responsible corporate directors and officers or even a separate but related corporation, may be impleaded and held answerable solidarily in a labor case, even after final judgment and on execution, so long as it is established that such persons have deliberately used the corporate vehicle to unjustly evade the judgment obligation, or have resorted to fraud, bad faith or malice in doing so.

When the shield of a separate corporate identity is used to commit wrongdoing and opprobriously elude responsibility, the courts and the legal authorities in a labor case have not hesitated to step in and shatter the said shield and deny the usual protections to the offending party, even after final judgment.

The key element is the presence of fraud, malice or bad faith. Bad faith, in this instance, does not connote bad judgment or negligence but imposes a dishonest purpose or some moral obliquity and conscious doing of wrong; it means breach of a known duty through some motive or interest or ill will; it partakes of the nature of fraud.

It shows that Guillermo, the officer being held liable, is the person responsible in the actual running of the company and for the malicious and illegal dismissal of the complainant; he, likewise, was shown to have a role in dissolving the original obligor company in an obvious “scheme to avoid liability” which jurisprudence has always looked upon with a suspicious eye in order to protect the rights of labor. It is also clearly reflected in the records that it was Guillermo himself, as President and General Manager of the company, who received the summons to the case, and who also subsequently and without justifiable cause refused to receive all notices and orders of the Labor Arbiter that followed. This makes Guillermo responsible for his and his company’s failure to participate in the entire proceedings before the said office.

Records likewise bear that Guillermo dissolved Royal Class Venture and helped incorporate a new firm, located in the same address as the former, wherein he is again a stockholder. This is borne by the Sheriffs Return which reported: that at Royal Class Venture’s business address at Minien East, Sta. Barbara, Pangasinan, there is a new establishment named “Joel and Sons Corporation,” a family corporation owned by the Guillermos in which Jose Emmanuel F. Guillermo is again one of the stockholders; that Guillermo received the writ of execution but used the nickname “Joey” and denied being Jose Emmanuel F. Guillermo and, instead, pretended to be Jose’s brother; that the guard on duty confirmed that Jose and Joey are one and the same person; and that the respondent corporation Royal Class Venture had been dissolved. Again, the facts contained in the Sheriffs Return were not disputed nor controverted by Guillermo, either in the hearings of Uson’s Motions for Issuance of Alias Writs of Execution, in subsequent motions or pleadings, or even in the petition before this Court.

Essentially, then, the facts form part of the records and now stand as further proof of Guillermo’s bad faith and malicious intent to evade the judgment obligation. The foregoing clearly indicate a pattern or scheme to avoid the obligations to Uson and frustrate the execution of the judgment award, which this Court, in the interest of justice, will not countenance.