FIRST DIVISION
G.R. No. 196134, October 12, 2016
VALENTIN S. LOZADA, Petitioner, v. MAGTANGGOL MENDOZA, Respondent.
D E C I S I O N
BERSAMIN, J.:
This appeal seeks the reversal of the decision promulgated on September 28, 2010,1 whereby the Court Appeals (CA), in CA-G.R. SP No. 111722, set aside the decision of the National Labor Relations Commission (NLRC) upon finding that the NLRC had gravely abused its discretion amounting to lack or excess of jurisdiction in reversing the ruling of the Labor Arbiter dated February 24, 2009,2 and reinstated such ruling in favor of the respondent holding the petitioner liable for the satisfaction of the money judgment in favor of the respondent.
On October 13, 1997, the petitioner Magtanggol Mendoza was employed as a technician by VSL Service Center, a single proprietorship owned and managed by Valentin Lozada.On February 23, 2005, the Labor Arbiter declared the dismissal of the petitioner from employment as illegal, disposing thusly:ChanRoblesVirtualawlibrary
Sometime in August 2003, the VSL Service Center was incorporated and changed its business name to LB&C Services Corporation. Subsequently, the petitioner was asked by respondent Lozada to sign a new employment contract. The petitioner did not accede because the respondent company did not consider the number of years of service that he had rendered to VSL Service Center. From then on, the petitioner's work schedule was reduced to one to three days a week.
In December 2003, the petitioner was given his regular working schedule by the respondent company. However, on January 12, 2004, the petitioner was advised by the respondent company's Executive Officer, Angeline Aguilar, not to report for work and just wait for a cal1 from the respondent company regarding his work schedule.
The petitioner patiently waited for the respondent company's call regarding his work schedule. However, he did not receive any call from it. Considering that his family depends on him for support, he asked his wife to call the respondent company and inquire on when he would report back to work. Still, the petitioner was not given any work schedule by the respondent company.
Aggrieved, the petitioner filed a complaint against the respondent company on January 21, 2004 for illegal dismissal with a prayer for the payment of his 13th month pay, service incentive leave pay, holiday pay and separation pay and with a claim for moral and exemplary damages, and attorney's fees. The case was docketed as NLRC NCR Case No. 00-01-00968-2004.
A mandatory conciliation conference was conducted, but to no avail, thus, they were ordered by the Labor Arbiter to submit their respective position papers.
In his Position paper dated March 2, 2004, the petitioner alleged that he was constructively dismissed as he was not given any work assignment for his refusal to sign a new contract of employment. He was dismissed from his work without any valid authorized cause. He was not given any separation pay for the services that he rendered for almost six (6) years that he worked with VSL Service Center. He thus claimed that his termination from employment was effected illegally, hastily, arbitrarily and capriciously.
In its Position paper, dated March 9, 2004, the respondent company vehemently denied the allegation of the petitioner that he was dismissed from employment. The petitioner was still reporting for work with the respondent company even after he filed a complaint with the arbitration board of the NLRC up to February 10, 2004. It also denied that the petitioner was its employee since 1997. The truth of the matter, according to the respondent company, was that it employed the petitioner only on August 1, 2003 because the respondent company started its corporate existence only on August 27, 2002 and started its business operation on August 1, 2003. It further averred that respondent Valentin Lozada was not an officer or employee of the respondent company nor (sic) its authorized representative. The respondent company finally claimed that it was the petitioner who severed his relationship with it.3chanroblesvirtuallawlibrary
WHEREFORE, premises considered, judgment is rendered declaring the dismissal of complainant as illegal and ordering his reinstatement with full backwages plus payment of his 13th month pay (less P500.00 pesos) and service incentive leave pay all computed three years backward, as follows:LB&C Services Corporation appealed, but the NLRC dismissed the appeal for non-perfection thereof due to failure to deposit the required cash or surety bond. Thus, the Labor Arbiter's decision attained finality on August 4, 2006, and the entry of judgment was issued by the NLRC on August 16, 2006.
chanRoblesvirtualLawlibraryx x x x
SO ORDERED.4chanroblesvirtuallawlibrary
WHEREFORE, premises considered, respondents' appeal is hereby GRANTED. Accordingly, the order of the labor arbiter is hereby REVERSED and SET ASIDE.The respondent assailed the reversal by motion for reconsideration, which the NLRC thereafter denied.
As prayed for by the respondents, the levy constituted over such Las Piñas property which is covered by Transfer Certificate of Title No. (sic) is hereby LIFTED.
SO ORDERED.11chanroblesvirtuallawlibrary
As between PNB and PNEI, petitioners want us to disregard their separate personalities, and insist that because the company, PNEI, has already ceased operations and there is no other way by which the judgment in favor of the employees can be satisfied, corporate officers can be held jointly and severally liable with the company. Petitioners rely on the pronouncement of this Court in A.C. Ransom Labor Union-CCLU v. NLRC and subsequent cases.The records of this case do not warrant the application of the exception. The rule, which requires malice or bad faith on the part of the directors or officers of the corporation, must still prevail. The petitioner might have acted in behalf of LB&C Services Corporation but the corporation's failure to operate could not be hastily equated to bad faith on his part. Verily, the closure of a business can be caused by a host of reasons, including mismanagement, bankruptcy, lack of demand, negligence, or lack of business foresight. Unless the closure is clearly demonstrated to be deliberate, malicious and in bad faith, the general rule that a corporation has, by law, a personality separate and distinct from that of its owners should hold sway. In view of the dearth of evidence indicating that the petitioner had acted deliberately, maliciously or in bad faith in handling the affairs of LB&C Services Corporation, and such acts had eventually resulted in the closure of its business, he could not be validly held to be jointly and solidarily liable with LB&C Services Corporation.
This reliance fails to persuade. We find the aforesaid decisions inapplicable to the instant case.
For one, in the said cases, the persons made liable after the company's cessation of operations were the officers and agents of the corporation. The rationale is that, since the corporation is an artificial person, it must have an officer who can be presumed to be the employer, being the person acting in the interest of the employer. The corporation, only in the technical sense, is the employer. In the instant case, what is being made liable is another corporation (PNB) which acquired the debtor corporation (PNEI).
Moreover, in the recent cases Carag v. National Labor Relations Commission and McLeod v. National Labor Relations Commission, the Court explained the doctrine laid down in AC Ransom relative to the personal liability of the officers and agents of the employer for the debts of the latter. In AC Ransom, the Court imputed liability to the officers of the corporation on the strength of the definition of an employer in Article 212(c) (now Article 212[e]) of the Labor Code. Under the said provision, employer includes any person acting in the interest of an employer, directly or indirectly, but does not include any labor organization or any of its officers or agents except when acting as employer. It was clarified in Carag and McLeod that Article 212(e) of the Labor Code, by itself, does not make a corporate officer personally liable for the debts of the corporation. It added that the governing law on personal liability of directors or officers for debts of the corporation is still Section 31 of the Corporation Code.
More importantly, as aptly observed by this Court in AC Ransom, it appears that Ransom, foreseeing the possibility or probability of payment of backwages to its employees, organized Rosario to replace Ransom, with the latter to be eventually phased out if the strikers win their case. The execution could not be implemented against Ransom because of the disposition posthaste of its leviable assets evidently in order to evade its just and due obligations. Hence, the Court sustained the piercing of the corporate veil and made the officers of Ransom personally liable for the debts of the latter.
Clearly, what can be inferred from the earlier cases is that the doctrine of piercing the corporate veil applies only in three (3) basic areas, namely: 1) defeat of public convenience as when the corporate fiction is used as a vehicle for the evasion of an existing obligation; 2) fraud cases or when the corporate entity is used to justify a wrong, protect fraud, or defend a crime; or 3) alter ego cases, where a corporation is merely a farce since it is a mere alter ego or business conduit of a person, or where the corporation is so organized and controlled and its affairs are so conducted as to make it merely an instrumentality, agency, conduit or adjunct of another corporation. In the absence of malice, bad faith, or a specific provision of law making a corporate officer liable, such corporate officer cannot be made personally liable for corporate liabilities.23 [Bold Emphasis supplied]
Undoubtedly, respondent Lozada cannot be absolved from his liability as corporate officer. Although, as a rule, the officers and members of a corporation are not personally liable for the acts done in the performance of their duties, this rule admits of exceptions one of which is when the employer corporation is no longer existing and is unable to satisfy the judgment in favor of the employee. The corporate officer in such case should be held for acting on behalf of the corporation. Here, the respondent company already ceased its business operation.The Labor Arbiter did not render any findings about the petitioner perpetrating the wrongful act against the respondent, or about the petitioner being personally liable along with LB&C Services Corporation for the monetary award. The lack of such findings was not assailed by the respondent. On its part, the NLRC did not discuss the matter at all in its decision of May 31, 2006, which ultimately attained finality. To hold the petitioner liable after the decision had become final and executory would surely alter the tenor of the decision in a manner that would exceed its terms.
x x x x
x x x The petitioner's claim that respondent Lozada was the real owner of the LB & C Corporation is thus correct and tenable. The conclusion is bolstered by the fact that the respondent company never revealed who were the officers of the LB & C Corporation if only to pinpoint responsibility in the closure of the company that resulted in the dismissal of the petitioner from employment. Respondent Lozada is, therefore, personally liable for the payment of the monetary benefits due to the petitioner, its former employee.25cralawredchanroblesvirtuallawlibrary
Endnotes:
1Rollo, pp. 149-157; penned by Associate Justice Isaias Dicdican (retired), and concurred in by Associate Justice Stephen C. Cruz and Associate Justice Samuel H. Gaerlan.
2 Id. at 128-129.
3 Id. at 150-152.
4 Id. at 152.
5 Id. at 108-110.
6 Id. at 109.
7 Id. at 112-114.
8 Id. at 153-154.
9 Id. at 154.
10 Id.
11 Id. at 155.
12 Id. at 157.
13Polymer Rubber Corporation v. Salamuding, G.R. No. 185160, July 24, 2013, 702 SCRA 153, 160.
14Ever Electrical Manufacturing, Inc.(EEMI) v. Samahang Manggagawa ng Ever Electrical/NAMAWU Local, G.R. No. 194795, June 13, 2012, 672 SCRA 562, 569.
15Polymer Rubber Corporation v. Salamuding, supra, at 161.
16 G.R. No. 119085, September 9, 1999, 314 SCRA 24.
17 Id. at p. 32.
18 Id.
19Ever Electrical Manufacturing, Inc. (EEMI) v. Samahang Manggagawa ng Ever Electrical/NAMA WU Local, supra, note 14, at 570.
20 G.R. No. 161134, March 3, 2008, 547 SCRA 402.
21 G.R. Nos. 170689 and 170705, March 17, 2009, 581 SCRA 598.
22 Supra, note 20, at 414.
23 Supra, note 2l, at 614-616.
24Rollo, p. 156.
25cralawred Id. at 158-159.
26Alba v. Yupangco, G.R. No. 188233, June 29, 2010, 622 SCRA 503, 508.