G.R. No. 210032 - Dutch Movers, Inc. vs. Lequin

Employment and Termination:

Respondents Edilberto Lequin, Christopher Salvador, Reynaldo Singsing, and Raffy Mascardo were employed by Dutch Movers, Inc. (DMI), a domestic corporation engaged in hauling liquefied petroleum gas. Lequin was a truck driver, while the others were helpers.
On December 28, 2004, Cesar Lee, through Supervisor Nazario Furio, informed respondents that DMI would cease its hauling operations without providing a formal notice. Respondents requested a formal notice, but DMI failed to issue one.
Respondents filed an illegal dismissal complaint, arguing that their termination was without cause and based on the pretext of closure.

DOLE Certification:

The Department of Labor and Employment (DOLE) issued a certification confirming that DMI did not file any notice of business closure.

Labor Arbiter and NLRC Proceedings:

On October 28, 2005, Labor Arbiter Aliman D. Mangandog dismissed the case for lack of cause of action.
On November 23, 2007, the National Labor Relations Commission (NLRC) reversed the Labor Arbiter’s decision, ruling that respondents were illegally dismissed. The NLRC ordered DMI to reinstate respondents and pay full backwages, including attorney’s fees.
The NLRC decision became final and executory on December 30, 2007.

Execution Stage and Impleadment of Petitioners:

During the execution stage, respondents discovered that DMI had ceased operations. They filed a Motion to Implead, alleging that petitioners Cesar Lee and Yolanda Lee, who managed DMI, were the real owners and should be held liable for the judgment awards.
Spouses Edgar and Millicent Smith, who were listed as incorporators of DMI, claimed they merely lent their names to assist in the incorporation and had no involvement in DMI’s management.

Labor Arbiter’s Order and Writ of Execution:

On April 1, 2009, Labor Arbiter Lilia S. Savari issued an Order holding petitioners liable for the judgment awards, finding that they represented themselves as DMI’s owners and managers.
A Writ of Execution was issued on July 31, 2009, directing petitioners to pay the judgment awards.

NLRC’s Reversal:

On October 29, 2009, the NLRC quashed the Writ of Execution, ruling that petitioners could not be held personally liable for DMI’s obligations.

Court of Appeals Decision:

On July 1, 2013, the Court of Appeals (CA) reversed the NLRC’s decision, holding that petitioners were liable for the judgment awards. The CA found that petitioners controlled DMI and used it as a conduit to evade legal obligations.
The CA denied petitioners’ Motion for Reconsideration on November 13, 2013.

Supervening Events and Immutability of Judgment:
- The principle of immutability of judgment is not absolute. A supervening event, such as the closure of DMI without filing a notice of business closure, renders the execution of judgment unjust or impossible.
- Petitioners controlled DMI and used it to evade legal obligations, making them personally liable for the judgment awards.
Piercing the Veil of Corporate Fiction:
- A corporation has a separate and distinct personality from its stockholders. However, this personality may be disregarded if the corporation is used to defeat public convenience, justify wrong, protect fraud, or evade labor laws.
- Petitioners actively participated in DMI’s management and used it as a conduit to evade obligations, justifying the piercing of the corporate veil.
Separation Pay in Lieu of Reinstatement:
- Since DMI has ceased operations, reinstatement is no longer feasible. Respondents are entitled to separation pay instead of reinstatement.