Case Summary (G.R. No. 178352)
Procedural and factual background: filing and labor arbiter decision
On October 29, 2004, Delima filed an illegal dismissal complaint against Golden Union Aquamarine Corporation, Prospero Gois, and Susan Gois before the NLRC Regional Arbitration Branch No. VIII (NLRC RAB VIII Case No. 10‑0231‑04). On April 29, 2005, Labor Arbiter Philip B. Montaces found the dismissal illegal and ordered Golden to pay a total of P115,561.05 (breakdown: backwages, separation pay, salary differentials, service incentive leave pay, and 10% attorney’s fees). Golden did not appeal the labor arbiter’s decision, which thereby became final and executory, and a writ of execution issued, resulting in attachment of an Isuzu jeep.
Third-party claim and labor arbiter’s orders on release/substitution
Respondent Susan Gois filed an affidavit of third‑party claim asserting the attached vehicle was registered in her name and that she was not a party to the illegal dismissal case. The Labor Arbiter denied the third‑party claim in an order dated December 29, 2005 on the grounds that Gois had been named in the complaint, had been served summons, had verified Golden’s position paper, and was an incorporator/officer of the corporation. Gois appealed to the NLRC and concurrently moved before the Labor Arbiter to substitute the vehicle with a cash bond equivalent to the judgment amount. On January 16, 2006, the Labor Arbiter granted the motion and ordered the sheriff to release the jeep to Gois upon substitution with a cash bond (O.R. No. 8307036) in the amount of P115,561.05.
NLRC resolution dismissing appeal and subsequent procedural history
The NLRC issued a Resolution on May 31, 2006 dismissing Gois’s appeal; a motion for reconsideration was filed and denied on August 22, 2006. The NLRC later entered an Entry of Judgment on September 29, 2006, after noting the resolution became final and executory on September 12, 2006. Gois filed a petition for certiorari with the Court of Appeals on October 13, 2006, with a supplement on October 27, 2006, challenging the NLRC’s denial of her third‑party claim and asserting she should not be held personally liable for a corporation’s debt.
Court of Appeals decision and reasoning
The Court of Appeals granted Gois’s petition on December 21, 2006, annulling and setting aside the NLRC’s May 31 and August 22, 2006 resolutions and ordering return of the cash bond to Gois. The CA reasoned that the Labor Arbiter’s dispositive order had directed liability only against Golden Union Aquamarine Corporation and did not impose joint and solidary liability on Gois. It reiterated the doctrine of corporate personality: corporate officers are not personally liable for corporate obligations absent a showing of malice or bad faith designed to evade corporate obligations. The CA also accepted Gois’s showing that the vehicle was registered in her name and thus not properly subject to levy for the corporation’s debt. The CA further held that Gois’s petition for certiorari was timely.
Issues raised before the Supreme Court by petitioner Delima
Delima’s petition for review under Rule 45 challenged the CA ruling on three grounds: (1) that the CA omitted Gois as a principal respondent in its statement of facts; (2) that the CA erred in holding that a vehicle used in corporate operations but registered in Gois’s name could not be garnished; and (3) that the CA erred in annulling and setting aside a final and executed NLRC order/resolution.
Supreme Court discussion: corporate personality and officer liability
The Supreme Court reiterated the general rule that a corporation has a personality separate and distinct from its stockholders and officers; obligations incurred by the corporation are its liabilities, and corporate property cannot be attached to satisfy personal debts and vice versa. Corporate officers are not personally liable for corporate obligations unless they have exceeded authority or acted with malice or bad faith intended to evade corporate obligations. The Court cited precedents upholding the separate personality doctrine and the narrow circumstances that justify piercing the corporate veil or imposing personal liability on officers.
Supreme Court findings on personal liability and attachability of Gois’s vehicle
Applying the foregoing principles, the Court found that the labor arbiter’s April 29, 2005 decision imposed liability only on Golden Union Aquamarine Corporation and did not establish a joint and solidary obligation with Gois. There was no evidence presented that the termination of Delima’s employment was tainted by malice or bad faith that would justify holding corporate officers personally liable. Because the vehicle was undisputedly owned by Gois (registered under her name), it should not have been attached to satisfy a judgment against the corporation. Consequently, Gois could not be held personally liable for the corporate obligation reflected in the labor arbiter’s award.
Supreme Court findings on finality, timeliness, and NLRC error
The Court addressed the procedural contention regarding finality and timeliness. It held that the NLRC erred in declaring its May 31, 2006 Resolution final and executory while the reglementary period to file a petition for certiorari under Rule 65 was still runnin
...continue readingCase Syllabus (G.R. No. 178352)
Case Caption and Citation
- Reported as 577 Phil. 597, Third Division, G.R. No. 178352, dated June 17, 2008.
- Decision penned by Justice Ynares-Santiago.
- Petition for review under Rule 45 of the Rules of Court filed by petitioner Virgilio S. Delima assailing: (a) the December 21, 2006 Decision of the Court of Appeals which annulled and set aside the May 31, 2006 and August 22, 2006 Resolutions of the National Labor Relations Commission (NLRC) in NLRC Case No. V-000188-2006 and ordered petitioner to return the cash bond released to him; and (b) the February 5, 2007 Resolution denying petitioner's Motion for Reconsideration.
Parties and Roles
- Petitioner: Virgilio S. Delima — complainant in the underlying illegal dismissal case; later executed judgment creditor and possessor of a cash bond substitution.
- Respondent: Susan Mercaida Gois — third-party claimant asserting ownership of an attached vehicle; stockholder and incorporator/officer of Golden Union Aquamarine Corporation; appellant from Labor Arbiter's denial of third-party claim and petitioned the Court of Appeals.
- Other party in underlying labor case: Golden Union Aquamarine Corporation (Golden) — employer adversely ordered by Labor Arbiter to pay Delima; judgment debtor.
Underlying Labor Case (Facts)
- Delima filed a case for illegal dismissal against Golden, Prospero Gois, and Susan M. Gois before the Regional Arbitration Branch No. VIII of the NLRC on October 29, 2004 (NLRC RAB VIII Case No. 10-0231-04).
- Labor Arbiter Philip B. Montaces rendered a decision on April 29, 2005, finding the dismissal illegal and awarding specific monetary relief to Delima totalling P115,561.05 (breakdown provided in the decision).
- The dispositive award components included:
- Backwages (July 30, 2004 to April 29, 2005; 9 months at P5,350.50) = P48,154.50
- Separation pay (P5,350.50 x 4 years) = P21,402.00
- Salary differentials = P32,679.00
- Service incentive leave pay = P2,820.00
- Attorney's fee (10%) = P10,505.55
- Total = P115,561.05
- Labor Arbiter dismissed other claims for lack of merit.
Execution and Attachment
- Golden did not appeal the Labor Arbiter's decision; the decision became final and executory as to Golden.
- A writ of execution was issued; an Isuzu jeep (plate number PGE-531 per one mention; another Order references Plate No. PGE-532) was attached by the sheriff.
- Respondent Gois filed an Affidavit of Third Party Claim asserting that the attachment of the vehicle was irregular because the vehicle was registered in her name and she was not a party to Delima’s illegal dismissal case.
Labor Arbiter Proceedings on Third-Party Claim and Substitution
- In an Order dated December 29, 2005, the Labor Arbiter denied Susan Gois’s third-party claim on grounds that:
- she was named as a respondent in Delima’s complaint,
- summons were served upon her and Prospero Gois,
- she and Prospero Gois verified Golden’s position paper and therein alleged themselves as respondents, and
- she was one of the incorporators/officers of Golden.
- Susan Gois filed an appeal before the NLRC from the denial of the third-party claim.
- Concurrently, she moved before the Labor Arbiter to release the motor vehicle upon substituting a cash bond in the amount of P115,561.05 (under O.R. No. 8307036), equivalent to the judgment award.
- On January 16, 2006, the Labor Arbiter issued an Order finding the Motion to Release Motor Vehicle after substitution of the cash bond in order and directing Sheriff Felicisimo T. Basilio to release the Isuzu jeep (plate No. referenced as PGE-532) and return it to Susan M. Gois.
NLRC Proceedings and Resolutions
- The NLRC issued a Resolution on May 31, 2006 dismissing respondent Gois’s appeal for lack of merit.
- Susan Gois filed a Motion for Reconsideration on July 24, 2006, which the NLRC denied on August 22, 2006.
- The NLRC Resolution was alleged to have become final and executory on September 12, 2006, and an Entry of Judgment was issued on September 29, 2006.
- The record indicates a copy of the denial of the motion for reconsideration was received by respondent on September 1, 2006.
Petition for Certiorari to the Court of Appeals
- On October 13, 2006, Gois filed a petition for certiorari before the Court of Appeals, with a Supplement to Petition filed on October 27, 2006.
- Gois alleged that the NLRC committed grave abuse of discretion in dismissing her appeal and contended:
- she would be condemned to pay a judgment debt of a corporation of which she was not president nor majority owner but merely a stockholder;
- corporate personality is separate and distinct from her personal personality; hence the judgment against the corporation could not be satisfied out of her personal assets.
Court of Appeals Decision (December 21, 2006)
- The Court of Appeals granted Gois’s petition, annulled and set aside the NLRC Resolutions dated May 31, 2006 and August 22, 2006, and ordered return to Gois of the cash bond earlier released to her.
- The Court of Appeals’ key rationales included:
- The Labor Arbiter’s April 29, 2005 decision directed only Golden to pay the award; it did not make liability joint and solidary with Susan Gois.
- Corporate officers are not ordinarily liable for damages on account of employee dismissal because the corporation has a personality separate and distinct from its officers who act as its agents.
- Solidary liability of officers with the corporation for employment termination requires clear showing of evident malice or bad faith; such showing was not established in this case.
- Citing Reahs Corporation vs. NLRC: the doctrine of separate corporate personality should remain the guiding rule; to justify solidary liability there must be allegation or showing that officers deliberately or maliciously designed to evade corporate financial obligations.
- Altho