G.R. No. 209011 - Malayan Insurance Company, Inc. vs. Alibudbud

Case Summary (G.R. No. 209011)

Petitioners

Petitioners are the former employees who filed complaints for illegal dismissal against Undaloc Inc. and who were awarded monetary relief (totaling P3,693,474.68 by the Labor Arbiter) and later sought enforcement of the final judgments against respondents, including efforts to hold Cigin Corp. and Sps. Undaloc solidarily liable during execution.

Respondents

Respondents include Undaloc Construction Company, Inc. (initial employer and judgment debtor), Cigin Construction & Development Corporation (a subsequently incorporated family corporation), and spouses Cirilo and Gina Undaloc (officers and principal actors in the corporate entities). Allegations include cessation of Undaloc Inc.’s operations, formation of Cigin Corp., and transfers of corporate assets (notably construction vehicles) to frustrate execution.

Key Dates and Procedural Landmarks

Labor Arbiter decisions awarding petitioners: November 16, 2011; January 19 and 20, 2012.
NLRC decision reversing Labor Arbiter: July 31, 2012.
CA decision reinstating Labor Arbiter (CA‑G.R. SP No. 07306): September 4, 2015; became final on May 28, 2016.
Sheriff’s execution attempts revealed scant bank assets (UCPB balance P3,366.52): reported in 2017.
Labor Arbiter’s Order amending writ to add Cigin Corp. and Sps. Undaloc as jointly and severally liable: July 6, 2017.
NLRC TRO issued in connection with Verified Petition: July 24, 2017.
CA decision in CA‑G.R. SP No. 11072 reversing the Labor Arbiter’s July 6, 2017 order: May 11, 2018; Motion for Reconsideration denied: August 29, 2019.
Supreme Court decision (Rule 45 review): June 23, 2021 (uses 1987 Constitution as governing charter).

Applicable Law

The decision applies the 1987 Constitution as the governing charter. Procedural context includes Rule 45 (Petition for Review on Certiorari), principles on forum shopping, res judicata and immutability of judgments, and labor jurisprudence permitting piercing the corporate veil in execution where fraud, bad faith, or deliberate evasion is shown. The Court relied on prior precedents cited in the record (e.g., Chua v. MBTC; Guillermo v. Uson; A.C. Ransom Labor Union-CCLU v. NLRC) as part of its legal framework.

Material Facts

Petitioners obtained favorable Labor Arbiter awards for illegal dismissal and related monetary claims. Undaloc Inc. appealed and secured reversal from the NLRC by virtue of a supersedeas bond that the NLRC accepted despite alleged irregularities. The CA later reinstated the Labor Arbiter’s awards. Execution revealed that Undaloc Inc. had ceased operations and held negligible bank funds. Shortly after the adverse decisions, Cigin Corp. was incorporated with family members as officers/incorporators, and motor vehicles formerly registered to Undaloc Inc. were transferred to Cigin Corp. at various dates in 2016–2017. Petitioners sought amendment of the writ of execution to include Cigin Corp. and Sps. Undaloc as jointly and severally liable on the judgment.

NLRC Decision (2012) and CA Reversal (2015)

The NLRC initially reversed the Labor Arbiter (July 31, 2012), finding no constructive dismissal for most complainants and ordering reinstatement without backwages. The CA, in CA‑G.R. SP No. 07306 (September 4, 2015), reinstated the Labor Arbiter’s decisions, finding constructive dismissal and rejecting evidence of voluntary resignation/quitclaims for certain employees. The CA, however, declined to hold Cirilo or Cigin Corp. solidarily liable at that stage for lack of proof of malice, bad faith, or evidence justifying piercing the corporate veil; the CA also stressed due process concerns for persons not impleaded.

Execution Proceedings and Labor Arbiter’s July 6, 2017 Order

During execution, petitioners discovered Undaloc Inc.’s lack of assets (bank account balance P3,366.52) and alleged transfers of essential assets to Cigin Corp. Petitioners filed a Motion to Hold All Respondents Solidarily Liable for the Judgment Award with the Labor Arbiter. The Labor Arbiter granted the motion and amended the writ of execution to include Cirilo and Gina Undaloc and Cigin Corp., finding that respondents used corporate fiction and transfers to avoid obligations, citing transfers of key construction vehicles and the pattern of forming successor family corporations when faced with labor liabilities.

NLRC TRO and CA Review (CA‑G.R. SP No. 11072)

Undaloc Inc. filed a Verified Petition in the NLRC seeking injunctive relief; the NLRC issued a TRO (July 24, 2017) enjoining execution pending resolution after directing the filing of answers. Petitioners sought CA review via certiorari. The CA (May 11, 2018) held the Labor Arbiter’s July 6, 2017 order void as an impermissible modification of its final decision in CA‑G.R. SP No. 07306, reasoning that the cessation of Undaloc Inc. was not a supervening event because it occurred before the CA’s decision became final, and therefore could not justify piercing the corporate veil post‑finality. The CA set aside the Labor Arbiter’s order and declared subsequent proceedings void; its denial of reconsideration was affirmed on August 29, 2019.

Issues Presented to the Supreme Court

Whether petitioners committed forum shopping by filing the Motion to Hold All Respondents Solidarily Liable for the Judgment Award with the Labor Arbiter during execution notwithstanding the CA’s final decision that had previously declined to hold Cigin Corp. and Sps. Undaloc liable.
Whether the Labor Arbiter properly modified a final and executory CA judgment to pierce the corporate veil of Undaloc Inc. and Cigin Corp. and hold respondents solidarily liable for the monetary award.

Supreme Court’s Ruling on Forum Shopping

The Supreme Court held that petitioners were not guilty of forum shopping. It explained that forum shopping requires multiple proceedings based on the same cause of action and same prayers, either pending (litis pendentia) or finally resolved (res judicata), or impermissible splitting of causes of action. The Court found material differences between the earlier CA proceedings (where the CA had considered and denied piercing based on the record then available) and the execution‑stage motion: new and critical facts emerged during execution (notably the meager bank balance and alleged transfers) that justified a new execution remedy. Because petitioners acted during execution to protect enforceability of a final judgment in light of newly discovered facts, their motion to implead additional parties at execution did not constitute forum shopping.

Supreme Court’s Ruling on Piercing the Corporate Veil

The Supreme Court concluded that the Labor Arbiter validly modified the final judgment for purposes of execution by permitting piercing of the corporate veil and holding Cigin Corp. and Sps. Undaloc solidarily liable with Undaloc Inc. The Court applied the established exception to immutability of judgments: even after finality, courts may disregard corporate separateness and hold related corporations or responsible officers liable when there is deliberate use of corporate forms to unjustly evade judgment obligations, or where fraud, malice, or bad faith is demonstrated. The Supreme Court found that the requisite bad faith and evasion were sufficiently shown on the record to warrant disregarding corporate fiction at the execution stage.

Evidence Supporting Application of the

Case Syllabus (G.R. No. 209011)

Facts of the Case

Petitioners (a group of former employees collectively referred to as Dinoyo, et al.) filed complaints for illegal dismissal against Undaloc Construction Company, Inc. (Undaloc Inc.) and were initially awarded a total of PHP 3,693,474.68 for backwages, money claims, moral and exemplary damages, and attorney’s fees.
Undaloc Inc. appealed to the National Labor Relations Commission (NLRC) and posted a partial cash bond of PHP 300,000.00 beyond the 10-day reglementary period; four months later it filed a supersedeas bond that contained multiple irregularities (lack of counsel’s signature on the joint affidavit, bond effective only until May 3, 2013 instead of until finality, no proof of security deposit or collateral, and no Supreme Court accreditation certificate).
Despite those irregularities, the NLRC accepted the supersedeas bond and, on July 31, 2012, reversed the Labor Arbiter’s decisions, finding neither constructive dismissal nor abandonment and ordering reinstatement without backwages for most complainants, except seven who were found to have voluntarily resigned and executed quitclaims.
While appeals were pending, Undaloc Inc. ceased operations; subsequently, Cigin Construction & Development Corporation (Cigin Corp.) was incorporated with the same family officers, and minor children of the family appearing as incorporators.
The CA in CA-G.R. SP No. 07306 (Decision dated September 4, 2015) reinstated the Labor Arbiter’s decisions, finding constructive dismissal, and held there was no sufficient proof of malice to hold Cirilo A. Undaloc solidarily liable; the CA nonetheless accepted the supersedeas bond on grounds of liberality.
After the CA’s decision became final and executory (May 28, 2016), execution was attempted, but the sheriff reported no assets of Undaloc Inc. suitable for levy. Garnishment revealed only PHP 3,366.52 in Undaloc Inc.’s UCPB account.
Petitioners filed a Motion to Hold All Respondents Solidarily Liable during the execution stage to pierce the corporate veil of Undaloc Inc. and Cigin Corp. and to hold Spouses Cirilo and Gina Undaloc personally liable; evidence alleged to show evasion included Articles of Incorporation of Cigin Corp., LTO transfers of motor vehicles from Undaloc Inc. to Cigin Corp., LTO records of vehicles in Cirilo’s name, and a Memorandum of Encumbrances in TCT No. 107-180197.
The Labor Arbiter found a scheme to use corporate entities to defeat workers’ rights, noted transfers of essential construction vehicles to Cigin Corp. (with specific plate numbers and transfer dates), and observed that Undaloc Inc. had not undergone dissolution and liquidation; the Labor Arbiter amended the writ of execution to include Cigin Corp. and Spouses Undaloc as jointly and severally liable for PHP 16,918,110.96.
Undaloc Inc. sought injunctive relief at the NLRC; the NLRC issued a TRO (effective upon posting of PHP 50,000 bond) that, notwithstanding that Cigin Corp. and Spouses Undaloc were not captioned in the Verified Petition, enjoined further acts in execution and directed submission of the records.
The Court of Appeals (CA) in CA-G.R. SP No. 11072 (Decision dated May 11, 2018) found the Labor Arbiter’s July 6, 2017 order to be a void modification of the CA’s final decision, reasoning that the cessation of Undaloc Inc.’s business in 2012 was not a supervening event occurring after finality (the cessation occurred before the CA’s finality on May 28, 2016); the CA set aside the Labor Arbiter’s order and declared subsequent proceedings void. A Motion for Reconsideration was denied on August 29, 2019.
The Supreme Court (G.R. No. 249638) thereafter reviewed and resolved these matters in the petition now under syllabus.

Procedural History (Chronological)

Labor Arbiter decisions awarding monetary claims (dates of decisions: November 16, 2011; January 19, 2012; January 20, 2012).
NLRC Decision reversing Labor Arbiter (July 31, 2012).
Undaloc Inc. cessation of operations and incorporation of Cigin Corp. (Cigin Articles registered October 3, 2012).
CA Decision in CA-G.R. SP No. 07306 reinstating Labor Arbiter (September 4, 2015); resolution became final and executory (May 28, 2016).
Execution remanded to Labor Arbiter; sheriff reports no assets (2016–2017); discovery of only PHP 3,366.52 in UCPB account.
Petitioners filed Motion to Hold All Respondents Solidarily Liable (May 22, 2017) during execution.
Labor Arbiter issued Order holding Cigin Corp. and Spouses Undaloc jointly and severally liable and amending writ of execution (July 6, 2017).
NLRC issued TRO enjoining execution and directing answers (July 24, 2017).
Petition for certiorari to CA (CA-G.R. SP No. 11072); CA denied petition and set aside Labor Arbiter order as void (May 11, 2018); denial of reconsideration (August 29, 2019).
Supreme Court decision in G.R. No. 249638 (June 23, 2021) granting petition and setting aside CA Decision and Resolution, adjudging Cigin Corp. and Spouses Undaloc solidarily liable with Undaloc Inc.

Issues Presented

Whether Dinoyo, et al. committed forum shopping by filing a Motion to Hold All Respondents Solidarily Liable for the Judgment Award with the Labor Arbiter during execution despite a final and executory CA decision in CA-G.R. SP No. 07306 that respondents were not solidarily liable.
Whether the Labor Arbiter could validly modify a final and executory judgment of the CA (in CA-G.R. SP No. 07306) to pierce the corporate veil of Undaloc Inc. and Cigin Corp., and hold respondents solidarily liable for the monetary award.

Petitioners’ Contentions

Only Undaloc Inc. filed the Verified Petition before the NLRC; automatic treatment of Cigin Corp. and Spouses Undaloc as petitioners by the NLRC lacked legal basis.
Petitioners presented documentary evidence alleging bad faith and evasion of obligations: Cigin Corp.'s Articles of Incorporation (October 3, 2012) naming Cirilo as President and Gina as Treasurer and their children as incorporators; LTO certifications showing transfers of motor vehicles from Undaloc Inc. to Cigin Corp. on August 25, 2016; July 20, 2016; and February 7, 2017; LTO lists of motor vehicles owned by Cirilo; and a Memorandum of Encumbrances in TCT No. 107-180197 allegedly used as collateral for loans obtained by Undaloc Inc. and Cigin Corp.

Respondents’ Contentions

Petitioners are guilty of forum shopping because the issue of non-liability of Cigin Corp. and Spouses Undaloc had already been resolved with finality in CA-G.R. SP No. 07306; therefore the present motion in the Labor Arbiter is substantially the same and improperly duplicative.
The CA’s Decision and Resolution in CA-G.R. SP No. 07306 constitute res judicat