Case Summary (G.R. No. 222551)
Key Dates
- December 28, 2004: Alleged termination of respondents’ employment
- October 28, 2005: Labor Arbiter (LA) Mangandog dismisses illegal dismissal complaint
- November 23, 2007: NLRC reverses LA decision, orders reinstatement and backwages
- December 30, 2007: NLRC decision becomes final and executory
- February 14, 2008: NLRC issues Entry of Judgment
- September 4, 2009: LA Savari orders petitioners liable for award and issues writ of execution
- October 29, 2009 & January 29, 2010: NLRC quashes writ as to petitioners’ personal liability
- July 1, 2013 & November 13, 2013: Court of Appeals decision and denial of motion for reconsideration
- April 25, 2017: Supreme Court decision
Applicable Law
- 1987 Philippine Constitution
- Labor Code provisions on security of tenure and illegal dismissal
- Rule 45, Rules of Court (petition for review on certiorari)
Factual Antecedents
Respondents, employed by DMI as driver and helpers, were informed on December 28, 2004 that hauling operations would cease. No formal closure notice was issued. A DOLE‐NCR certification confirmed the absence of such notice. Respondents filed an illegal dismissal complaint before the Labor Arbiter.
Labor Arbiter and NLRC Rulings
Labor Arbiter Mangandog (October 2005) dismissed the complaint for lack of cause of action. On November 23, 2007, the NLRC reversed, concluding respondents were illegally dismissed, ordering reinstatement with backwages and 10% attorney’s fees. This decision became final on December 30, 2007, and respondents sought execution.
Motion to Implead and LA Savari’s Execution Order
Respondents discovered that DMI ceased operations and that spouses Cesar and Yolanda Lee continued operating Toyota Alabang. They moved to implead the Lees and nominal incorporators (spouses Smith) as solidarily liable. LA Savari (April 1, 2009) granted impleader and issued writ of execution (July 31, 2009) against DMI and the Lees for Php 4,240,505.32.
NLRC Quashes Writ as to Petitioners
Petitioners moved to quash, arguing lack of jurisdiction and immutability of NLRC’s final decision. On October 29, 2009, the NLRC reversed LA Savari’s order, quashing the writ insofar as it held the Lees personally liable, citing corporate separateness and absence of bad faith. A January 29, 2010 motion for reconsideration was denied.
Court of Appeals Decision
On July 1, 2013, the CA granted respondents’ petition for certiorari, finding a supervening event—DMI’s closure and fraudulent incorporation—justified modifying execution. The CA pierced the corporate veil, affirmed impleader of the Lees as solidarily liable, and denied the motion for reconsideration on November 13, 2013.
Supreme Court Issue
Whether the Lees can be held personally liable for the judgment awards despite the finality of the NLRC decision and the corporate personality of DMI.
Supreme Court Ruling and Legal Principles
- Rule 45 restricts review to questions of law but permits reconsideration where factual findings diverge.
- The immutability of a final judgment admits an exception for supervening events occurring after finality, per Valderrama v. NLRC and David v. CA.
- DMI ceased operations without notice; nominal incorporators (spouses Smith) declared they had lent their names to the Lees, who controlled and managed DMI and thereafter evaded liabilities.
- The corporate veil may be pierced when a corporation is used to defeat labor laws, facilitate fraud, or evade obligations. Active participation and bad faith justify imposing personal liability on responsible persons.
Analysis of Corporat
Case Syllabus (G.R. No. 222551)
Factual Background
- Dutch Movers, Inc. (DMI) is a domestic corporation engaged in hauling liquefied petroleum gas.
- Edilberto Lequin was employed as a truck driver; Christopher R. Salvador, Reynaldo L. Singsing, and Raffy B. Mascardo were employed as helpers.
- On December 28, 2004, Supervisor Nazario Furio informed the respondents that DMI would cease hauling operations without stating any reason.
- Respondents requested a formal notice of closure but none was issued.
- A DOLE–NCR certification confirmed that DMI had not filed any notice of business closure.
- Respondents claimed illegal dismissal, arguing their termination was without cause and merely a pretext for closure.
Procedural History
- October 28, 2005: Labor Arbiter (LA) Aliman D. Mangandog dismissed the illegal dismissal complaint for lack of cause of action.
- November 23, 2007: NLRC reversed the LA’s decision, ruling respondents were illegally dismissed, ordering reinstatement with full backwages and 10% attorney’s fees.
- December 30, 2007: NLRC Decision became final and executory; February 14, 2008: Entry of Judgment issued.
- Respondents filed a Motion for Writ of Execution and an Updated Computation of Full Backwages.
- Respondents filed a Manifestation and Motion to Implead petitioners Cesar and Yolanda Lee, and alleged officers Edgar N. Smith and Millicent C. Smith, claiming DMI had ceased operations and was fraudulently structured to evade liabilities.
- Spouses Smith opposed impleading, asserting they only lent their names for incorporation and had no management role; they transferred purported rights to the Lees.
- April 1, 2009: LA Lilia S. Savari held petitioners liable and issued a Writ of Execution on July 31, 2009, commanding recovery of Php 4,240,505.32 total (backwages, attorney’s fees, execution fee).
- Petitioners moved to quash; on September 4, 2009, LA Savari denied the motio