Polymer Rubber Corporation and Ang v. Salamuding

G.R. No. 185160, 24 July 2013

FACTS:

Herein respondent Bayolo Salamuding (Salamuding), Mariano Gulanan and Rodolfo Raif (referred to as the complainants) were employees of petitioner Polymer Rubber Corporation (Polymer), who were dismissed after allegedly committing certain irregularities against Polymer.

The three employees filed a complaint against Polymer and Ang (petitioners) for unfair labor practice, illegal dismissal, non-payment of overtime services, violation of Presidential Decree No. 851, with prayer for reinstatement and payment of back wages, attorney’s fees, moral and exemplary damages.

The Labor Arbiter (LA) rendered a decision in favor of the complainants. The petitioners appealed the decision.

Polymer, however, ceased its operations

A writ of execution was issued. However, since the writ of execution was returned unsatisfied, another alias writ of execution was issued.

In the latter part of 2004, Polymer with all its improvements in the premises was gutted by fire.

On December 2, 2004, the complainants filed a Motion for Recomputation and Issuance of Fifth (5th) Alias Writ of Execution. Due to the failure of the petitioners to comment/oppose the amount despite notice, the LA approved said amount.

In the implementation of this 5thalias writ of execution, shares of stocks of Ang at USA Resources Corporation were levied. The petitioners moved to quash the 5th alias writ of execution, and to lift the notice of garnishment. They alleged that Ang should not be held jointly and severally liable with Polymer since it was only the latter which was held liable in the decision of the LA, NLRC and the Supreme Court. The LA granted the motion. The NLRC upheld the decision of the LA. But was overruled by the CA.

Aggrieved by the CA decision, the petitioners filed the instant petition

ISSUE:

Whether Ang, the Officer of the Corporation can be held personally liable and be made to pay the liability of the Corporation.

RULING:

NO, in the absence of a finding that he acted with malice or bad faith, it was error to hold him responsible.

“A corporation, as a juridical entity, may act only through its directors, officers and employees. Obligations incurred as a result of the directors’ and officers’ acts as corporate agents, are not their personal liability but the direct responsibility of the corporation they represent. As a rule, they are only solidarily liable with the corporation for the illegal termination of services of employees if they acted with malice or bad faith.”

To hold a director or officer personally liable for corporate obligations, two requisites must concur: (1) it must be alleged in the complaint that the director or officer assented to patently unlawful acts of the corporation or that the officer was guilty of gross negligence or bad faith; and (2) there must be proof that the officer acted in bad faith.

There is solidary liability when the obligation expressly so states, when the law so provides, or when the nature of the obligation so requires. MAM Realty Development Corporation v. NLRC, on solidary liability of corporate officers in labor disputes, enlightens:

x x x True solidary liabilities may at times be incurred but only when exceptional circumstances warrant such as, generally, in the following cases:

1. When directors and trustees or, in appropriate cases, the officers of a corporation:
(a) vote for or assent to patently unlawful acts of the corporation;
(b) act in bad faith or with gross negligence in directing the corporate affairs;
x x x x
In labor cases, for instance, the Court has held corporate directors and officers solidarily liable with the corporation for the termination of employment of employees done with malice or in bad faith.”

In the instant case, the dispositive portion of the LA Decision which Salamuding attempts to enforce does not mention that Ang is jointly and severally liable with Polymer. To hold Ang personally liable at this stage is quite unfair. The judgment of the LA, as affirmed by the NLRC and later by the SC had already long become final and executory. It has been held that a final and executory judgment can no longer be altered. The judgment may no longer be modified in any respect, even if the modification is meant to correct what is perceived to be an erroneous conclusion of fact or law, and regardless of whether the modification is attempted to be made by the court rendering it or by the highest Court of the land. “Since the alias writ of execution did not conform, is different from and thus went beyond or varied the tenor of the judgment which gave it life, it is a nullity. To maintain otherwise would be to ignore the constitutional provision against depriving a person of his property without due process of law.”

Anent the computation of their liability for the payment of separation pay in lieu of reinstatement in favor of Salamuding, the Court agrees with the ruling of the LA that it must be computed only up to the time Polymer ceased operations in September 1993. The computation must be based on the number of days when Polymer was in actual operation. It cannot be held liable to pay separation pay beyond such closure of business because even if the illegally dismissed employees would be reinstated, they could not possibly work beyond the time of the cessation of its operation.

Thus, Ang is merely one of the incorporators of Polymer and to single him out and require him to personally answer for the liabilities of Polymer is without basis.

*Case digest by Doreena Pauline V. Aranal, JD – 4, Andres Bonifacio College, SY 2019 – 2020

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