A.C. Ransom Labor Union-CCLU v. National Labor Relations Commission
REITERATIONFacts
1. The Antecedents: The underlying dispute concerns the non-payment of back wages to 22 strikers of A.C. Ransom (Philippines) Corporation (RANSOM), who were refused reinstatement after a strike in 1961. RANSOM, a family corporation engaged in ink manufacturing, was ordered by the Court of Industrial Relations in 1972 to reinstate these strikers with back wages. Subsequently, RANSOM applied for and was granted clearance to cease operations in 1973, rendering the reinstatement aspect of the order moot. The back wages were later computed to be P164,984.00. 2. Procedural History: Following the 1972 order, the A.C. Ransom Labor Union-CCLU filed multiple motions for execution of the back wages against RANSOM, which proved difficult to enforce due to the company's apparent lack of leviable assets. In 1978, the Union filed a motion seeking to hold officers and agents of RANSOM personally liable for the back wages. Labor Arbiter Tito F. Genilo granted this motion in 1980, issuing a writ of execution against RANSOM and seven of its officers. RANSOM appealed to the National Labor Relations Commission (NLRC), which affirmed the Labor Arbiter's order regarding the enforceability of the decision beyond five years but modified it by ruling that the individual officers and agents were not personally liable unless they exceeded their authority, of which there was no evidence. The NLRC's decision upholding non-personal liability for the individual respondents was then appealed. 3. The Petition: The A.C. Ransom Labor Union-CCLU, as petitioner, seeks review of the NLRC's decision that absolved the individual officers and agents of RANSOM from personal liability for the unpaid back wages. The Union argues, based on provisions of the Labor Code, particularly Article 212(c) defining 'employer' to include any person acting in the interest of an employer, that responsible officers of a corporation can be held personally liable for such payments. The Union contends that the policy of the law is to prevent corporations from evading such obligations and that the NLRC erred in not holding the officers personally liable, especially given the company's cessation of operations and the potential for evasion. The petition asks this Court to set aside the NLRC's decision and reinstate the Labor Arbiter's order holding the officers personally liable.
Issue(s)
Whether the decision of the Industrial Relations Court, having become final and executory in 1973, is enforceable by a writ of execution issued in 1980, more than five years after the finality of the decision. Whether a judgment against a corporation for reinstatement with back wages is enforceable against its officers and agents in their individual capacities, despite not being parties to the original case. Whether corporate officers acting in the interest of the employer can be held personally liable for the payment of back wages.
Ruling
The Supreme Court SET ASIDE the questioned Decision of the National Labor Relations Commission and REINSTATED the Order of Labor Arbiter Tito F. Genilo dated March 11, 1980, with the modification that personal liability for the back wages shall be limited to Ruben Hernandez, who was President of RANSOM in 1974, jointly and severally with other Presidents of the same corporation who had been elected as such after 1972 or up to the time the corporate life was terminated.
Ratio Decidendi
On the issue of enforceability of the decision beyond five years: The NLRC correctly ruled that the statute of limitations is designed to protect those who sleep on their rights, not those who assert their rights but are prevented by causes beyond their control. The repeated motions for execution filed by the petitioner demonstrated that the decision had not remained dormant. Furthermore, even if Section 6, Rule 39 of the Rules of Court were applicable, the five-year period might not have expired by December 18, 1978, as it could be counted from the time the back wages were determined (early 1974), not from the finality of the original decision in 1973. On the enforceability of the judgment against corporate officers in their individual capacities: The NLRC erred in holding that officers are not personally liable unless they exceeded their authority and were not parties to the case. Article 212(c) of the Labor Code defines 'employer' to include 'any person acting in the interest of an employer directly or indirectly.' This provision, derived from RA 602, allows for the holding of responsible corporate officers personally liable for labor law violations. The policy behind this is to prevent corporations from evading their obligations and to ensure the protection of employees. On the personal liability of corporate officers for back wages: The Court found that the policy of the law, as evidenced by Article 212(c) of the Labor Code and provisions in PD 525 and RA 602, is to hold responsible officers personally liable for non-payment of back wages. This is to prevent evasion of such obligations. In the absence of clear identification of the specific officer responsible, the Court presumed the President of the corporation, as the chief operating officer, to be the responsible party. Considering the continuing non-payment, the Court held that the personal liability of the President should be continuing and joint and several with all subsequent Presidents, to ensure the strikers' rights are not defeated by the election of a president without leviable assets.
Main Doctrine
The Supreme Court affirmed that corporate officers acting in the interest of the employer can be held personally liable for the payment of back wages owed to employees. This is based on the definition of 'employer' in Article 212(c) of the Labor Code, which includes any person acting in the interest of an employer directly or indirectly. The Court reasoned that such a doctrine is necessary to prevent corporations from evading their labor obligations and to ensure the protection of workers' rights, citing precedents from the Minimum Wage Law and PD 525.