Gudez v. National Labor Relations Commission
REITERATIONFacts
The Antecedents: Petitioners were employees of Retired Army Protective and Security Agency Inc. (RAPSA), a security services corporation headed by its president, Herminia A. Crisologo. In July 1986, RAPSA was ordered to cease operations by the Philippine Constabulary, leading to the termination of petitioners' employment on August 15, 1986. Following RAPSA's closure, its clients engaged the services of another agency. The petitioners subsequently filed separate complaints against RAPSA, Crisologo, and the successor agency for separation pay, recovery of lost tool deposit, allowances, and other monetary claims. Procedural History: The Labor Arbiter rendered a decision on September 25, 1987, ordering RAPSA and Mrs. Herminia A. Crisologo to pay the petitioners their separation pay, lost tool deposit, and cash bond deposit. The complaints of certain individuals were dismissed for failure to prosecute, and motions to dismiss by other individuals were granted. RAPSA, through its counsel, filed a memorandum of appeal with the National Labor Relations Commission (NLRC), with Mrs. Crisologo's name being added by handwriting. On March 10, 1988, the NLRC modified the Labor Arbiter's decision, dismissing the appeal and ruling that Mrs. Crisologo could not be held personally liable as the veil of corporate fiction should not be pierced, and that the liability should solely rest with RAPSA. The Petition: The petitioners filed a petition for certiorari under Rule 65 of the Rules of Court, seeking to annul the NLRC's resolution. They argued that the NLRC erred in considering Mrs. Crisologo's appeal valid, as her name was added by handwriting and her counsel had no authority to represent her in the appeal. Furthermore, they contended that Mrs. Crisologo, as president of RAPSA, should be held jointly and severally liable with the corporation for the monetary claims, citing Article 212(c) of the Labor Code and relevant jurisprudence. The petition also highlighted that RAPSA had ceased to exist and filed for voluntary insolvency, making it imperative to hold Crisologo personally liable to ensure the enforceability of any judgment.
Issue(s)
Whether the appeal filed by counsel for respondent RAPSA with the NLRC can be considered as an appeal for respondent Crisologo. Whether respondent Crisologo may be held solidarily liable with respondent corporation for separation pay and other monetary claims due to petitioners.
Ruling
The petition is GRANTED, and the decision of the respondent National Labor Relations Commission dated March 10, 1988, is REVERSED and SET ASIDE. The decision of the Labor Arbiter is REINSTATED.
Ratio Decidendi
On Issue 1: The Supreme Court found the petitioners' contentions meritorious regarding the appeal filed by counsel for RAPSA. The Court noted that Mrs. Crisologo's name was inserted by handwriting in the memorandum of appeal. Furthermore, the counsel for RAPSA had no authority to represent Mrs. Crisologo in her appeal, as she was represented by a different lawyer before the Labor Arbiter. The Court emphasized that there can be no valid substitution of counsel without complying with the prescribed procedure, which includes a written application for substitution, written consent of the client, written consent of the attorney to be substituted (if obtainable), and proof of service of notice of the motion if consent cannot be procured. Since these procedures were not followed, the Court concluded that there was no valid substitution of counsel and the counsel for RAPSA was not authorized to appeal on behalf of Mrs. Crisologo. On Issue 2: The Supreme Court held that respondent Crisologo could be held personally liable with the corporation. The Court cited Article 212(c) of the Labor Code, which defines 'employer' to include any person acting in the interest of an employer, directly or indirectly. The Court reiterated its ruling in previous cases, such as A.C. Ransom Labor Union-CCLU v. National Labor Relations Commission, that the president of a corporation may be held liable for the corporation's obligations to its workers. The Court reasoned that since RAPSA had closed its business and ceased to exist, and was unable to satisfy the judgment, holding Mrs. Crisologo liable was necessary to prevent the decision from being rendered useless and ineffective. The Court noted that RAPSA had filed for voluntary insolvency on the same day the Labor Arbiter rendered its decision, further necessitating the personal liability of the officer acting on behalf of the corporation to ensure enforceability of the judgment.
Main Doctrine
The president of a corporation may be held personally liable for the corporation's monetary obligations to its employees, especially when the corporation has ceased to exist and is unable to satisfy the judgment, to prevent the judgment from becoming a mere brutum fulmen.