Uichico v. National Labor Relations Commission
REITERATIONFacts
The Antecedents: Private respondents, employees of Crispa, Inc., were terminated in September 1991, allegedly due to retrenchment necessitated by serious business losses. The employees subsequently filed complaints for illegal dismissal and diminution of compensation against Crispa, Inc., its major stockholder Valeriano Floro, and the petitioners, who were high-ranking officers and directors of the company. Procedural History: The consolidated complaints were initially dismissed by Labor Arbiter Raul Aquino, who nonetheless ordered the company and its officers to pay separation pay. The National Labor Relations Commission (NLRC), on appeal by the private respondents, reversed this decision, finding the company and petitioners liable for illegal dismissal and modifying the separation pay award. A motion for reconsideration by the petitioners was denied. Subsequently, the NLRC granted the private respondents' motion for clarification, directing the inclusion of backwages in the computation, and denied a subsequent motion for reconsideration by the petitioners. This led to the filing of the present petition. The Petition: Petitioners seek reversal of the NLRC Resolutions through a special civil action for certiorari and prohibition. They primarily challenge the NLRC's finding of illegal dismissal due to insufficient proof of financial losses and argue that any monetary awards should be solely the responsibility of Crispa, Inc. The petitioners contend that they, as directors and officers, should not be held solidarily liable with the corporation for the termination of employment. The Supreme Court, however, found no grave abuse of discretion on the part of the NLRC, affirming the solidary liability of the petitioners due to their participation in the illegal dismissal, which was indicative of bad faith.
Issue(s)
Whether the termination of private respondents' employment due to alleged retrenchment was legal. Whether the NLRC committed grave abuse of discretion in holding petitioners solidarily liable with Crispa, Inc. for the payment of separation pay and backwages to the illegally dismissed private respondents.
Ruling
The petition is dismissed. The Supreme Court found no grave abuse of discretion on the part of the NLRC. Petitioners are held solidarily liable with Crispa, Inc. for the money claims of the illegally terminated employees.
Ratio Decidendi
On the legality of retrenchment and illegal dismissal: The Court affirmed the NLRC's finding that the termination was illegal. The NLRC correctly ruled that the Statement of Profit and Losses submitted by Crispa, Inc. to justify the retrenchment lacked evidentiary value as it was not signed by a certified public accountant or audited by an independent auditor. This failure meant that the alleged financial losses were not sufficiently established, rendering the retrenchment illegal. The burden of proof to establish economic or business losses rests upon the employer, and unsubstantiated claims do not meet the required standards of substantiality, imminence, necessity, and proof. On the solidary liability of petitioners: The Court agreed with the NLRC that petitioners, as directors and officers, are solidarily liable with Crispa, Inc. for the illegal dismissal. While a corporation has a separate legal personality, directors and officers can be held solidarily liable under exceptional circumstances, such as when they act with malice or in bad faith. In this case, petitioners signed the Board Resolution for retrenchment based on feigned business losses, supported only by an unsigned and unaudited financial statement. This act demonstrated bad faith, making them jointly and severally liable for all the money claims of the illegally terminated employees. The Court reiterated that corporate directors and officers are solidarily liable with the corporation for termination of employment done with malice or in bad faith.
Main Doctrine
Corporate directors and officers are solidarily liable with the corporation for the termination of employment of corporate employees done with malice or in bad faith, particularly when they sign resolutions for retrenchment based on feigned grounds without sufficient evidence.