Polymer Rubber Corp. v. Salamuding
REITERATIONFacts
The Antecedents: Respondent Bayolo Salamuding, along with two other employees, Mariano Gulanan and Rodolfo Raif, were dismissed by petitioner Polymer Rubber Corporation (Polymer) and its officer, Joseph Ang, for alleged irregularities. The employees filed a complaint for unfair labor practice, illegal dismissal, and various monetary claims, including back wages, 13th-month pay, overtime, damages, and attorney's fees. Procedural History: The Labor Arbiter initially ruled in favor of the complainants, ordering reinstatement and payment of back wages and other monetary benefits. This decision was affirmed with modifications by the National Labor Relations Commission (NLRC), which deleted the award for moral and exemplary damages and modified the computation of the 13th-month pay. The Supreme Court further modified the NLRC decision by deleting the award for overtime pay. Following the cessation of Polymer's operations and a subsequent fire that destroyed its premises, an alias writ of execution was issued. Petitioners moved to quash this writ, arguing that Ang should not be held jointly and severally liable, that the computation was erroneous, and that the claim was barred by the statute of limitations. The Labor Arbiter granted this motion, quashing the writ and lifting the notice of levy on Ang's shares. The NLRC affirmed the LA's decision regarding the quashal of the writ but modified it to state that the complainants were not barred by the statute of limitations. The Court of Appeals (CA) reversed the NLRC, finding Ang jointly and severally liable with Polymer and remanding the case for execution against both. The Petition: The petitioners seek review of the CA's decision, arguing that a final and executory judgment cannot be altered, that corporate officers cannot be personally held liable for corporate obligations without proof of malice or bad faith, that liability for salaries and benefits should not extend beyond the company's existence, and that separation pay for a closed business should be computed at half a month's salary per year of service. The petition contends that the CA erred in holding Ang personally liable, as the original judgments did not establish his joint and several liability, and there was no evidence of bad faith or gross negligence on his part. The petition also asserts that monetary awards should only be computed up to the date of the company's cessation of operations.
Issue(s)
Whether Joseph Ang can be held personally liable for the monetary awards granted to the respondent. Whether the computation of monetary awards, particularly backwages and separation pay, should extend beyond the cessation of Polymer Rubber Corporation's operations. Whether the motion for execution of the judgment was barred by the statute of limitations.
Ruling
The petition is granted. The Decision of the Court of Appeals is set aside, and the Decision of the National Labor Relations Commission is reinstated. The case is remanded to the Labor Arbiter for proper computation of the award in accordance with the Supreme Court's decision.
Ratio Decidendi
On the personal liability of Joseph Ang: The Court held that a corporation, as a juridical entity, acts through its directors and officers. Obligations incurred by them as corporate agents are the direct responsibility of the corporation, not their personal liability. Personal liability of a director or officer requires two requisites: (1) it must be alleged in the complaint that the officer assented to patently unlawful acts or was guilty of gross negligence or bad faith; and (2) there must be proof of such bad faith. In this case, the CA imputed bad faith based on Polymer ceasing operations the day after an SC resolution, but the Court found no evidence that Ang acted with malice or bad faith. The original LA decision did not hold Ang jointly and severally liable, and to hold him liable at this stage would alter the final and executory judgment. The Court reiterated that piercing the corporate veil requires exceptional circumstances, such as acting with malice or bad faith, which were not sufficiently proven here. On the computation of monetary awards beyond company closure: The Court agreed with the LA that backwages and separation pay must be computed only up to the time Polymer ceased operations in September 1993. The computation must be based on the days Polymer was in actual operation, as employees could not have worked beyond the cessation of business. The Court cited Chronicle Securities Corp. v. NLRC, stating that backwages should not be ordered beyond the date of closure if the closure was for legitimate business reasons and not merely to defeat a reinstatement order. On the statute of limitations: While the NLRC found that the complainants did not sleep on their rights by filing successive motions for execution, the LA had previously ruled that the motion to execute was barred by the statute of limitations. The Supreme Court, in setting aside the CA decision and reinstating the NLRC decision, implicitly agreed with the NLRC's finding that the complainants' actions did not constitute a bar by prescription. However, the ultimate ruling focused on the personal liability of Ang and the computation period for awards, remanding for proper computation, which suggests the issue of prescription was not the primary basis for the final disposition, but rather the modification of the CA's piercing of the corporate veil and the computation period.
Main Doctrine
A corporate officer cannot be held personally liable for corporate obligations unless it is alleged and proven that they acted with malice or bad faith, or assented to patently unlawful acts of the corporation. A final and executory judgment cannot be altered, and an alias writ of execution that varies the tenor of the judgment is a nullity.