Professional Documents
Culture Documents
On the other hand, the General Information Sheet of HPPI revealed the
following:
Name
of
Subscribed
Stockholder
3. Corporate Officers
2. Board of Directors
Amount
both
corporations
had
the same president,
thesame board of directors, the same corporate officers,
and substantially the same subscribers.
From the foregoing, it appears that, among other things,
the respondent (herein petitioner) and the third-party
claimant shared the same address and/or premises.
Under this circumstances, (sic) it cannot be said that the
property levied upon by the sheriff were not of
respondents. 16
Clearly, petitioner ceased its business operations in order to evade the
payment to private respondents of back wages and to bar their
reinstatement to their former positions. HPPI is obviously a business
conduit of petitioner corporation and its emergence was skillfully
orchestrated to avoid the financial liability that already attached to
petitioner corporation.
The facts in this case are analogous to Claparols v. Court of Industrial
Relations, 17 where we had the occasion to rule:
Respondent court's findings that indeed the Claparols
Steel and Nail Plant, which ceased operation of June
30, 1957, was SUCCEEDED by the Claparols Steel
Corporation effective the next day, July 1, 1957, up to
December 7, 1962, when the latter finally ceased to
operate, were not disputed by petitioner. It is very clear
that the latter corporation was a continuation and
successor of the first entity . . . . Both predecessors and
successor were owned and controlled by petitioner
Eduardo Claparols and there was no break in the
succession and continuity of the same business. This
"avoiding-the-liability" scheme is very patent,
considering that 90% of the subscribed shares of stock
Finally, we do not find any reason to disturb the rule that factual
findings of quasi-judicial agencies supported by substantial evidence
are binding on this Court and are entitled to great respect, in the
absence of showing of grave abuse of a discretion. 18
WHEREFORE, the petition is DISMISSED and the assailed
resolutions of the NLRC, dated April 23, 1992 and December 3, 1992,
are AFFIRMED.
SO ORDERED.
Republic
SUPREME
Manila
of
the
Philippines
COURT
SECOND DIVISION
G.R. No. 147993
ENRIQUEZ
SECURITY
SERVICES,
vs.
VICTOR A. CABOTAJE, respondent.
INC., petitioner,
DECISION
CORONA, J.:
Sometime in January 1979, respondent Victor A. Cabotaje was
employed as a security guard by Enriquez Security and Investigation
Agency (ESIA). On November 13, 1985, petitioner Enriquez Security
Services, Inc. (ESSI) was incorporated. Respondent continued to work
as security guard in petitioners agency.
On reaching the age of 60 in July 1997,1 respondent applied for
retirement.
xxx
xxx
On appeal, the NLRC set aside the labor arbiters award of one-month
salary for every year of service for being excessive. It ruled that under
RA 7641, respondent Cabotaje was entitled to retirement pay
equivalent only to one-half month salary for every year of service.
Thus:
WHEREFORE, the assailed decision is hereby set aside and a
new one entered ordering respondents to pay complainant the
amount of P76,710.60 representing his retirement benefits.
SO ORDERED.4
On March 15, 2000, the NLRC denied petitioners motion for
reconsideration.5
Republic
SUPREME
Manila
of
the
Philippines
COURT
FIRST DIVISION
G.R. No. 116781 September 5, 1997
TOMAS LAO CONSTRUCTION, LVM CONSTRUCTION
CORPORATION, THOMAS and JAMES DEVELOPERS
(PHIL.),
INC., petitioners,
vs.
NATIONAL LABOR RELATIONS COMMISSION, MARIO O.
LABENDIA, SR., ROBERTO LABENDIA, NARCISO ADAN,
FLORENCIO
GOMEZ,
ERNESTO
BAGATSOLON,
SALVADOR BABON, PATERNO BISNAR, CIRPRIANO
BERNALES, ANGEL MABUHAY, SR., LEO SURIGAO, and
ROQUE MORILLO, respondents.
BELLOSILLO, J.:
From October to December 1990 private respondents individually filed
complaints for illegal dismissal against petitioners with the National
Labor Relations Commission Regional Arbitration Branch No. VIII
(NLRC RAB VIII), Tacloban City. Alleging that they were hired for
various periods as construction workers in different capacities they
described their contractual terms as follows: (a) Roberto Labendia,
general construction foreman, from 1971 to 17 October 1990 at
P3,700/month; (b) Narciso Adan, tireman, from October 1981 to
November 1990 at P75.00/day; (c) Florencio Gomez, welder, from
July 1983 to July 1990 at P260.00/day; (d) Ernesto Bagatsolon
leadman/checker, from June 1982 to October 1990 at P2,800/month;
thus argue that their dismissal from the service of private respondents
was legal since the projects for which they were hired had already
been completed. As additional ground, they claim that Mario Labendia
and Roberto Labendia had absented themselves without leave giving
management no choice but to sever their employment.
We are not convinced. The principal test in determining whether
particular employees are "project employees" distinguished from
"regular employees" is whether the "project employees" are assigned
to carry out "specific project or undertaking," the duration (and scope)
of which are specified at the time the employees are engaged for the
project. "Project" in the realm of business and industry refers to a
particular job or undertaking that is within the regular or usual
business of employer, but which is distinct and separate and
identifiable as such from the undertakings of the company. Such job or
undertaking begins and ends at determined or determinable times. 9
While it may be allowed that in the instant case the workers were
initially hired for specific projects or undertakings of the company and
hence can be classified as project employees, the repeated re-hiring
and the continuing need for their services over a long span of time (the
shortest, at seven [7] years) have undeniably made them regular
employees. Thus, we held that where the employment of project
employees is extended long after the supposed project has been
finished, the employees are removed from the scope of project
employees and considered regular employees. 10
While length of time may not be a controlling test for project
employment, it can be a strong factor in determining whether the
employee was hired for a specific undertaking or in fact tasked to
perform functions which are vital, necessary and indispensable to the
usual business or trade of the employer. In the case at bar, private
respondents had already gone through the status of project employees.
But their employments became non-coterminous with specific projects
circumvent labor laws on tenurial security. Settled is the rule that when
periods have been imposed to preclude the acquisition of tenurial
security by the employee, they should be struck down as contrary to
public morals, good customs or public order. 21 Worth noting is that
petitioners had engaged in various joint venture agreements in the past
without having to draft project employment contracts. That they would
require execution of employment contracts and waivers at this point,
ostensibly to be used for audit purposes, is a suspect excuse,
considering that petitioners enforced the directive by withholding the
salary of any employee who spurned the order.
We likewise reject petitioners' justification in re-hiring private
respondents i.e., that it is much cheaper and economical to re-hire or
re-employ the same workers than to train a new set of employees. It is
precisely because of this cost-saving benefit to the employer that the
law deems it fair that the employees be given a regular status. We need
not belabor this point.
The NLRC was correct in finding that the workers were illegally
dismissed. The rule is that in effecting a valid dismissal, the mandatory
requirements of substantive and procedural due process must be
strictly complied with. These were wanting in the present case. Private
respondents were dismissed allegedly because of insubordination or
blatant refusal to comply with a lawful directive of their employer. But
willful disobedience of the employer's lawful orders as a just cause for
the dismissal of the employees envisages the concurrence of at least
two (2) requisites: (a) the employee's assailed conduct must have been
willful or intentional, the willfulness being characterized by a
wrongful and perverse attitude; and, (b) the order violated must have
been reasonable, lawful, made known to the employee and must
pertain to the duties which he has been engaged to discharge. 22 The
refusal of private respondents was willful but not in the sense of plain
and perverse insubordination. It was dictated by necessity and
justifiable reasons for what appeared to be an innocent
be computed from the time of illegal termination until the time of the
finality of the decision. 28 The award shall be based on the documents
submitted by private respondents, i.e. affidavits, SSS and Medicare
documents, since petitioners failed to adduce competent evidence to
the contrary. The separation pay shall be equivalent to "at least one (1)
month salary or to one (1) month salary for every year of service,
whichever is higher, a fraction of at least six (6) months being
considered as one whole year." 29
Finally, public respondent NLRC did not err in disregarding the veil of
separate corporate personality and holding petitioners jointly and
severally liable for private respondents' back wages and separation
pay. The records disclose that the three (3) corporations were in fact
substantially owned and controlled by members of the Lao family
composed of Lao Hian Beng alias Tomas Lao, Chiu Siok Lian (wife of
Tomas Lao), Andrew C. Lao, Lao Y. Heng, Vicente Lao Chua, Lao E.
Tin, Emmanuel Lao and Ismaelita Maluto. A majority of the
outstanding shares of stock in LVM and T&J is owned by the Lao
family. T&J is 100% owned by the Laos as reflected in its Articles of
Incorporation. The Lao Group of Companies therefore is a closed
corporation where the incorporators and directors belong to a single
family. Lao Hian Beng is the same Tomas Lao who owns Tomas Lao
Corporation and is the majority stockholder of T&J. Andrew C. Lao is
the Managing Director of LVM Construction, and President and
Managing Director of the Lao Group of Companies. Petitioners are
engaged in the same line of business under one management and use
the same equipment including manpower services. Where it appears
that [three] business enterprises are owned, conducted and controlled
by the same parties, both law and equity will, when necessary to
protect the rights of third persons, disregard the legal fiction that the
[three] corporations are distinct entities, and treat them as identical. 30
Consonant with our earlier ruling, 31 we hold that the liability of
petitioners extends to the responsible officers acting in the interest of
of
the
FIRST DIVISION
G.R. No. 154975
Philippines
COURT
Some four years later, the Alcantara family assigned its rights and
interests over the bearer note to ALSONS which thenceforth became
the holder thereof.7 But even before the execution of the assignment
deal aforestated, letters of demand for interest payment were already
sent to EQUITY, through its President, Wilfredo Labayen, who
pleaded inability to pay the stipulated interest, EQUITY no longer then
having assets or property to settle its obligation nor being extended
financial support by GCC.
What happened next, as narrated in the assailed Decision of the CA,
may be summarized, as follows:
1. On January 14, 1986, before the RTC of Makati, ALSONS,
having failed to collect on the bearer note aforementioned, filed
a complaint for a sum of money8 against EQUITY and GCC.
The case, docketed as Civil Case No. 12707, was eventually
raffled to Branch 58 of the court. As stated in par. 4 of the
complaint, GCC is being impleaded as party-defendant for any
"bearer" promissory note marked as Exhibit "K" and over sixty (60)
other marked and subsequently admitted documents, 9 were to the
effect that five (5) incorporators, each contributing P100,000.00 as the
initial paid up capital of the company, organized EQUITY to manage,
as it did manage, various GCC franchises through management
contracts. Before EQUITYs incorporation, however, GCC was
already into the financing business as it was in fact managing and
operating various CCC franchises. Presented in evidence, too, was the
September 29, 1982 letter-reply of one G. Villanueva, then GCC
President, to EQUITY President Wilfredo Labayen, bearing on the sale
of EQUITY shares to third parties, part of the proceeds of which the
Alcantaras wanted applied to liquidate the promissory note in question.
In said letter, Mr. Villanueva explained that the GCC Board denied the
Alcantaras request to be paid out of such proceeds, but nonetheless
authorized EQUITY to pay them interest out of EQUITYs operation
income, in preference over what was due GCC.10
Albeit EQUITY presented its president, it opted to adopt the testimony
of some of ALSONS witnesses, inclusive of the documentary exhibits
testified to by each of them, as its evidence.
For its part, GCC called only Wilfredo Labayen to testify. It stuck to
its underlying defense of separateness and presented documentary
evidence detailing the organizational structures of both GCC and
EQUITY. And in a bid to negate the notion that it was conducting its
business illegally, GCC presented CB and SEC-issued licenses
authoring it to engage in financing and quasi-banking activities. It also
adduced evidence to prove that it was never a party to any of the
actionable documents ALSONS and its predecessors-in-interest had in
their possession and that the November 27, 1985 deed of assignment
of rights over the promissory note was unenforceable.
Eventually, the trial court, on its finding that EQUITY was but an
instrumentality or adjunct of GCC and considering the legal
4. The fact of full payment stated in the ten (10) deeds of sale
of the shares of stock is conclusive on the sellers, and by the
patrol evidence rule, the alleged fact of its non-payment cannot
be introduced in evidenced; and
5. The counter-claim filed by GCC against Alsons should be
granted in the interest of justice.
The petition and the arguments and/or issues holding it together are
without merit. The desired reversal of the assailed decision and
resolution of the appellate court is accordingly DENIED.
Instead of raising distinctly formulated questions of law, as is expected
of one seeking a review under Rule 45 of the Rules of Court of a final
CA judgment,13 petitioner GCC starts off by voicing disappointment
over the "perfunctory" denial by the CA of its twin motions for
reconsideration and oral argument. Petitioner, to be sure, cannot
plausibly expect a reversal action premised on the cursory way its
motions were denied, if such indeed were the case. Such manner of
denial, while perhaps far from ideal, is not even a recognized ground
for appeal by certiorari, unless a denial of due process ensues, which is
not the case here. And lest it be overlooked, the CA prefaced its
assailed denial resolution with the clause: "[F]inding no reversible
error committed to warrant the modification and/or reversal of the
April 11, 2002 Decision," suggesting that the appellate court gave the
petitioners motion for reconsideration the attention it deserved. At the
very least, the petitioner was duly apprised of the reasons why
reconsideration could not be favorably considered. An extended
resolution was not really necessary to dispose of the motion for
reconsideration in question.
Petitioners lament about being deprived of procedural due process
owing to the denial of its motion for oral argument is simply specious.
Under the CA Internal Rules, the appellate court may tap any of the
If the petition is given due course, the Court may consider the case
submitted for decision or require the parties to submit their
memorandum or set the case for oral argument. xxx. After the oral
argument or upon submission of the memoranda the case shall be
deemed submitted for decision.
In the case at bench, records reveal that the appellate court, in line with
the prescription of its own rules, required the parties to just submit, as
they did, their respective memoranda to properly ventilate their
separate causes. Under this scenario, the petitioner cannot be validly
heard, having been deprived of due process.
Just like the first, the last three (3) arguments set forth in the petition
will not carry the day for the petitioner. In relation therewith, the Court
notes that these arguments and the issues behind them were not raised
before the trial court. This appellate maneuver cannot be allowed. For,
well-settled is the rule that issues or grounds not raised below cannot
be resolved on review in higher courts.14 Springing surprises on the
GCC was the entity which initiated and benefited immensely from the
fraudulent scheme perpetrated in violation of the law. (Words in
parenthesis in the original; emphasis and bracketed words added).
Given the foregoing considerations, it behooves the petitioner, as a
matter of law and equity, to assume the legitimate financial obligation
of a cash-strapped subsidiary corporation which it virtually controlled
to such a degree that the latter became its instrument or agent. The
facts, as found by the courts a quo, and the applicable law call for this
kind of disposition. Or else, the Court would be allowing the wrong
use of the fiction of corporate veil.
WHEREFORE, the instant petition is DENIED and the appealed
Decision and Resolution of the Court of Appeals are accordingly
AFFIRMED.
Costs against the petitioner.
SO ORDERED.
Republic
SUPREME
Manila
of
the
Philippines
COURT
FIRST DIVISION
G.R. No. L-28694 May 13, 1981
TELEPHONE ENGINEERING & SERVICE COMPANY, INC.,
petitioner,
vs.
WORKMEN'S
COMPENSATION
COMMISSION,
PROVINCIAL SHERIFF OF RIZAL and LEONILA SANTOS
GATUS, for herself and in behalf of her minor children, Teresita,
Antonina and Reynaldo, all surnamed GATUS, respondents.
MELENCIO-HERRERA, J.:1wph1.t
These certiorari proceedings stem from the award rendered against
petitioner Telephone Engineering and Services, Co., Inc. (TESCO) on
October 6, 1967 by the Acting Referee of Regional Office No. 4,
Quezon City Sub-Regional Office, Workmen's Compensation Section,
in favor of respondent Leonila S. Gatus and her children, dependents
of the deceased employee Pacifico L. Gatus. The principal contention
is that the award was rendered without jurisdiction as there was no
employer-employee relationship between petitioner and the deceased.
Petitioner is a domestic corporation engaged in the business of
manufacturing telephone equipment with offices at Sheridan Street,
Mandaluyong, Rizal. Its Executive Vice-President and General
Manager is Jose Luis Santiago. It has a sister company, the Utilities
Management Corporation (UMACOR), with offices in the same
location. UMACOR is also under the management of Jose Luis
Santiago.
On September 8, 1964, UMACOR employed the late Pacifica L. Gatus
as Purchasing Agent. On May 16, 1965, Pacifico L. Gatus was detailed
with petitioner company. He reported back to UMACOR on August 1,
1965. On January 13, 1967, he contracted illness and although he
retained to work on May 10, 1967, he died nevertheless on July 14,
1967 of "liver cirrhosis with malignant degeneration."
On August 7, 1967, his widow, respondent Leonila S. Gatus, filed a
"Notice and Claim for Compensation" with Regional Office No. 4,
Quezon City Sub-Regional Office, Workmen's Compensation Section,
alleging therein that her deceased husband was an employee of
TESCO, and that he died of liver cirrhosis. 1 On August 9, 1967, and
Office wrote petitioner transmitting the Notice and for Compensation,
the case of Manila Jockey Club, Inc. vs. Del Rosario, 2 SCRA 462
(1961). 1wph1.t
An aggrieved party by the decision of a Commissioner
should seek a reconsideration of the decision by the
Commission en banc. If the decision is adverse to him,
he may appeal to the Supreme Court. An appeal brought
to the Supreme Court without first resorting to the
remedy referred to is premature and may be dismissed.
Although this rule admits of exceptions, as where public welfare and
the advancement of public policy so dictate, the broader interests of
justice so require, or where the Orders complained of were found to be
completely null and void or that the appeal was not considered the
appropriate remedy, 23 the case at bar does not fan within any of these
exceptions. WHEREFORE, this Petition is hereby dismissed.
SO ORDERED.
QUISUMBING, J.:
only respondent Gregorio Manuel and the heirs of the late Benita
Trinidad. According to petitioner, there was no cause of action by said
respondent against petitioner; personal concerns of the heirs should be
distinguished from those involving corporate affairs. Petitioner further
contends that the present case does not fall among the instances
wherein the courts may look beyond the distinct personality of a
corporation. According to petitioner, the services for which respondent
Gregorio Manuel seeks to collect fees from petitioner are personal in
nature. Hence, it avers the heirs should have been sued in their
personal capacity, and not involve the corporation. 14
With regard to the permissive counterclaim, petitioner also insists that
there was no proper service of the answer containing the permissive
counterclaim. It claims that the counterclaim is a separate case which
can only be properly served upon the opposing party through
summons. Further petitioner states that by nature, a permissive
counterclaim is one which does not arise out of nor is necessarily
connected with the subject of the opposing party's claim. Petitioner
avers that since there was no service of summons upon it with regard
to the counterclaim, then the court did not acquire jurisdiction over
petitioner. Since a counterclaim is considered an action independent
from the answer, according to petitioner, then in effect there should be
two simultaneous actions between the same parties: each party is at the
same time both plaintiff and defendant with respect to the
other,15 requiring in each case separate summonses.
In their Comment, private respondents focus on the two questions
raised by petitioner. They defend the propriety of piercing the veil of
corporate fiction, but deny the necessity of serving separate
summonses on petitioner in regard to their permissive counterclaim
contained in the answer.
Private respondents maintain both trial and appellate courts found that
respondent Gregorio Manuel was employed as assistant legal officer of
petitioner corporation, and that his services were solicited by the
incorporators, directors and members to handle and represent them in
Special Proceedings No. 7803, concerning the Intestate Estate of the
late Benita Trinidad. They assert that the members of petitioner
corporation took advantage of their positions by not compensating
offset the unpaid balance of the purchase and repair of a jeep body
could only result from an obvious misapprehension that petitioner's
corporate assets could be used to answer for the liabilities of its
individual directors, officers, and incorporators. Such result if
permitted could easily prejudice the corporation, its own creditors, and
even other stockholders; hence, clearly inequitous to petitioner.
Furthermore, considering the nature of the legal services involved,
whatever obligation said incorporators, directors and officers of the
corporation had incurred, it was incurred in their personal capacity.
When directors and officers of a corporation are unable to compensate
a party for a personal obligation, it is far-fetched to allege that the
corporation is perpetuating fraud or promoting injustice, and be
thereby held liable therefor by piercing its corporate veil. While there
are no hard and fast rules on disregarding separate corporate identity,
we must always be mindful of its function and purpose. A court should
be careful in assessing the milieu where the doctrine of piercing the
corporate veil may be applied. Otherwise an injustice, although
unintended, may result from its erroneous application.
The personality of the corporation and those of its incorporators,
directors and officers in their personal capacities ought to be kept
separate in this case. The claim for legal fees against the concerned
individual incorporators, officers and directors could not be properly
directed against the corporation without violating basic principles
governing corporations. Moreover, every action including a
counterclaim must be prosecuted or defended in the name of the
real party in interest. 20 It is plainly an error to lay the claim for legal
fees of private respondent Gregorio Manuel at the door of petitioner
(FMC) rather than individual members of the Francisco family.
However, with regard to the procedural issue raised by petitioner's
allegation, that it needed to be summoned anew in order for the court
to acquire jurisdiction over it, we agree with respondent court's view to
the contrary. Section 4, Rule 11 of the Rules of Court provides that a
counterclaim or cross-claim must be answered within ten (10) days
from service. Nothing in the Rules of Court says that summons should
first be served on the defendant before an answer to counterclaim must
be made. The purpose of a summons is to enable the court to acquire
Republic
SUPREME
Manila
of
the
Philippines
COURT
SECOND DIVISION
G.R. No. 185280
TIMOTEO
H.
SARONA, Petitioner,
vs.
NATIONAL LABOR RELATIONS COMMISSION, ROYALE
SECURITY AGENCY (FORMERLY SCEPTRE SECURITY
AGENCY) and CESAR S. TAN, Respondents.
DECISION
REYES, J.:
This is a petition for review under Rule 45 of the Rules of Court from
the May 29, 2008 Decision1 of the Twentieth Division of the Court of
Appeals (CA) in CA-G.R. SP No. 02127 entitled "Timoteo H. Sarona
v. National Labor Relations Commission, Royale Security Agency
(formerly Sceptre Security Agency) and Cesar S. Tan" (Assailed
Decision), which affirmed the National Labor Relations Commissions
(NLRC) November 30, 2005 Decision and January 31, 2006
Resolution, finding the petitioner illegally dismissed but limiting the
amount of his backwages to three (3) monthly salaries. The CA
likewise affirmed the NLRCs finding that the petitioners separation
pay should be computed only on the basis of his length of service with
Factual Antecedents
On June 20, 2003, the petitioner, who was hired by Sceptre as a
security guard sometime in April 1976, was asked by Karen Therese
Tan (Karen), Sceptres Operation Manager, to submit a resignation
letter as the same was supposedly required for applying for a position
at Royale. The petitioner was also asked to fill up Royales
employment application form, which was handed to him by Royales
General Manager, respondent Cesar Antonio Tan II (Cesar).3
After several weeks of being in floating status, Royales Security
Officer, Martin Gono (Martin), assigned the petitioner at Highlight
Metal Craft, Inc. (Highlight Metal) from July 29, 2003 to August 8,
2003. Thereafter, the petitioner was transferred and assigned to Wide
Wide World Express, Inc. (WWWE, Inc.). During his assignment at
Highlight Metal, the petitioner used the patches and agency cloths of
Sceptre
and
it
was
only
when he was posted at WWWE, Inc. that he started using those of
Royale.4
On September 17, 2003, the petitioner was informed that his
assignment at WWWE, Inc. had been withdrawn because Royale had
allegedly been replaced by another security agency. The petitioner,
however, shortly discovered thereafter that Royale was never replaced
as WWWE, Inc.s security agency. When he placed a call at WWWE,
Inc., he learned that his fellow security guard was not relieved from his
post.5
On September 21, 2003, the petitioner was once again assigned at
Highlight Metal, albeit for a short period from September 22, 2003 to
September 30, 2003. Subsequently, when the petitioner reported at
Royales office on October 1, 2003, Martin informed him that he
would no longer be given any assignment per the instructions of Aida
Sabalones-Tan (Aida), general manager of Sceptre. This prompted him
to file a complaint for illegal dismissal on October 4, 2003.6
In his May 11, 2005 Decision, Labor Arbiter Jose Gutierrez (LA
Gutierrez) ruled in the petitioners favor and found him illegally
dismissed. For being unsubstantiated, LA Gutierrez denied credence to
the respondents claim that the termination of the petitioners
employment relationship with Royale was on his accord following his
alleged employment in another company. That the petitioner was no
longer interested in being an employee of Royale cannot be presumed
from his request for a certificate of employment, a claim which, to
begin with, he vehemently denies. Allegation of the petitioners
abandonment is negated by his filing of a complaint for illegal
dismissal three (3) days after he was informed that he would no longer
be given any assignments. LA Gutierrez ruled:
In short, respondent wanted to impress before us that complainant
abandoned his employment. We are not however, convinced.
There is abandonment when there is a clear proof showing that one has
no more interest to return to work. In this instant case, the record has
no proof to such effect. In a long line of decisions, the Supreme Court
ruled:
"Abandonment of position is a matter of intention expressed in
clearly certain and unequivocal acts, however, an interim
employment does not mean abandonment." (Jardine Davis, Inc. vs.
NLRC, 225 SCRA 757).
"In abandonment, there must be a concurrence of the intention to
abandon and some overt acts from which an employee may be
In addition, all officers and staff of SCEPTRE are now the same
officers and staff of ROYALE, that all [the] properties of SCEPTRE
are now being owned by ROYALE and that ROYALE is now
occupying the property of SCEPTRE. We are not however, persuaded.
It should be pointed out at this juncture that SCEPTRE, is a single
proprietorship. Being so, it has no distinct and separate personality. It
is owned by the late Roso T. Sabalones. After the death of the owner,
the property is supposed to be divided by the heirs and any claim
against the sole proprietorship is a claim against Roso T. Sabalones.
After his death, the claims should be instituted against the estate of
Roso T. Sabalones. In short, the estate of the late Roso T. Sabalones
should have been impleaded as respondent of this case.
Complainant wanted to impress upon us that Sceptre was organized
into another entity now called Royale Security Agency. There is
however, no proof to this assertion. Likewise, there is no proof that
Roso T. Sabalones, organized his single proprietorship business into a
corporation, Royale Security Agency. On the contrary, the name of
Roso T. Sabalones does not appear in the Articles of Incorporation.
The names therein as incorporators are:
Bruno M. Kuizon -
[P]150,000.00
Wilfredo K. Tan -
100,000.00
100,000.00
100,000.00
50,000.00
It may be true that the place where respondent Royale hold (sic) office
is the same office formerly used by "SCEPTRE." Likewise, it may be
true that the same officers and staff now employed by respondent
Royale Security Agency were the same officers and staff employed by
"SCEPTRE." We find, however, that these facts are not sufficient to
justify to require respondent Royale to answer for the liability of
Sceptre, which was owned solely by the late Roso T. Sabalones. As we
have stated above, the remedy is to address the claim on the estate of
Roso T. Sabalones.8
[P]15,600.00
2. Separation Pay -
5,200.00
583.34
2,138.33
Total
[P]23,521.67
The respondents do not likewise deny that Royale and Sceptre share
the same officers and employees. Karen assumed the dual role of
Sceptres Operation Manager and incorporator of Royale. With respect
to the petitioner, even if he has already resigned from Sceptre and has
been employed by Royale, he was still using the patches and agency
cloths of Sceptre during his assignment at Highlight Metal.
Royale also claimed a right to the cash bond which the petitioner
posted when he was still with Sceptre. If Sceptre and Royale are
indeed separate entities, Sceptre should have released the petitioners
cash bond when he resigned and Royale would have required the
petitioner to post a new cash bond in its favor.
Taking the foregoing in conjunction with Aidas control over Sceptres
and Royales business affairs, it is patent that Royale was a mere
subterfuge for Aida. Since a sole proprietorship does not have a
separate and distinct personality from that of the owner of the
enterprise, the latter is personally liable. This is what she sought to
avoid but cannot prosper.
Effectively, the petitioner cannot be deemed to have changed
employers as Royale and Sceptre are one and the same. His separation
pay should, thus, be computed from the date he was hired by Sceptre
in April 1976 until the finality of this decision. Based on this Courts
ruling in Masagana Concrete Products, et al. v. NLRC, et al.,58 the
intervening period between the day an employee was illegally
dismissed and the day the decision finding him illegally dismissed
becomes final and executory shall be considered in the computation of
his separation pay as a period of "imputed" or "putative" service:
Separation pay, equivalent to one month's salary for every year of
service, is awarded as an alternative to reinstatement when the latter is
no longer an option. Separation pay is computed from the
commencement of employment up to the time of termination,
including the imputed service for which the employee is entitled to
backwages, with the salary rate prevailing at the end of the period of
putative service being the basis for computation.59
Republic
SUPREME
Manila
WHEREFORE,
premises
considered,
the
Petition
is
hereby GRANTED. We REVERSE and SET ASIDE the CAs May
29, 2008 Decision in C.A.-G.R. SP No. 02127 and order the
respondents to pay the petitioner the following minus the amount of
(P23,521.67) paid to the petitioner in satisfaction of the NLRCs
November 30, 2005 Decision in NLRC Case No. V-000355-05:
of
Twenty-Five
Thousand
Pesos
of
the
Philippines
COURT
SECOND DIVISION
G.R. No. 185122
DECISION
MENDOZA, J.:
This is a petition for review on certiorari under Rule 45 of the Rules of
Court filed by an employer who was charged before the National
Labor Relations Commission (NLRC) for dismissing an employee
upon the advice of a Feng Shui master. In this action, the petitioners
assail the May 28, 2008 Decision1 and October 23, 2008 Resolution2 of
the Court of Appeals (CA) in CA-G.R. SP No. 98855 entitled Loreta T.
Yung v. National Labor Relations Commission, Wensha Spa Center,
Inc. and/or Xu Zhi Jie.
THE FACTS:
Wensha Spa Center, Inc. (Wensha) in Quezon City is in the business of
sauna bath and massage services. Xu Zhi Jie a.k.a. Pobby Co (Xu) is
its president,3 respondent Loreta T. Yung (Loreta) was its
administrative manager at the time of her termination from
employment.
In her position paper,4 Loreta stated that she used to be employed by
Manmen Services Co., Ltd. (Manmen) where Xu was a client. Xu was
x x x x.
Finally, after the Private Respondents filed their position paper, they
alleged mistake on the part of their former counsel in stating that Yung
was dismissed on August 31, 2004. Thus, they subsequently moved for
the admission of their rejoinder. Notably, however, the said rejoinder
was dated October 4, 2004, earlier than the date when their position
paper was filed, which was on November 3, 2004. It is also puzzling
that their position paper was dated November 25, 2004, much later
than its date of filing. The irregularities are simply too glaring to be
ignored. Nevertheless, the Private Respondents admission of Yungs
termination on August 31, 2004 cannot be retracted. They cannot use
the mistake of their counsel as an excuse considering that the position
paper was verified by their Operations Manager, delos Reyes, who
attested to the truth of the contents therein.10 [Emphasis supplied]
Hence, the fallo of the CA decision reads:
WHEREFORE, the instant petition is GRANTED. Wensha Spa Center,
Inc. and Xu Zhi Jie are ORDERED to, jointly and severally, pay
Loreta T. Yung her full backwages, other privileges, and benefits, or
their monetary equivalent, corresponding to the period of her dismissal
from September 1, 2004 up to the finality of this decision, and
damages in the amounts of fifty thousand pesos (Php50,000.00) as
moral damages, twenty five thousand pesos (Php25,000.00) as
exemplary damages, and twenty thousand pesos (Php20,000.00) as
attorneys fees. No costs.
SO ORDERED.11
Wensha and Xu now assail this ruling of the CA in this petition
presenting the following:
V. GROUNDS FOR THE ALLOWANCE OF THE PETITION
5.1 The following are the reasons and arguments, which are
purely questions of law and some questions of facts, which
justify the appeal by certiorari under Rule 45 of the 1997
Revised Rules of Civil Procedure, as amended, to this
Honorable SUPREME COURT of the assailed Decision and
Resolution, to wit:
5.1.1 The Honorable COURT OF APPEALS gravely erred in
reversing that factual findings of the Honorable Labor Arbiter
and the Honorable NLRC (Third Division) notwithstanding
recognized and established rule in our jurisdiction that findings
of facts of quasi-judicial agencies who have gained expertise
on their respective subject matters are given respect and
finality;
5.1.2 The Honorable COURT OF APPEALS committed grave
abuse of discretion and serious errors when it ruled that
findings of facts of the Honorable Labor Arbiter and the
Honorable NLRC are not supported by substantial evidence
despite the fact that the records clearly show that petitioner
therein was not dismissed but is under investigation, and that
she is guilty of serious infractions that warranted her
termination;
5.1.3 The Honorable COURT OF APPEALS grave[ly] erred
when it ordered herein petitioner to pay herein respondent her
separation pay, in lieu of reinstatement, and full backwages, as
well as damages and attorneys fees;
5.1.4 The Honorable COURT OF APPEALS committed grave
abuse of discretion and serious errors when it held that
petitioner XU ZHI JIE to be solidarily liable with WENSHA,
assuming that respondent was illegally dismissed;
from the affidavit24 of Princess Delos Reyes (Delos Reyes) which was
dated March 21, 2005, not in Wenshas earlier position paper or
pleadings submitted to the LA. The affidavits 25 of employees attached
to Delos Reyes affidavit were all dated November 19, 2004 indicating
that they were not yet executed when the complaints against Loreta
were supposedly being investigated in August 2004.
It is also noteworthy that Wenshas position paper related that because
of the gossips perpetrated by Loreta, a certain Oliva
Gonzalo (Gonzalo) resigned from Wensha. Because of the incident,
Gonzalo, whose father was a policeman, "reportedly got angry with
complainant and of the management telling her friends at respondent
company that she would retaliate thus creating fear among those
concerned."26 As a result, Loreta was advised to take a paid leave of
absence for one month while Wensha conducted an investigation.
According to Loreta, however, the reason for her termination was her
aura did not match that of Xu and the work environment at Wensha.
Loreta narrated:
On August 10, 2004 however, complainant was called by respondent
Xu and told her to wait at the lounge area while the latter and a Feng
Shui Master were doing some analysis of the office. After several
hours of waiting, respondent Xu then told complainant that according
to the Feng Shui master her Chinese Zodiac sign is a "mismatch" with
that of the respondents; that complainant should not enter the
administrative office for a month while an altar was to be placed on the
left side where complainant has her table to allegedly correct the
"mismatch" and that it is necessary that offerings and prayers have to
be made and said for about a month to correct the alleged "jinx."
Respondent Xu instructed complainant not to report to the office for a
month with assurance of continued and regular salary. She was ordered
not to seek employment elsewhere and was told to come back on the
10th of September 2004.27
Although she was a little confused, Loreta did as she was instructed
and did not report for work for a month. She returned to work on
September 10, 2004. This is how Loreta recounted the events of that
day:
On September 10, 2004, in the morning, complainant reported to the
office of respondents. As usual, she punched-in her time card and
signed in the logbook of the security guard. When she entered the
administrative office, some of its employees immediately contacted
respondent Xu. Respondent Xu then contacted complainant thru her
mobile phone and told her to leave the administrative office
immediately and instead to wait for him in the dining area.
xxx
Complainant waited for respondent Xu in the dining area. After
waiting for about two (2) hours, respondent Xu was nowhere. Instead,
it was Jiang Xue Qin a.k.a Annie Co, the Chinese wife of respondent
Xu, who arrived and after a short conversation between them, the
former frankly told complainant that she has to resign allegedly she is
a mismatch to respondent Xu according to the Feng Shui master and
therefore she does not fit to work (sic) with the respondents. Surprised
and shocked, complainant demanded of Jiang Xue Qin to issue a letter
of termination if it were the reason therefor.
Instead of a termination letter issued, Jiang Xue Qin insisted for the
complainant's resignation. But when complainant stood her ground,
Jian Xue Qin shouted invectives at her and told to leave the office
immediately.
Respondent Xu did not show up but talked to the complainant over the
mobile phone and convinced her likewise to resign from the company
since there is no way to retain her because her aura unbalanced the
area of employment according to the Feng Shui, the Chinese spiritual
More importantly, the records are bereft of evidence that Loreta was
duly informed of the charges against her and that she was given the
opportunity to respond to those charges prior to her dismissal. If there
were indeed charges against Loreta that Wensha had to investigate,
then it should have informed her of those charges and required her to
explain her side. Wensha should also have kept records of the
investigation conducted while Loreta was on leave.1avvphi1 The law
requires that two notices be given to an employee prior to a valid
termination: the first notice is to inform the employee of the charges
against her with a warning that she may be terminated from her
employment and giving her reasonable opportunity within which to
explain her side, and the second notice is the notice to the employee
that upon due consideration of all the circumstances, she is being
terminated from her employment.30 This is a requirement of due
process and clearly, Loreta did not receive any of those required
notices.
We are in accord with the pronouncement of the CA that the
reinstatement of Loreta to her former position is no longer feasible in
the light of the strained relations between the parties. Reinstatement,
under the circumstances, would no longer be practical as it would not
be in the interest of both parties. Under the law and jurisprudence, an
illegally dismissed employee is entitled to two reliefs - backwages and
reinstatement, which are separate and distinct. If reinstatement would
only exacerbate the tension and further ruin the relations of the
employer and the employee, or if their relationship has been unduly
strained due to irreconcilable differences, particularly where the
illegally dismissed employee held a managerial or key position in the
company, it would be prudent to order payment of separation pay
instead of reinstatement.31 In the case of Golden Ace Builders v.
Talde,32 We wrote:
Under the doctrine of strained relations, the payment of separation pay
has been considered an acceptable alternative to reinstatement when
the latter option is no longer desirable or viable. On the one hand, such
payment liberates the employee from what could be a highly
oppressive work environment. On the other, the payment releases the
employer from the grossly unpalatable obligation of maintaining in its
employ a worker it could no longer trust.
In the case at bench, the CA, upon its own assessment, pronounced
that the relations between petitioners and the respondent have become
strained because of her dismissal anchored on dubious charges. The
respondent has not contested the finding. As she is not insisting on
being reinstated, she should be paid separation pay equivalent to one
(1) month salary for every year of service.33 The CA, however, failed
to decree such award in the dispositive portion.ten.lihpwal This should
be rectified.
Nevertheless, the Court finds merit in the argument of petitioner Xu
that the CA erred in ruling that he is solidarily liable with Wensha.
Elementary is the rule that a corporation is invested by law with a
personality separate and distinct from those of the persons composing
it and from that of any other legal entity to which it may be related.
"Mere ownership by a single stockholder or by another corporation of
all or nearly all of the capital stock of a corporation is not of itself
sufficient ground for disregarding the separate corporate personality."34
In labor cases, corporate directors and officers may be held solidarily
liable with the corporation for the termination of employment only if
done with malice or in bad faith. 35 Bad faith does not connote bad
judgment or negligence; it imports a dishonest purpose or some moral
obliquity and conscious doing of wrong; it means breach of a known
duty through some motive or interest or ill will; it partakes of the
nature of fraud.36
HI-CEMENT
vs.
x-----------------------x
G.R. No. 132419
E.T. HENRY & CO. and SPOUSES ENRIQUE TAN and LILIA
TAN, Petitioners,
vs.
INSULAR BANK OF ASIA AND AMERICA (later PHILIPPINE
COMMERCIAL
INTERNATIONAL
BANK
and
now,
EQUITABLE-PCI BANK), Respondent.
DECISION
CORONA, J.:
At bar are consolidated petitions assailing the decision of the Court of
Appeals (CA) dated January 21, 1998 in CA-G.R. CV No. 31600
entitled Insular Bank of Asia and America [now Philippine
Commercial International Bank/(PCIB)] v. E.T. Henry & Co., et al.1
The antecedent facts follow.
of
the
Philippines
COURT
FIRST DIVISION
G.R. No. 132403
Petitioners Enrique Tan and Lilia Tan (spouses Tan) were the
controlling stockholders of E.T. Henry & Co., Inc. (E.T. Henry), a
company engaged in the business of processing and distributing
bunker fuel.2 Among E.T. Henry's customers were petitioner HiCement Corporation (Hi-Cement),3 Riverside Mills Corporation
(Riverside) and Kanebo Cosmetics Philippines, Inc. (Kanebo). For
their purchases, these corporations issued postdated checks to E.T.
Henry.
In G.R. No. 132419, on the other hand, E.T. Henry and the spouses
Tan essentially contend that the lower courts erred in: (1) applying the
doctrine of piercing the veil of the corporate entity to make the spouses
Tan solidarily liable with E.T. Henry; (2) not ruling on their crossclaims and counterclaims, and (3) not declaring the foreclosure of E.T.
Henry's Sucat property as void.19
Both the trial court and the CA concluded that Hi-Cement authorized
its general manager and treasurer to issue the subject postdated crossed
checks. They both held that Hi-Cement was already estopped from
denying such authority since it never objected to the signatories'
issuance of all previous checks to E.T. Henry which the latter, in turn,
was able to re-discount with respondent.
SO ORDERED.17
Only petitioners appealed the decision to the CA which affirmed
it in toto. Hence, these petitions.
In G.R. No. 132403, petitioner Hi-Cement disclaims liability for the
postdated crossed checks because (1) it did not authorize their
issuance; (2) respondent was not a holder in due course and (3) there
was no basis for the lower courts holding that it was solidarily liable
for the face value of Riversides and Kanebos checks.18
We agree with the lower courts that both the general manager and
treasurer of Hi-Cement were authorized to issue the subjects checks.
However, notwithstanding such fact, respondent could not be
considered a holder in due course.
Respondent Bank Not a Holder In Due Course
The Negotiable Instruments Law (NIL), specifically Section
191,22 provides:
Art. 1208. If from the law, or the nature of the wording of the
obligations to which the preceding article refers to the contrary does
not appear, the credit or debt shall be presumed to be divided into as
many equal shares as there are creditors or debtors, the credits or debts
being considered distinct from one another, subject to the Rules
governing the multiplicity of suits.
First, the trial court failed to provide a clear ground why the doctrine
was used. It merely stated that it agreed with respondents arguments
but did not explain why the doctrine was relevant to petitioner E.T.
Henry's and the spouses Tans case. On the other hand, the CA held:
the
In their petition, E.T. Henry and the spouses Tan argue that the lower
courts erred in applying the "piercing the veil of corporate entity"
doctrine to their case. They claim that both the trial and appellate
courts failed to cite the reasons why the doctrine was relevant to them.
Similarly, the CA left a gaping hole by failing to provide the basis for
its ruling that E.T. Henry and the spouses Tan defrauded respondent. It
did not also state what act constituted the fraud. Fraud is an allegation
of fact that demands clear and convincing evidence.36 It is never
presumed.37
At any rate, the issue has become moot in view of our ruling that HiCement is not liable for the checks.
(B) G.R. No. 132419
Doctrine
of
Veil of Corporate Entity
Piercing
We agree with petitioners E.T. Henry and the spouses Tan in this
respect.
If any general rule can be laid down, it is that the corporation will be
looked upon as a legal entity until sufficient reasons to the contrary
appear. 33 It is only when the fiction or notion of legal entity is used to
defeat public convenience, justify wrong, perpetuate fraud or defend
crime that the law will shred the corporate legal veil and regard it as a
mere association of persons.34 This is referred to as the doctrine of
piercing the veil of corporate entity.
Second, E.T. Henry and the spouses Tan filed the counterclaim against
respondent on the basis of an alleged void foreclosure proceeding on
E.T. Henry's Sucat property due to an inadequate bid price. It is no
longer necessary to delve into this matter in view of our finding that
the mere inadequacy of the bid price on the property did not
automatically render the foreclosure sale irregular or void.
Incidentally, the petition in G.R. No. 132419 posed no contest on the
lower courts ruling on E.T. Henrys and the spouses Tans solidary
liability with Riverside and Kanebo vis-a-vis their checks.43 To be
consistent, however, with our dictum on the separate personality of
E.T. Henry and the spouses Tan, the solidarity liability arising from the
checks of Riverside and Kanebo shall only be enforced against E.T.
Henry.
WHEREFORE, the assailed decision of the Court of Appeals in CAG.R. CV No. 31600 is hereby AFFIRMED withMODIFICATION.
Accordingly, petitioner Hi-Cement Corporation is discharged from any
liability. Only petitioner E.T. Henry & Co. is ORDERED to pay
respondent Insular Bank of Asia and America (later Philippine
Commercial International Bank and now Equitable PCI-Bank) the
following:
1. P10,000,000 representing the value of Hi-Cement's checks it
received from respondent plus accrued interests, charges and
penalties until fully paid, and
2. the loans for P1,661,266.51 and P4,900,805 plus accrued
interests, charges and penalties until fully paid.
Let the records of this case be remanded to the trial court for the
proper computation of E.T. Henry's, Riverside's and Kanebo's
liabilities for the checks, attorney's fees and costs of litigation.
Republic
SUPREME
Manila
of
the
Philippines
COURT
EN BANC
G.R. No. 184517
October 8, 2013
nor an authorized cause that would legally permit the dismissal of the
corporations employees en masse.
Before this Court are consolidated Rule 45 Petitions for Review on
Certiorari3 assailing the Decision4 and Resolution5 of the Court of
Appeals(CA) in CA-G.R. SP No. 97510 and its Decision 6 and
Resolution7 in CA-G.R. SP No. 97942.
The facts of the case are as follows:
Respondent employees Elicerio Gaspar (Elicerio), Ricardo Gaspar, Jr.
(Ricardo), Eufemia Rosete (Eufemia), Fidel Espiritu (Fidel), Simeon
Espiritu, Jr. (Simeon, Jr.), and Liberato Mangoba (Liberato) were
employees of Small and Medium Enterprise Bank, Incorporated (SME
Bank).Originally, the principal shareholders and corporate directors of
the bank were Eduardo M. Agustin, Jr. (Agustin) and Peregrin de
Guzman, Jr. (De Guzman).
In June 2001, SME Bank experienced financial difficulties. To remedy
the situation, the bank officials proposed its sale to Abelardo
Samson(Samson).8
Accordingly, negotiations ensued, and a formal offer was made to
Samson. Through his attorney-in-fact, Tomas S. Gomez IV, Samson
then sent formal letters (Letter Agreements) to Agustin and De
Guzman, demanding the following as preconditions for the sale of
SME Banks shares of stock:
4. You shall guarantee the peaceful turn over of all assets as well as the
peaceful transition of management of the bank and shall
terminate/retire the employees we mutually agree upon, upon transfer
of shares in favor of our groups nominees;
xxxx
7.
All
retirement
benefits,
if
any
of
the
above
officers/stockholders/board of directors are hereby waived upon
consummation [sic] of the above sale. The retirement benefits of the
rank and file employees including the managers shall be honored by
the new management in accordance with B.R. No. 10, S. 1997.9
respondent employees, except for Simeon, Jr.,26 were not rehired. After
a month in service, Simeon, Jr. again resigned on October 2001.27
SO ORDERED.31
Agustin and De Guzman filed a Rule 65 Petition for Certiorari with the
CA, docketed as CA-G.R. SP No. 97510. The Samson Group likewise
filed a separate Rule 65 Petition for Certiorari with the CA, docketed
as CA-G.R. SP No. 97942. Motions to consolidate both cases were not
acted upon by the appellate court.
On 13 March 2008, the CA rendered a Decision in CA-G.R. SP
No.97510 affirming that of the NLRC. The fallo of the CA Decision
reads:
WHEREFORE, in view of the foregoing, the petition is DENIED.
Accordingly, the Decision dated May 8, 2006, and Resolution dated
November 28, 2006 of the National Labor Relations Commission in
NLRC NCR CA No. 043236-05 (NLRC RAB III-07-4542-02) are
hereby AFFIRMED.
SO ORDERED.33
Subsequently, CA-G.R. SP No. 97942 was disposed of by the appellate
court in a Decision dated 15 January 2008, which likewise affirmed
that of the NLRC. The dispositive portion of the CA Decision states:
WHEREFORE, premises considered, the instant Petition for Certiorari
is denied, and the herein assailed May 8, 2006 Decision and November
28, 2006 Resolution of the NLRC are hereby AFFIRMED.
SO ORDERED.34
There are two types of corporate acquisitions: asset sales and stock
sales.58 In asset sales, the corporate entity59 sells all or substantially all
of its assets60 to another entity. In stock sales, the individual or
corporate shareholders61 sell a controlling block of stock62 to new or
existing shareholders.
In asset sales, the rule is that the seller in good faith is authorized to
dismiss the affected employees, but is liable for the payment of
separation pay under the law.63 The buyer in good faith, on the other
hand, is not obliged to absorb the employees affected by the sale, nor
is it liable for the payment of their claims. 64 The most that it may do,
for reasons of public policy and social justice, is to give preference to
the qualified separated personnel of the selling firm.65
In contrast with asset sales, in which the assets of the selling
corporation are transferred to another entity, the transaction in stock
sales takes place at the shareholder level. Because the corporation
possesses a personality separate and distinct from that of its
shareholders, a shift in the composition of its shareholders will not
affect its existence and continuity. Thus, notwithstanding the stock
sale, the corporation continues to be the employer of its people and
continues to be liable for the payment of their just claims.
Furthermore, the corporation or its new majority share holders are not
entitled to lawfully dismiss corporate employees absent a just or
authorized cause.
In the case at bar, the Letter Agreements show that their main object is
the acquisition by the Samson Group of 86.365% of the shares of stock
of SME Bank.66 Hence, this case involves a stock sale, whereby the
Simeon, Jr., on the other hand, contends that while he was reappointed
by the new management after his letter of application was transmitted,
he was not given a clear position, his benefits were reduced, and he
suffered a demotion in rank.82 These allegations were not refuted by
the Samson Group.
We hold that Simeon, Jr. was likewise illegally dismissed from his
employment.
The CA and the NLRC discussed the case of Simeon, Jr. together with
that of the rest of respondent-employees. However, a review of the
None of the parties dispute that SME Bank was the employer of
respondent employees. The fact that there was a change in the
composition of its shareholders did not affect the employer-employee
relationship between the employees and the corporation, because an
equity transfer affects neither the existence nor the liabilities of a
corporation. Thus, SME Bank continued to be the employer of
respondent employees notwithstanding the equity change in the
corporation. This outcome is in line with the rule that a corporation has
a personality separate and distinct from that of its individual
shareholders or members, such that a change in the composition of its
shareholders or members would not affect its corporate liabilities.
Therefore, we conclude that, as the employer of the illegally dismissed
employees before and after the equity transfer, petitioner SME Bank is
liable for the satisfaction of their claims.
Turning now to the liability of Agustin, De Guzman and the Samson
Group for illegal dismissal, at the outset we point out that there is no
privity of employment contracts between Agustin, De Guzman and the
Samson Group, on the one hand, and respondent employees on the
other. Rather, the employment contracts were between SME Bank and
the employees. However, this fact does not mean that Agustin, De
Guzman and the Samson Group may not be held liable for illegal
dismissal as corporate directors or officers. In Bogo-Medellin
Sugarcane Planters Association, Inc. v. NLRC, 90 we laid down the rule
as regards the liability of corporate directors and officers in illegal
dismissal cases, as follows:
Unless they have exceeded their authority, corporate officers are, as a
general rule, not personally liable for their official acts, because a
corporation, by legal fiction, has a personality separate and distinct
from its officers, stockholders and members. However, this fictional
veil may be pierced whenever the corporate personality is used as a
means of perpetuating a fraud or an illegal act, evading an existing