[G.R. No. L-23586. March 20, 1968.]
in which Amador
A.D. SANTOS, INC., Petitioner, v. VENTURA VASQUEZ, Respondent.
Ventura Vasquez was AD Santos’ taxi driver. Sometime on
December 22 or 23, 1961, while AD Santos’ taxicab, he vomitted
blood. He reported to AD Santos such fact. He was then sent for
treatment at Sto. Tomas Hospital where he was confined for 6 days.
Thereafter, he was admitted at the Quezon Institute where he
stayed until March 19, 1962 and was diagnosed with pulmonary
tuberculosis. Upon his discharge on March 19, 1962, he was
clinically improved. His X-ray examination, however, showed the
same finding, i.e., PTB, moderately advanced. He has not resumed
work.
On May 9, 1962, Ventura filed a complaint for compensation against
AD Santos under the Workmen’s Compensation Act. WCC ruled in
the former’s favour.
AD Santos now contends, amongst others, that Ventura has no
cause of action against it. After all Ventura admitted, in the course
of his testimony, that he worked for the City Cab operated by
Amador Santos. Ventuara thus should have made his claim upon
Amador.
ISSUE: WON Ventura has a cause of action against AD Santos.
HELD: YES.
Ventura’s admission will not detract from the validity of his right to
compensation. For, the truth is that really at one time Amador
Santos was the sole owner and operator of the City Cab. It was
subsequently transferred to A.D. Santos, Inc.
Santos was an officer. The mention by Ventura of Amador Santos as
his employer in the course of his testimony "should not be allowed
to confuse the facts relating to employer- employee relationship,"
for "when the veil of corporate fiction is made as a shield to
perpetrate a fraud and/or confuse legitimate issues (here, the
relation of employer-employee), the same should be pierced."
NOTE: AD’s other contention: such claim was not filed within two
months following illness  Untenable. AD Santos failed to file with
WCC a notice of controversion. Hence, the defense that the claim
for compensation was not filed within the statutory period is
deemed waived and their right to controvert the claim is deemed
forfeited (Section 45, WCA). Petitioner here knew of respondent’s
illness. Yet, it did not controvert respondent’s right to
compensation. Constructively such failure is an admission that the
claim is compensable.
DUE PROCESS
G.R. No. 80043 June 6, 1991
ROBERTO A. JACINTO, petitioner, vs. HONORABLE COURT OF
APPEALS and METROPOLITAN BANK AND TRUST COMPANY,
respondents.
 In this case, Metrobank sued Inland Industries and Roberto
Jacinto, its President and General Manager. Notably, the
former did not allege in its complaint that the two
defendants are one and the same.
 Trial ensued with Metrobank trying to prove that Inland
Industries is a mere alter ego of Jancito.
  Eventually, both the RTC nd the CA ruled in favour of
Metrobank, holding Inland Industries and Jacinto solidarily
liable to it.
ISSUE: WON the lower courts are correct in piercing the veil of
corporate fiction between Inland and Jacinto despite the fact that
Mettrobank failed to allege in its complaint the oneness of the two
defendants.
HELD: YES. VEIL OF CORPORATE FICTION MUST BE PIERCED.
 While on the face of the complaint there is no specific
allegation that the corporation is a mere alter ego of
petitioner, subsequent developments, from the stipulation
of facts up to the presentation of evidence and the
examination of witnesses, unequivocally show that
respondent Metrobank sought to prove that Jacinto and
Inland are one, no serious objection was heard from Jacinto.
 Pursuant to Section 5 of Rule 10, ROC, "when evidence is
presented by one party, with the express or implied consent
of the adverse party, as to issues not alleged in the
pleadings, judgment may be rendered validly as regards
those issues, which shall be considered as if they have been
raised in the pleadings. There is implied consent to the
evidence thus presented when the adverse party fails to
object thereto.
 NOTE: It was Jacinto who dealt entirely with Metrobank in
the itransactions subject of controversy in this case, and in
the Trust Receipts that he signed supposedly in behalf of
Inland Industries, Inc., it is not even mentioned that he did
so in his official capacity.
NOTE: Jacinto even admitted that he and his wife own 52% of the
stocks of defendant corporation. We cannot accept as true the
assertion of Jacinto that he only acted in his official capacity as
President and General Manager of Inland when he signed the
aforesaid trust receipts.
As could be expected, Roberto Jacinto in his direct testimony
presented a different corporate scenario regarding Inland
Industries, Inc. and vehemently declared that it is Bienvenida
Catabas who is its President, while Aurora Heresa is its Chairman of
the Board. His assertion on this point, however, is not convincing in
view of his admission in the same breath, that his wife, Hedy U.
Jacinto, own (sic) with him 52% of the shares of stock of said
corporation. Indeed, this circumstance –– even if standing alone ––
cannot but engender in the most unprejudiced mind doubt and
misgiving why Catabas and Heresa would be defendant
corporation's President and Chairman of the Board, respectively.
The conflicting statements by defendant Jacinto place in extreme
doubt his credibility anent his alleged participation in said
transactions and We are thus persuaded to agree with the findings
of the lower court that the latter (Roberto Jacinto) was practically
the corporation itself. Indeed, a painstaking examination of the
records show that there is no clear-cut delimitation between the
personality of Roberto Jacinto as an individual and the personality
of Inland Industries, Inc. as a corporation.
PIERCING THE VEIL DOCTRINE: "when the veil of corporate fiction is
made as a shield to perpetuate fraud and/or confuse legitimate
issues, the same should be pierced." // ALTER EGO DOCTRINE:
"Where a corporation is merely an adjunct, business conduit or alter
ego, the fiction of separate and distinct corporate entity should be
disregarded."
A cursory perusal of the RTC decision would at once readily show on
that said factual findings of the court is well grounded as the same
in fact even include a portion of the very testimony of said
defendant-appellant admitting that he and his wife own 52% of the
stocks of defendant corporation. The stipulation of facts also show
that Roberto Jacinto acted in his capacity as President/General
Manager of defendant corporation and that "all the goods covered
by the three (3) Letters of Credit (Annexes "A", "B" & "C") and paid
for under the Bills of Exchange (Annexes "D", "E" & "F") were
delivered to and received by defendant Inland Industries, Inc.
through its co-defendant Roberto A. Jacinto, its President and
General Manager, who signed for and in behalf of defendant Inland
and agreed to the terms and conditions of three (3) separate trust
receipts covering the same.
ARCILLA CASE – NO DIGEST; READ FULL CASE
AC RANSOM CASE – SEPARATE FILE
G.R. No. 79907 March 16, 1989
SAMUEL CASAS LIM, petitioner, vs. NLRC and VICTORIA R.
CALSADO, respondents.
Victoria Calsado was hired by Sweet Lines, Inc. on March 5, 1981, as
Senior Branch Officer of its International Accounts Department for a
fixed salary and a stipulated 5 % commission on sales production.
On December 1, 1983, after tendering her resignation to accept
another offer of employment, she was persuaded to remain with an
offer of her promotion to Manager of the Department with
corresponding increase in compensation, which she accepted. She
was also allowed to buy a second-hand Colt Lancer pursuant to a
liberal car plan under which one-half of the cost was to be paid by
the company and the other half was to be deducted from her salary.
Relations began to sour later, however, when she repeatedly asked
for payment of her commissions, which had accumulated and were
long overdue. She also complained of the inordinate demands on
her time even when she was sick and in the hospital. Finally, on July
16, 1985, she was served with a letter from Samuel Casas Lim, the
other petitioner, informing her that her "employment with Sweet
Lines" would terminate on August 5, 1985. Efforts were also taken
by Sweet Lines to forcibly take the car from her, culminating in an
action for replevin against her in the regional trial court of Manila.
On August 14, 1985, Calsado filed a complaint against both
petitioners for illegal dismissal, illegal deduction, and unpaid wages
and commissions plus moral and exemplary damages, among other
claims. 1 There followed an extended hearing where she testified on
the details of her employment, emphasizing her unsatisfactory
treatment by the management of Sweet Lines and especially the
termination of her services without the required notice and hearing
and without valid cause. She also presented four other witnesses to
corroborate her charges.
The respondents' defenses were based mainly on the claim that
Calsado was not an employee of Sweet Lines but an independent
contractor and that therefore their dispute with her came under the
jurisdiction of the civil courts and not of the Labor Arbiter. 2 On this
matter the private respondent pointedly comments:
At this point, private respondent would like to underscore the fact
that while private respondent in the proceedings before the Labor
Arbiter presented five witnesses including herself, all of whom were
cross-examined by petitioners, and numerous documents which
were marked as Exhs. "A" to "GG-8d" and 858 receipts and bills, all
of which were duly identified and testified to by private respondent
and her witnesses and examined by petitioners, petitioner failed to
present any single evidence, testimonial or documentary, to
controvert private respondent's evidence. All that they presented
were their unsubstantiated pleadings not one of which was under
oath, not even their position paper which, under the NLRC rules
(Sec. 2, Rule 7, Revised Rules of the NLRC), have to be verified.
On December 29, 1986, decision was rendered against the two
petitioners by the Labor Arbiter 4 who held them liable in solidum
to the complainant for the following amounts:
(a) Separation pay equivalent to one month pay for every year
of service based on her latest basic salary of P2,500.00 plus
allowance of P500.00, or a total monthly pay of P3,000.00;
(b) Backwages based on her last monthly pay rate of P3,000.00
to be computed from the time of her dismissal to the actual
payment of her separation pay;
(c) Proportionate 13th month pay for the year 1985;
(d) Sales commission in the sum of P432,656.68;
(e) Moral damages of P100,000.00;
(f) Exemplary damages of P10,000.00; and
(g) Attorney's fees of P10,000.00 pLus 25 % of the total
monetary awards in favor of the complainant.
The decision was appealed to the National LaBor Relations
Commission and affirmed in toto except as to the attorney's fees,
which were reduced to 10% of the total award. 5 Both Sweet Lines
and Lim then came to us in separate petitions to raise the above-
stated issues. On October 14, 1987, we issued a temporary
restraining order against the enforcement of the decision of the
public respondent dated September 11, 1987. 6 The petitions were
consolidated on December 7, 1987, and given due course on May
16, 1987, with the parties being required to submit their respective
memoranda. On the first question, we hold that the employee-
employer relations between Calsado and Sweet Lines have been
sufficiently established. The following documents submitted by the
former and not controverted by the latter should belie the claim
that Calsado was only an independent contractor over whom Sweet
Lines had no control.
1. Certification issued by Sweet Lines, lnc. dated May 2l,1984,
stating that private respondent 'is employed with this company
since March 5, 1982 up to the present, presently designated as
International Accounts Manager of the Sweet Lines, Inc., Manila
Branch." (Exh. "W" )
2. Termination letter issued by Samuel Casas Lim to private
respondent reading. 'Your employment with Sweet lines, Inc. will
cease effective August 15, 1985. In connection with the foregoing,
you are entitled to (1) separation pay equivalent to one half month
of every year of service ... ; (2) The computed money value of
unused vacation leave ... ; (3) Thirteenth month pay ... ;" (Exh. "W")
3. Notice of private respondent's promotion effective
December 1, 1982 from Senior Branch Officer to Manager,
International Accounts, with an increase in basic salary from P1,250
to P2,500 a month; (Exh. "D")
4. Computation of her salary, allowance and 13th month pay
differentials on account of her promotion, prepared and approved
by the proper officials of petitioner Sweet Lines, Inc. whose
signatures appear thereon; (Exh. "E")
5. Certification dated September 6, 19M issued by the
petitioner company, subscribed and sworn to before a notary public
declaring that private respondent was then an Account Executive of
Sweet Lines, Inc.; (Exh. "E")
6. Certification, notarized on January 10, 1985, by Atty.
Gregorio Francisco, counsel for petitioner company, that private
respondent "is a bona fide employee of Sweet Lines, Inc. and
presently holding the position of Manager, International Account.'
(Exh. "Y")
7. Approved application for sick leave of private respondent
for 15 days from March 7, 1985 to April 3, 1985. (Exh. "I")
There is in the above exhibits a consistent and categorical
recognition of Calsado as an employee of petitioner Sweet Lines.
Indeed, its notarized certification that Calsado was its bona fide
employee is irrefutable. The petitioner cannot now argue that the
grant to her of the 13th month pay and even the differential pay
was a mere accomodation like the car plan (which, for that matter,
is a benefit usually extended only to employees). If it is true that
Sweet Lines had no control over her and left her free to determine
her work schedule, there would have been no reason at all for its
approval of her application for sick leave from March 7, 1985 to
April 3, 1985. The termination letter itself, which was signed by the
other petitioner as Vice President of Sweet Lines, said she was
"entitled" to certain payments as a result of the cessation of her
"employment with Sweet Lines, Inc."
Sweet Lines has also failed to substantiate its allegation that
Calsado was an independent contractor, as it should have, with
evidence showing inter alia that she had the financial resources and
other means or equipment to operate as such. One must prove
what one alleges, but Sweet Lines confined itself to mere denials.
At any rate, the determination of the existence of employee-
employer relations is a factual finding which this Court will not
disturb or reverse in the absence of a showing of grave abuse of
discretion. We do not see such justification here. On the contrary,
the ascertainment of the employment status of the private
respondent was made on the basis of the criteria consistently
employed by the Court in the determination of the employee-
employer relationship. 7 We find from the record that all these test
have been satisfied.
Such relationship having been established, the third issue is
automatically resolved and requires not much elaboration. Suffice it
only to stress that the damages claimed by private respondent as a
result of her illegal dismissal and the violation of the terms and
conditions of her employment also come within the jurisdiction of
the Labor Arbiter as a contrary rule would result in the splitting of
actions and the consequent multiplication of suits. So we recently
affirmed in Limquiaco v. Ramolete 8 and more positively in National
Union of Bank Employees v. Lazaro, 9 where we declared:
As we stated, the damages (allegedly) suffered by the petitioners
only form part of the civil component of the injury arising from the
unfair labor practice. Under Article 247 of the Code, "the civil
aspects of all cases involving unfair labor practices which may
include claims for damages and other affirmative relief, shall be
under the jurisdiction of the labor arbiters.
On the fourth issue, we agree with petitioner Lim that he cannot be
held personally liable with Sweet Lines for merely having signed the
letter informing Calsado of her separation. There is no evidence that
he acted with malice or bad faith. The letter, in fact, informed her
not only of her separation but also of the benefits due her as a
result of the termination of her services.
It is true that Lim has raised this matter rather tardily and also that
he belongs to a closed corporation contolled by the members of one
family only. But these circumstances should not be allowed to
operate against him if he is to be accorded substantial justice in the
resolution of the private respondent's claim. As we said in Ortigas
vs. Lufthansa German Airlines, 10 the Court is "clothed with ample
authority to review matters, even if they are not assigned as errors
in the appeal, if it finds that its consideration is necessary in arriving
at a just decision of the case." As for the second charge, the mere
fact that Lim is part of the family corporation does not mean that all
its acts are imputable to him directly and personally. His acts were
official acts, done in his capacity as Vice President of Sweet Lines
and on its behalf. There is no showing that he acted without or in
excess of his authority or was motivated by personal ill-will toward
Calsado. The applicable decision is Sunio v. NLRC, 11 where it was
held:
Petitioner Sunio was impleaded in the Complaint in his capacity as
General Manager of petitioner corporation. There appears to be no
evidence on record that he acted maliciously or in bad faith in
terminating the services of private respondents. His act, therefore,
was within the scope of his authority and was a corporate act.
It is basic that a corporation is invested by law with a personality
separate and distinct from those of the persons composing it as well
as from that of any other 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. Petitioner Sunio, therefore, should not have been made
personally answerable for the payment of private respondents' back
salaries.
The case of Ransom v. NLRC 12 is not in point because there the
debtor corporation actually ceased operations after the decision of
the Court of Industrial Relations was promulgated against it, making
it necessary to enforce it against its former president. Sweet lines is
still existing and able to satisfy the judgment in favor of the private
respondent.
The Solicitor General, invoking equity rather than law, observes that
making Lim solidarity liable with Sweet Lines will ensure payment of
Calsado's claim. But this precaution, even assuming it to be valid, is
really unnecessary. in fact, as a condition for the issuance of our
temporary restraining order of October 14, 1987, Sweet Lines
posted as required a bond in the amount of P850,000.00, which
should cover the amounts awarded to the private respondent.
We especially uphold the award of moral and exemplary damages in
view of the acts of harassment and bad faith testified to by the
private respondent and not refuted by Sweet Lines. Her treatment
during her employment, the delays in the payment of her
commissions, the pressures exerted upon her even when she was
sick in the hospital, the suggestion of one of the company officers
that she discuss her complaints with him alone in a private place,
her arbitrary separation, the questionable attempts to get the
vehicle from her after her dismissal, among other aggravations,
clearly demonstrate the validity of the private respondent's
complaints.
Finally, we hold that the contention of Sweet Lines that separation
pay and back wages are inconsistent with each other is not well-
taken. Separation pay is granted where reinstatement is no longer
advisable because of strained relations between the employee and
the employer. Back wages represent compensation that should
have been earned but were not collected because of the unjust
dismissal. The bases for computing the two are different, the first
being usually the length of the employee's service and the second
the actual period when he was unlawfully prevented from working.
G.R. No. 90856 July 23, 1992
ARTURO DE GUZMAN, petitioner, vs. NLRC
Arturo de Guzman was the general manager of the Manila office of
the Affiliated Machineries Agency, Ltd., which was based in
Hongkong. On June 30, 1986, he received a telex message from Leo
A. Fialla, managing director of AMAL in its main office, advising him
of the closure of the company due to financial reverses. This
message triggered the series of events that are the subject of this
litigation.
Immediately upon receipt of the advise, De Guzman notified all the
personnel of the Manila office. The employees then sent a letter to
AMAL accepting its decision to close, subject to the payment to
them of their current salaries, severance pay, and other statutory
benefits. De Guzman joined them in these representations.
These requests were, however, not heeded. Consequently, the
employees, now herein private respondents, lodged a complaint
with the NLRC against AMAL, through Leo A. Fialla and Arturo de
Guzman, for illegal dismissal, unpaid wages or commissions,
separation pay, sick and vacation leave benefits, 13th month pay,
and bonus.
For his part, the petitioner began selling some of AMAL's assets and
applied the proceeds thereof, as well as the remaining assets, to the
payment of his claims against the company. He also organized
Susarco, Inc., with himself as its president and his wife as one of the
incorporators and a member of the board of directors. This
company is engaged in the same line of business and has the same
clients as that of the dissolved AMAL.
With this development, Susarco and its officers were impleaded in
the amended complaint of the private respondents. Later, William
Quasha and/or Cirilo Asperilla were also included in the suit as the
resident agents of AMAL of the Philippines.
On November 7, 1986, the petitioner filed his own complaint with
the NLRC against AMAL for his remaining unsatisfied claims.
On May 29, 1987, Labor Arbiter Eduardo G. Magno, to whom the
petitioner's complaint was assigned, rendered a decision ordering
AMAL to pay the petitioner the amount of P371,469.59 as
separation pay, unpaid salary and commissions, after deducting the
value of the assets earlier appropriated by the petitioner.
On September 30, 1987, Labor Arbiter Ma. Lourdes A. Sales, who
tried the private respondents' complaint, rendered a decision —
1. Ordering Respondents AMAL and Arturo de Guzman to pay
jointly and severally to each Complainant separation pay computed
at one-half month pay for every year of service, backwages for one
month, unpaid salaries for June 16-30, 1986, 13th month pay from
January to June 30, 1986 and incentive leave pay equivalent to two
and-a-half days pay;
4. Ordering respondents AMAL and Arturo de Guzman to pay
jointly and severally attorney's fees to Complainants equivalent to
10% of the monetary awards herein.
This decision was on appeal affirmed in toto by the NLRC.
The petitioner does not dispute the jurisdiction of the Labor Arbiter
and NLRC over the complaint of the private respondents against
AMAL in view of their previous employment relationship. He argues,
however, that the public respondents acted without or in excess of
jurisdiction in holding him jointly and severally liable with AMAL as
he was not an employer of the private respondents.
The Solicitor General and the private respondents disagree. They
maintain that the petitioner, being AMAL's highest local
representative in the Philippines, may be held personally
answerable for the private respondents' claims because he is
included in the term "employer" under Art. 212 (c),
(now e) of the Labor Code which provides:
Art. 212. c. "Employer" includes any person acting in the
interest of an employer, directly or indirectly. . . .
In the leading case of A.C. Ransom Labor Union-CCLU vs. NLRC, 4 as
affirmed in the subsequent cases of Gudez vs. NLRC, 5 and Maglutac
vs. NLRC, 6 this Court treated the president of the employer
corporation as an "employer" and held him solidarily liable with the
said corporation for the payment of the employees' money claims.
So was the vice-president of the employer corporation in the case of
Chua vs. NLRC.
The aforecited cases will not apply to the instant case, however,
because the persons who were there made personally liable for the
employees' claims were stockholders-officers of the respondent
corporation. In the case at bar, the petitioner, while admittedly the
highest ranking local representative of AMAL in the Philippines, is
nevertheless not a stockholder and much less a member of the
board of directors or an officer thereof. He is at most only a
managerial employee under Art. 212 (m) of the Labor Code, which
reads in relevant part as follows:
Art 212: m. Managerial employee is one who is vested with
powers and prerogatives to lay down and execute management
policies and/or to hire, transfer, suspend, lay off, recall, discharge,
assign or discipline employees. . . .
As such, the petitioner cannot be held directly responsible for the
decision to close the business that resulted in his separation and
that of the private respondents. That decision came directly and
exclusively from AMAL. The petitioner's participation was limited to
the enforcement of this decision in line with his duties as general
manager of the company. Even in a normal situation, in fact, he
would not be liable, as a managerial employee of AMAL, for the
monetary claims of its employees. There should be no question that
the private respondents' recourse for such claims cannot be against
the petitioner but against AMAL and AMAL alone.
The judgment in favor of the private respondents could have been
enforced against the properties of AMAL located in this country
except for one difficulty. The problem is that these properties have
already been appropriated by the petitioner to satisfy his own
claims against the company.
By so doing, has the petitioner incurred liability to the private
respondents?
The Labor Arbiter believed he had because of his bad faith and ruled
as follows:
Considering that Respondent A. de Guzman is guilty of bad faith in
appropriating for himself the properties of Respondent AMAL to the
prejudice of Complainants herein whose claims are known to
Respondent at the time he made the disposition of AMAL's
properties, he is held jointly and severally liable with Respondent
AMAL for the award of unpaid wages, separation pay, backwages
for one month, 13th month pay and cash value of unused vacation
leave.
In Velayo v. Shell Co. of the Philippines, 8 Commercial Air Lines, Inc.
(CALI), knowing that it did not have enough assets to pay off its
liabilities, called a meeting of its creditors where it announced that
in case of non-agreement on a pro-rata distribution of its assets,
including the C-54 plant in California, it would file insolvency
proceedings. Shell Company of the Philippines, one of its creditors,
took advantage of this information and immediately made a
telegraphic assignment of its credits in favor of its sister corporation
in the United States. The latter thereupon promptly attached the
plane in California and disposed of the same, thus depriving the
other creditors of their proportionate share in its value. The Court
declared that Shell had acted in bad faith and betrayed the trust of
the other creditors of CALI. The said company was ordered to pay
them compensatory damages in a sum equal to the value of the C-
54 plane at the time it assigned its credit and exemplary damages in
the sum of P25,000.00.
We quote with approval the following observations of Labor Arbiter
Sales in her decision:
While the legitimacy of Respondent A. de Guzman's claims against
AMAL is not questioned, it must be stated that the manner and the
means by which he satisfied such claims are evidently characterized
by bad faith on his part. For one, Respondent A. de Guzman took
advantage of his position as General Manager and arrogated to
himself the right to retain possession and ownership of all
properties owned and left by AMAL in the Philippines, even if he
knew that Complainants herein have similar valid claims for unpaid
wages and other employee benefits from the Respondent AMAL. . . .
Another strong indication of bad faith on the part of Respondent A.
de Guzman is his filing of a separate complaint against AMAL before
the NLRC Arbitration Branch about four (4) months after the filing of
the instant case without informing this Office about the existence of
said case during the proceedings in the instant case. This case was
deemed submitted for decision on May 18, 1987 but it was only on
June 2, 1987 that Respondent A. de Guzman formally notified this
Office through his Supplemental Position Paper of his pending
complaint before Arbiter Eduardo Magno docketed as NLRC Case
No. 11-4441-86. Under Rule V, Section 4 of the revised rules of the
NLRC, it is provided that:
Sec. 4. CONSOLIDATION OF CASES — where there are two or more
cases pending before different Labor Arbiters in the same Regional
Arbitration Branch involving the same employer and issues or the
same parties with different issues, the case which was filed last shall
be consolidated with the first to avoid unnecessary costs or delay.
Such cases shall be disposed of by the Labor Arbiter to whom the
first case was assigned. (Emphasis supplied).
Had Respondent A. de Guzman given timely notice of his complaint,
his case could have been consolidated with this case and the issues
in both cases could have been resolved in a manner that would give
due consideration to the rights and liabilities of all parties in interest
at the least, in case consolidation is objected to or no longer
possible, the Complainants herein could have been given a chance
to intervene in the other case so that whatever disposition might be
rendered by Arbiter Magno would include consideration of
Complainants' claims herein.
It is not disputed that the petitioner in the case at bar had his own
claims against AMAL and consequently had some proportionate
right over its assets. However, this right ceased to exist when,
knowing fully well that the private respondents had similarly valid
claims, he took advantage of his position as general manager and
applied AMAL's assets in payment exclusively of his own claims.
According to Tolentino in his distinguished work on the Civil Code:
The exercise of a right ends when the right disappears, and it
disappears when it is abused, especially to the prejudice of others.
The mask of a right without the spirit of justice which gives it life, is
repugnant to the modern concept of social law. It cannot be said
that a person exercises a right when he unnecessarily prejudices
another or offends morals or good customs. Over and above the
specific precepts of positive law are the supreme norms of justice
which the law develops and which are expressed in three principles:
honeste vivere, alterum non laedre and just suum quique tribuere;
and he who violates them violates the law. For this reason, it is not
permissible to abuse our rights to prejudice others.
The modern tendency, he continues, is to depart from the classical
and traditional theory, and to grant indemnity for damages in cases
where there is an abuse of rights, even when the act is not illicit.
Law cannot be given an anti-social effect. If mere fault or negligence
in one's acts can make him liable for damages for injury caused
thereby, with more reason should abuse or bad faith make him
liable. A person should be protected only when he acts in the
legitimate exercise of his right, that is, when he acts with prudence.

Although the petitioner cannot be made solidarily liable with AMAL

for the monetary demand of its employees, he is nevertheless
directly liable to them for his questionable conduct in attempting to
deprive them of their just share in the assets of AMAL.

It is settled that the court can grant the relief warranted by the
allegation and the proof even if it is not specifically sought by the
injured party. 13 In the case at bar, while the private respondents
did not categorically pray for damages, they did allege that the
petitioner, taking advantage of his position as general manager, had
appropriated the properties of AMAL in payment of his own claims
against the company. That was averment enough of the injury they
suffered as a result of the petitioner's bad faith.

It is stressed that the petitioner's liability to the private respondents

is a direct liability in the form of moral and exemplary damages and
not a solidary liability with AMAL for the claims of its employees
against the company. He is being held liable not because he is the
general manager of AMAL but because he took advantage of his
position by applying the properties of AMAL to the payment
exclusively of his own claims to the detriment of other employees.