GR 147590; (April, 2007) (Digest)
G.R. No. 147590 . April 2, 2007.
ANTONIO C. CARAG, Petitioner, vs. NATIONAL LABOR RELATIONS COMMISSION, ISABEL G. PANGANIBAN-ORTIGUERRA, as Executive Labor Arbiter, NAFLU, and MARIVELES APPAREL CORPORATION LABOR UNION, Respondents.
FACTS
Mariveles Apparel Corporation (MAC) ceased operations on July 8, 1993. The labor unions, NAFLU and MACLU, filed a complaint for illegal dismissal, alleging the closure was effected without the required one-month written notice to employees and the Department of Labor and Employment, rendering it illegal. They further claimed unpaid wages and benefits. During proceedings, the unions moved to implead MAC’s Chairman, Antonio Carag, and its President, Armando David, as solidarily liable respondents, arguing the corporation was no longer operational and judgment against it alone would be ineffectual.
The Labor Arbiter declared the case submitted for resolution based on the pleadings after the respondents failed to appear at scheduled conferences. The Arbiter ruled the closure was illegal due to non-compliance with the notice requirement under Article 283 of the Labor Code and held MAC, Carag, and David solidarily liable for the separation pay of the rank-and-file employees. The NLRC and the Court of Appeals affirmed this decision.
ISSUE
Whether petitioner Antonio C. Carag, as Chairman of the Board of MAC, can be held personally and solidarily liable for the payment of separation pay to the illegally dismissed employees.
RULING
Yes. The Supreme Court affirmed the personal and solidary liability of Antonio Carag. The legal logic rests on the principle that a corporation possesses a separate juridical personality, but this veil can be pierced when the corporate form is used to evade legal obligations. Citing established jurisprudence, the Court held that corporate officers can be treated as the “employer” themselves under the Labor Code’s definition, which includes “any person acting in the interest of an employer.”
The Court found that Carag was not merely a passive corporate officer but was acting in the interest of MAC as its Chairman and owner. More critically, the closure was deemed illegal for failure to provide the mandatory one-month notice. An illegal closure or dismissal negates any claim of a bona fide exercise of management prerogative. Consequently, where the corporate employer is no longer operational or is unable to satisfy a judgment award arising from such illegal acts, the responsible officers who acted on behalf of the corporation must be held personally liable to ensure the workers’ claims are satisfied. This prevents the corporate fiction from being used as a shield to perpetrate injustice against employees. The non-appearance of respondents during hearings also constituted a waiver of their right to present contrary evidence, leaving the unions’ allegations uncontroverted.