G.R. No. 249638 , June 23, 2021
EDUARDO GILBERT DINOYO, ET AL., PETITIONERS, VS. UNDALOC CONSTRUCTION COMPANY, INC., CIGIN CONSTRUCTION & DEVELOPMENT CORPORATION, SPOUSES CIRILO AND GINA UNDALOC, RESPONDENTS.

FACTS

Petitioners, employees of respondent Undaloc Construction Company, Inc. (Undaloc Inc.), filed complaints for illegal dismissal and were awarded monetary claims by the Labor Arbiter. Undaloc Inc. appealed to the NLRC, posting a partial cash bond late and a supersedeas bond with irregularities. The NLRC reversed the Labor Arbiter’s decision. The CA, in a prior petition (CA-G.R. SP No. 07306), reinstated the Labor Arbiter’s decision, finding petitioners were constructively dismissed. The CA, however, did not hold corporate officer Cirilo Undaloc solidarily liable, and also declined to hold his spouse Gina, their children, or Cigin Construction & Development Corporation (Cigin Corp.) liable, citing due process and insufficient evidence to pierce the corporate veil. This decision became final.
During execution, the sheriff found Undaloc Inc. had no leviable assets. Petitioners filed a motion to hold respondents solidarily liable, seeking to pierce the corporate veil. The Labor Arbiter granted the motion, finding that Undaloc Inc., Spouses Cirilo and Gina Undaloc, and Cigin Corp. used corporate fiction to defeat the workers’ rights. The Labor Arbiter noted that vehicles were transferred from Undaloc Inc. to Cigin Corp. in 2016, both companies were family corporations controlled by the spouses, and Undaloc Inc. ceased operations after the labor case decision while Cigin Corp. was incorporated. The Labor Arbiter amended the writ of execution to include the spouses and Cigin Corp. as jointly and severally liable.
Respondents challenged this order before the NLRC, which issued a TRO and later reversed the Labor Arbiter, ruling that the doctrine of piercing the corporate veil was improperly applied after the judgment had become final and immutable. The CA affirmed the NLRC, holding that the Labor Arbiter’s order altering the solidary liability of the parties constituted an amendment of a final judgment, which is prohibited.

ISSUE

Whether the CA erred in affirming the NLRC’s ruling that the Labor Arbiter could not, in the execution stage, pierce the corporate veil to hold Spouses Undaloc and Cigin Corp. solidarily liable with Undaloc Inc. for the judgment award after the decision had become final and immutable.

RULING

Yes. The Supreme Court reversed the CA and reinstated the Labor Arbiter’s order. The principle of immutability of judgment is not absolute and admits of exceptions, such as when its execution becomes impossible or unjust. Piercing the corporate veil is an equitable remedy that can be applied during execution to address attempts to evade judgment obligations through corporate fiction. The Labor Arbiter did not amend the final judgment but merely enforced it by identifying the real parties liable upon finding that Undaloc Inc., the Spouses Undaloc, and Cigin Corp. were not distinct entities but were used to commit fraud and injustice. The evidence showed a pattern of closing one business entity and opening another to avoid labor liabilities, transfer of assets to the new corporation, and common control and ownership by the spouses. Therefore, the Labor Arbiter correctly applied the doctrine of piercing the corporate veil during the execution stage to hold Spouses Cirilo and Gina Undaloc and Cigin Corp. solidarily liable with Undaloc Inc. for the judgment award.