G.R. No. L-69494 June 10, 1986
A.C. RANSOM LABOR UNION-CCLU, petitioner, vs. NATIONAL LABOR RELATIONS COMMISSION, First Division, A.C. RANSOM (PHILS.) CORPORATION, RUBEN HERNANDEZ, MAXIMO C. HERNANDEZ, JR., PORFIRIO R. VALENCIA, LAURA H. CORNEJO, FRANCISCO HERNANDEZ, CELESTINO C. HERNANDEZ & MA. ROSARIO HERNANDEZ, respondents.

FACTS

The petitioner union represented twenty-two (22) employees of respondent A.C. Ransom Corporation who staged a strike in 1961 and were subsequently refused reinstatement. The Court of Industrial Relations, in a 1972 decision, ordered their reinstatement with back wages. Ransom ceased operations in 1973, rendering reinstatement impossible, and the back wages were computed at P164,984.00. Despite multiple motions for execution filed by the union, the award remained unsatisfied, as the corporation appeared to have no leviable assets, having sold its machineries in 1975. In 1980, a Labor Arbiter granted the union’s motion and authorized a writ of execution against both the corporation and its seven individual officers and directors, holding them personally liable for the back wages. The NLRC, on appeal, affirmed the execution order but modified it by absolving the individual respondents from personal liability, ruling that corporate officers are not personally liable for corporate obligations unless they exceeded their authority, which was not proven.

ISSUE

The core issue is whether the corporate officers of A.C. Ransom Corporation can be held personally and solidarily liable for the payment of back wages awarded to the illegally dismissed employees.

RULING

The Supreme Court reversed the NLRC and reinstated the Labor Arbiter’s order with modification. The legal logic is anchored on the statutory definition of “employer” under the Labor Code and the imperative to prevent evasion of labor obligations. Article 212(c) of the Labor Code defines “employer” to include “any person acting in the interest of an employer.” Since a corporation acts only through its officers, these individuals can be deemed the “employer” for the purpose of implementing labor standards. The Court emphasized that without such personal liability, a corporation could devise schemes to evade its obligations, as evidenced here by the formation of a new family-owned corporation, Rosario Industrial, in 1969 and Ransom’s eventual cessation of operations after the adverse judgment. To give effect to the law and prevent injustice, the responsible corporate officer must be held accountable. In the absence of definitive proof identifying the specific culpable officer, the Court presumed the President to be the chief operating officer responsible. Consequently, the President at the time the back wages were due (Ruben Hernandez in 1974) and all succeeding presidents up to corporate dissolution were held jointly and severally liable to ensure the award could be satisfied and not frustrated by changes in corporate leadership.