A.C RANSOM LABOR UNION VS NLRC CASE DIGEST

G.R. No. L-69494 May 29, 1987
A.C. RANSOM LABOR UNION-CCLU, petitioner,
vs.
NATIONAL LABOR RELATIONS COMMISSION, First Division A.C. RANSOM (PHIIS.) CORPORATION RUBEN HERNANDEZ, MAXIMO C. HERNANDEZ, SR., PORFIRIO R. VALENCIA, LAURA H. CORNEJO, FRANCISCO HERNANDEZ, CELESTINO C. HERNANDEZ and MA. ROSARIO HERNANDEZ, respondents.

CORPORATION LAW; DUE PROCESS

FACTS:

  • There was a decision rendered by the CIR finding A.C Ransom (RANSOM) guilty of unfair labor practice ordering said corporation, its officers and agents to cease and desist from committing the same: reinstating immediately to their respective positions with backwages the employees
  • The backwages due the 22 employees having been computed by the CIR Examiner, successive Motions for Execution were filed by the UNION all of which RANSOM opposed. RANSOM manifested that it did not have the necessary funds to deposit and asked that the employees' earnings elsewhere during this suspension be deducted. 
  • The UNION filed another Motion for Execution alleging that although RANSOM is suffering from business reverse, its officers and principal stockholders had organized a new corporation, the Rosario Industrial Corporation (thereinafter called ROSARIO), using the same equipment, personnel, business stocks and the same place of business. 
  • RANSOM declared that ROSARIO is a distinct and separate corporation, which was organized long before these instant cases were decided adversely against RANSOM.
  • It appears that sometime in 1969, ROSARIO, a closed corporation, was, in fact, established. Engaged in the same line of business, with the same Hernandez family as the owners, the same officers, the same President, the same counsel and the same address. The compound, building, plant, equipment, machinery, laboratory and bodega were the same as those occupied and used by RANSOM. The UNION claims that ROSARIO thrives to this day.

  • Writs of execution were issued successively against RANSOM to no avail.

  • The UNION again filed an ex-parte Motion for Writ of Execution and Garnishment praying that the Writ issue against the Officers/Agents of RANSOM personally and on their estates

  • RANSOM countered that the CIR Decision could no longer be enforced by mere Motion because more than five (5) years had already lapsed.

  • Acting on the Motion, Labor Arbiter issued an order holding the respondent corporation's Directors and Chairman of the Board liable, however It appears that 3 out of 5 directors already died as well as the only Chairman of The Board.

  • NLRC, on appeal, modified the Decision by relieving the officers and agents of liability

  • Reconsideration sought by the UNION from the NLRC was denied, hence this special civil action of Certiorari

  • CA promulgated its Decision, reinstating the order of the Labor Arbiter with the modification that personal liability for the backwages due the 22 strikers shall be limited to Ruben Hernandez, who was President of RANSOM in 1974, jointly and severally with other Presidents of the same corporation who had been elected as such after 1972 or up to the time the corporate life was terminated.

ISSUE:

Whether or not Ruben Hernanded who was president of RANSOM in 1974, can be held liable  with other Presidents of the same corporation who had been elected as such after 1972 or up to the time the corporate life was terminated.

 HELD:

  • YES. The responsible officer of an employer corporation can be held personally, not to say even criminally, liable for a non- payment of back wages.The officers and agents listed in the Genilo Order  (Labor Arbiter) except for those who have since passed away, should, as affirmed by this Court, be held jointly and severally liable for the payment of backwages to the 22 strikers. 
  • The worker preference applies even if the employer's properties are encumbered by means of a mortgage contract, as in this case. So that, when machinery and equipment of RANSOM were sold to Revelations Manufacturing Corporation for P 2M in 1975, the right of the 22 laborers to be paid from the proceeds should have been recognized, even though it is claimed that those proceeds were turned over to the Commercial Bank and Trust Company (Comtrust) in payment of RANSOM obligations, since the workers' preference is over and above the claim of other creditors. The contention, therefore, of the heirs of the late Maximo C. Hernandez, Sr. that since they paid from their own personal funds the balance of the amount owing by RANSOM to Comtrust they are the "preferential creditors" of RANSOM, is clearly without merit. Workers are to be paid in full before other creditors may establish any claim to a share in the assets of the employer.
  •  When a notion of legal entity is used to. defeat public convenience, justify wrong, protect fraud, or defend crime, the law will regard the corporation as an association or persons, or, in the case of two corporations, will merge them into one.
  • WHEREFORE, the questioned Decision of the National Labor Relations Commission is SET ASIDE, and the Order of Labor Arbiter is reinstated with the modification that Rosario Industrial Corporation and its officers and agents are hereby held jointly and severally liable with the surviving private respondents for the payment of the backwages due the 22 union members.





 










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