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Polymer Rubber Corporation vs. Salamuding

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G.R. No. 185160. July 24, 2013.

POLYMER RUBBER CORPORATION and JOSEPH ANG,


petitioners, vs. BAYOLO SALAMUDING, respondent.
Corporation Law Liability of Corporate Officers Obligations
incurred as a result of the directors and officers acts as corporate
agents, are not their personal liability but the direct responsibility
of the corporation they represent.A corporation, as a juridical
entity, may act only through its directors, officers and employees.
Obligations incurred as a result of the directors and officers acts
as corporate agents, are not their personal liability but the direct
responsibility of the corporation they represent. As a rule, they
are only solidarily liable with the corporation for the illegal
termination of services of employees if they acted with malice or
bad faith.
Same Same To hold a director or officer personally liable for
corporate obligations, two requisites must concur: (1) it must be
alleged in the complaint that the director or officer assented to
patently unlawful acts of the corporation or that the officer was
guilty of gross negligence or bad faith and (2) there must be proof
that the officer acted in bad faith.To hold a director or officer
personally liable for corporate obligations, two requisites must
concur: (1) it must be alleged in the complaint that the director or
officer assented to patently unlawful acts of the corporation or
that the officer was guilty of gross negligence or bad faith and (2)
there must be proof that the officer acted in bad faith.
Remedial Law Civil Procedure Judgments Immutability of
Judgments A final and executory judgment can no longer be
altered. The judgment may no longer be modified in any respect,
even if the modification is meant to correct what is perceived to be
an erroneous conclusion of fact or law, and regardless of whether
the modification is attempted to be made by the court rendering it
or by the highest Court of the land.To hold Ang personally liable
at this stage is quite unfair. The judgment of the LA, as affirmed
by the NLRC and later by the SC had already long become final
and executory. It has
_______________
*FIRST DIVISION.

154

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SUPREME COURT REPORTS ANNOTATED


Polymer Rubber Corporation vs. Salamuding

been held that a final and executory judgment can no longer be


altered. The judgment may no longer be modified in any respect,
even if the modification is meant to correct what is perceived to be
an erroneous conclusion of fact or law, and regardless of whether
the modification is attempted to be made by the court rendering it
or by the highest Court of the land. Since the alias writ of
execution did not conform, is different from and thus went beyond
or varied the tenor of the judgment which gave it life, it is a
nullity. To maintain otherwise would be to ignore the
constitutional provision against depriving a person of his property
without due process of law.
Labor Law Separation Pay Backwages Even an employer
who is found guilty of unfair labor practice in dismissing his
employee may not be ordered so to pay backwages beyond the date
of closure of business where such closure was due to legitimate
business reasons and not merely an attempt to defeat the order of
reinstatement.Anent the computation of their liability for the
payment of separation pay in lieu of reinstatement in favor of
Salamuding, the Court agrees with the ruling of the LA that it
must be computed only up to the time Polymer ceased operations
in September 1993. The computation must be based on the
number of days when Polymer was in actual operation. It cannot
be held liable to pay separation pay beyond such closure of
business because even if the illegally dismissed employees would
be reinstated, they could not possibly work beyond the time of the
cessation of its operation. In the case of Chronicle Securities Corp.
v. NLRC, 444 SCRA 342 (2004), we ruled that even an employer
who is found guilty of unfair labor practice in dismissing his
employee may not be ordered so to pay backwages beyond the
date of closure of business where such closure was due to
legitimate business reasons and not merely an attempt to defeat
the order of reinstatement.

PETITION for review on certiorari of the decision and


resolution of the Court of Appeals.
The facts are stated in the opinion of the Court.
Gerardo Rabanes for petitioners.
The Law Firm of Chan, Robles and Associates for
respondent.
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Polymer Rubber Corporation vs. Salamuding

REYES, J.:
The instant petition1 assails the Decision2 dated June
30, 2008 of the Court of Appeals (CA) in CAG.R. SP No.
98387 directing the recall of the alias writ of execution and
the lifting of the notice of levy on the shares of stocks of
petitioner Joseph Ang (Ang). The Resolution3 dated
November 5, 2008 denied the motion for reconsideration
thereof.
The antecedent facts are as follows:
Herein respondent Bayolo Salamuding (Salamuding),
Mariano Gulanan and Rodolfo Raif (referred to as the
complainants) were employees of petitioner Polymer
Rubber Corporation (Polymer), who were dismissed after
allegedly committing certain irregularities against
Polymer.
On July 24, 1990, the three employees filed a complaint
against Polymer and Ang (petitioners) for unfair labor
practice, illegal dismissal, nonpayment of overtime
services, violation of Presidential Decree No. 851, with
prayer for reinstatement and payment of back wages,
attorneys fees, moral and exemplary damages.4
On November 21, 1990, the Labor Arbiter (LA) rendered
a decision, the dispositive portion of which reads:
WHEREFORE, judgment is hereby rendered dismissing
the complainant unfair labor practice (sic) but directing the
respondent the following:
1. Reinstate complainants to their former position
with full back wages from the time they were illegally
dismissed up to the time of reinstatement.
_______________
1Rollo, pp. 316.
2 Penned by Associate Justice Sixto C. Marella, Jr., with Associate Justices
Edgardo F. Sundiam and Monina ArevaloZenarosa, concurring id., at pp. 1731.
3Id., at pp. 3334.
4Id., at p. 18.
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SUPREME COURT REPORTS ANNOTATED


Polymer Rubber Corporation vs. Salamuding

2. To pay individual complainants their 13th month


pay and for the year 1990 in the following amount:

a. Mariano Gulanan . [P]3,194


b. Rodolfo Raif [P]3,439
c. Bayolo Salam[u]ding [P]3,284
3. To pay individual complainants overtime in the
amount of [P]1,335 each.
4. To pay individual complainants overtime in the
amount of [P]6,608.80 each.
5. To pay individual complainants moral and
exemplary damages in the amount of [P]10,000 each.
6. To pay attorneys fee equivalent to ten (10)
percent of the total monetary award of the
complainants.
SO ORDERED.5

A writ of execution was subsequently issued on April 18,


1991 to implement the aforesaid judgment.6
The petitioners appealed to the National Labor
Relations Commission (NLRC).
On April 7, 1992, the NLRC affirmed the decision of the
LA with modifications. The NLRC deleted the award of
moral and exemplary damages, service incentive pay, and
modified the computation of 13th month pay.7 The
corresponding Entry of Judgment was made on September
25, 1992,8 and an alias writ of execution was issued on
October 29, 1992, based on the NLRC decision.9
The case was subsequently elevated to the Supreme
Court (SC) on a petition for certiorari. In a Resolution
dated Sep
_______________
5Id., at pp. 1819.
6Id., at p. 19.
7Id., at pp. 1920.
8CA Rollo, p. 28.
9Rollo, p. 20.
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Polymer Rubber Corporation vs. Salamuding

tember 29, 1993, the Court affirmed the disposition of the


NLRC with the further modification that the award of
overtime pay to the complainants was deleted.10
On September 30, 1993, Polymer ceased its operations.11
Upon a motion dated November 11, 1994, the LA a quo
issued a writ of execution on November 16, 1994 based on

the SC resolution. Since the writ of execution was returned


unsatisfied, another alias writ of execution was issued on
June 4, 1997.12
In the latter part of 2004, Polymer with all its
improvements in the premises was gutted by fire.13
On December 2, 2004, the complainants filed a Motion
for Recomputation and Issuance of Fifth (5th) Alias Writ of
Execution. The Research and Computation Unit of the
NLRC came up with the total amount of P2,962,737.65.
Due to the failure of the petitioners to comment/oppose the
amount despite notice, the LA approved said amount.14
Thus, on April 26, 2005, the LA issued a 5th Alias Writ
of Execution15 prayed for commanding the sheriff to collect
the amount.
In the implementation of this alias writ of execution
dated April 26, 2005, the shares of stocks of Ang at USA
Resources Corporation were levied.
On November 10, 2005, the petitioners moved to quash
the 5th alias writ of execution, and to lift the notice of
garnishment.16 They alleged that: a) Ang should not be
held jointly and severally liable with Polymer since it was
only the latter
_______________
10CA Rollo, p. 29.
11Rollo, p. 26.
12CA Rollo, pp. 2930.
13Rollo, p. 28.
14CA Rollo, pp. 4850.
15Id.
16Id., at pp. 5155.
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SUPREME COURT REPORTS ANNOTATED


Polymer Rubber Corporation vs. Salamuding

which was held liable in the decision of the LA, NLRC and
the Supreme Court b) the computation of the monetary
award in favor of the complainants in the amount of
P2,962,737.65 was misleading, anomalous and highly
erroneous and c) the decision sought to be enforced by
mere motion is already barred by the statute of
limitations.17
In an Order18 dated December 16, 2005, the LA granted
the motion. The LA ordered the quashal and recall of the
writ of execution, as well as the lifting of the notice of levy

on Angs shares of stocks.


The LA ruled that the Decision dated November 21,
1990 did not contain any pronouncement that Ang was also
liable. To hold Ang liable at this stage when the decision
had long become final and executory will vary the tenor of
the judgment, or in excess of its terms. As to the extent of
the computation of the backwages, the same must only
cover the period during which the company was in actual
operation. Further, the LA found that the complainants
motion to execute the LAs decision was already barred by
the statute of limitations. The fallo of the decision reads:
WHEREFORE, premises all considered, an order is
hereby rendered quashing and recalling the Writ of
Execution and lifting the Notice of Levy on the Shares of
Stocks of respondent Joseph Ang.19

On appeal, the NLRC affirmed the findings of the LA in


a Decision20 dated September 27, 2006. It, however, made a
pronouncement that the complainants did not sleep on
their rights as they continued to file series of motions for
the execution of the monetary award and are, thus, not
barred by the statute of limitations. The appeal on the
aspect of the lifting
_______________
17Id.
18Id., at pp. 4047.
19Id., at p. 47.
20Id., at pp. 2636.
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Polymer Rubber Corporation vs. Salamuding

of the notice of levy on the shares of stocks of Ang was


dismissed. The dispositive portion of the decision reads as
follows:
WHEREFORE, the assailed Order dated December 16,
2005 is hereby AFFIRMED with MODIFICATION
declaring the rights of the complainants to execute the
Decision dated November 21, 1990 not having barred by the
statute of limitations. The appeal is hereby, DISMISSED
for lack of merit.21

On January 12, 2007, the NLRC denied the motion for


reconsideration of the foregoing decision.22

reconsideration of the foregoing decision.22


Undeterred, Salamuding filed a Petition for Certiorari23
before the CA.
On June 30, 2008, the CA found merit with the
petition.24 The CA stated that there has to be a responsible
person or persons working in the interest of Polymer who
may also be considered as the employer, invoking the cases
of NYK Intl. Knitwear Corp. Phils. v. NLRC25 and A.C.
Ransom Labor UnionCCLU v. NLRC.26 Since Ang as the
director of Polymer was considered the highest ranking
officer of Polymer, he was therefore properly impleaded and
may be held jointly and severally liable for the obligations
of Polymer to its dismissed employees. Thus, the
dispositive portion of the assailed decision reads as follows:
WHEREFORE, the petition is granted in part. The
Decision dated September 27, 2006 and the Resolution
dated January 12, 2007 of respondent NLRC are hereby
annulled and set aside insofar as they direct the recall
_______________
21Id., at p. 35.
22Id., at pp. 3739.
23Id., at pp. 224.
24Rollo, pp. 1731.
25445 Phil. 654 397 SCRA 607 (2003).
26226 Phil. 199 142 SCRA 269 (1986).
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SUPREME COURT REPORTS ANNOTATED


Polymer Rubber Corporation vs. Salamuding

and quashal of the Writ of Execution and lifting of the


Notice of Levy on the shares of stock of respondent Joseph
Ang. The Order dated December 16, 2005 of the Honorable
Labor Arbiter Ramon Valentin C. Reyes is nullified.
Let the records of the case be remanded to the Labor
Arbiter for execution of the Decision dated November 21,
1990 as modified by the NLRC against the respondents
Polymer Rubber Corporation and Joseph Ang.27

Aggrieved by the CA decision, the petitioners filed the


instant petition raising the following questions of law:
a. That upon the finality of the Decision, the same can
no longer be altered or modified[]
b. That the Officer of the Corporation cannot be
personally held liable and be made to pay the liability of the

corporation[]
c. That the losing party cannot be held liable to pay the
salaries and benefits of the employees beyond the
companies [sic] existence
d. That the separation pay of employees of the company
which has closed its business permanently is only half
month salary for every year of service.28

There is merit in the petition.


A corporation, as a juridical entity, may act only
through its directors, officers and employees. Obligations
incurred as a result of the directors and officers acts as
corporate agents, are not their personal liability but the
direct responsibility of the corporation they represent. As a
rule, they are only solidarily liable with the corporation for
the illegal termination of services of employees if they
acted with malice or bad faith.29
_______________
27Rollo, pp. 3031.
28Id., at p. 10.
29Peaflor v. Outdoor Clothing Manufacturing Corporation, G.R. No.
177114, April 13, 2010, 618 SCRA 208, 216.
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Polymer Rubber Corporation vs. Salamuding

To hold a director or officer personally liable for


corporate obligations, two requisites must concur: (1) it
must be alleged in the complaint that the director or officer
assented to patently unlawful acts of the corporation or
that the officer was guilty of gross negligence or bad faith
and (2) there must be proof that the officer acted in bad
faith.30
In the instant case, the CA imputed bad faith on the
part of the petitioners when Polymer ceased its operations
the day after the promulgation of the SC resolution in 1993
which was allegedly meant to evade liability. The CA found
it necessary to pierce the corporate fiction and pointed at
Ang as the responsible person to pay for Salamudings
money claims. Except for this assertion, there is nothing in
the records that show that Ang was responsible for the acts
complained of. At any rate, we find that it will require a
great stretch of imagination to conclude that a corporation
would cease its operations if only to evade the payment of
the adjudged monetary awards in favor of three (3) of its

employees.
The dispositive portion of the LA Decision dated
November 21, 1990 which Salamuding attempts to enforce
does not mention that Ang is jointly and severally liable
with Polymer. Ang is merely one of the incorporators of
Polymer and to single him out and require him to
personally answer for the liabilities of Polymer is without
basis. In the absence of a finding that he acted with malice
or bad faith, it was error for the CA to hold him
responsible.
In Aliling v. Feliciano,31 the Court explained to wit:
The CA held the president of WWWEC, Jose B. Feliciano,
San Mateo and Lariosa jointly and severally liable for the
monetary awards of Aliling on the ground that the officers
are considered employers acting in the interest of the
corporation. The CA cited NYK Interna
_______________
30Francisco v. Mallen, Jr., G.R. No. 173169, September 22, 2010, 631 SCRA
118, 123124.
31G.R. No. 185829, April 25, 2012, 671 SCRA 186.
162

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SUPREME COURT REPORTS ANNOTATED


Polymer Rubber Corporation vs. Salamuding

tional Knitwear Corporation Philippines (NYK) v. National


Labor Relations Commission in support of its argument.
Notably, NYK in turn cited A.C. Ransom Labor Union
CCLU v. NLRC.
Such ruling has been reversed by the Court in Alba v.
Yupangco, where the Court ruled:
By Order of September 5, 2007, the Labor Arbiter
denied respondents motion to quash the 3rd alias
writ. Brushing aside respondents contention that his
liability is merely joint, the Labor Arbiter ruled:
Such issue regarding the personal liability of
the officers of a corporation for the payment of
wages and money claims to its employees, as in
the instant case, has long been resolved by the
Supreme Court in a long list of cases [A.C.
Ransom Labor UnionCLU vs. NLRC (142
SCRA 269) and reiterated in the cases of Chua
vs. NLRC (182 SCRA 353), Gudez vs. NLRC
(183 SCRA 644)]. In the aforementioned cases,
the Supreme Court has expressly held that the

irresponsible officer of the corporation (e.g.,


President) is liable for the corporations
obligations to its workers. Thus, respondent
Yupangco, being the president of the
respondent YL Land and Ultra Motors Corp., is
properly jointly and severally liable with the
defendant corporations for the labor claims of
Complainants Alba and De Guzman. xxx
xxxx
As reflected above, the Labor Arbiter held that
respondents liability is solidary.
There is solidary liability when the obligation
expressly so states, when the law so provides, or when
the nature of the obligation so requires. MAM Realty
Development Corpo
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Polymer Rubber Corporation vs. Salamuding

ration v. NLRC, on solidary liability of corporate


officers in labor disputes, enlightens:
x x x A corporation being a juridical entity,
may act only through its directors, officers and
employees. Obligations incurred by them, acting
as such corporate agents are not theirs but the
direct accountabilities of the corporation they
represent. True solidary liabilities may at times
be incurred but only when exceptional
circumstances warrant such as, generally, in
the following cases:
1. When directors and trustees or, in
appropriate cases, the officers of a corporation:
(a) vote for or assent to patently unlawful
acts of the corporation
(b) act in bad faith or with gross negligence
in directing the corporate affairs
xxxx
In labor cases, for instance, the Court has held
corporate directors and officers solidarily liable with
the corporation for the termination of employment of
employees done with malice or in bad faith.32
(Citations omitted and underscoring ours)

To hold Ang personally liable at this stage is quite


unfair. The judgment of the LA, as affirmed by the NLRC
and later by the SC had already long become final and
executory. It has been held that a final and executory

judgment can no longer be altered. The judgment may no


longer be modified in any respect, even if the modification
is meant to correct what is perceived to be an erroneous
conclusion of fact or law, and regardless of whether the
modification is attempted to be
_______________
32Id., at pp. 218219.
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SUPREME COURT REPORTS ANNOTATED


Polymer Rubber Corporation vs. Salamuding

made by the court rendering it or by the highest Court of


the land.33 Since the alias writ of execution did not
conform, is different from and thus went beyond or varied
the tenor of the judgment which gave it life, it is a nullity.
To maintain otherwise would be to ignore the
constitutional provision against depriving a person of his
property without due process of law.34
Anent the computation of their liability for the payment
of separation pay in lieu of reinstatement in favor of
Salamuding, the Court agrees with the ruling of the LA
that it must be computed only up to the time Polymer
ceased operations in September 1993. The computation
must be based on the number of days when Polymer was in
actual operation.35 It cannot be held liable to pay
separation pay beyond such closure of business because
even if the illegally dismissed employees would be
reinstated, they could not possibly work beyond the time of
the cessation of its operation.36 In the case of Chronicle
Securities Corp. v. NLRC,37 we ruled that even an employer
who is found guilty of unfair labor practice in dismissing
his employee may not be ordered so to pay backwages
beyond the date of closure of business where such closure
was due to legitimate business reasons and not merely an
attempt to defeat the order of reinstatement.38
_______________
33Manning International Corp. v. NLRC, G.R. No. 83018, March 13,
1991, 195 SCRA 155, 161.
34Alba v. Yupangco, G.R. No. 188233, June 29, 2010, 622 SCRA 503,
509, citing B.E. San Diego, Inc. v. Alzul, G.R. No. 169501, June 8, 2007,
524 SCRA 402, 433 and Cabang v. Basay, G.R. No. 180587, March 20,
2009, 582 SCRA 172.
35Durabuilt Recapping Plant & Co. v. NLRC, 236 Phil. 351, 358 152

SCRA 328, 336 (1987).


36J.A.T. General Services v. NLRC, 465 Phil. 785, 798799 421 SCRA
78, 88 (2004).
37486 Phil. 560 444 SCRA 342 (2004).
38 Id., at p. 572 p. 353, citing Pizza Inn/Consolidated Foods
Corporation v. NLRC, G.R. No. L74531, June 28, 1988, 162 SCRA 773,
778.
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Polymer Rubber Corporation vs. Salamuding

WHEREFORE, the petition is GRANTED. The


Decision dated June 30, 2008 and the Resolution dated
November 5, 2008 of the Court of Appeals in CAG.R. SP
No. 98387 are SET ASIDE. The Decision of the National
Labor Relations Commission dated September 27, 2006 is
REINSTATED. Let the records of the case be remanded to
the Labor Arbiter for proper computation of the award in
accordance with this decision.
SO ORDERED.
Sereno (CJ., Chairperson), LeonardoDe
Bersamin and Villarama, Jr., JJ., concur.

Castro,

Petition granted, judgment and resolution set aside.


Notes.The main role of the courts of justice is to assist
in the enforcement of the law and in the maintenance of
peace and order by putting an end to judiciable
controversies with finality, and nothing better serves this
role than the long established doctrine of immutability of
judgments. (Apo Fruits Corporation vs. Court of Appeals,
607 SCRA 200 [2009])
Separation pay is awarded when reinstatement no
longer advisable Backwages is that earned but not
collected due to unjust dismissal. (Golden Ace Builders vs.
Talde, 620 SCRA 283 [2010])
o0o

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