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VOL. 142, JUNE 10, 1986 269

A.C. Ransom Labor Union—CCLU vs. NLRC

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, FRAN-
CISCO HERNANDEZ, CELESTINO C. HERNANDEZ &
MA. ROSARIO HERNANDEZ, respondents.

Labor Law; Illegal Dismissal; Backwages; Liability for

payment of backwages by an employer corporation; Officer of a
corporation, acting in the interest of a corporation, is presumed to
be the employer.—Since RANSOM is an artificial person, it must
have an officer who can be presumed to be the employer, being the
“person acting in the interest of (the) employer” RANSOM. The
corporation, only in the technical sense, is the employer.
Same; Same; Same; Same; Responsible officer of an employer
corporation can be held personally and criminally liable for non-
payment of back wages to workers.—The responsible officer of an
employer corporation can be held personally, not to say even
criminally, liable for non-payment of back wages.
Same; Same; Same; Same; Reason for policy of the law to hold
an employer corporation liable for payment of backwages; Case at
bar.—If the policy of the law were otherwise, the corporation
employer can have devious ways for evading payment of back
wages. In the instant case, it would appear that RANSOM, in
1969, foreseeing the possibility or probability of payment of back
wages to the 22 strikers, organized ROSARIO to replace
RANSOM, with the latter to be eventually phased out if the 22
strikers win their case. RANSOM actually ceased operations on
May 1, 1973, after the December 19, 1972 Decision of the Court of
Industrial Relations was promulgated against RANSOM.
Same; Same; Same; Same; Absent definite proof as to the
identity of an officer or officers of the corporation directly liable for
failure to pay backwages, the responsible officer is the president of

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the corporation jointly and severally with other presidents of the

same

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* FIRST DIVISION

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A.C. Ransom Labor Union—CCLU vs. NLRC

corporation.—The record does not clearly identify “the officer or

officers” of RANSOM directly responsible for failure to pay the
back wages of the 22 strikers. In the absence of definite proof in
that regard, we believe it should be presumed that the responsible
officer is the President of the corporation who can be deemed the
chief operation officer thereof. Thus, in RA 602, criminal
responsibility is with the “Manager or in his default, the person
acting as such.” In RANSOM, the President appears to be the
Manager. (e) Considering that non-payment of the back wages of
the 22 strikers has been a continuing situation, it is our opinion
that the personal liability of the RANSOM President, at the time
the back wages were ordered to be paid should also be a
continuing joint and several personal liabilities of all who may
have thereafter succeeded to the office of president; otherwise, the
22 strikers may be deprived of their rights by the election of a
president without leviable assets.

PETITION to review the decision of the National Labor

Relations Commission.

The facts are stated in the opinion of the Court.

MELENCIO-HERRERA, J.:

The facts relevant to this case may be related as follows:

1. Respondent A. C. Ransom (Philippines) Corporation

(RANSOM, for short) was established in 1933 by
Maximo C. Hernandez, Sr. It was a “family”
corporation, the stockholders of which were/are
members of the Hernandez family. It has a
compound in Las Piñas, Rizal, where it has been
engaged in the manufacture mainly of ink and
articles associated with ink.
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2. On June 6, 1961, employees of RANSOM, most of

them being members of petitioner Labor UNION,
went on strike and established a picket line which,
however, was lifted on June 21st with most of the
strikers returning and being allowed to resume
their work by RANSOM. Twenty-two (22) strikers
were refused reinstatement by the Company.
3. During 1969, the same Hernandez family organized
another corporation, Rosario Industrial Corporation
(ROSARIO, for short) which also engaged, in the
RANSOM Compound, in the business of
manufacture of ink and products

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A.C. Ransom Labor Union—CCLU vs. NLRC

associated with ink.

4. The strike became the subject of Cases Nos. 2848—
ULP and 2880—ULP of the Court of Industrial
Relations which, on December 19, 1972, ordered
RANSOM “its officers and agents”, to reinstate the
22 strikers with back wages from July 25, 1969.
5. On April 2, 1973, RANSOM filed an application for
clearance to close or cease operations effective May
1, 1973, which was granted by the Ministry of
Labor and Employment in its Order of June 7,
1973, without prejudice to the right of employees to
seek redress of grievance, if any. Although it has
stopped operations, RANSOM has continued its
personality as a corporation. For practical purposes,
reinstatement of the 22 strikers has been
precluded. As a matter of fact, reinstatement is not
an issue in this case.
6. Back wages of the 22 strikers were subsequently
computed at P164,984.00, probably in early 1974.
The exact date is not reflected in the record.
7. Up to September 9, 1976, petitioner UNION had
filed about ten (10) motions for execution against
RANSOM; but all of them could not be
implemented, presumably for failure to find leviable
assets of RANSOM; although it appears that, in
1975, RANSOM had sold machineries and
equipment for P2 million to Revelations
Manufacturing Corporation.

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8. Directly related to this case is the last Motion for

Execution, dated December 18, 1978, filed by
petitioner UNION wherein it asked that officers
and agents of RANSOM be held personally liable
for payment of the back wages. That Motion was
granted by Labor Arbiter, Tito F. Genilo, on March
11, 1980 (The GENILO ORDER), wherein he
expressly authorized a Writ of Execution to be
issued for P164,984.00 (the back wages) against
RANSOM and seven officers and directors of the
Company who are the named individual
respondents herein. RANSOM took an appeal to
NLRC which affirmed the GENILO ORDER, except
as modified in the body of its decision of July 31,
1984.
9. In RANSOM’S appeal to the NLRC, two issues were
raised:

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A.C. Ransom Labor Union—CCLU vs. NLRC

(a) One of the issues was:

“THE DECISION OF THE INDUSTRIAL RELATIONS COURT

HAVING BECOME FINAL AND EXECUTORY IN 1973, IS IT
ENFORCEABLE BY A WRIT OF EXECUTION ISSUED IN 1980
OR MORE THAN FIVE YEARS AFTER THE FINALITY OF THE
DECISION SOUGHT TO BE ENFORCED?”

The corresponding ruling made by NLRC was:

“Perforce, respondent’s theory that execution proceedings must

stop after the lapse of five (5) years and that a motion to revive
need be filed, must fail. Suffice it to state also that the statute of
limitations has been devised to operate primarily against those
who sleep on their rights, not against those who assert their right
but fail for causes beyond their control. The above recital of facts
contradicts respondent’s contention that the CIR decision of
August 19, 1972 had remained dormant to require a motion to
revive.”

(b) The second issue raised was:

“IS THE JUDGMENT AGAINST A CORPORATION TO

REINSTATE ITS DISMISSED EMPLOYEES WITH
BACKWAGES, ENFORCEABLE AGAINST ITS OFFICERS AND
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AGENTS, IN THEIR INDIVIDUAL, PRIVATE AND PERSONAL

CAPACITIES, WHO WERE NOT PARTIES IN THE CASE
WHERE THE JUDGMENT WAS RENDERED;”

The NLRC ruling was:

“As to the liability of the respondent’s officers and agents, we

agree with the contention of the respondent-appellant that there
is nothing in the Order dated May 11, 1980 that would justify the
holding of the individual officers and agents of respondent in their
personal capacity. As a general rule, officers of the corporation are
not liable personally for the official acts unless they have
exceeded the scope of their authority. In the absence of evidence
showing that the officers mentioned in the Order of the Labor
Arbiter dated March 11, 1980 have exceeded their authority, the
writ of execution can not be enforced against them, especially so
since they were not given a chance to be heard.”

RANSOM and the seven individual respondents in this

case

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A.C. Ransom Labor Union—CCLU vs. NLRC

have not appealed from the ruling of the NLRC that

Section 6, Rule 39, is not invocable by them in regards to
the execution of the decision of December 19, 1972. Hence,
the issue can no longer be raised herein. Even if the said
section were applicable, the 5-year period therein
mentioned may not have expired by December 18, 1978
because the period should be counted only from the time
the back wages were determined, which could have been in
early 1974.
We now come to the NLRC’s decision upholding non-
personal liabilities of the individual respondents herein for
back wages of the 22 strikers.

(a) Article 265 of the Labor Code, in part, expressly

provides:

“Any worker whose employment has been terminated as a

consequence of an unlawful lockout shall be entitled to
reinstatement with full back wages.”

Article 273 of the Code provides that:

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“Any person violating any of the provisions of Article 265 of this

Code shall be punished by a fine of not exceeding five hundred
pesos and/or imprisonment for not less than one (1) day nor more
than six (6) months.”

(b) How can the foregoing provisions be implemented when

the employer is a corporation? The answer is found in
Article 212 (c) of the Labor Code which provides:
“(c) ‘Employer’ includes any person acting in the interest of an
employer, directly or indirectly. The term shall not include
any labor organization or any of its officers or agents
except when acting as employer.”

The foregoing was culled from Section 2 of RA 602, the

Minimum Wage Law. Since RANSOM is an artificial
person, it must have an officer who can be presumed to be
the employer, being the “person acting in the interest of
(the) employer” RANSOM. The corporation, only in the
technical sense, is the employer.

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A.C. Ransom Labor Union—CCLU vs. NLRC

The responsible officer of an employer corporation can be

held personally, not to say even criminally, liable for non-
payment of back wages. That is the policy of the law. In the
Minimum Wage Law, Section 15(b) provided:

“(b) If any violation of this Act is committed by a corporation,

trust, partnership or association, the manager or in his
default, the person acting as such when the violation took
place, shall be responsible. In the case of a government
corporation, the managing head shall be made
responsible, except when shown that the violation was due
to an act or commission of some other person, over whom
he has no control, in which case the latter shall be held
responsible.”

In PD 525, where a corporation fails to pay the emergency

allowance therein provided, the prescribed penalty “shall
be imposed upon the guilty officer or officers” of the
corporation.

(c) If the policy of the law were otherwise, the

corporation employer can have devious ways for
evading payment of back wages. In the instant case,
it would appear that RANSOM, in 1969, foreseeing
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the possibility or probability of payment of back

wages to the 22 strikers, organized ROSARIO to
replace RANSOM, with the latter to be eventually
phased out if the 22 strikers win their case.
RANSOM actually ceased operations on May 1,
1973, after the December 19, 1972 Decision of the
Court of Industrial Relations was promulgated
against RANSOM.
(d) The record does not clearly identify “the officer or
officers” of RANSOM directly responsible for failure
to pay the back wages of the 22 strikers. In the
absence of definite proof in that regard, we believe
it should be presumed that the responsible officer is
the President of the corporation who can be deemed
the chief operation officer thereof. Thus, in RA 602,
criminal responsibility is with the “Manager or in
his default, the person acting as such.” In
RANSOM, the President appears to be the
Manager.
(e) Considering that non-payment of the back wages of
the 22 strikers has been a continuing situation, it is
our opinion that the personal liability of the
RANSOM President, at the time the back wages
were ordered to be paid should also be a continuing
joint and several personal liabilities of all who may

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A.C. Ransom Labor Union—CCLU vs. NLRC

have thereafter succeeded to the office of president;

otherwise,the 22 strikers may be deprived of their rights by
the electionof a president without leviable assets.
WHEREFORE, the questioned Decision of the National
Labor Relations Commission is SET ASIDE, and the Order
of Labor Arbiter Tito F. Genilo of March 11, 1980 is
reinstated with the modification that personal liability for
the back wages 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.
SO ORDERED.

       Abad Santos (Chairman), Yap, Cruz and Paras,**,

JJ., concur.

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     Narvasa, J., no part.

Decision set aside.

Notes.—A company manager acting in good faith within

the scope of his authority in terminating the services of
certain employees cannot be personally liable for damages.
(Sunio vs. National Labor Relations Commission, 127
SCRA 390.)
It is basic that a corporation is invested by law with a
personality separate and distinct from those of the persons
composing it as well as from that of any other legal entity
to which it may be related. Mere ownership by a single
stockholder or by another corporation of all or nearly all of
the capital stock of a corporation is not of itself sufficient
ground for disregarding the separate corporate personality.
Petitioner, therefore, should not have been made
personally answerable for the payment of private
respondents’ back salary. (Sunio vs. National Labor
Relations Commission, 127 SCRA 390.)

——o0o——

_______________

** Justice Edgardo L. Paras was designated to sit in the First Division

in lieu of Justice Andres R. Narvasa, who inhibited himself.

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