Delima vs. Gois

A corporation has a personality separate and distinct from its stockholders and officers; obligations incurred by the corporation are its sole liabilities, and corporate officers are not personally or solidarily liable for a judgment debt against the corporation absent malice or bad faith or a joint and solidary judgment. A petition for certiorari under Rule 65 from an NLRC resolution must be filed within 60 days from notice of the denial of the motion for reconsideration, counted from receipt by counsel of record; an entry of judgment issued before that period lapses does not render the NLRC resolution final and executory.

Virgilio S. Delima was employed by Golden Union Aquamarine Corporation. Susan Mercaida Gois was a stockholder, incorporator, and officer of Golden, and an Isuzu jeep used in Golden’s business operations was registered in her name. The dispute implicated the corporation’s separate and distinct personality and the procedure for third-party claims in labor execution proceedings.

Virgilio S. Delima was employed by Golden Union Aquamarine Corporation. On October 29, 2004, he filed an illegal dismissal complaint against Golden, Prospero Gois, and Susan Mercaida Gois before the Regional Arbitration Branch No. VIII of the NLRC, docketed as NLRC RAB VIII Case No. 10-0231-04.

On April 29, 2005, Labor Arbiter Philip B. Montaces rendered a decision finding Delima’s dismissal illegal and ordering Golden to pay him backwages of P48,154.50, separation pay of P21,402.00, salary differentials of P32,679.00, service incentive leave pay of P2,820.00, and attorney’s fees of P10,505.55, for a total of P115,561.05; all other claims were dismissed. Golden did not appeal, so the decision became final and executory. A writ of execution was issued, and an Isuzu Jeep with plate number PGE-531 was attached.

Gois filed an Affidavit of Third Party Claim, asserting that the attachment was irregular because the vehicle was registered in her name and not in Golden’s, and because she was not a party to the illegal dismissal case. In an Order dated December 29, 2005, the Labor Arbiter denied the third-party claim on the grounds that Gois was named in the complaint as one of the respondents, that summons were served upon her and Prospero Gois, that both verified Golden’s Position Paper and alleged therein that they were respondents, and that Gois was one of the incorporators/officers of the corporation. Gois appealed to the NLRC and, at the same time, moved before the Labor Arbiter to release the motor vehicle after substituting it with a cash bond of P115,561.05. On January 16, 2006, the Labor Arbiter granted the motion and directed Sheriff Felicisimo T. Basilio to release from custody the Isuzu jeep with Plate No. PGE-532 and return it to Gois.

On May 31, 2006, the NLRC issued a Resolution dismissing Gois’s appeal for lack of merit. Her motion for reconsideration was denied on August 22, 2006, and she received a copy of the denial on September 1, 2006. On September 12, 2006, the NLRC Resolution became final and executory, and an Entry of Judgment was issued on September 29, 2006.

On October 13, 2006, Gois filed a petition for certiorari before the Court of Appeals, followed by a Supplement on October 27, 2006. She alleged that the NLRC committed grave abuse of discretion in dismissing her appeal; that by denying her third-party claim, she was in effect condemned to pay a judgment debt issued against a corporation of which she was neither president nor majority owner but merely a stockholder; and that her personality was separate and distinct from Golden, so the judgment against the corporation could not be satisfied out of her personal assets. The Court of Appeals later found that the vehicle was registered in Gois’s name and that no malice or bad faith attended Delima’s termination. Delima’s motion for reconsideration was denied, prompting the present petition for review under Rule 45.

• Inclusion in the Original Complaint: Petitioner argued that the Court of Appeals erred in omitting respondent Susan M. Gois as one of the principal respondents in the original complaint in its brief statement of facts.
• Garnishment of the Vehicle: Petitioner argued that the Court of Appeals erred in holding that the vehicle principally used in the corporation’s business operations, registered under the name of respondent who was also the corporation president, cannot be subject of garnishment.
• Finality of the NLRC Resolution: Petitioner argued that the Court of Appeals erred in annulling and setting aside a final and executed order/resolution of the NLRC.

• Grave Abuse of Discretion: Respondent alleged that the NLRC committed grave abuse of discretion when it dismissed her appeal.
• Separate Corporate Personality: Respondent claimed that by denying her third-party claim, she was in effect condemned to pay a judgment debt issued against a corporation of which she was neither president nor majority owner but merely a stockholder; her personality was separate and distinct from Golden, and the judgment against the corporation could not be satisfied out of her personal assets.
• Ownership of the Vehicle: Respondent argued that the vehicle was registered in her name and not Golden’s, and that the corporation’s use of the vehicle did not make it corporate property subject to levy.

• Corporate Officer Liability and Separate Personality: Whether the Court of Appeals erred in not holding respondent Susan M. Gois personally liable for the judgment debt of Golden Union Aquamarine Corporation despite her inclusion in the illegal dismissal complaint and her status as stockholder, incorporator, and officer.
• Garnishment of Vehicle: Whether the vehicle registered in respondent’s name, though principally used in the corporation’s business operations, may be garnished or attached to satisfy the judgment against the corporation.
• Finality of NLRC Resolution and Timeliness of Certiorari: Whether the Court of Appeals erred in annulling and setting aside the NLRC Resolutions as final and executory, and whether respondent’s petition for certiorari was timely filed.
• Reimbursement of Cash Bond: Whether Golden Union Aquamarine Corporation must reimburse respondent Susan M. Gois the P115,561.05 cash bond released to petitioner to prevent unjust enrichment.

• Corporate Officer Liability and Separate Personality: No. The Labor Arbiter’s decision ordered only Golden to pay and did not impose joint and solidary liability on Gois; under the separate personality doctrine, corporate obligations are the corporation’s sole liabilities, and officers are not personally liable absent malice or bad faith.
• Garnishment of Vehicle: No. The vehicle was owned by Gois and registered in her name; use by the corporation did not make it corporate property subject to attachment for the corporation’s debt.
• Finality of NLRC Resolution and Timeliness of Certiorari: No. The petition for certiorari was timely filed within 60 days from receipt of the denial of the motion for reconsideration, so the NLRC prematurely declared its May 31, 2006 Resolution final and executory.
• Reimbursement of Cash Bond: Yes. Because petitioner was legally entitled to the amount and Golden was relieved of its judgment debt, Golden must reimburse Gois P115,561.05; otherwise, Golden would be unjustly enriched.

• Corporate Officer Liability and Separate Personality: A corporation has a personality distinct and separate from its individual stockholders or members and from its officers who manage and run its affairs. Obligations incurred by the corporation through its directors, officers, and employees are its sole liabilities. Property belonging to a corporation cannot be attached to satisfy the debt of a stockholder, and vice versa. The Labor Arbiter’s April 29, 2005 Decision directed only Golden to pay Delima P115,561.05; it did not impose a joint and solidary obligation on Gois. Although Gois was named in the complaint and was an incorporator/officer, corporate officers are generally not personally liable for their official acts unless they exceeded their authority. No evidence showed the termination was attended by malice or bad faith, which is required to hold corporate officers solidarily liable with the corporation. Thus, Gois could not be held personally liable for Golden’s judgment debt.
• Garnishment of Vehicle: The subject vehicle was owned by Gois and registered in her name. The fact that the corporation used the vehicle in its business operations did not establish corporate ownership or make it subject to levy for the corporation’s judgment debt. Property of a stockholder or officer cannot be attached to answer the liabilities of the corporation. Therefore, the vehicle should not have been attached to satisfy the judgment against Golden.
• Finality of NLRC Resolution and Timeliness of Certiorari: The NLRC issued its Resolution dismissing Gois’s appeal on May 31, 2006. Gois filed a motion for reconsideration on July 24, 2006; it was denied on August 22, 2006, and she received a copy of the denial on September 1, 2006. Under Section 4, Rule 65, a petition for certiorari must be filed not later than 60 days from notice of the judgment, order, or resolution sought to be assailed. Thus, Gois had until October 31, 2006 to file her petition. Her petition filed on October 13, 2006 was timely. The NLRC’s entry of judgment on September 29, 2006, after it allegedly became final on September 12, 2006, was premature because the reglementary period for certiorari had not yet lapsed. A decision is final and executory when it disposes of the subject matter entirely or terminates the proceeding, leaving nothing else to be done but execution, such as after the lapse of the reglementary period to appeal without an appeal being perfected. Consequently, the NLRC erred in declaring its May 31, 2006 Resolution final and executory. The period or manner of appeal from the NLRC to the Court of Appeals is governed by Rule 65 under St. Martin Funeral Home vs. National Labor Relations Commission. Section 4, Rule III of the NLRC Rules counts the period from receipt by counsel of record, and the same rule was applied to certiorari petitions filed with the Court of Appeals from NLRC decisions.
• Reimbursement of Cash Bond: The Court of Appeals ordered Delima to return the cash bond, but Delima admitted the money was spent to defray the medical expenses of his ailing mother. Since Delima was legally entitled to receive the amount, Golden must reimburse Gois P115,561.05. Otherwise, Golden would be unjustly enriched, having been relieved of its obligation to pay the judgment debt through Gois’s payment.

• Separate Corporate Personality — A corporation has a personality distinct and separate from its individual stockholders or members and from its officers who manage and run its affairs. Obligations incurred by the corporation, acting through its directors, officers, and employees, are its sole liabilities. Property belonging to a corporation cannot be attached to satisfy the debt of a stockholder, and property of a stockholder cannot be attached to satisfy the debt of the corporation. The Court applied this doctrine to hold that Gois could not be held personally liable for Golden’s judgment debt and that her vehicle could not be attached to satisfy that debt.
• Personal Liability of Corporate Officers — As a general rule, corporate officers are not personally liable for their official acts unless they have exceeded their authority. They may be held solidarily liable with the corporation for the termination of employment of employees if the termination was done with malice or bad faith. The Court found no evidence that Delima’s termination was attended by malice or bad faith, so Gois could not be held solidarily liable with Golden.
• Finality of Judgment and Entry of Judgment — A decision is final and executory when it disposes of the subject matter in its entirety or terminates a particular proceeding or action, leaving nothing else to be done but to enforce by execution what has been determined, such as when after the lapse of the reglementary period to appeal, no appeal has been perfected. The Court held that the NLRC prematurely declared its May 31, 2006 Resolution final and executory because the reglementary period to file a petition for certiorari had not yet lapsed.
• Rule 65 Certiorari Period for NLRC Decisions — A petition for certiorari under Rule 65 must be filed not later than 60 days from notice of the judgment, order, or resolution sought to be annulled. The period or manner of appeal from the NLRC to the Court of Appeals is governed by Rule 65. Section 4, Rule III of the NLRC Rules counts the period from receipt of the decision, award, or order by counsel of record, and the same rule applies to petitions for certiorari filed with the Court of Appeals from NLRC decisions. The Court applied this to hold that Gois’s October 13, 2006 petition was timely.
• Unjust Enrichment — Where a corporation has been relieved of its obligation to pay a judgment debt through a payment made by its stockholder or officer, the corporation must reimburse the amount to prevent unjust enrichment. The Court ordered Golden to reimburse Gois P115,561.05 because Golden benefited from her payment and Delima was legally entitled to the amount.

• "A corporation has a personality distinct and separate from its individual stockholders or members and from that of its officers who manage and run its affairs. The rule is that obligations incurred by the corporation, acting through its directors, officers and employees, are its sole liabilities." — This passage states the foundational separate personality doctrine applied to absolve Gois from personal liability for Golden’s judgment debt.
• "Since the Decision of the Labor Arbiter dated April 29, 2005 directed only Golden to pay the petitioner the sum of P115,561.05 and the same was not joint and solidary obligation with Gois, then the latter could not be held personally liable since Golden has a separate and distinct personality of its own." — This is the ratio decidendi on why Gois could not be held personally liable despite her inclusion in the complaint.
• "Thus, respondent has sixty (60) days from receipt of the denial of the motion for reconsideration or until October 31, 2006, within which to file the petition for certiorari under Section 4 of Rule 65 of the Rules of Court. Thus, the petition for certiorari filed by respondent before the Court of Appeals on October 13, 2006 was timely." — This passage resolves the timeliness of the certiorari petition and explains why the NLRC’s declaration of finality was premature.
• "Considering that petitioner is legally entitled to receive said amount, Golden must reimburse respondent Gois the amount of P115,561.05. To rule otherwise would result in unjust enrichment of Golden." — This passage justifies the modification ordering reimbursement to prevent the corporation’s unjust enrichment.

• St. Martin Funeral Home vs. National Labor Relations Commission, G.R. No. 130866, September 16, 1998, 295 SCRA 494 — Cited for the rule that the period or manner of appeal from the NLRC to the Court of Appeals is governed by Rule 65.
• Malonso vs. Principe, A.C. No. 6289, December 16, 2004, 447 SCRA 1, 16 — Cited in support of the rule that a corporation has a personality distinct and separate from its stockholders and officers, and that corporate obligations are the corporation’s sole liabilities.
• Juco vs. Heirs of Tomas Siy Chung Fu, G.R. No. 150233, February 16, 2005, 451 SCRA 464, 474 — Cited for the definition of a final and executory decision.
• David vs. Cordova, G.R. No. 152992, July 28, 2005, 464 SCRA 384 — Cited for the rule that a petition for certiorari under Rule 65 must be filed not later than 60 days from notice of the judgment, order, or resolution sought to be annulled.
• Ginete vs. Sunrise Manning Agency, G.R. No. 142023, June 21, 2001, 359 SCRA 404, 407-408 — Cited for the Rule 65 period and the NLRC rule counting the period from receipt by counsel of record.
• Reahs Corporation vs. NLRC — Cited in the Court of Appeals decision reproduced in the text for the rule that separate corporate personality is the guiding rule and that solidary liability of officers requires an allegation or showing that they deliberately or maliciously designed to evade the corporation’s financial obligation to employees.

• Section 4, Rule 65, Rules of Court — Provides that a petition for certiorari may be filed not later than 60 days from notice of the judgment, order, or resolution sought to be assailed. Applied to hold that Gois’s October 13, 2006 petition was timely because she received the denial of her motion for reconsideration on September 1, 2006 and had until October 31, 2006 to file.
• Section 4, Rule III, New Rules of Procedure of the NLRC — Mandates that, for purposes of computing the period of appeal, the period is counted from receipt of the decisions, awards, or orders by the counsel of record. Applied by analogy to petitions for certiorari filed with the Court of Appeals from NLRC decisions.

Ma. Alicia Austria-Martinez, Minita V. Chico-Nazario, Ruben T. Reyes, and Arturo D. Brion concurred. Ruben T. Reyes was designated in lieu of Associate Justice Antonio Eduardo B. Nachura, who was on official leave under the Court’s Wellness Program.