Gagui vs. Dejero

Under Section 10 of R.A. 8042, the joint and solidary liability of corporate officers and directors of a recruitment/placement agency is not automatic; it requires a separate finding that the officer was remiss in directing the affairs of the agency. A final and executory judgment cannot be altered by impleading a corporate officer as a judgment debtor during execution. Under the Neypes rule, a fresh 15-day period to file a Rule 45 petition runs from receipt of the denial of a motion for reconsideration.

PRO Agency Manila, Inc. is a recruitment/placement agency against which respondents, overseas workers, obtained a labor judgment. Petitioner Elizabeth M. Gagui was its Vice-President, stockholder, and director. Section 10 of Republic Act No. 8042, the Migrant Workers and Overseas Filipinos Act of 1995, governs money claims arising from overseas employment and addresses the liability of principals/employers, recruitment/placement agencies, and their corporate officers and directors.

Respondents Simeon Dejero and Teodoro R. Permejo were overseas workers with money claims against PRO Agency Manila, Inc., a recruitment/placement agency, and Abdul Rahman Al Mahwes. Petitioner Elizabeth M. Gagui was the Vice-President, stockholder, and director of PRO Agency Manila, Inc. On 14 December 1993, respondents filed separate complaints for illegal dismissal, nonpayment of salaries and overtime pay, refund of transportation expenses, damages, and attorney’s fees against PRO Agency Manila, Inc. and Abdul Rahman Al Mahwes.

After due proceedings, on 7 May 1997, Labor Arbiter Pedro Ramos rendered a Decision ordering PRO Agency Manila, Inc. and Abdul Rahman Al Mahwes to jointly and severally pay complainants unpaid salaries of US$4,130.00 each, overtime pay of US$1,032.00 each, US$2,950.00 each for the unexpired portion of their contract, refund of plane tickets in the amounts of ₱15,642.90 and ₱16,932.00, refund of excessive placement fees of ₱4,000.00 each, moral and exemplary damages of ₱10,000.00 each, and attorney’s fees of ₱48,750.00. The dispositive portion named only PRO Agency Manila, Inc. and Abdul Rahman Al Mahwes as liable.

A Writ of Execution issued on 10 October 1997 was returned unsatisfied, and an Alias Writ of Execution was likewise returned unsatisfied. On 30 October 2002, respondents filed a Motion to Implead PRO Agency Manila, Inc.’s Corporate Officers and Directors as Judgment Debtors, including petitioner. Executive Labor Arbiter Voltaire A. Balitaan granted the motion on 25 April 2003, holding Merlita G. Lapuz and petitioner jointly and solidarily liable with the original party-respondent and ordering a 2nd Alias Writ of Execution. The 2nd Alias Writ issued on 10 June 2003 and garnished petitioner’s bank deposit in the amount of ₱85,430.48. Because the judgment remained unsatisfied, respondents sought a third alias writ on 26 February 2004; Executive Labor Arbiter Lita V. Aglibut granted the motion on 15 December 2004, and the 3rd Alias Writ issued on 6 June 2005, levying two parcels of lot owned by petitioner in San Fernando, Pampanga.

On 14 September 2005, petitioner filed a Motion to Quash the 3rd Alias Writ, followed by a Supplemental Motion on 29 June 2006. She alleged that she had not been made aware of being impleaded and that the dispositive portion of the 7 May 1997 Decision did not hold her liable; impleading her for execution was tantamount to modifying a final and executory decision. On 26 June 2006, Executive Labor Arbiter Aglibut denied the motions, finding that petitioner had been given sufficient notices but refused to oppose, effectively waiving her right to be heard, and that Section 10 of R.A. 8042 allowed corporate officers to be held jointly and severally liable. Petitioner appealed to the NLRC, which denied the appeal and affirmed the Order. The CA affirmed the NLRC, holding that there was no need to implead petitioner because R.A. 8042 expressly made her solidarily liable and that malice need not be proven. Petitioner’s motions for reconsideration were denied.

• Timeliness of Appeal: Petitioner countered that she had a fresh period of 15 days from 16 March 2011, the date she received the CA Resolution denying her motions for reconsideration, or until 31 March 2011, within which to file the Petition.
• Express Statement in Decision: Petitioner argued that while R.A. 8042 and the Corporation Code provide for solidary liability, such liability must be expressly stated in the decision sought to be implemented; absent such statement, a corporate officer may not be impleaded and made to personally answer for the liability of the corporation.
• Finality and Laches: Petitioner maintained that the 1997 Decision had already been final and executory for five years and could no longer be modified; respondents were guilty of laches for waiting five years before taking action against her.

• Timeliness of Appeal: Respondents alleged that the petition had been filed 15 days after the prescriptive period of appeal under Section 2, Rule 45 of the Rules of Court.
• Loss of Right to Appeal: Respondents insisted that by opting to file a Motion for Reconsideration instead of directly appealing the CA Decision, petitioner effectively lost her right to appeal; she should have sought an extension of time to file her appeal from the denial of her motion.

• Timeliness of Petition: Whether the Petition for Review on Certiorari was filed on time under the Neypes fresh-period rule.
• Liability of Corporate Officer: Whether petitioner may be held jointly and severally liable with PRO Agency Manila, Inc. under Section 10 of R.A. 8042 despite not having been impleaded in the Complaint and not named in the Decision.

• Timeliness of Petition: Yes. The Petition was timely filed on 30 March 2011, within the fresh 15-day period counted from petitioner’s receipt on 16 March 2011 of the CA Resolution denying her motions for reconsideration.
• Liability of Corporate Officer: No. Section 10 of R.A. 8042 does not make corporate officers automatically liable; a separate finding of remissness in directing the agency’s affairs is required, and the final 1997 Decision could not be modified at execution.

• Timeliness of Petition: Under Neypes vs. Court of Appeals, a fresh period of 15 days to appeal is counted from receipt of the order denying a motion for new trial or motion for reconsideration, and this rule applies to Rule 45 petitions. Respondents’ contention that petitioner lost her right to appeal by filing a Motion for Reconsideration instead of directly appealing deserves scant consideration. Petitioner received the CA Resolution denying her two Motions for Reconsideration only on 16 March 2011, giving her until 31 March 2011 to file the Petition. The Petition filed on 30 March 2011 fell within the prescribed 15-day period.
• Liability of Corporate Officer: Section 10 of R.A. 8042 provides that if the recruitment/placement agency is a juridical being, its corporate officers, directors, and partners shall themselves be jointly and solidarily liable with the corporation or partnership for claims and damages. However, Sto. Tomas vs. Salac held that this liability is not automatic; there must be a finding that the corporate officers were remiss in directing the affairs of the company, such as sponsoring or tolerating illegal activities. The records revealed no finding of neglect on the part of petitioner in directing the affairs of the agency, and respondents made no mention of any instance when petitioner allegedly failed to manage the agency in accordance with law, thereby contributing to their illegal dismissal. Thus, petitioner could not be held jointly and solidarily liable. Moreover, the 1997 Decision had become final and executory because it was not appealed. Its fallo held only PRO Agency Manila, Inc. and Abdul Rahman Al Mahwes jointly and severally liable to complainants. Impleading petitioner for the purpose of execution was tantamount to modifying a final and executory decision. Under PH Credit Corporation vs. Court of Appeals and JNIMACO vs. NLRC, once a decision or order becomes final and executory, it is removed from the jurisdiction of the court that rendered it; execution must conform to the dispositive portion, and an order of execution that varies the tenor of the judgment is a nullity. Although labor laws should be construed liberally in favor of labor, this must be balanced with petitioner’s equally important right to due process.

• Fresh-Period Rule (Neypes Rule) — A party who files a motion for reconsideration or motion for new trial has a fresh period of 15 days from receipt of the order denying the motion within which to appeal. The rule applies to Rule 45 petitions for review to the Supreme Court. In this case, petitioner received the CA Resolution denying her motions for reconsideration on 16 March 2011; her Petition filed on 30 March 2011 was therefore timely.
• Non-Automatic Liability of Corporate Officers under Section 10, R.A. 8042 — Corporate officers, directors, and partners of a recruitment/placement agency are not automatically jointly and solidarily liable for money claims and damages adjudged against the agency. There must be a separate finding that they were remiss in directing the affairs of the company, such as sponsoring or tolerating illegal activities. The Court found no such finding or evidence against petitioner, so she could not be held liable.
• Immutability of Final Judgments — Once a decision or order becomes final and executory, it is removed from the jurisdiction of the court that rendered it and can no longer be altered or amended. Execution must conform to the dispositive portion or fallo of the decision, and an order of execution that varies the tenor of the judgment is a nullity. The 1997 Decision named only PRO Agency Manila, Inc. and Abdul Rahman Al Mahwes as liable; impleading petitioner at the execution stage impermissibly modified that final judgment.
• Due Process in Labor Cases — While labor laws are construed liberally in favor of labor, this liberality must be balanced with the equally important right of the other party to due process. The Court held that modifying the final judgment against petitioner through a motion to implead filed only in 2002 violated her right to due process.

• "But the Court has already held, pending adjudication of this case, that the liability of corporate directors and officers is not automatic. To make them jointly and solidarily liable with their company, there must be a finding that they were remiss in directing the affairs of that company, such as sponsoring or tolerating the conduct of illegal activities." — Quoted by the Court from Sto. Tomas vs. Salac and adopted as the controlling rule for Section 10, R.A. 8042; it states the required separate finding before corporate officers may be held solidarily liable.
• "Hence, for petitioner to be found jointly and solidarily liable, there must be a separate finding that she was remiss in directing the affairs of the agency, resulting in the illegal dismissal of respondents." — This is the Court’s application of the Sto. Tomas ruling to petitioner; it supplies the ratio for reversing her solidary liability.
• "Since petitioner received the CA Resolution denying her two Motions for Reconsideration only on 16 March 2011, she had another 15 days within which to file her Petition, or until 31 March 2011. This Petition, filed on 30 March 2011, fell within the prescribed 15-day period." — This passage resolves the procedural issue and applies the Neypes fresh-period rule to the Rule 45 Petition.
• "While labor laws should be construed liberally in favor of labor, we must be able to balance this with the equally important right of petitioner to due process." — This states the Court’s balancing principle in labor cases and supports its refusal to allow the final judgment to be modified at petitioner’s expense.

• Neypes vs. Court of Appeals, 506 Phil. 613, 626-627 (2005) — Established the fresh-period rule, allowing a fresh 15-day period to appeal from receipt of the order denying a motion for new trial or motion for reconsideration; the Court applied it to Rule 45 petitions.
• Sto. Tomas vs. Salac, G.R. No. 152642, 13 November 2012, 685 SCRA 245, 262 — Held that the liability of corporate directors and officers under Section 10, R.A. 8042 is not automatic and requires a finding that they were remiss in directing the company’s affairs; the Court relied on it to reverse petitioner’s liability.
• PH Credit Corporation vs. Court of Appeals, 421 Phil. 821, 833 (2001) — Held that execution must conform to the dispositive portion or fallo of the decision; cited to support the immutability of the 1997 Decision.
• JNIMACO vs. NLRC, 387 Phil. 659, 667 (2000) — Held that a final and executory decision cannot be altered or amended and that an alias writ of execution varying the tenor of the judgment is null and void; cited in reversing the execution orders against petitioner.

• Section 10, Republic Act No. 8042 (Migrant Workers and Overseas Filipinos Act of 1995) — Provides that the liability of the principal/employer and the recruitment/placement agency for money claims is joint and several; if the recruitment/placement agency is a juridical being, its corporate officers, directors, and partners shall themselves be jointly and solidarily liable with the corporation or partnership for the claims and damages. The Court held that this liability is not automatic and requires a separate finding that the corporate officer was remiss in directing the agency’s affairs.
• Section 2, Rule 45, Rules of Court — Cited by respondents as the prescriptive period for appeal; the Court resolved the timeliness issue under the Neypes fresh-period rule and held that the Petition filed on 30 March 2011 was timely.

Teresita J. Leonardo-De Castro, Lucas P. Bersamin, Martin S. Villarama, Jr., and Bienvenido L. Reyes concurred.