Oyster Plaza Hotel vs. Melivo

Corporate directors and officers are held solidarily liable with the corporation for an employee's illegal termination only when the dismissal is done with malice or bad faith.

Oyster Plaza Hotel is a business entity engaged in hotel operation, owned and operated by Martyniuk Development Corporation (MDC). Rolito Go and Jennifer Ampel were impleaded as petitioners alongside the hotel. Errol O. Melivo was hired by the hotel as a trainee room boy and subsequently rehired on a probationary basis before his eventual dismissal. The dispute arose from Melivo's complaint for illegal dismissal, which led to an examination of the validity of summons service, employment status, and the personal liability of corporate officers in labor cases.

On October 22, 2009, respondent Errol O. Melivo filed a complaint for illegal dismissal against Oyster Plaza Hotel, Rolito Go, and Jennifer Ampel. Melivo alleged that he was hired as a trainee room boy in August 2008, and after three months of training, he was rehired as a probationary room boy in November 2008 under an employment contract that expired in March 2009. He was rehired again on April 7, 2009, without any written contract. In September 2009, his supervisor, Ampel, verbally informed him that his contract was expiring and he must stop reporting for work.

Summons and notices of hearing were sent to the petitioners by registered mail. Although some notices were returned unserved, a notice for the February 17, 2010 hearing was received by a certain Charlie Miraña. The petitioners failed to appear at the hearings, prompting the Labor Arbiter to submit the case for decision ex parte. The LA ruled that Melivo was illegally dismissed, having attained regular employment status, and ordered his reinstatement and the payment of backwages and other monetary claims.

The petitioners appealed to the NLRC, arguing that the summons was improperly served, Oyster Plaza had no legal personality, and Melivo was a fixed-term employee. The NLRC affirmed the LA's decision, finding that the service of summons was valid and that Melivo was a regular employee illegally dismissed. The CA subsequently affirmed the NLRC ruling, prompting the petitioners to elevate the case to the Supreme Court.

• Service of Summons: Petitioners argued that the service of summons was defective, rendering the proceedings void, as neither Miraña nor Ampel was authorized to receive summons for Oyster Plaza/MDC.
• Corporate Personality: Petitioners maintained that Oyster Plaza was merely a business style of MDC and could not be sued, and that summons addressed to Oyster Plaza could not bind MDC.
• Employment Status: Petitioners argued that Melivo was not illegally dismissed because he was a fixed-term employee, not a regular employee.
• Solidary Liability: Petitioners contended that Go could not be held solidarily liable as he was no longer connected with the hotel, and Ampel could not be held liable as there was no proof she acted in bad faith.

• Service of Summons: Respondent countered that procedural rules governing service of summons in NLRC proceedings are not strictly construed and that there was substantial compliance.
• Corporate Personality: Respondent argued that the non-inclusion of MDC's corporate name was a mere procedural error that did not affect the jurisdiction of the labor tribunals.
• Solidary Liability: Respondent maintained that Go and Ampel were responsible officers of Oyster Plaza.
• Illegal Dismissal: Respondent argued that his dismissal was done in bad faith because he was verbally and arbitrarily dismissed.

• Due Process: Whether the petitioners were deprived of their right to due process of law as they were not properly served with summons.
• Illegal Dismissal: Whether the Court of Appeals erred in holding that Melivo was illegally dismissed.
• Solidary Liability: Whether the Court of Appeals erred in finding petitioners Go and Ampel solidarily liable with Oyster Plaza/MDC.

• Due Process: No. The petitioners were not deprived of due process because substantial compliance with the service of summons was observed, and they were afforded the opportunity to be heard before the NLRC.
• Illegal Dismissal: No. The CA correctly held that Melivo was illegally dismissed, as he had attained regular employment status and was terminated without just or authorized cause.
• Solidary Liability: Yes. The CA erred in finding Go and Ampel solidarily liable, as there was no evidence of malice or bad faith in the termination of Melivo.

• Due Process: In quasi-judicial proceedings before the NLRC, procedural rules governing service of summons are not strictly construed, and substantial compliance is sufficient. The summons and notices were served by registered mail at the petitioners' place of business, creating a presumption that the persons who received them were authorized to do so. The petitioners failed to discharge the burden of proving irregularity. Furthermore, the failure to implead MDC was a mere procedural error that did not divest the labor tribunals of jurisdiction, as Oyster Plaza was owned and operated by MDC. The essence of due process is the opportunity to be heard, which the petitioners had before the NLRC.
• Illegal Dismissal: Melivo was first hired as a trainee in August 2008, and his performance was under observation. When he was rehired as a room boy after his training period in November 2008, he attained regular employment status. Even assuming the 3-month training was a probationary period, he completed it and was rehired in April 2009, making him a regular employee. The petitioners failed to indicate a specific project in his employment contract or submit a termination report, negating the claim that he was a project employee. As a regular employee, he could only be dismissed for just or authorized causes with notice and hearing, which the petitioners failed to prove.
• Solidary Liability: A corporation acts through its directors, officers, and employees, and obligations incurred by them are the direct accountabilities of the corporation. Corporate directors and officers are held solidarily liable with the corporation for an employee's termination only when done with malice or bad faith. Ampel's participation was limited to verbally informing Melivo of his termination, which is not malicious enough to warrant solidary liability. As for Go, no act relating to the illegal dismissal was averred against him, and Melivo failed to provide substantial evidence of Go's relation with Oyster Plaza or MDC. Without malice or bad faith, solidary liability cannot attach to Go and Ampel.

• Substantial Compliance with Service of Summons in Labor Cases — In quasi-judicial proceedings before the NLRC, technical rules of procedure are not strictly applied, and only substantial compliance with the service of summons is required. The constitutional requirement of due process is satisfied if the service reasonably gives the notice desired. The Court applied this by holding that service by registered mail at the place of business creates a presumption that the receiver is authorized, thus satisfying due process.
• Regular Employment Status — An employee allowed to work beyond the probationary period is deemed a regular employee. The Court applied this by considering Melivo's 3-month training as a probationary period; upon his rehiring after training, he became a regular employee.
• Solidary Liability of Corporate Officers in Labor Cases — Corporate directors and officers are held solidarily liable with the corporation for the employee's termination only when the dismissal is done with malice or bad faith. The Court applied this doctrine to absolve Go and Ampel, as there was no substantial evidence of malice or bad faith in their participation in Melivo's dismissal.

• "In quasi-judicial proceedings before the NLRC and its arbitration branch, procedural rules governing service of summons are not strictly construed. Substantial compliance thereof is sufficient." — This passage establishes the standard for service of summons in labor cases, emphasizing substantial compliance over strict adherence to technical rules.
• "An employee allowed to work beyond the probationary period is deemed a regular employee." — This succinctly states the rule on the attainment of regular employment status, which was central to the finding of illegal dismissal.
• "Thus, in labor cases, corporate directors and officers are held solidarity liable with the corporation for the employee's termination only when the same is done with malice or bad faith." — This defines the exception to the general rule of corporate limited liability in the context of illegal dismissal, serving as the basis for absolving Go and Ampel.

• Scenarios, Inc. vs. Vinluan, 587 Phil. 351 (2008) — Cited to support the ruling that service of summons by registered mail at the respondent's place of business constitutes substantial compliance.
• Pison-Arceo Agricultural Development Corp. vs. NLRC, 344 Phil. 723 (1997) — Cited to support the ruling that the failure to implead the corporate name is a mere procedural error that does not affect the jurisdiction of the labor tribunals.
• Holiday Inn Manila vs. NLRC, G.R. No. 109114, September 14, 1993, 226 SCRA 417 — Cited to support the ruling that an employee's training period can be considered a probationary period, and rehiring after training confers regular employment status.
• Nacar vs. Gallery Frames, 716 Phil. 267 (2013) — Cited to justify the modification of the monetary awards to include legal interest at 12% per annum until June 30, 2013, and 6% per annum thereafter.

• Article 280, Labor Code — Defines a project employee as one whose employment is fixed for a specific project or undertaking. The Court applied this to reject the petitioners' claim that Melivo was a project employee, as the contract did not indicate a specific project.
• Section 2, Department Order No. 19 — Requires the submission of a report of termination to the nearest public employment office. The Court noted the petitioners' failure to file this report, indicating that Melivo was not a project employee.
• 2005 Revised NLRC Rules of Procedure — Governs the service of summons in labor cases. The Court applied its provisions with substantial compliance, not strict construction.

Carpio (Chairperson), Del Castillo, and Leonen, JJ., concur. Brion, J., on leave.