Valderrama vs. NLRC

A corporate officer, such as a president, who acts in the interest of an employer corporation may be held personally and solidarily liable for the monetary awards granted to an illegally dismissed employee, especially when the corporation has ceased operations and is unable to satisfy the judgment. This liability is founded on the statutory definition of "employer" under the Labor Code, which includes any person acting in the interest of an employer, and is consistent with the state policy of protecting labor.

Private respondent Maria Andrea Saavedra filed a complaint for illegal dismissal against COMMODEX (Phils.), Inc., its owner Consuelo Valderrama (petitioner), and other corporate officers. The Labor Arbiter found that Saavedra was dismissed due to her pregnancy, constituting illegal dismissal, and rendered a decision ordering "respondent company" to reinstate her with full backwages and pay moral and exemplary damages plus attorney's fees. Upon execution, the sheriff reported that COMMODEX had ceased operations. The individual officers, including petitioner, resisted enforcement, arguing the dispositive portion named only the corporation. Saavedra then filed a Motion for Clarification, praying that the decision be amended to hold the respondents "jointly and severally" liable, containing the body of the decision clearly found all respondents liable.

• Nature of Action: The case originated from a complaint for illegal dismissal filed by private respondent Maria Andrea Saavedra against COMMODEX (Phils.), Inc. and its officers, including petitioner Consuelo Valderrama as owner.
• Finding of Illegal Dismissal: The Labor Arbiter found that Saavedra was dismissed from her employment due to her pregnancy. The employer's claim of redundancy and retrenchment was found to be a mere allegation to disguise the unlawful termination.
• Original Decision and Execution Problem: The Labor Arbiter's 1986 decision ordered "respondent company" to pay backwages, damages, and attorney's fees. A writ of execution was returned unsatisfied because COMMODEX had ceased operations. The individual officers argued they could not be held liable based on the dispositive portion.
• Motion for Clarification and Evidence: Saavedra moved to clarify the decision to hold all respondents jointly and severally liable. The Labor Arbiter granted the motion and received evidence, including COMMODEX's corporate documents, showing petitioner owned 1,993 of 2,000 shares and was its Chairman and President.
• Subsequent Ruling: The Labor Arbiter issued an order in 1988 declaring petitioner personally liable for the awards, which was affirmed by the NLRC.

• Finality of Judgment: Petitioner argued that the Labor Arbiter's decision dated December 2, 1986 had become final and executory and could no longer be substantially amended to include her personal liability, which was not stated in the original dispositive portion.
• Lack of Personal Liability: Petitioner contended she could not and should not be held personally liable jointly and severally with COMMODEX for the awards, relying on the separate corporate personality doctrine.

• Clarification, Not Amendment: Private respondent countered that the motion sought only to correct a clerical error or clarify an ambiguity, as the body of the Labor Arbiter's decision repeatedly held all respondents liable. The dispositive portion's mention of only "respondent company" was an inadvertence.
• Statutory Liability of Corporate Officers: It was argued that under the Labor Code and jurisprudence (e.g., A.C. Ransom Labor Union-CCLU v. NLRC), the president or officer acting in the interest of the employer is considered an "employer" and can be held personally liable, especially when the corporation is unable to pay.

• Finality of Judgment: Whether the Labor Arbiter's order holding petitioner personally liable constituted a prohibited substantial amendment of a final and executory decision.
• Personal Liability of Corporate Officer: Whether petitioner, as president and controlling shareholder of COMMODEX, could be held personally and solidarily liable for the monetary awards adjudged in favor of the illegally dismissed employee.

• Finality of Judgment: The order was not a prohibited amendment but a permissible clarification. The rule on finality of judgments admits of exceptions where execution becomes impossible or unjust. Here, COMMODEX had ceased operations, making execution against it impossible. Moreover, the body of the decision clearly found all respondents, including petitioner, liable; thus, the clarification merely aligned the dispositive portion with the decision's true intent, which must be read in its entirety.
• Personal Liability of Corporate Officer: Petitioner could be held personally liable. Under Article 212(c) of the Labor Code, "employer" includes any person acting in the interest of an employer. Following A.C. Ransom, the responsible officer of a corporation, such as its president, can be held personally liable for backwages when the corporation fails to pay. This prevents corporations from evading liability through technicalities. The evidence showed petitioner was the controlling shareholder and president, making her the corporation's alter ego. The ruling in Carmelcraft Corp. v. NLRC was also cited, where the president and owner was held liable.

• Personal Liability of Corporate Officers for Labor Claims — Under the Labor Code, the term "employer" is not limited to the corporate entity but includes any person acting in the interest of an employer. When a corporation fails to satisfy a judgment for labor claims, its responsible officers, particularly the president or general manager, may be held personally and solidarily liable. This doctrine prevents the use of corporate fiction to defeat workers' rights.
• Exception to the Rule on Finality of Judgments — A final and executory judgment may be modified when facts and circumstances transpire after its finality that render its execution impossible or unjust. Such modification is allowed to harmonize the judgment with justice and the new facts.

• "The rule that once a judgment becomes final it can no longer be disturbed, altered, or modified is not an inflexible one. It admits of exceptions, as where facts and circumstances transpire after a judgment has become final and executory which render its execution impossible or unjust."
• "A corporation can only act through its officers and agents. . . . [Under the Labor Code], the responsible officer of an employer corporation can be held personally, not to say even criminally, liable for the non-payment of back wages. That is the policy of the law."
• "Indeed it is well said that to get the true intent and meaning of a decision, no specific portion thereof should be resorted to but same must be considered in its entirety."

• A.C. Ransom Labor Union-CCLU v. NLRC, 142 SCRA 269 (1986) — Controlling precedent establishing that the president of a corporation can be held personally liable for backwages as the "person acting in the interest of the employer."
• Carmelcraft Corp. v. NLRC, 186 SCRA 393 (1990) — Followed; held the president and owner personally liable, rejecting the defense of separate corporate personality.
• Gudez v. NLRC, 183 SCRA 645 (1990) — Cited for the principle that where the employer corporation is no longer existing and unable to satisfy judgment, the officer acting on its behalf should be held liable.
• General Baptist Bible College v. NLRC, 219 SCRA 549 (1993) — Cited for the principle that technicalities should not defeat substantial justice in labor cases, and procedural rules are merely suppletory.

• Article 212(c), Labor Code — Defines "employer" to include "any person acting in the interest of an employer, directly or indirectly." This was the statutory basis for holding petitioner personally liable.
• Article 4, Labor Code — Mandates that all doubts in the implementation and interpretation of the Labor Code shall be resolved in favor of labor.
• Article 221, Labor Code — Provides that the Rules of Court apply only in a suppletory manner in labor cases to effectuate the objectives of the Labor Code.
• Article 2176, Civil Code — Cited by private respondent in her Motion for Clarification, arguing the illegal dismissal constituted a quasi-delict, justifying joint and several liability.

Justice Regalado, Justice Romero, Justice Puno, and Justice Torres, Jr. concurred with the decision penned by Justice Mendoza.