FACTS:

Jose Emmanuel Guillermo filed a petition for review on certiorari against the decision of the Court of Appeals, which affirmed the decision of the NLRC. Guillermo was the President and General Manager of Royal Class Venture Phils., Inc. (Royal Class Venture), while Crisanto Uson, the respondent, was the accounting supervisor who filed a complaint for illegal dismissal and other claims against the company. The Labor Arbiter ruled in favor of Uson, ordering reinstatement and payment of damages. Royal Class Venture did not appeal, and an execution was issued. However, execution became difficult because the company had reportedly been dissolved and Guillermo refused to accept the notices and orders pertaining to the case. The Labor Arbiter held Guillermo personally liable and issued an alias writ of execution. Guillermo's motion for reconsideration was denied. He appealed to the NLRC, but it was dismissed. He then filed a petition with the Court of Appeals, which also dismissed the petition. Guillermo's motion for reconsideration was likewise denied. He then filed a petition for review with the Supreme Court, arguing that he should not be held personally liable and that the doctrines of "piercing the veil of corporate fiction" and personal liability of company officers in labor cases should not apply to him. The Supreme Court denied the petition.

ISSUES:

1. Whether a person who was not originally impleaded in a labor case can be held solidarily liable with the employer corporation for its unpaid obligations to complainant-employees.

2. Whether personal liability can be imposed on responsible officers, officers of a newly-formed corporation, or stockholders of the employer corporation during execution, when there is a failure to collect the judgment debt awarded to the workers.

3. Whether there is evidence of bad faith or malice on the part of Guillermo, the officer of the corporation

4. Whether the case is an intra-corporate controversy or a labor case

5. Whether or not the case involves a labor dispute that is cognizable by the labor tribunals.

RULING:

1. Yes, a person who was not originally impleaded in a labor case can be held solidarily liable with the employer corporation for its unpaid obligations to complainant-employees. This is especially true if the newly-formed corporation is considered a mere conduit or alter ego of the originally impleaded corporation and/or the officers or stockholders of the latter corporation.

2. Yes, personal liability can be imposed on responsible officers, officers of a newly-formed corporation, or stockholders of the employer corporation during execution, when there is a failure to collect the judgment debt awarded to the workers. However, personal liability attaches only under certain circumstances specified in Section 31 of the Corporation Code, such as willful and knowing assent to patently unlawful acts of the corporation, gross negligence or bad faith in directing the affairs of the corporation, or conflict of interest resulting in damages to the corporation.

3. Yes, there is evidence of bad faith or malice on Guillermo's part. The records show that Guillermo was the person responsible for running the company and for the malicious and illegal dismissal of the complainant. Guillermo's refusal to receive the summons and notices of the labor arbiter, as well as his involvement in dissolving the original obligor company and incorporating a new firm, all indicate a pattern or scheme to evade the judgment obligation. These acts are evidence of Guillermo's bad faith and malicious intent.

4. The case is a labor case. Although the complainant is also a stockholder and director of the corporation, the nature of the action and jurisdiction of the tribunal are determined by the allegations in the complaint at the time of filing. In this case, the complainant alleged that he was maliciously and illegally dismissed by Guillermo, the company president and general manager. The dispute does not involve any intra-corporate relationship issues but rather an employment issue. Therefore, the case falls within the jurisdiction of the National Labor Relations Commission (NLRC) and not any other tribunal.

5. The Supreme Court held that the case involves a labor dispute cognizable by the labor tribunals. The complaint and redress sought by the petitioner are centered solely on his dismissal as an employee, and it did not raise any issue regarding the regulation of the corporation. Thus, the Court affirmed the decision of the Court of Appeals, which held that the matter is a labor dispute.

PRINCIPLES:

• The veil of corporate fiction can be pierced and responsible corporate directors and officers or even a separate but related corporation may be impleaded and held answerable solidarily in a labor case, even after final judgment and on execution, if it is established that they have deliberately used the corporate vehicle to unjustly evade the judgment obligation or have resorted to fraud, bad faith, or malice in doing so.

• Personal liability can be imposed on responsible officers, officers of a newly-formed corporation, or stockholders of the employer corporation during execution if there is a failure to collect the judgment debt awarded to the workers. However, personal liability attaches only under specific circumstances enumerated in Section 31 of the Corporation Code.

• The doctrine of piercing the corporate veil applies only in certain areas, including defeat of public convenience, fraud cases, or alter ego cases.

• In the absence of malice, bad faith, or a specific provision of law making a corporate officer liable, such corporate officer cannot be personally liable for corporate liabilities.

• The conferment of liability on officers for a corporation's obligations to labor is an exception to the general doctrine of separate personality of a corporation.

• Only the "responsible officer" or the person directly responsible for and who acted in bad faith in committing the illegal dismissal or any act violative of the Labor Code is held solidarily liable, in cases wherein the corporate veil is pierced. However, in the absence of a clearly identifiable officer directly responsible for the legal infraction, the president of the corporation is considered as such officer.

• Each case where corporate fiction is disregarded must be evaluated according to its peculiar circumstances.

• Bad faith or malice is a question of fact and must be supported by evidence.

• The nature of an action and jurisdiction of a tribunal are determined by the allegations in the complaint at the time of filing.

• Not all conflicts between a stockholder and the corporation are intra-corporate controversies. An examination of the complaint must be made to determine if the complainant is involved in their capacity as a stockholder or director, or as an employee. If the dispute does not meet the test for an intra-corporate controversy, it is a labor case cognizable by the NLRC.

• A labor dispute involves any controversy or matter concerning terms and conditions of employment or the association or representation of persons in negotiating, fixing, maintaining, changing, or arranging the terms and conditions of employment.

• Labor disputes, as defined by law, are cognizable by the labor tribunals.