DUTCH MOVER’S INC. VS.

LEQUIN, et al
GR. No. 210032, April 25, 2017

FACTS:

Respondents in this case were employed by Dutch Mover’s Inc. (DMI), a domestic
corporation engaged in hauling liqueified petroleum gas. They were emplyed as truck
driver and helpers; on December 28, 2004, Cesar Lee, through itts supervisor in-
formed respondents that DMI would cease its hauling operations for no reason; as
such they requested DMI to issue a formal notice regarding the matter but to no avail.
Upon respondent’s request, DOLE-NCR issued a certification revealing that DMI did
not any file any notice of business closure. This led to the filing of the case by respond-
ents alleging they were illegally dismissed without just cause and under the pretext of
closure.

The NLRC ordered DMI to reinstate the respondents with full backwages ruling that
they were illegally dismissed and not provided with any work. When the NLRC decision
became final and executory, respondents filed for a Motion for Writ of Execution and
subsequently filed a Manifestation and Motion to Implead after discovering that DMI
no longer operated. Respondents insisted that petitioners Cesar and Yolanda Lee
were the real owners of DMI, thus they prayed that petitioners were also impleaded in
the payment of the judgment awards.

LA Savari issued an Order finding petitioners liable for the judgment awards and there-
after issued a Writ of Execution which was opposed by petitioners via a motion to
quash the writ alleging that the LA Order was void since it has no authority to modify
the final and executory NLRC decision.

The Labor Arbiter denied the Motion to Quash but was modified by the NLRC insofar
as it holds petitioners Cesar Lee and Yolanda Lee liable for the judgment awards.
NLRC held that the Writ of Execution should only pertain to DMI since petitioners were
not held liable to pay respondents in the NLRC Decision. Further, it adds that petition-
ers could not be sued personally for the acts of DMI because the latter had a separate
and distince personality from the persons comprising it.

The Court of Appeals reversed the decision of NLRC and affirmed the Writ of Execu-
tion impleading petitioners as liable to answer for the judgment awards on the ground
that as a rule a judgment that has become final and executory can no longer be mod-
ified except if there is a supervening even which renders the execution of judment
impossible. In this case, the supervening event was the closure of DMI’s operations.

ISSUE:

Whether petitioners are personally liable to pay judgment awards in favor of respond-
ents.

HELD:

Yes, they are liable. The Court held that the principle of immutability of judgment, or
the rule that once a judgment has become final and executory, the same can no longer
be altered or modified and the court's duty is only to order its execution, is not abso-
lute.One of its exceptions is when there is a supervening event occurring after the
judgment becomes nal and executory, which renders the decision unenforceable.
The Court took note of a supervening event that happened after the NLRC decision
became final and executory which rendered the execution of judgment impossible.
During the execution stage, DMI ceased its operation and did not file any formal notice
regarding it.

Moreover, there exists a basic principle that a corporation has a separate and distinct
personality from its stockholders however, such personality may be disregarded or the
veil of corporate fiction may be pierced if it is used to defeat public convenience, justify
wrong, protect fraud or defend crime or is used as a device to defeat labor laws. Added
to this, one of the impleaded parties, Spouses Smith, admitted that they only lent their
names to petitioners to help form DMI and transferred their rights in DMI to petitioners
which proved that petitioners really were the owners of DMI.

BUENAFLOR CAR SERVICES, INC. v. CEZAR DURUMPILI DAVID, JR.

G.R No. 222730, November 07, 2016

FACTS:

Respondent was employed as Service Manager by petitioner, doing business

under the trade name “Pronto! Auto Services”. In such capacity, he was in charge of
the overall day-to-day operations of petitioner, including the authority to sign checks,
check voucher, and purchase orders.

In the course of petitioner’s business, with respect to the purchase and delivery of
automotive parts and products, it was company policy that all checks should be issued
in the name of the specific supplier and not in “cash”, and that said checks are to be
picked up from the petitioner’s accounting assistant, Marilyn A. Del Rosario, at the
company’s office in Muntinlupa City. On August 8, 2013, Chief Finance Officer Cristina
S. David of petitoner’s affiliate company, Diamond IGB, Inc., received a call from the
branch manager of ChinaBank, SM City Bicutan Branch, informing her that the latter
had cleared several checks issued by petitioner bearing the words “OR CASH” indi-
cated after the payee’s name. An investigation was conducted thereafter.

On August 22, 2013, petitioner, through its president, Exequiel Lampa, along with
Helen Lee, Human Resource Manager, confronted Del Rosario on the questioned
checks. Del Rosario readily confessed that upon respondent’s instruction, she inserted
the words “OR CASH” after the name of the payees when the same had been signed
by all the authorized signatories. Along with respondent, Del Rosario also implicated
De Guzman, Purchasing Officer, and Caranto, petitioner’s messenger/driver, who she
alleged, were also under the respondent’s direct supervision and co-conspirators. Del
Rosario’s confession was put into writing in two (2) separate letters both of even date.
(Extrajudicial Confession)

The ensuing investigation revealed that there were 27 checks with the words “OR
CASH”, all signed by respondent in the total amount of P1,021,561.72. As a result,
respondent, together with Del Rosario, De Guzman, and Caranto, were placed under
preventive suspension for a period of 30 days and directed to submit their respective
written explanations.

Respondent, for his part, vehemently denied the charges against him. He claimed that
he has no control over the company’s finance and billing operations, nor the authority
to instruct Del Rosario to make any check alterations, without the permission and au-
thority of either Buenaflor, vice-president of operations, or Vasay, Chief Finance Of-
ficer.

On September 20, 2013, respondent and his co-workers were served with their re-
spective notices of termination after having been found guilty of violating the com-
pany’s code of conduct and behavior, particularly serious misconduct and willful
breach of trust. Respondent, De Guzman, and Caranto filed a complaint for illegal
dismissal with prayer for reinstatement and payment of damages and attorney’s fees
against petitioners and Buenaflor.

In a decision dated September 29, 2014, The Labor Arbiter ruled that respondent, De
Guzman, and Caranto were illegally dismissed, and consequently, awarded back-
wages, separation pay and attorney’s fees. The LA observed that petitioner failed to
establish existence of conspiracy among respondent, De Guzman, Caranto and Del
Rosario in altering the checks and that the latter’s extrajudicial confession was infor-
mally made and not supported by evidence. Petitioner appealed this decision to the
NLRC.

Meanwhile, in a decision dated November 28, 2014, the NLRC affirmed with modifi-
cation the LA’s decision, finding that De Guzman and Caranto have been dismissed
for cause, but sustained the illegality of respondent’s termination from work.NLRC held
that since De Guzman prepared the purchase orders, and Caranto encashed the
checks despite knowledge of the company policy, they could not be discounted from
the scheme. Having his motion for partial reconsideration denied, petitioner appealed
to the Court of Appeals.

But CA found no grave abuse of discretion on the part of the NLRC in holding that
respondent was illegally dismissed. CA ruled that Del Rosario’s extrajudicial confes-
sion only bound her as confessant but constitutes hearsay with respect to respondent
and the other co-accused. CA noted that at the time the checks were signed by re-
spondent, the words “OR CASH” were not yet written on thereon.

ISSUE:

In respect to issue on termination: Whether or not the Court of Appeals committed

reversible error in upholding the NLRC’s ruling that respondent was illegally dis-
missed.

In respect to main issue regarding NLRC Rules: Whether or not CA, in affirming NLRC,
was correct in ruling that the extrajudicial confession was binding only on the confess-
ant and inadmissible against the co-accused.

HELD:
Regarding Termination

The petition is meritorious.

Article 297 of the Labor Code, as renumbered, enumerates the just causes for termi-
nation of an employee, to wit:

ART. 297. Termination by Employer. An Employer may terminate an employ-

ment for any of the following causes:

(a) Serious misconduct or willful disobedience by the employee of the lawful or-
ders of his employer or representative in conncetion with his work

(b) Gross and habitual neglect by the employee of his duties

(c) Fraud or willful breach by the employee of the trust reposed in him by his em-
ployer or duly authorized representative

(d) Commission of a crime or offense by the employee against the person of his
employer or any immediate member of his family or his duly authorized represent-
atives; and

(e) Other causes analogous to the foregoing.

In the case at bar, respondent’s termination was grounded on his violation of peti-
toioner’s code of conduct and behavior, which was supposedly tantamount to (a) Se-
rious Misconduct and/or (b) willful breach of trust reposed in him by his employer.

Petitioner’s claims was hinged on respondent’s alleged directive to petitioner’s ac-

counting assistant, Del Rosario, to insert the word “OR CASH” in the checks payable
to the suppliers.

While the respondent denies these allegations, but, given his position of trust, although
his statements may be true, the court observes that it is highly unlikely that respondent
did not have any participation in the above-mentioned scheme to defraud petitioner.
No checks would have been issued if no purchase orders were made, which the re-
spondent must approve before the payment process can even commence.

Regarding NLRC Rules

Respondent was directly implicated in the controversy through the extrajudicial con-
fession of his co-employee, Del Rosario, who had admitted to be the author of the
checks' alterations, although mentioned that she did so only upon respondent's impri-
matur. The NLRC, as affirmed by the CA, however, deemed the same to be inadmis-
sible in evidence on account of the res inter alios acta rule, which, as per Section 30,
Rule 130 of the Rules of Court, provides that the rights of a party cannot be prejudiced
by an act, declaration, or omission of another. Consequently, an extrajudicial confes-
sion is binding only on the confessant and is not admissible against his or her co-
accused because it is considered as hearsay against them. However, the NLRC
should not have bound itself by the technical rules of procedure as it is allowed
to be liberal in the application of its rules in deciding labor cases. The NLRC
Rules of Procedure state that "[t]he rules of procedure and evidence prevailing
in courts of law and equity shall not be controlling and the Commission shall
use every and all reasonable means to ascertain the facts in each case speedily
and objectively, without regard to technicalities of law or procedure . . . ."

In any case, even if it is assumed that the rule on res inter alios acta were to apply in
this illegal dismissal case, the treatment of the extrajudicial confession as hearsay is
bound by the exception on independently relevant statements. "Under the doctrine of
independently relevant statements, regardless of their truth or falsity, the fact that such
statements have been made is relevant. The hearsay rule does not apply, and the
statements are admissible as evidence.

Petition Granted. Respondent is held to be validly dismissed, and thus, not entitled to
backwages, separation pay, as well as attorney’s fees.