SULDAO V.

CIMECH SYSTEM CONSTRUCTION

G.R. No. 171392 | Oct. 30, 2006 | Ynares-Santiago ISSUE/S & RATIO:
1. W/N CA erred in reversing the decision of the LA and NLRC? NO.
Nature of Case: Petition for review on certiorari of decision of CA  Constructive dismissal: Quitting because continued employment is
Digest maker: Rojo rendered impossible, unreasonable or unlikely, as an officer involving a
demotion in rank and a diminution in pay.
SUMMARY: Suldao was dismissed by Cimech. In the LA and NLRC, the o This is a case of constructive dismissal since petitioner is
President and General Manger Engr. Labucay was held to be solidarily liable rendered impossible so as to foreclose any choice on his part
with the corporation. Court ruled that there is no reason to pierce the except to resign from such employment.
corporate veil and make Labucay liable.  Burden of proof is on employer to show employee was validly dismissed
and with just caused.
DOCTRINE: The veil of corporate fiction treats as separate and distinct the o Respondent failed to discharge this burden. No evidence
affairs of a corporation and its officers and stockholders. As a general rule, a showing that complainant committed the offense and was
corporation will be looked upon as a legal entity, unless and until sufficient placed on suspension as disciplinary measure.
reason to the contrary appears. When the notion of legal entity is used to o Complainant does not have high educational attainment and his
defeat public convenience, justify wrong, protect fraud, or defend crime, the skill is limited to being a machinist; as such, all he can do is
law will regard the corporation as an association of persons. Also, the obey the biddings of his superior.
corporate entity may be disregarded in the interest of justice in such cases as  Decision to transfer employees to other areas of operation forms part of
fraud that may work inequities among members of the corporation internally, management prerogatives, such must not be exercised with grave abuse
involving no rights of the public or third persons. In both instances, there must of discretion.
have been fraud and proof of it. For the separate juridical personality of a o It cannot be used as a subterfuge by the employer to rid himself
corporation to be disregarded, the wrongdoing must be clearly and of an undesirable worker.
convincingly established. It cannot be presumed. o In this case, the petitioner’s transfer was valid but the manner by
which respondent unjustifiably prevented him from returning on
 Aug. 31, 2001: Respondent Cimech Construction employed petitioner several occasions belies the claim of good faith.
Suldao as a machinist with a daily was of P300 on a contractual status  By reporting to work, petitioner manifested willingness to
for a period of 5 months comply with regulations and desire to continue to work
o Jan. 31, 2002: Respondent became a permanent employee but he was barred from entering the premises without
 Due to lack of projects, Suldao was instructed to take a leave of absence any explanation.
from Nov. 1-6, 2002. Again on Nov 7-14.  [TOPIC] Liability of respondent corporation for constructive
o Nov. 15, 2002: Ordered to make a letter-request for field work dismissal of petitioner has been clearly established, same does not
transfer for which he complied. hold true for Engr. Rodolfo Labucay (President and General
o Was not able to report to work the next day due to sickness Manager)
 Nov. 17, 2002 and Nov. 21, 2002: Reported for work but was allegedly o Corp is invested by law with a personality separate from that of
barred from entering its stockholder/members.
 Petitioner filed complaint for constructive dismissal against o Has a personality separate and distinct from those of the
Cimech and Eng. Rodolfo Labucay persons composing it.
o Respondent claimed that due to lack of available work in the o Mere ownership by a single stockholder or by another corp of all
machine shop, petitioner was temporarily transferred to its or nearly all of the capital stock is not itself sufficient ground for
fabrication dept which petitioner refused to accept. disregarding the separate corp personality.
o Due to petitioner’s unruly and arrogant behavior, guard led him o Corp’s authority to act and its liability for its actions are separate
out. Upon return, asked for a salary increase. and apart form individuals who own it.
o Respondent considered the acts of petitioner amounting to  Veil of corporate fiction treats as separate and distinct the affairs of a
insubordination thus suspended him for 6 days. corp and its officers and stockholders.
 LA: Suldao found to have been illegally dismissed. Labucay also liable. o GR: Corporation will be looked upon as a legal entity, unless
 NLRC: Affirmed. and until sufficient reason to the contrary appears.
 CA: Reversed. For Cimech. o E: When the notion of legal entity is used to defeat public
 Hence, this petition. convenience, justify wrong, protect fraud, or defend crime, the
 law will regard the corporation as an association of persons;
Corporate entity will be disregarded in the interest of justice in
such cases as fraud that amy work inequities among members
of the corporation internally.
o There must have been fraud and proof of it.
 For the separate juridical personality of a corporation to be disregarded,
the wrongdoing must be clearly and convincingly established. It cannot
be presumed.
o In this case, no reason exists to justify piercing of the veil of
corporate fiction such as to hold Labucay, as president and
general manager of the corp to be solidarily liabie.
o Liability of corporate dismissal solely on the respondent
corp.

RULING: WHEREFORE, the petition is GRANTED. The June 23, 2005 Decision
of the Court of Appeals in CA-G.R. SP No. 83963 and its January 10, 2006
Resolution are REVERSED and SET ASIDE. The February 27, 2004 Resolution
of the National Labor Relations Commission in NLRC CA No. 036963-03
affirming the decision of the Labor Arbiter finding that petitioner was
constructively dismissed, is REINSTATED with MODIFICATION that only the
respondent corporation, Cimech System Construction, Inc. is held liable.

No pronouncement as to costs.