J.A.B. Bulao & Associates

CASE 2016-0004: JOSE EMMANUEL P. GUILLERMO VS. CRISANTO P. USON (G.R. NO. 198967, 07 MARCH 2016, PERALTA, J.) (SUBJECT/S: PIERCING THE VEIL OF CORPORATE FICTION; OFFICERS AND COMPANIES NOT IMPLEADED IN LABOR CASE CAN BE HELD LIABLE TO WORKERS) (BRIEF TITLE: GUILLERMO VS. USON)

DISPOSITIVE:

“WHEREFORE, the petition is DENIED. The Court of Appeals Decision dated June 8, 2011 and Resolution dated October 7, 2011 in CAG.R. SP No. 115485 are AFFIRMED.

SO ORDERED.”

SUBJECTS/DOCTRINES/DIGEST:

GUILLERMO ASSERTS THAT HE WAS IMPLEADED IN THE CASE ONLY MORE THAN A YEAR AFTER ITS DECISION HAD BECOME FINAL AND EXECUTORY. BUT IN THE EXECUTION STAGE HE WAS INCLUDED AS JUDGMENT OBLIGOR. IS THIS PROPER?

YES. LIABILITY ATTACHED, ESPECIALLY TO THE RESPONSIBLE OFFICERS, EVEN AFTER FINAL JUDGMENT AND DURING EXECUTION, WHEN THERE WAS A FAILURE TO COLLECT FROM THE EMPLOYER CORPORATION THE JUDGMENT DEBT AWARDED TO ITS WORKERS.

IN THIS CASE GUILLERMO IS THE PERSON RESPONSIBLE IN THE ACTUAL RUNNING OF THE COMPANY AND FOR THE MALICIOUS AND ILLEGAL DISMISSAL OF THE COMPLAINANT; HE, LIKEWISE, WAS SHOWN TO HAVE A ROLE IN DISSOLVING THE ORIGINAL OBLIGOR COMPANY IN AN OBVIOUS “SCHEME TO AVOID LIABILITY”

“In the earlier labor cases of Claparols v. Court of Industrial Relations43 and A.C. Ransom Labor Union-CCLU v. NLRC,44 persons who were not originally impleaded in the case were, even during execution, held to be solidarily liable with the employer corporation for the latter’s unpaid obligations to complainant-employees.”

CAN ANOTHER CORPORATION NOT IMPLEADED BE MADE A JUDGMENT OBLIGOR IN A LABOR CASE?

YES IF IT IS A MERE CONDUIT OR ALTER EGO OF THE ORIGINALLY IMPLEADED CORPORATION, AND/OR THE OFFICERS OR STOCKHOLDERS OF THE LATTER CORPORATION.

“The common thread running among the aforementioned cases, however, is that 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, so long as it is established that such persons have deliberately used the corporate vehicle to unjustly evade the judgment obligation, or have resorted to fraud, bad faith or malice in doing so. When the shield of a separate corporate identity is used to commit wrongdoing and opprobriously elude responsibility, the courts and the legal authorities in a labor case have not hesitated to step in and shatter the said shield and deny the usual protections to the offending party, even after final judgment. The key element is the presence of fraud, malice or bad faith. Bad faith, in this instance, does not connote bad judgment or negligence but impo1is a dishonest purpose or some moral obliquity and conscious doing of wrong; it means breach of a known duty through some motive or interest or ill will; it partakes of the nature of fraud.61”

WHEN DOES PERSONAL LIABILITY ATTACH?

PERSONAL LIABILITY ATTACHES ONLY WHEN, AS ENUMERATED BY THE SAID SECTION 31 OF THE CORPORATION CODE, THERE IS A WILFULL AND KNOWING ASSENT TO PATENTLY UNLAWFUL ACTS OF THE CORPORATION, THERE IS GROSS NEGLIGENCE OR BAD FAITH IN DIRECTING THE AFFAIRS OF THE CORPORATION, OR THERE IS A CONFLICT OF INTEREST RESULTING IN DAMAGES TO THE CORPORATION.

WHEN DOES THE DOCTRINE OF PIERCING THE CORPORATE VEIL IS HELD TO APPLY?

IN THREE (3) BASIC AREAS, NAMELY: ( 1) DEFEAT OF PUBLIC CONVENIENCE AS WHEN THE CORPORATE FICTION IS USED AS A VEHICLE FOR THE EVASION OF AN EXISTING OBLIGATION; (2) FRAUD CASES OR WHEN THE CORPORATE ENTITY IS USED TO JUSTIFY A WRONG, PROTECT FRAUD, OR DEFEND A CRIME; OR (3) ALTER EGO CASES, WHERE A CORPORATION IS MERELY A FARCE SINCE IT IS A MERE ALTER EGO OR BUSINESS CONDUIT OF A PERSON, OR WHERE THE CORPORATION IS SO ORGANIZED AND CONTROLLED AND ITS AFFAIRS ARE SO CONDUCTED AS TO MAKE IT MERELY AN INSTRUMENTALITY, AGENCY, CONDUIT OR ADJUNCT OF ANOTHER CORPORATION.

IN A CASE WHERE THE CORPORATE VEIL IS PIERCED, ARE ALL THE OFFICERS PERSONALLY LIABLE?

ONLY THE “RESPONSIBLE OFFICER,” I.E., THE PERSON DIRECTLY RESPONSIBLE FOR AND WHO “ACTED IN BAD FAITH” IN COMMITTING THE ILLEGAL DISMISSAL OR ANY ACT VIOLATIVE OF THE LABOR CODE

IN A CLOSE CORPORATION, WHO IS PERSONALLY LIABLE?

IT IS THE PERSON ACTIVELY ENGAGED IN THE MANAGEMENT OF THE CORPORATION.

WHEN WILL CORPORATE FICTION BE DISREGARDED?

THERE IS NO HARD AND FAST RULE ON WHEN CORPORATE FICTION MAY BE DISREGARDED; INSTEAD, EACH CASE MUST BE EVALUATED ACCORDING TO ITS PECULIAR CIRCUMSTANCES.

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SCD-2016-0004-GUILLERMO

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CASE 2016-0003: WIGBERTO “TOBY” R. TANADA, JR. VS. HOUSE OF REPRESENTATIVES ELECTORAL TRIBUNAL ET AL (G.R. No. 217012, 01 MARCH 2016, CARPIO JUSTICE) (BRIEF TITLE: TANADA VS. HRET)

DISPOSITIVE:

“WHEREFORE, we DISMISS the petition and AFFIRM the assailed Resolutions promulgated on 25 September 2014 and 22 January 2015 by the House of Representatives Electoral Tribunal in HRET Case No. 13-018 (EP).

SO ORDERED.”

SUBJECTS/DOCTRINES/DIGEST:

COMELEC RULES PROHIBIT FILING OF MOTION FOR RECONSIDERATION OF AN EN BANC RULING OF THE COMELEC

“First, Wigberto filed a prohibited pleading: a motion for reconsideration of a resolution of the COMELEC En Banc. Section 1 ( d), Rule 13 of the COMELEC Rules of Procedure specifically prohibits the filing of a “motion for reconsideration of an en banc ruling, resolution, order or decision except in election offense cases.” Consequently, the COMELEC En Banc ruling became final and executory, 8 precluding Wigberto from raising again in any other forum Alvin John’s nuisance candidacy as an issue.”

COMELEC EN BANC RULING BECOMES FINAL AFTER 5 DAYS

“Second, Wigberto filed his petition beyond the period provided by the COMELEC Rules of Procedure. The COMELEC En Banc promulgated its resolution on Alvin John’s alleged nuisance candidacy on 25 April 2013. Wigberto filed his petition in G.R. Nos. 207199-200 before this Court on 27 May 2013. By this date, the COMELEC En Bane’s resolution on Alvin John’s alleged nuisance candidacy was already final and executory. Section 3, Rule 37 of the COMELEC Rules of Procedure provides:

Section 3. Decisions Final After Five Days. -Decisions in preproclamation cases and petitions to deny due course to or cancel certificates of candidacy, to declare a candidate as nuisance candidate or to disqualify a candidate, and to postpone or suspend elections shall become final and executory after the lapse of five (5) days from their promulgation, unless restrained by the Supreme Court.”

HERET HAS NO JURISDICTION TO DETERMINE WHETHER ALVIN JOHN WAS A NUISANCE CANDIDATE BECAUSE THE COMELEC EN BANC RULING HAS ALREADY BECOME FINAL AND EXECUTORY

“The HRET did not commit any grave abuse of discretion in declaring that it has no jurisdiction to determine whether Alvin John was a nuisance candidate. If Wigberto timely filed a petition before this Court within the period allotted for special actions and questioned Alvin John’s nuisance candidacy, then it is proper for this Court to assume jurisdiction and rule on the matter. As things stand, the COMELEC En Bane’s ruling on Alvin John’s nuisance candidacy had long become final and executory.”

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SCD-2016-0003-TANADA

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CASE 2010-0001: MA. SOCORRO CAMACHO-REYES VS.  RAMON REYES (G.R. NO. 185286, 18 AUG 2010, NACHURA J.) SUBJECT/S: PSYCHOLOGICAL INCAPACITY; DECLARATION OF NULLITY OF MARRIAGE (BRIEF TITLE: REYES VS. REYES)

DISPOSITIVE:

        “WHEREFORE, the petition is GRANTED. The decision of the Court of Appeals in CA -G.R. CV No. 89761 is REVERSED. The decision of the Regional Trial Court, Branch 89, Quezon City in Civil Case No. Q-01-44854 declaring the marriage between petitioner and respondent NULL and VOID under Article 36 of the Family Code is REINSTATED. No costs.

SO ORDERED.”

SUBJECTS/DOCTRINES/DIGEST:

CONCLUSION ON PSYCHOLOGICAL INCAPACITY MAY BE REACHED WITHOUT INTERVIEWING THE PARTY WHO IS PSYCHOLOGICALLY INCAPACITATED.

CA REJECTED THE TESTIMONIES OF DOCTORS MAGNO AND VILLEGAS FOR BEING HEARSAY SINCE THEY NEVER PERSONALLY EXAMINED AND INTERVIEWED THE RESPONDENT. WAS CA CORRECT?

THE TOTALITY OF THE BEHAVIOUR OF RESPONDENT WAS PERSONALLY EXPERIENCED BY PETITIONER. SHE HAD OCCASION TO INTERACT WITH, AND EXPERIENCE, RESPONDENT’S PATTERN OF BEHAVIOR WHICH SHE COULD THEN VALIDLY RELAY TO THE CLINICAL PSYCHOLOGISTS AND THE PSYCHIATRIST. SECONDLY THE FINDINGS OF THE DOCTORS WERE NOT BASED SOLELY ON THE INTERVIEW WITH PETITIONER BUT ALSO ON THE INTERVIEW WITH OTHER INFORMANTS.

 “The lack of personal examination and interview of the respondent, or any other person diagnosed with personality disorder, does not per se invalidate the testimonies of the doctors. Neither do their findings automatically constitute hearsay that would result in their exclusion as evidence.

For one, marriage, by its very definition, necessarily involves only two persons. The totality of the behavior of one spouse during the cohabitation and marriage is generally and genuinely witnessed mainly by the other. In this case, the experts testified on their individual assessment of the present state of the parties marriage from the perception of one of the parties, herein petitioner. Certainly, petitioner, during their marriage, had occasion to interact with, and experience, respondents pattern of behavior which she could then validly relay to the clinical psychologists and the psychiatrist.

For another, the clinical psychologists and psychiatrists assessment were not based solely on the narration or personal interview of the petitioner. Other informants such as respondents own son, siblings and in-laws, and sister-in-law (sister of petitioner), testified on their own observations of respondents behaviour and interactions with them, spanning the period of time they knew him. These were also used as the basis of the doctors assessments.”

WHAT ARE THE GENERAL DIAGNOSTIC CRITERIAL FOR PERSONALITY DISORDERS? 

“The recent case of Lim v. Sta. Cruz-Lim,[1][18] citing The Diagnostic and Statistical Manual of Mental Disorders, Fourth Edition (DSM IV),[2][19] instructs us on the general diagnostic criteria for personality disorders:

1. An enduring pattern of inner experience and behavior that deviates markedly from the expectations of the individual’s culture. This pattern is manifested in two (2) or more of the following areas:

(1) cognition (i.e., ways of perceiving and interpreting self, other people, and events)

(2) affectivity (i.e., the range, intensity, liability, and appropriateness of emotional response)

(3) interpersonal functioning

        (4) impulse control

1. The enduring pattern is inflexible and pervasive across a broad range of personal and social situations.
2. The enduring pattern leads to clinically significant distress or impairment in social, occupational or other important areas of functioning.
3. The pattern is stable and of long duration, and its onset can be traced back at least to adolescence or early adulthood.
4. The enduring pattern is not better accounted for as a manifestation or a consequence of another mental disorder.
5. The enduring pattern is not due to the direct physiological effects of a substance (i.e., a drug of abuse, a medication) or a general medical condition (e.g., head trauma).

Specifically, the DSM IV outlines the diagnostic criteria for Antisocial Personality Disorder:

1. There is a pervasive pattern of disregard for and violation of the rights of others occurring since age 15 years, as indicated by three (or more) of the following:

(1) failure to conform to social norms with respect to lawful behaviors as indicated by repeatedly performing acts that are grounds for arrest

(2)    deceitfulness, as indicated by repeated lying, use of aliases, or conning others for personal profit or pleasure

(3)    impulsivity or failure to plan ahead

(4)    irritability and aggressiveness, as indicated by repeated physical fights or assaults

(5)    reckless disregard for safety of self or others

(6)    consistent irresponsibility, as indicated by repeated failure to sustain consistent work behavior or honor financial obligations

(7) lack of remorse as indicated by being indifferent to or rationalizing having hurt, mistreated, or stolen from another

1. The individual is at least 18 years.

1. There is evidence of conduct disorder with onset before age 15 years.

1. The occurrence of antisocial behavior is not exclusively during the course of schizophrenia or a manic episode.[3][20]”

CAN DENIAL BY RESPONDENT THAT HE IS PSYCHOLOGICALLY INCAPACITATED CONTRAVENE DOCTOR’S FINDINGS?

1. A PERSON AFFLCITED WITH A PERSONALITY DISORDER WILL NOT NECESSARILY HAVE PERSONAL KNOWLEDGE THEREOF.

“Within their acknowledged field of expertise, doctors can diagnose the psychological make up of a person based on a number of factors culled from various sources. A person afflicted with a personality disorder will not necessarily have personal knowledge thereof. In this case, considering that a personality disorder is manifested in a pattern of behavior, self-diagnosis by the respondent consisting only in his bare denial of the doctors separate diagnoses, does not necessarily evoke credence and cannot trump the clinical findings of experts.”

THE CA SAYS THAT THE PSYCHOLOGICAL INCAPACITY OF RESPONDENT IS NOT INCURABLE BECAUSE THE DOCTOR RECOMMENDED THERAPY. IS CA CORRECT?

NO.

THERAPY IS USUALLY RECOMMENDED ONLY TO MANAGE BEHAVIOUR.

“The CA declared that, based on Dr. Dayans findings and recommendation, the psychological incapacity of respondent is not incurable.

The appellate court is mistaken.

A recommendation for therapy does not automatically imply curability. In general, recommendations for therapy are given by clinical psychologists, or even psychiatrists, to manage behavior. In Kaplan and Saddocks textbook entitled Synopsis of Psychiatry,[4][21] treatment, ranging from psychotherapy to pharmacotherapy, for all the listed kinds of personality disorders are recommended. In short, Dr. Dayans recommendation that respondent should undergo therapy does not necessarily negate the finding that respondents psychological incapacity is incurable.”

IN THIS CASE WHAT WERE THE MANIFESTATIONS ON RESPONDENT’S PATTERN OF BEHAVIOR WHICH BECAME BASIS FOR THE FINDING ON HIS PSYCHOLOGICAL INCAPACITY?

 “In sum, we find points of convergence & consistency in all three reports and the respective testimonies of Doctors Magno, Dayan and Villegas, i.e.: (1) respondent does have problems; and (2) these problems include chronic irresponsibility; inability to recognize and work towards providing the needs of his family; several failed business attempts; substance abuse; and a trail of unpaid money obligations.”

…………………………………….

        In the instant case, respondents pattern of behavior manifests an inability, nay, a psychological incapacity to perform the essential marital obligations as shown by his: (1) sporadic financial support; (2) extra-marital affairs; (3) substance abuse; (4) failed business attempts; (5) unpaid money obligations; (6) inability to keep a job that is not connected with the family businesses; and (7) criminal charges of estafa.”

WHAT IS THE GENERAL RULE ON DIAGNOSES MADE BY CLINICAL PSYCHOLOGISTS OR PSYCHIATRISTS?

THESE FINDINGS ARE NOT AUTOMATICALLY BELIEVED BY THE COURT.

“It is true that a clinical psychologists or psychiatrists diagnoses that a person has personality disorder is not automatically believed by the courts in cases of declaration of nullity of marriages. Indeed, a clinical psychologists or psychiatrists finding of a personality disorder does not exclude a finding that a marriage is valid and subsisting, and not beset by one of the parties or both parties psychological incapacity.

On more than one occasion, we have rejected an experts opinion concerning the supposed psychological incapacity of a party.[5][24] In Lim v. Sta. Cruz-Lim,[6][25] we ruled that, even without delving into the non-exclusive list found in Republic v. Court of Appeals & Molina,[7][26] the stringent requisites provided in Santos v. Court of Appeals[8][27] must be independently met by the party alleging the nullity of the marriage grounded on Article 36 of the Family Code. We declared, thus:

It was folly for the trial court to accept the findings and conclusions of Dr. Villegas with nary a link drawn between the “psychodynamics of the case” and the factors characterizing the psychological incapacity. Dr. Villegas’ sparse testimony does not lead to the inevitable conclusion that the parties were psychologically incapacitated to comply with the essential marital obligations. Even on questioning from the trial court, Dr. Villegas’ testimony did not illuminate on the parties’ alleged personality disorders and their incapacitating effect on their marriage x x x.

Curiously, Dr. Villegas’ global conclusion of both parties’ personality disorders was not supported by psychological tests properly administered by clinical psychologists specifically trained in the tests’ use and interpretation. The supposed personality disorders of the parties, considering that such diagnoses were made, could have been fully established by psychometric and neurological tests which are designed to measure specific aspects of people’s intelligence, thinking, or personality.

x x x x

The expert opinion of a psychiatrist arrived at after a maximum of seven (7) hours of interview, and unsupported by separate psychological tests, cannot tie the hands of the trial court and prevent it from making its own factual finding on what happened in this case. The probative force of the testimony of an expert does not lie in a mere statement of his theory or opinion, but rather in the assistance that he can render to the courts in showing the facts that serve as a basis for his criterion and the reasons upon which the logic of his conclusion is founded.”

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SC-2010-0001-AUGUST-2010-REYES

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[1][18]     G.R. No. 176464, February 4, 2010.

[2][19]     Quick Reference to the Diagnostic Criteria from DSM IV-TR, American Psychiatric Association, 2000.

[3][20]     See Kaplan and Saddock’s Synopsis of Psychiatry and Psychology Behavioral Sciences/Clinical Psychiatry (8^th ed.), p. 785.

[4][21]     See Kaplan and Saddock’s Synopsis of Psychiatry and Psychology Behavioral Sciences/Clinical Psychiatry (8^th ed.), 1998.

[5][24]     Padilla-Rumabaua v. Rumbaua, G.R. No. 166738, August 14, 2009, 596 SCRA 157; Paz v. Paz, G.R. No. 166579, February 18, 2010.

[6][25]     Supra note 18.

[7][26]     Supra.

[8][27]     Supra note 11.