Pamplona Plantation Company vs. Ramon Acosta

CASE DIGEST: G.R. No. 153193, December 6, 2006

Labor Law, Liability of Corporation Officers

FACTS:

This stems from a case before the Labor Arbiter for underpayment, overtime pay, premium pay for rest day and holiday, service incentive leave pay, damages, attorney’s fees, and 13th month pay. The complainants claimed that they were regular rank and file employees of petitioner Pamplona Plantation Co., Inc. with different hiring periods, work designations, and salary rates.

Petitioner, however, denied this, alleging that some of the complainants are seasonal employees, some are contractors, others were hired under the pakyaw system, while the rest were hired by the Pamplona Plantation Leisure Corporation, which has a separate and distinct entity from it.

The Labor Arbiter (LA) held petitioner and Pamplona Plantation’s manager, Jose Luis Bondoc, liable for underpayment as complainants were regular employees of petitioner. They were also held guilty of illegal dismissal with regard to two complainants.

The NLRC reversed the LA’s decision, dismissing all the complaints, finding that the complaint should have been directed against the Pamplona Plantation Leisure Corporation since complainants’ individual affidavits contained the allegations that their tasks pertained to their work “in the golf course.”

The Court of Appeals (CA) set aside the NLRC’s dismissal and reinstated the LA’s Decision with modification.

ISSUES:

1) Whether or not Pamplona Plantation is liable for the wage differentials of the worker-respondents who themselves admitted in their affidavits that their employer was another entity – Pamplona Plantation Leisure Corporation?

2) Whether or not Pamplona Plantation’s manager is personally liable for the money claims awarded to the workers?

HELD:

Petition PARTIALLY GRANTED.

For the purpose of resolving the workers’ claims, Pamplona Plantation and Pamplona Leisure are hereby deemed one and the same entity. The CA is MODIFIED in that the manager of Pamplona Plantation is absolved of any personal liability as regards the money claims awarded to respondents.

In all other respects, the Decision is AFFIRMED.

Petitioner is estopped from denying that respondents worked for it. It never raised this defense in the proceedings before the Labor Arbiter. Notably, the defense it raised pertained to the nature of respondents’ employment, i.e., whether they are seasonal employees, contractors, or worked under the pakyaw system. Thus, in its Position Paper, petitioner alleged that some of the respondents are coconut filers and copra hookers or sakadors; some are seasonal employees who worked as scoopers or lugiteros; some are contractors; and some worked under the pakyaw system. In support of these allegations, petitioner even presented the company’s payroll.

By setting forth these defenses, petitioner, in effect, admitted that respondents worked for it, albeit in different capacities. Such allegations are negative pregnants – denials pregnant with the admission of the substantial facts in the pleading responded to which are not squarely denied, and amounts to an acknowledgement that respondents were indeed employed by petitioner.

Reiterating Pamplona Plantation Company, Inc. v. Tinghil, the Court holds that by piercing the veil of corporate fiction, the two corporations – the Pamplona Plantation Corporation, Inc. and the Pamplona Plantation Leisure Corporation – are one and the same. An examination of the facts reveals that, for both the coconut plantation and the golf course, there is only one management which the laborers deal with regarding their work. A portion of the plantation (also called Hacienda Pamplona) had actually been converted into a golf course and other recreational facilities. The weekly payrolls issued by petitioner-company bore the name “Pamplona Plantation Co., Inc.”

It is also a fact that respondents all received their pay from the same person, Bondoc -- the managing director of the company. True, Pamplona Plantation Co., Inc., and the Pamplona Plantation Leisure Corporation appear to be separate corporate entities. But it is settled that this fiction of law cannot be invoked to further an end subversive of justice. The corporations have basically the same incorporators and directors and are headed by the same official. Both use only one office and one payroll and are under one management. The attempt to make the two corporations appear as two separate entities, insofar as the workers are concerned, should be viewed as a devious but obvious means to defeat the ends of the law. Such a ploy should not be permitted to cloud the truth and perpetrate an injustice. Also, just because they worked at the golf course did not necessarily mean that they were not employed to do other tasks, especially since the golf course was merely a portion of the coconut plantation. Thus, petitioner cannot now deny that respondents are its employees.

As to the issue on the dismissal of one particular worker, Joselito Tinghil, it is well-settled that the employer has the burden of proving that the dismissal was for a valid and just cause. Failure to discharge this burden of proof substantially means that the dismissal was not justified and therefore, illegal. Given petitioner’s failure to discharge this burden, the Court sustains the finding of illegal dismissal vis-à-vis respondent Joselito Tinghil.

Lastly, petitioner believes that its manager, Jose Luis Bondoc, should not have been held solidarily liable with the company for the wage differentials awarded to respondents. Petitioner argues that Bondoc is merely an employee of the company and not a corporate director or officer who can be held personally liable therefor.

The rule is that officers of a corporation are not personally liable for their official acts unless it is shown that they have exceeded their authority. However, the legal fiction that a corporation has a personality separate and distinct from stockholders and members may be disregarded if it is used as a means to perpetuate fraud or an illegal act or as a vehicle for the evasion of an existing obligation, the circumvention of statutes, or to confuse legitimate issues. Moreover, assuming Bondoc is a corporate officer, a corporate officer is not personally liable for the money claims of discharged corporate employees unless he acted with evident malice and bad faith in terminating their employment.

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