TOPIC: Liquidation Effected by the Board of Directors and Officers of the Dissolved Corporation

G.R. No. 90856 July 23, 1992

ARTURO DE GUZMAN, petitioner,

vs.
NATIONAL LABOR RELATIONS COMMISSION, LABOR ARBITER MA. LOURDES A. SALES,
AVELINO D. VALLESTEROL, ALEJANDRO Q. FRIAS, LINDA DE LA CRUZ, CORAZON M. DE LA
FUENTE, LILIA F. FLORO, and MARIO F. JAYME, respondents.

FACTS:

Immediately after Arturo De Guzman, who was the general manager of the Manila office of Affiliated
Machineries Agency, Ltd, was advised of the closure of the company due to financial reverses, he notified
all the personnel. The employees then sent a letter to AMAL accepting its decision to close, subject to the
payment to them of their current salaries, severance pay, and other statutory benefits. De Guzman joined
them in these representations.

These requests were, however, not heeded. Consequently, the employees, now herein private
respondents, lodged a complaint with the NLRC against AMAL, through Leo A. Fialla and Arturo de
Guzman, for illegal dismissal, unpaid wages or commissions, separation pay, sick and vacation leave
benefits, 13th month pay, and bonus.

For his part, the petitioner began selling some of AMAL's assets and applied the proceeds thereof, as well
as the remaining assets, to the payment of his claims against the company. He also organized Susarco,
Inc., with himself as its president and his wife as one of the incorporators and a member of the board of
directors. This company is engaged in the same line of business and has the same clients as that of the
dissolved AMAL.

With this development, Susarco and its officers were impleaded in the amended complaint of the private
respondents. Later, William Quasha and/or Cirilo Asperilla were also included in the suit as the resident
agents of AMAL of the Philippines.

The petitioner filed his own complaint with the NLRC against AMAL for his remaining unsatisfied claims.
Labor Arbiter Magno, to whom the petitioner's complaint was assigned, rendered a decision ordering AMAL
to pay the petitioner the amount of P371,469.59 as separation pay, unpaid salary and commissions, after
deducting the value of the assets earlier appropriated by the petitioner.

Labor Arbiter Ma. Lourdes A. Sales, who tried the private respondents' complaint, rendered a decision
ordering respondents AMAL and Arturo de Guzman to pay jointly and severally to each Complainant
separation pay computed at one-half month pay for every year of service, backwages for one month, unpaid
salaries for June 16-30, 1986, 13th month pay from January to June 30, 1986 and incentive leave pay
equivalent to two and-a-half days pay.

This decision was on appeal affirmed in toto by the NLRC.

ISSUE:

Whether or not Arturo De Guzman is jointly and severally liable with AMAL.

HELD:
YES.

The properties of AMAL was appropriated by the petitioner to satisfy his own claim to the prejudice of
Complainants herein whose claims are known to Respondent, the manner and the means by which he
satisfied such claims are evidently characterized by bad faith on his part. For one, Respondent A. de
Guzman took advantage of his position as General Manager and arrogated to himself the right to retain
possession and ownership of all properties owned and left by AMAL in the Philippines, even if he knew that
Complainants herein have similar valid claims for unpaid wages and other employee benefits from the
Respondent AMAL.

It is not disputed that the petitioner in the case at bar had his own claims against AMAL and consequently
had some proportionate right over its assets. However, this right ceased to exist when, knowing fully well
that the private respondents had similarly valid claims, he took advantage of his position as general
manager and applied AMAL's assets in payment exclusively of his own claims.

Additional Note:

Petitioner while admittedly the highest ranking local representative of AMAL in the Philippines, is
nevertheless not a stockholder and much less a member of the board of directors or an officer thereof. He
is at most only a managerial employee.

The petitioner cannot be held directly responsible for the decision to close the business that resulted in his
separation and that of the private respondents. That decision came directly and exclusively from AMAL.
The petitioner's participation was limited to the enforcement of this decision in line with his duties as general
manager of the company. Even in a normal situation, in fact, he would not be liable, as a managerial
employee of AMAL, for the monetary claims of its employees. There should be no question that the private
respondents' recourse for such claims cannot be against the petitioner but against AMAL and AMAL alone.

However, because of his bad faith in appropriating the AMALs properties for his own claim, he ca be held
jointly and severally liable with AMAL.