G.R. Nos. 148263 and 148271-72. April 21, 2009.
ARMANDO DAVID, Petitioner, vs. NATIONAL FEDERATION OF LABOR UNION and MARIVELES APPAREL CORPORATION, Respondents.

FACTS

Mariveles Apparel Corporation (MAC) ceased operations on July 8, 1993, allegedly without prior notice to its employees. The National Federation of Labor Unions (NAFLU) and the Mariveles Apparel Corporation Labor Union (MACLU) filed a complaint for illegal dismissal against MAC on August 12, 1993. Petitioner Armando David served as MAC’s President from May 1990 but tendered his irrevocable resignation effective October 15, 1993. During the proceedings before Labor Arbiter Isabel Panganiban-Ortiguerra, MAC failed to appear at settlement conferences. In their position paper dated January 3, 1994, NAFLU and MACLU moved to implead Antonio Carag (MAC Chairman) and Armando David as parties to guarantee satisfaction of any judgment award. The Labor Arbiter, in a Decision dated June 17, 1994, granted the motion to implead and held David and Carag solidarily liable with MAC for the employees’ money claims, including separation pay. David claimed he was not notified of the complaint or the decision, learned of it only by chance, and did not know an appeal was filed on his behalf. He filed a petition for certiorari. The Court of Appeals affirmed the Labor Arbiter’s decision. David elevated the case to the Supreme Court.

ISSUE

1. Whether petitioner Armando David was afforded due process.
2. Whether the Labor Arbiter acquired jurisdiction over the person of David.
3. Whether the Labor Arbiter acted with grave abuse of discretion in holding David jointly and severally liable with MAC.

RULING

1. Yes, David was denied due process. The proceedings before the Labor Arbiter deprived David of due process. He was not issued summons, not accorded a conciliatory conference, not ordered to submit a position paper, not given a hearing or opportunity to present evidence, and not notified that the case was submitted for resolution or of the decision against him. The motion to implead him was first made in the complainants’ position paper, and there is no record of any order summoning him to a conference. This utter lack of jurisdiction voids any liability imposed on David.
2. No, the Labor Arbiter did not acquire jurisdiction over David’s person. The records fail to show any summons was issued to David. His knowledge of a labor case against MAC did not substitute for proper summons. His belated inclusion as a party in the Labor Arbiter’s decision itself, without prior separate order and observance of procedural rules, meant jurisdiction over his person was not acquired.
3. Yes, the Labor Arbiter acted with grave abuse of discretion in holding David solidarily liable. Assuming arguendo that jurisdiction was acquired, it was improper to hold David personally liable for MAC’s obligations. The Labor Arbiter cited the need to ensure employees’ claims would not be defeated by the corporate closure. However, Article 212(e) of the Labor Code (defining “employer”) does not, by itself, make a corporate officer personally liable for corporate debts. Personal liability of corporate officers is governed by Section 31 of the Corporation Code, which requires evidence that the officer acted with malice or bad faith. The Labor Arbiter’s decision contained no finding that David acted with malice or bad faith in the closure of MAC. Therefore, holding him solidarily liable was improper.