LABOR LAW: What to do if you cannot collect from the company that employed you

Have you won a labor case against your company employer but cannot recover your monetary award because it has ceased its business operation?

In almost all instances, an employee who files a labor case against his employer will name the corporation and some other individuals who acted for the corporation, like the company president or managing director, as respondents.

Nevertheless, it can happen that in the dispositive portion of the decision, only the respondent corporation is mentioned as liable for the award and is silent with respect to the other individuals.

Since the employee will consider this type of judgment as a win, he would not appeal it to the Labor Commission. He would be more interested in collecting his award from his employer. On the other hand, the respondents would likewise not be motivated to appeal it because anyway, the corporation has ceased doing business and may no longer have any assets that the winning party can run after. Besides, their names are not specifically mentioned in the dispositive portion of the decision.

But when the employee, through the Sheriff, attempts to execute the judgment against the company, they find that all its bank accounts have already been closed and it has not real or personal properties in its name. So, the award is left unsatisfied. Under the circumstances, what the employee do?

He can file a motion to modify the decision to make the individual respondents jointly and severally liable with the corporation so that he can run after the personal assets of these individuals, notwithstanding that it has become final and executory.

In Valderrama vs. NLRC, G.R. No. 98239, April 25, 1996, the Supreme Court extensively discussed the basis for allowing this modification by saying that while as a rule, once a judgment has become final and executory, it can no longer be disturbed or altered, it admits of exceptions, as where facts and circumstances transpire after a judgment has become final and executory which render its execution impossible or unjust. In such a case the modification of the decision may be sought by the interested party and the court will modify and alter the judgment to harmonize it with justice and the facts.

The Court continued that in the case at bar, modification of the judgment is appropriate considering that the company is no longer in operation and there is no showing that it has filed bankruptcy proceedings in which private respondent might file a claim and pursue her remedy under Article 110 of the Labor Code. Holding petitioner personally liable for the judgment in this case is eminently just and proper considering that, although the dispositive portion of the decision mentions only the "respondent company,"; the text repeatedly mentions "respondents" in assessing liability for the illegal dismissal of private respondent.

It can be inferred from the Valderrama case that modification is not possible where the other respondents were cleared by the Labor Arbiter of liability. Additionally, this remedy might not be available in instances where the corporation has initiated bankruptcy proceedings because the employee can pursue his claims in that proceeding.

After the judgment has been modified to include the other respondents, it may be executed against the other respondents in their personal capacities.

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