G.R. No. L-20502 – 121 Phil. 276 – 13 SCRA 291 – Mercantile Law – Corporation Law – Principle of the Corporate Fiction – Equity Case
Honorata Cruz was terminated by Emilio Cano Enterprises, Inc. (ECEI). She then filed a complaint for unfair labor practice against Emilio Cano, in his capacity as president and proprietor, and Rodolfo Cano, in his capacity as manager. Cruz won and the Court of Industrial Relations (CIR) ordered the Canos to reinstate Cruz plus pay her backwages with interest. The Canos appealed to the CIR en banc but while on appeal Emilio died. The Canos lost on appeal and an order of execution was levied against ECEI’s property. ECEI filed an ex parte motion to quash the writ as ECEI avers that it is a corporation with a separate and distinct personality from the Canos. Their motion was denied and ECEI filed a petition for certiorari with the Supreme Court.
ISSUE: Whether or not the judgment of the Court of Industrial Relations is correct.
HELD: Yes. This is an instance where the corporation and its members can be considered as one. ECEI is a close family corporation – the incorporators are members of the Cano family. Further, the Canos were sued in their capacity as officers of ECEI not in their private capacity. Having been sued officially, their connection with the case must be deemed to be impressed with the representation of the corporation. The judgment against the Canos has a direct bearing to ECEI. Verily, the order against them is in effect against the corporation. Further still, even if this technicality be strictly observed, what will simply happen is for this case to be remanded, change the name of the party, but the judgment will still be the same – there can be no real benefit and will only be subversive to the ends of justice. In this case, to hold ECEI liable is not to ignore the legal fiction but merely to give meaning to the principle that such fiction cannot be invoked if its purpose is to use it as a shield to further an end subversive of justice.
