101. CARMEN B. DY-DUMALASA vs. DOMINGO SABADO S. FERNANDEZ, VIRGILIO P. MONSALUD, EMELYN R. MONARES, MARIA NILA M.

DURO, ROSE GUIAO, JUANITO B. RACCA, JR., RENATO M. CARLOS, JR., WILFREDO M. MERCADO, JUANITA B. DIMANLIG, REYNALDO M.
DIMANLIG, AMIE A. MICOR, TYNE C. DIGNADICE (D), JOANNE H. COMANDA, JOCELYN H. FERNANDEZ (D), SHYAMELA L. FARAON, REBECCA
V. DUNGAO, DOUGLAS A. ANDOSAY, VIRGINIA V. VILLARTA, VICTORIA O. HUELGAS, LORETA S. SANTERO, MARISSA F. TRASMONTERO,
NORBERTO C. TRASMONTERO, DELIA S. DADO, ROWENA L. VICTORIA, MARITES P. TANAN, MA. THERESA ROQUE, DANILO NICOLAS,
JOCELYN J. ORDOÑEZ and ANNABEL M. DY, ET AL.
July 23, 2009| CARPIO MORALES,  J.
5. NORMAL CONSEQUENCES OF DISMISSAL - 5.2 Where there is illegality of the act of dismissal - Dismissal without
just cause - d) Liability of corporate officers

DOCTRINE/S:
 To hold a director personally liable for debts of the corporation, and thus pierce the veil of corporate fiction, the bad faith or
wrongdoing of the director must be established clearly and convincingly. Bad faith is never presumed.
 There is a solidary liability only when the obligation expressly so states, when the law so provides or when the nature of the
obligation so requires.
SUMMARY: Respondents (former employees of HELIOS) filed a complaint for illegal dismissal or illegal closure of business, non-payment
of salaries and other money claims against HELIOS. Despite numerous issuance of service of summons, only Leonardo Dy-Dumalasa,
HELIOS Pres. & Gen. Manager- husband of petitioner, appeared with counsel. SC held that Labor Arbiter acquired jurisdiction over her
person regardless of the fact that there was allegedly no valid service of summons. It also held that petitioner is only jointly liable.
Absent a clear and convincing showing of the bad faith in effecting the closure of HELIOS that can be individually attributed to petitioner
as an officer thereof, and without the pronouncement in the Decision that she is being held solidarily liable, petitioner is only jointly
liable.
FACTS:
1. Fernandez, et al. (respondents) are former employees of Helios Manufacturing Corporation (HELIOS), a closed
domestic corporation engaged in soap manufacturing located in Muntinlupa, of which petitioner is a
stockholder, a member of the Board of Directors, and Acting Corporate Secretary.
o 2001: Respondents filed a Complaint against HELIOS for illegal dismissal or illegal closure of business,
non-payment of salaries and other money claims against HELIOS.
o Despite service of summons, of the remaining four members of the Board, only Leonardo Dy-Dumalasa,
HELIOS' President and General Manager-husband of petitioner, appeared with counsel.

2. Labor Arbiter found that the closure of the Muntinlupa office/plant was a sham, as HELIOS simply relocated its
operations to a new plant in Carmona, Cavite under the new name of ―Pat & Suzara, in response to the
newly-established local union. HELIOS and it Board of Directors and stockholders were held liable.
3. NLRC modified the LA’s Order, holding that Dumalasa is not jointly and severally liable with HELIOS for
Fernandez, et al.’s claim, there being no showing that she acted in bad faith nor that HELIOS cannot pay..
4. CA reversed and set aside the NLRC Resolution, holding that what the NLRC, in effect, modified was not the
Order denying the Motion to Quash the Writ of Execution, but the LA’s Decision itself.
o This is an impermissible act since the Decision has become final and executor; hence, it could no longer be
reversed or modified.
o CA held that the same is a superfluity since there was no statement, either in the main case or in the Writ,
that the liability is solidary.
o Dumalasa is merely jointly liable for the judgment award. Dumalasa moved for reconsideration of the
appellate court’s Decision, which was denied. Hence, this petition.
ISSUES:
1. WON the failure to attend hearing and to submit position papers due to absence of valid service of summons
subject the petitioner to the decision of the Labor Arbiter – No. Labor Arbiter acquired jurisdiction over her
person regardless of the fact that there was allegedly no valid service of summons.
2. WoN Petitioner is solidarily liable – No. Absent a clear and convincing showing of the bad faith in effecting the
closure of HELIOS that can be individually attributed to petitioner as an officer thereof, and without the
pronouncement in the Decision that she is being held solidarily liable, petitioner is only jointly liable.
RULING:
SC found that the petition is bereft of merit. Contrary to petitioner's contention, the LA acquired jurisdiction over
her person regardless of the fact that there was allegedly no valid service of summons.
è In quasi-judicial proceedings, procedural rules governing service of summons are not strictly construed.
Substantial compliance therewith is sufficient. 
è In the cases at bar, petitioner, her husband and three other relatives, were all individually impleaded in the
complaint. The LA furnished her with notices of the scheduled hearings and other processes.
 è HELIOS was in fact heard, proof of which is the attendance of her husband, President-General Manager of
HELIOS, together with counsel in one such scheduled hearing and the Labor Arbiter's consideration of their
position paper in arriving at the Decision, albeit the same position paper was belatedly filed.
è Clearly, petitioner was adequately represented in the proceedings conducted by the Labor Arbiter by the
lawyer retained by HELIOS.
HELIOS' knowledge of the pendency thereof and its efforts to resist them are deemed to be knowledge and action
of petitioner. That petitioner and her fellow members of the Board refused to heed the summons and avail of the
opportunity to defend themselves as they instead opted to hide behind the corporate veil does not shield them
from the application of labor laws.
è While the appellate court reinstated the Labor Arbiter's decision, it held that since its   fallo  did not indicate
with certainty the solidary nature of the obligation, the obligation is merely joint.
è Industrial Management Int'l. Development Corp. v. NLRC:  It is an elementary principle of procedure that
the resolution of the court in a given issue as embodied in the dispositive part of a decision or order is the
controlling factor as to settlement of rights of the parties.

A perusal of the Labor Arbiter's Decision readily shows that, notwithstanding the finding of bad faith on
the part of the management, the dispositive portion did not expressly mention the solidary liability of the
officers and Board members, including petitioner.

Well-entrenched is the rule that solidary obligation cannot lightly be inferred. There is a solidary liability
only when the obligation expressly so states, when the law so provides or when the nature of the
obligation so requires. 
è   Carag v. NLRC: To hold a director personally liable for debts of the corporation, and thus pierce the veil
of corporate fiction, the bad faith or wrongdoing of the director must be established clearly and
convincingly. Bad faith is never presumed. Bad faith does not connote bad judgment or negligence. Bad
faith imports a dishonest purpose. Bad faith means breach of a known duty through some ill motive or
interest. Bad faith partakes of the nature of fraud. (Emphasis and underscoring supplied)
è Absent a clear and convincing showing of the bad faith in effecting the closure of HELIOS that can
be individually attributed to petitioner as an officer thereof, and without the pronouncement in the
Decision that she is being held solidarily liable, petitioner is only jointly liable.

DISPOSITION: WHEREFORE, the petition is DENIED. The Decision dated April 28, 2006 and the Resolution dated
June 29, 2007 of the Court of Appeals are AFFIRMED. The liability of the respondents in NLRC-NCR South Sector
Case No. 30-10-04950-01 and NLRC-NCR South Sector Case No. 30-11-05301-01 pursuant to the Decision of Labor
Arbiter Nieves V. de Castro dated August 30, 2002 should be, as it is hereby, considered joint, without prejudice to
the enforcement of the award against petitioner's co-judgment obligors in said cases.