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30 DONE Dutch Movers, Inc. vs. Lequin

Edilberto Lequin was employed as a truck driver by Dutch Movers, Inc. which was owned by spouses Edgar and Yolanda Lee. When Dutch Movers ceased operations without providing proper notice, Lequin and other workers filed an illegal dismissal case. The NLRC ruled in their favor but Dutch Movers had closed. Lequin then sought to enforce the judgment against Edgar and Yolanda Lee, claiming they were the true owners. The LA agreed but the NLRC did not, saying only Dutch Movers was liable. However, the CA affirmed piercing the corporate veil and holding the individual owners liable, which the Supreme Court also confirmed was allowed given the owners used the corporation to evade labor laws.

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185 views2 pages

30 DONE Dutch Movers, Inc. vs. Lequin

Edilberto Lequin was employed as a truck driver by Dutch Movers, Inc. which was owned by spouses Edgar and Yolanda Lee. When Dutch Movers ceased operations without providing proper notice, Lequin and other workers filed an illegal dismissal case. The NLRC ruled in their favor but Dutch Movers had closed. Lequin then sought to enforce the judgment against Edgar and Yolanda Lee, claiming they were the true owners. The LA agreed but the NLRC did not, saying only Dutch Movers was liable. However, the CA affirmed piercing the corporate veil and holding the individual owners liable, which the Supreme Court also confirmed was allowed given the owners used the corporation to evade labor laws.

Uploaded by

Kathlene Jao
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as PDF, TXT or read online on Scribd
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G.R. No. 210032 DUTCH MOVERS, INC. vs.

LEQUIN

FACTS: Dutch Movers, Inc. (Dutch Movers), is a domestic corporation owned by spouses Cesar
and Yolanda Lee which is engaged in hauling liquefied petroleum gas, employed Edilberto
Lequin (Lequin) as truck driver. Later on, Dutch Movers informed Lequin and the other workers
that it would cease operations. Lequin and the other workers requested a formal notice but to
no avail, and subsequently thereto, inquired with the Department of Labor and Employment
which issued a certification that Dutch Movers did not file any notice of business closure. Thus,
Lequin and the other workers filed a complaint for illegal dismissal before the Labor Arbiter
(LA).

LA Ruling: The complaint was set aside. NLRC Ruling: The LA decision was reversed and set
aside, ruling that Lequin and the other workers were illegally dismissed and should be
reinstated. The NLRC decision became final and executory, prompting Lequin to file a motion
for a writ of execution. Pending the motion, he filed a motion to implead spouses Edgar and
Yolanda Lee when he eventually discovered that Dutch Movers no longer operates. Further, the
Articles of Incorporation did not include Cesar and Yoland Lee as its directors and officers, with
the said list all being strangers to him. Given these developments, Lequin impleaded the said
directors and officers including the spouses Edgar and Millicent Smith.

The Smiths stressed that they were not Dutch Movers’ stockholders, directors, officers, or
managers at the time Lequin was terminated and that they were merely the lawyers of spouses
Edgar and Yolanda Lee as they lent their names to assist the latter spouses in incorporating
Dutch Movers. After which, the Smiths transferred their rights to spouses Edgar and Yolanda
Lee.

LA Ruling on Lequin’s motion: The LA issued an order holding spouses Edgar and Yolanda Lee
liable for the judgement awards as they represented themselves to Lequin as owners of the
Dutch Movers. Upon Lequin’s reiteration of his motion, the LA ordered the sheriff to proceed to
spouses Edgar and Yolanda Lee’s place of business to collect said judgement.
Spouses Edgar and Yolanda Lee filed a motion to quash the writ of execution on the ground
that the LA had no jurisdiction to modify the final and executory NLRC decision. The LA denied
said motion to quash, prompting the spouses Edgar and Yolanda Lee to appeal to the NLRC.

NLRC Ruling: The LA’s decision was set aside, holding that it should only be Dutch Movers who
should be held liable as the latter had a separate and distinct personality from the persons
comprising it, ruling that spouses Edgar and Yolanda Lee were not stockholders nor officers of
Dutch Movers. Undaunted, Lequin elevated the case to the Court of Appeals (CA).

CA Ruling: The NLRC decision is set aside, affirming the LA’s decision holding the spouses Edgar
and Yolanda Lee liable to answer for the judgement awards. While as a rule, once a judgment
becomes final and executory, it cannot anymore be altered or modified; however, an exception
to this rule is when there is a supervening event, which renders the execution of judgment
unjust or impossible. In this case, the supervening event was the closure of Dutch Movers.

ISSUE: Whether the piercing of the corporate veil is warranted?

RULING: Yes. The Supreme Court (SC) allows the piercing of the corporate veil when the
corporation’s personality is used as a device to defeat the labor laws, attaching personal liability
against responsible persons. The responsible persons in this case are the spouses Edgar and
Yolanda Lee, who have been shown to have control over Dutch Movers such that it existed not
as a separate entity but as their business conduit.

The piercing of the corporate veil is allowed, and responsible persons may be impleaded, and
be held solidarily liable even after final judgment and on execution, provided that such persons
deliberately used the corporate vehicle to unjustly evade the judgment obligation, or resorted
to fraud, bad faith, or malice in evading their obligation.

While such device to defeat labor laws may be deemed ingenious and imaginative, the Court
will not hesitate to draw the line, and protect the right of workers to security of tenure,
including ensuring that they will receive the benefits they deserve when they fall victims of
illegal dismissal.

Hence, the ruling.

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