Wensha vs Yung Case Digest

Rule 45 of the Rules of Court filed by an employer who was charged before the National Labor Relations Commission (NLRC) for dismissing an employee upon the advice of a Feng Shui master. Facts: Wensha Spa Center, Inc. (Wensha) in Quezon City is in the business of sauna bath and massage services. Xu Zhi Jie a. k. a. Pobby Co (Xu) is its president,3 respondent Loreta T. Yung (Loreta) was its administrative manager at the time of her termination from employment.

Loreta recounted that on August 10, 2004, she was asked to leave her office because Xu and a Feng Shui master were exploring the premises. Later that day, Xu asked Loreta to go on leave with pay for one month. She did so and returned on September 10, 2004. Upon her return, Xu and his wife asked her to resign from Wensha because, according to the Feng Shui master, her aura did not match that of Xu. Loreta refused but was informed that she could no longer continue working at Wensha. That same afternoon, Loreta went to the NLRC and filed a case for illegal dismissal against Xu and Wensha.

Labor Arbiter (LA) Francisco Robles dismissed Loreta’s complaint for lack of merit. He found it more probable that Loreta was dismissed from her employment due to Wensha’s loss of trust and confidence in her. NLRC affirmed in its Resolution,9 citing its observation that Wensha was still considering the proper action to take on the day Loreta left Wensha and filed her complaint. CA reversed the ruling of the NLRC on the ground that it gravely abused its discretion in appreciating the factual bases that led to Loreta’s dismissal. The CA noted that there were irregularities and inconsistencies in Wensha’s position.

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Issue: Whether or not petitioner Xu Zhi Jie is solidarily liable with Wensha. Ruling: Loreta’s security of tenure is guaranteed by the Constitution and the Labor Code. Under the security of tenure guarantee, a worker can only be terminated from his employment for cause and after due process. The records are bereft of evidence that Loreta was duly informed of the charges against her and that she was given the opportunity to respond to those charges prior to her dismissal. If there were indeed charges against Loreta that Wensha had to investigate, then it should have informed her of those charges and required her to explain her side.

Wensha should also have kept records of the investigation conducted while Loreta was on leave. The law requires that two notices be given to an employee prior to a valid termination: the first notice is to inform the employee of the charges against her with a warning that she may be terminated from her employment and giving her reasonable opportunity within which to explain her side, and the second notice is the notice to the employee that upon due consideration of all the circumstances, she is being terminated from her employment. This is a requirement of due process and clearly, Loreta did not receive any of those required notices.

Nevertheless, the Court finds merit in the argument of petitioner Xu that the CA erred in ruling that he is solidarily liable with Wensha. Elementary is the rule that a corporation is invested by law with a personality separate and distinct from those of the persons composing it and from that of any other legal entity to which it may be related. "Mere ownership by a single stockholder or by another corporation of all or nearly all of the capital stock of a corporation is not of itself sufficient ground for disregarding the separate corporate personality. In labor cases, corporate directors and officers may be held solidarily liable with the corporation for the termination of employment only if done with malice or in bad faith. Bad faith does not connote bad judgment or negligence; it imports a dishonest purpose or some moral obliquity and conscious doing of wrong; it means breach of a known duty through some motive or interest or ill will; it partakes of the nature of fraud. In the subject decision, the CA concluded that petitioner Xu and Wensha are jointly and severally liable to Loreta.

We have read the decision in its entirety but simply failed to come across any finding of bad faith or malice on the part of Xu. There is, therefore, no justification for such a ruling. To sustain such a finding, there should be an evidence on record that an officer or director acted maliciously or in bad faith in terminating the services of an employee. Moreover, the finding or indication that the dismissal was effected with malice or bad faith should be stated in the decision itself.

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