Case Title: Alba et al. vs.

Yupangco
GR No. 188233
June 29, 2010

Case Problem:

Querubin Alba (Alba) and Rizalinda De Guzman (De Guzman) were both illegally
dismissed by Y.L. Land Corporation while Ultra Motors Corporation failed to pay them their
retirements benefits. Robert Yupangco (Yupangco), as President of both companies, was also
impleaded by both the Labor Arbiter (LA) and National Labor Relations Commission (NLRC) as
solidarily liable for the obligation of both corporations, hence, the LA and NLRC Sheriff issued
and implemented respectively a Writ of Execution to seize Yupangco’s club shares of Manila
Golf and Country Club, Inc. Yupangco claims that he should only pay one third of the total
obligation of the corporations and filed a Petition for Prohibition against NLRC through the
Court of Appeals (CA) on the grounds that the former is not solidarily liable for the obligation of
both corporations.

Questions:

1. Compare and contrast solidary liability from joint liability. (2pts.)

2. Is Yupangco solidarily liable for the obligation of Y.L. Land Corporation and Ultra
Motors Corporation? Explain. (6pts.)

3. How much should Yupangco pay to Alba and De Guzman? Explain. (2pts.)

Answers:

1. Solidary liability, as stated in Article 1207 of the Civil Code, is (1) when the obligation
expressly says, (2) when the law provides, or (3) when the nature of obligation requires.
This means that each of the debtors is liable for the entire obligation and each of the
creditors is entitled to demand the satisfaction of the whole obligation from any of all of
the debtors. The maxim “to each his own” can be applied.

Whereas, joint liability, as provided in Article 1208 of the same Code, the credit or debt
shall be presumed to be divided into as many equal shares as there are creditors or
debtors. This means that it is only liable for a proportionate part of the debt, and the
creditor is entitled to demand only a proportionate part of the credit from each debtor.
The maxim “one for all, all for one” can be applied.

2. Yupangco is only held jointly liable for the obligation with his co-obligors corporations.

In the case of MAM Realty Development Corporation vs. NLRC, the Court held that
there is solidary liability (1) when the obligation expressly says, (2) when the law
provides, or (3) when the nature of obligation requires. A corporation being a juridical
entity, may act only through its directors, officers and employees. The obligations
 incurred by them acting as corporate agents are not theirs but as direct accountabilities of
the corporation they are representing. True solidary liabilities may at times be incurred
but only when exceptional circumstances warrant such as when directors and trustees or
officers of a corporation: (a) vote for or assent to patently unlawful acts of the
corporation; or (b) act in bad faith or with gross negligence in directing the corporate
affairs. Hence, in labor cases, the Court held corporate directors and officers are
solidarily liable with the corporation for the termination of employment of employees
done with malice or in bad faith.

Yupangco, acting as the President of both Y.L. Land Corporation and Ultra Motors
Corporation, only acts as a corporate agent of the corporations which he represents.

Since the LA did not find any indication that Alba and De Guzman’s dismissal was due to
malice or bad faith, therefore, Yupangco is only jointly liable.

3. Yupangco should only pay one third of the obligation with his co-obligor corporations
because he is jointly liable with them.

Article 1207 of the Civil Code provides that there is solidary liability (1) when the
obligation expressly says, (2) when the law provides, or (3) when the nature of obligation
requires.

Since there is no sufficient evidence that the corporations dismissed Alba and De
Guzman with malice or bad faith, hence, Yupangco should not be solidarily liable as held
in decided labor cases.

Therefore, Yupangco’s payment to Alba and De Guzman, which is equivalent to one third
of the total amount to be paid, is correct.
Tags: joint liability, solidary liability, illegal dismissal