Lawyerly

GR No. 200857

2014-10-22

BRION, J.

To hold an officer personally liable for the debts of the corporation, and thus pierce the veil of corporate fiction, it is necessary to clearly and convincingly establish the bad faith or wrongdoing of such officer, since bad faith is never presumed.[41] Because the respondents were not able to clearly show the definite participation of Burgos and Rana in their illegal dismissal, we uphold the general rule that corporate officers are not personally liable for the money claims of the discharged employees, unless they acted with evident malice and bad faith in terminating their employment.[42]

GR No. 182397

2011-09-14

ALERT SECURITY v. SAIDALI PASAWILAN

VILLARAMA, JR., J.

Further, in Carag v. National Labor Relations Commission,[28] the Court clarified the McLeod doctrine as regards labor laws, to wit: We have already ruled in McLeod v. NLRC[29] and Spouses Santos v. NLRC[30] that Article 212(e)[31] of the Labor Code, by itself, does not make a corporate officer personally liable for the debts of the corporation. The governing law on personal liability of directors for debts of the corporation is still Section 31 of the Corporation Code. x x x

GR No. 167751

2011-03-02

HARPOON MARINE SERVICES v. FERNAN H. FRANCISCO

DEL CASTILLO, J.

The general rule is grounded on the theory that a corporation has a legal personality separate and distinct from the persons comprising it.[36] To warrant the piercing of the veil of corporate fiction, the officer's bad faith or wrongdoing "must be established clearly and convincingly" as "[b]ad faith is never presumed."[37]

GR No. 159460

2010-11-15

SOLIDBANK CORPORATION v. ERNESTO U. GAMIER

VILLARAMA, JR., J.

It is basic that a corporation is invested by law with a personality separate and distinct from those of the persons composing it as well as 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.[61] In labor cases, in particular, the Court has held corporate directors and officers solidarily liable with the corporation for the termination of employment of corporate employees done with malice or in bad faith.[62] Bad faith is never presumed.[63] Bad faith does not simply connote bad judgment or negligence -- it imports a dishonest purpose or some moral obliquity and conscious doing of wrong. It means a breach of a known duty through some motive or interest or ill-will that partakes of the nature of fraud.[64]

GR No. 173169

2010-09-22

IRENE MARTEL FRANCISCO v. NUMERIANO MALLEN

CARPIO, J.

In Carag v. National Labor Relations Commission,[13] the Court did not hold a director personally liable for corporate obligations because the two requisites are lacking, to wit: Complainants did not allege in their complaint that Carag willfully and knowingly voted for or assented to any patently unlawful act of MAC. Complainants did not present any evidence showing that Carag willfully and knowingly voted for or assented to any patently unlawful act of MAC. Neither did Arbiter Ortiguerra make any finding to this effect in her Decision.

GR No. 170515

2010-05-06

MARMOSY TRADING v. CA

PEREZ, J.

It is no longer legally feasible to modify the final ruling in this case through the expediency of a petition questioning the order of execution. This late in the day, petitioner Victor Morales is barred, by the fact of a final judgment, from advancing the argument that his real property cannot be made liable for the monetary award in favor of respondent. For a reason greater than protection from personal liability, petitioner Victor Morales, as president of his corporation, cannot rely on our previous ruling that "to hold a director personally liable for debts of a corporation and thus pierce the veil of corporate fiction, the bad faith or wrongdoing of the director must be established clearly and convincingly."[41] Judgments of courts should attain finality at some point lest there be no end in litigation.[42] The final judgment in this case may no longer be reviewed, or in any way modified directly or indirectly, by a higher court, not even by the Supreme Court.[43] The reason for this is that, a litigation must end and terminate sometime and somewhere, and it is essential to an effective and efficient administration of justice that, once a judgment has become final, the winning party be not deprived of the fruits of the verdict. Courts must guard against any scheme calculated to bring about that result and must frown upon any attempt to prolong controversies.[44]

GR Nos. 164813 and 174590

2009-08-14

LOWE v. CA

CARPIO, J.

It is settled that in the absence of malice, bad faith, or specific provision of law, a director or an officer of a corporation cannot be made personally liable for corporate liabilities.[32] In Mcleod v. NLRC,[33] we said: To reiterate, a corporation is a juridical entity with legal personality separate and distinct from those acting for and in its behalf and, in general, from the people comprising it. The rule is that obligations incurred by the corporation, acting through its directors, officers, and employees are its sole liabilities.

GR NO. 178760

2009-07-23

CARMEN B. DY-DUMALASA v. DOMINGO SABADO S. FERNANDEZ

CARPIO MORALES, J.

And as held in Carag v. NLRC:[30]

GR No. 172212

2009-07-09

RAFAEL RONDINA v. CA FORMER SPECIAL 19TH DIVISION

QUISUMBING, J.

It is worth mentioning that VA Calipay made conflicting observations on the matter of bad faith or malice on the part of private respondents when they dismissed the employees. While he initially concluded that "[e]vidence had proven that [private] respondents were guilty of malice in illegally dismissing the complainants, inflicting oppression upon the complaining workers,"[13] he later on declared that "[i]n either case, moral damages may be awarded when the dismissal was executed with malice and oppression. But such is not clear in this case due to lack of convincing evidence."[14] Indeed, to hold a director personally liable for the 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.[15] Thus, we agree with the appellate court that VA Calipay failed to point out the circumstances proving that private respondents acted with bad faith or malice in dismissing the employees so as to make them solidarily liable with the corporation.

GR Nos. 148263 and 148271-72

2009-04-21

ARMANDO DAVID v. NATIONAL FEDERATION OF LABOR UNION

CARPIO, J.

The present case arose from the same circumstances as Antonio C. Carag v. National Labor Relations Commission, et al.[5]

GR No. 170689

2009-03-17

PANTRANCO EMPLOYEES ASSOCIATION (PEA-PTGWO) v. NLRC

NACHURA, J.

Moreover, in the recent cases Carag v. National Labor Relations Commission[50] and McLeod v. National Labor Relations Commission,[51] the Court explained the doctrine laid down in AC Ransom relative to the personal liability of the officers and agents of the employer for the debts of the latter. In AC Ransom, the Court imputed liability to the officers of the corporation on the strength of the definition of an employer in Article 212(c) (now Article 212[e]) of the Labor Code. Under the said provision, employer includes any person acting in the interest of an employer, directly or indirectly, but does not include any labor organization or any of its officers or agents except when acting as employer. It was clarified in Carag and McLeod that Article 212(e) of the Labor Code, by itself, does not make a corporate officer personally liable for the debts of the corporation. It added that the governing law on personal liability of directors or officers for debts of the corporation is still Section 31[52] of the Corporation Code.

GR No. 164326

2008-10-17

SEAOIL PETROLEUM CORPORATION v. AUTOCORP GROUP

NACHURA, J.

Moreover, Rodriguez, as stockholder and director of Uniline, cannot be held personally liable for the debts of the corporation, which has a separate legal personality of its own. While Section 31 of the Corporation Code[25] lays down the exceptions to the rule, the same does not apply in this case. Section 31 makes a director personally liable for corporate debts if he willfully and knowingly votes for or assents to patently unlawful acts of the corporation. Section 31 also makes a director personally liable if he is guilty of gross negligence or bad faith in directing the affairs of the corporation.[26] The bad faith or wrongdoing of the director must be established clearly and convincingly. Bad faith is never presumed.[27]

GR No. 158458

2007-12-19

ASIAN TERMINALS v. NATIONAL LABOR RELATIONS

AUSTRIA-MARTINEZ, J.

However, as to whether petitioner Atty. Rodolfo G. Corvite, Jr. should be held jointly and severally liable with petitioner Asian Terminals, Inc., we agree with the latter's view that, absent a distinct finding of bad faith or evident malice on the part of petitioner Atty. Rodolfo G. Corvite, Jr. in terminating the employment of respondent, the former should not be held solidarily liable for the payment of whatever monetary award is due respondent.[34]

	GR No. 200857 2014-10-22	FVR SKILLS v. JOVERT SEVA BRION, J.
To hold an officer personally liable for the debts of the corporation, and thus pierce the veil of corporate fiction, it is necessary to clearly and convincingly establish the bad faith or wrongdoing of such officer, since bad faith is never presumed.[41] Because the respondents were not able to clearly show the definite participation of Burgos and Rana in their illegal dismissal, we uphold the general rule that corporate officers are not personally liable for the money claims of the discharged employees, unless they acted with evident malice and bad faith in terminating their employment.[42]
	GR No. 182397 2011-09-14	ALERT SECURITY v. SAIDALI PASAWILAN VILLARAMA, JR., J.
Further, in Carag v. National Labor Relations Commission,[28] the Court clarified the McLeod doctrine as regards labor laws, to wit: We have already ruled in McLeod v. NLRC[29] and Spouses Santos v. NLRC[30] that Article 212(e)[31] of the Labor Code, by itself, does not make a corporate officer personally liable for the debts of the corporation. The governing law on personal liability of directors for debts of the corporation is still Section 31 of the Corporation Code. x x x
	GR No. 167751 2011-03-02	HARPOON MARINE SERVICES v. FERNAN H. FRANCISCO DEL CASTILLO, J.
The general rule is grounded on the theory that a corporation has a legal personality separate and distinct from the persons comprising it.[36] To warrant the piercing of the veil of corporate fiction, the officer's bad faith or wrongdoing "must be established clearly and convincingly" as "[b]ad faith is never presumed."[37]
	GR No. 159460 2010-11-15	SOLIDBANK CORPORATION v. ERNESTO U. GAMIER VILLARAMA, JR., J.
It is basic that a corporation is invested by law with a personality separate and distinct from those of the persons composing it as well as 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.[61] In labor cases, in particular, the Court has held corporate directors and officers solidarily liable with the corporation for the termination of employment of corporate employees done with malice or in bad faith.[62] Bad faith is never presumed.[63] Bad faith does not simply connote bad judgment or negligence -- it imports a dishonest purpose or some moral obliquity and conscious doing of wrong. It means a breach of a known duty through some motive or interest or ill-will that partakes of the nature of fraud.[64]
	GR No. 173169 2010-09-22	IRENE MARTEL FRANCISCO v. NUMERIANO MALLEN CARPIO, J.
In Carag v. National Labor Relations Commission,[13] the Court did not hold a director personally liable for corporate obligations because the two requisites are lacking, to wit: Complainants did not allege in their complaint that Carag willfully and knowingly voted for or assented to any patently unlawful act of MAC. Complainants did not present any evidence showing that Carag willfully and knowingly voted for or assented to any patently unlawful act of MAC. Neither did Arbiter Ortiguerra make any finding to this effect in her Decision.
	GR No. 170515 2010-05-06	MARMOSY TRADING v. CA PEREZ, J.
It is no longer legally feasible to modify the final ruling in this case through the expediency of a petition questioning the order of execution. This late in the day, petitioner Victor Morales is barred, by the fact of a final judgment, from advancing the argument that his real property cannot be made liable for the monetary award in favor of respondent. For a reason greater than protection from personal liability, petitioner Victor Morales, as president of his corporation, cannot rely on our previous ruling that "to hold a director personally liable for debts of a corporation and thus pierce the veil of corporate fiction, the bad faith or wrongdoing of the director must be established clearly and convincingly."[41] Judgments of courts should attain finality at some point lest there be no end in litigation.[42] The final judgment in this case may no longer be reviewed, or in any way modified directly or indirectly, by a higher court, not even by the Supreme Court.[43] The reason for this is that, a litigation must end and terminate sometime and somewhere, and it is essential to an effective and efficient administration of justice that, once a judgment has become final, the winning party be not deprived of the fruits of the verdict. Courts must guard against any scheme calculated to bring about that result and must frown upon any attempt to prolong controversies.[44]
	GR Nos. 164813 and 174590 2009-08-14	LOWE v. CA CARPIO, J.
It is settled that in the absence of malice, bad faith, or specific provision of law, a director or an officer of a corporation cannot be made personally liable for corporate liabilities.[32] In Mcleod v. NLRC,[33] we said: To reiterate, a corporation is a juridical entity with legal personality separate and distinct from those acting for and in its behalf and, in general, from the people comprising it. The rule is that obligations incurred by the corporation, acting through its directors, officers, and employees are its sole liabilities.
	GR NO. 178760 2009-07-23	CARMEN B. DY-DUMALASA v. DOMINGO SABADO S. FERNANDEZ CARPIO MORALES, J.
And as held in Carag v. NLRC:[30]
	GR No. 172212 2009-07-09	RAFAEL RONDINA v. CA FORMER SPECIAL 19TH DIVISION QUISUMBING, J.
It is worth mentioning that VA Calipay made conflicting observations on the matter of bad faith or malice on the part of private respondents when they dismissed the employees. While he initially concluded that "[e]vidence had proven that [private] respondents were guilty of malice in illegally dismissing the complainants, inflicting oppression upon the complaining workers,"[13] he later on declared that "[i]n either case, moral damages may be awarded when the dismissal was executed with malice and oppression. But such is not clear in this case due to lack of convincing evidence."[14] Indeed, to hold a director personally liable for the 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.[15] Thus, we agree with the appellate court that VA Calipay failed to point out the circumstances proving that private respondents acted with bad faith or malice in dismissing the employees so as to make them solidarily liable with the corporation.
	GR Nos. 148263 and 148271-72 2009-04-21	ARMANDO DAVID v. NATIONAL FEDERATION OF LABOR UNION CARPIO, J.
The present case arose from the same circumstances as Antonio C. Carag v. National Labor Relations Commission, et al.[5]
	GR No. 170689 2009-03-17	PANTRANCO EMPLOYEES ASSOCIATION (PEA-PTGWO) v. NLRC NACHURA, J.
Moreover, in the recent cases Carag v. National Labor Relations Commission[50] and McLeod v. National Labor Relations Commission,[51] the Court explained the doctrine laid down in AC Ransom relative to the personal liability of the officers and agents of the employer for the debts of the latter. In AC Ransom, the Court imputed liability to the officers of the corporation on the strength of the definition of an employer in Article 212(c) (now Article 212[e]) of the Labor Code. Under the said provision, employer includes any person acting in the interest of an employer, directly or indirectly, but does not include any labor organization or any of its officers or agents except when acting as employer. It was clarified in Carag and McLeod that Article 212(e) of the Labor Code, by itself, does not make a corporate officer personally liable for the debts of the corporation. It added that the governing law on personal liability of directors or officers for debts of the corporation is still Section 31[52] of the Corporation Code.
	GR No. 164326 2008-10-17	SEAOIL PETROLEUM CORPORATION v. AUTOCORP GROUP NACHURA, J.
Moreover, Rodriguez, as stockholder and director of Uniline, cannot be held personally liable for the debts of the corporation, which has a separate legal personality of its own. While Section 31 of the Corporation Code[25] lays down the exceptions to the rule, the same does not apply in this case. Section 31 makes a director personally liable for corporate debts if he willfully and knowingly votes for or assents to patently unlawful acts of the corporation. Section 31 also makes a director personally liable if he is guilty of gross negligence or bad faith in directing the affairs of the corporation.[26] The bad faith or wrongdoing of the director must be established clearly and convincingly. Bad faith is never presumed.[27]
	GR No. 158458 2007-12-19	ASIAN TERMINALS v. NATIONAL LABOR RELATIONS AUSTRIA-MARTINEZ, J.
However, as to whether petitioner Atty. Rodolfo G. Corvite, Jr. should be held jointly and severally liable with petitioner Asian Terminals, Inc., we agree with the latter's view that, absent a distinct finding of bad faith or evident malice on the part of petitioner Atty. Rodolfo G. Corvite, Jr. in terminating the employment of respondent, the former should not be held solidarily liable for the payment of whatever monetary award is due respondent.[34]

ANTONIO C. CARAG v. NLRC