Lawyerly

GR No. 171303

2016-01-20

ELIZABETH L. DIAZ v. GEORGINA R. ENCANTO

LEONARDO-DE CASTRO, J.

The resolution of this case hinges on the question of bad faith on the part of the respondents in denying petitioner Diaz's sabbatical leave application and withholding of her salaries. Bad faith, however, is a question of fact and is evidentiary.[26] Thus, contrary to petitioner Diaz's belief that "[w]hat is involved in this stage of the case is the legal interpretation or the legal consequence of the material facts of this case," the resolution of the issue at hand involves a question of fact, which the respondents rightly assert, is not within the province of a Rule 45 petition.[27] Nonetheless, the Court makes an exception in this case especially so that both the RTC and the Court of Appeals have the same findings of fact, but they arrived at different conclusions.[28]

GR No. 171118

2012-09-10

PARK HOTEL v. MANOLO SORIANO

PERALTA, J.

A corporation is an artificial being invested by law with a personality separate and distinct from that of its stockholders and from that of other corporations to which it may be connected.[35] While a corporation may exist for any lawful purpose, the law will regard it as an association of persons or, in case of two corporations, merge them into one, when its corporate legal entity is used as a cloak for fraud or illegality. This is the doctrine of piercing the veil of corporate fiction. The doctrine applies only when such corporate fiction is used to defeat public convenience, justify wrong, protect fraud, or defend crime, or when it is made as a shield to confuse the legitimate issues, or where a corporation is the mere alter ego or business conduit of a person, or where the corporation is so organized and controlled and its affairs are so conducted as to make it merely an instrumentality, agency, conduit or adjunct of another corporation.[36] To disregard the separate juridical personality of a corporation, the wrongdoing must be established clearly and convincingly. It cannot be presumed.[37]

GR No. 182331

2012-04-18

MA. CORINA C. JIAO v. NLRC

REYES, J.

As a rule, a corporation that purchases the assets of another will not be liable for the debts of the selling corporation, provided the former acted in good faith and paid adequate consideration for such assets, except when any of the following circumstances is present: (1) where the purchaser expressly or impliedly agrees to assume the debts; (2) where the transaction amounts to a consolidation or merger of the corporations; (3) where the purchasing corporation is merely a continuation of the selling corporation; and (4) where the selling corporation fraudulently enters into the transaction to escape liability for those debts.[37]

GR No. 182397

2011-09-14

ALERT SECURITY v. SAIDALI PASAWILAN

VILLARAMA, JR., J.

Jurisprudence has been consistent in defining the instances when the separate and distinct personality of a corporation may be disregarded in order to hold the directors, officers, or owners of the corporation liable for corporate debts. In McLeod v. National Labor Relations Commission,[27] the Court ruled: Thus, the rule is still that the doctrine of piercing the corporate veil applies only when the corporate fiction is used to defeat public convenience, justify wrong, protect fraud, or defend crime. In the absence of malice, bad faith, or a specific provision of law making a corporate officer liable, such corporate officer cannot be made personally liable for corporate liabilities. x x x

GR No. 173169

2010-09-22

IRENE MARTEL FRANCISCO v. NUMERIANO MALLEN

CARPIO, J.

In McLeod v. NLRC,[15] the Court did not hold a director, an officer, and other corporations personally liable for corporate obligations of the employer because the second requisite was lacking. The Court held: A corporation is an artificial being invested by law with a personality separate and distinct from that of its stockholders and from that of other corporations to which it may be connected.

GR No. 176748

2010-09-01

JUDY O. DACUITAL v. L.M. CAMUS ENGINEERING CORPORATION

NACHURA, J.

As held in Lowe, Inc. v. Court of Appeals,[54] citing McLeod v. NLRC:[55]

GR No. 160545

2010-03-09

PRISMA CONSTRUCTION v. ARTHUR F. MENCHAVEZ

BRION, J.

The doctrine of piercing the corporate veil applies only in three (3) basic instances, namely: a) when the separate and distinct corporate personality defeats public convenience, as when the corporate fiction is used as a vehicle for the evasion of an existing obligation; b) in fraud cases, or when the corporate entity is used to justify a wrong, protect a fraud, or defend a crime; or c) is used in alter ego cases, i.e., where a corporation is essentially a farce, since it is a mere alter ego or business conduit of a person, or where the corporation is so organized and controlled and its affairs so conducted as to make it merely an instrumentality, agency, conduit or adjunct of another corporation.[46] In the absence of malice, bad faith, or a specific provision of law making a corporate officer liable, such corporate officer cannot be made personally liable for corporate liabilities.[47]

GR No. 171587

2009-10-13

EASTERN SHIPPING LINES v. FERRER D. ANTONIO

PERALTA, J.

We rule that the award of moral damages is not proper. Moral damages are recoverable only if the defendant has acted fraudulently or in bad faith, or is guilty of gross negligence amounting to bad faith, or in wanton disregard of his contractual obligations. The breach must be wanton, reckless, malicious, or in bad faith, oppressive or abusive.[18] Further, moral damages are recoverable only where the dismissal was attended by bad faith or fraud, or constituted an act oppressive to labor, or was done in a manner contrary to morals, good customs or public policy.[19]

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. 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. 173333

2008-08-13

LUCIA MAGALING v. PETER ONG

CHICO-NAZARIO, J.

It is basic that 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.[40] The general rule is that obligations incurred by the corporation, acting through its directors, officers and employees, are its sole liabilities, and vice versa.

	GR No. 171303 2016-01-20	ELIZABETH L. DIAZ v. GEORGINA R. ENCANTO LEONARDO-DE CASTRO, J.
The resolution of this case hinges on the question of bad faith on the part of the respondents in denying petitioner Diaz's sabbatical leave application and withholding of her salaries. Bad faith, however, is a question of fact and is evidentiary.[26] Thus, contrary to petitioner Diaz's belief that "[w]hat is involved in this stage of the case is the legal interpretation or the legal consequence of the material facts of this case," the resolution of the issue at hand involves a question of fact, which the respondents rightly assert, is not within the province of a Rule 45 petition.[27] Nonetheless, the Court makes an exception in this case especially so that both the RTC and the Court of Appeals have the same findings of fact, but they arrived at different conclusions.[28]
	GR No. 171118 2012-09-10	PARK HOTEL v. MANOLO SORIANO PERALTA, J.
A corporation is an artificial being invested by law with a personality separate and distinct from that of its stockholders and from that of other corporations to which it may be connected.[35] While a corporation may exist for any lawful purpose, the law will regard it as an association of persons or, in case of two corporations, merge them into one, when its corporate legal entity is used as a cloak for fraud or illegality. This is the doctrine of piercing the veil of corporate fiction. The doctrine applies only when such corporate fiction is used to defeat public convenience, justify wrong, protect fraud, or defend crime, or when it is made as a shield to confuse the legitimate issues, or where a corporation is the mere alter ego or business conduit of a person, or where the corporation is so organized and controlled and its affairs are so conducted as to make it merely an instrumentality, agency, conduit or adjunct of another corporation.[36] To disregard the separate juridical personality of a corporation, the wrongdoing must be established clearly and convincingly. It cannot be presumed.[37]
	GR No. 182331 2012-04-18	MA. CORINA C. JIAO v. NLRC REYES, J.
As a rule, a corporation that purchases the assets of another will not be liable for the debts of the selling corporation, provided the former acted in good faith and paid adequate consideration for such assets, except when any of the following circumstances is present: (1) where the purchaser expressly or impliedly agrees to assume the debts; (2) where the transaction amounts to a consolidation or merger of the corporations; (3) where the purchasing corporation is merely a continuation of the selling corporation; and (4) where the selling corporation fraudulently enters into the transaction to escape liability for those debts.[37]
	GR No. 182397 2011-09-14	ALERT SECURITY v. SAIDALI PASAWILAN VILLARAMA, JR., J.
Jurisprudence has been consistent in defining the instances when the separate and distinct personality of a corporation may be disregarded in order to hold the directors, officers, or owners of the corporation liable for corporate debts. In McLeod v. National Labor Relations Commission,[27] the Court ruled: Thus, the rule is still that the doctrine of piercing the corporate veil applies only when the corporate fiction is used to defeat public convenience, justify wrong, protect fraud, or defend crime. In the absence of malice, bad faith, or a specific provision of law making a corporate officer liable, such corporate officer cannot be made personally liable for corporate liabilities. x x x
	GR No. 173169 2010-09-22	IRENE MARTEL FRANCISCO v. NUMERIANO MALLEN CARPIO, J.
In McLeod v. NLRC,[15] the Court did not hold a director, an officer, and other corporations personally liable for corporate obligations of the employer because the second requisite was lacking. The Court held: A corporation is an artificial being invested by law with a personality separate and distinct from that of its stockholders and from that of other corporations to which it may be connected.
	GR No. 176748 2010-09-01	JUDY O. DACUITAL v. L.M. CAMUS ENGINEERING CORPORATION NACHURA, J.
As held in Lowe, Inc. v. Court of Appeals,[54] citing McLeod v. NLRC:[55]
	GR No. 160545 2010-03-09	PRISMA CONSTRUCTION v. ARTHUR F. MENCHAVEZ BRION, J.
The doctrine of piercing the corporate veil applies only in three (3) basic instances, namely: a) when the separate and distinct corporate personality defeats public convenience, as when the corporate fiction is used as a vehicle for the evasion of an existing obligation; b) in fraud cases, or when the corporate entity is used to justify a wrong, protect a fraud, or defend a crime; or c) is used in alter ego cases, i.e., where a corporation is essentially a farce, since it is a mere alter ego or business conduit of a person, or where the corporation is so organized and controlled and its affairs so conducted as to make it merely an instrumentality, agency, conduit or adjunct of another corporation.[46] In the absence of malice, bad faith, or a specific provision of law making a corporate officer liable, such corporate officer cannot be made personally liable for corporate liabilities.[47]
	GR No. 171587 2009-10-13	EASTERN SHIPPING LINES v. FERRER D. ANTONIO PERALTA, J.
We rule that the award of moral damages is not proper. Moral damages are recoverable only if the defendant has acted fraudulently or in bad faith, or is guilty of gross negligence amounting to bad faith, or in wanton disregard of his contractual obligations. The breach must be wanton, reckless, malicious, or in bad faith, oppressive or abusive.[18] Further, moral damages are recoverable only where the dismissal was attended by bad faith or fraud, or constituted an act oppressive to labor, or was done in a manner contrary to morals, good customs or public policy.[19]
	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. 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. 173333 2008-08-13	LUCIA MAGALING v. PETER ONG CHICO-NAZARIO, J.
It is basic that 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.[40] The general rule is that obligations incurred by the corporation, acting through its directors, officers and employees, are its sole liabilities, and vice versa.

JOHN F. MCLEOD v. NLRC