Rodolfo Laborte v.

Pagsanjan Tourism Consumers Cooperative

G.R. No. 183860 January 15, 2014
Doctrine: As a general rule the officer cannot be held personally liable with the corporation,
whether civilly or otherwise, for the consequences of his acts, if acted for and in behalf of the
corporation, within the scope of his authority and in good faith.
Facts: Philippine Tourism Authority (PTA) is a government-owned and controlled corporation that
administers tourism zones as mandated by Presidential Decree (P.D.) No. 564 PTA used to
operate the Philippine Gorge Tourist Zone (PGTZ) Administration Complex (PTA Complex), a
declared tourist zone in Pagsanjan, Laguna. Pagsanjan Tourism Consumers’ Cooperative (PTCC)
is a cooperative organized since 1988 under Republic Act No. 6938, or the "Cooperative Code
of the Philippines." The other individual respondents are PTCC employees, consisting of restaurant
staff and boatmen at the PTA Complex. In order to help the PTCC as a cooperative, the PTA
allowed it to operate a restaurant business located at the main building of the PTA Complex
and the boat ride services to ferry guests and tourists to and from the Pagsanjan Falls, paying a
certain percentage of its earnings to the PTA. PTA implemented a reorganization and reshuffling
in its top level management. Herein petitioner Rodolfo Laborte (Laborte) was designated as
Area Manager, CALABARZON area with direct supervision over the PTA Complex and other
entities at the Southern Luzon.

On October 22, 1993, Laborte served a written notice upon the respondents to cease the
operations of the latter’s restaurant business and boat ride services in view of the rehabilitation,
facelifting and upgrading project of the PTA Complex. Consequently, on November 9, 1993, the
PTCC filed with the RTC, Branch 28, Santa Cruz, Laguna a Complaint for Prohibition, Injunction
and Damages with Temporary Restraining Order (TRO) and Preliminary Injunction 7 against
Laborte, docketed as Civil Case No. 3150. The PTCC also sought from the court the award of
moral and exemplary damages, attorney’s fees and costs of suit. It also prayed for the issuance
of a TRO or writ of preliminary injunction to prohibit Laborte from causing the PTCC to cease the
operations of the restaurant and boat ride services and from evicting the PTCC’s restaurant from
the main building of the PTA Complex.

Laborte averred that the PTCC does not own the restaurant facility as it was only tolerated to
operate the same by the PTA as a matter of lending support and assistance to the cooperative
in its formative years. It has neither been granted any franchise nor concession to operate the
restaurant nor any exclusive franchise to handle the boating operations in the complex. Since
the PTCC had no contract, concession, or exclusive franchise to operate the restaurant business
and the boating services in the PTA Complex, no existing right has been allegedly violated by
the petitioners. The respondents, therefore, had no right for the injunctive relief prayed for.
PTCC averred that Laborte and his lawyers defied the TRO and proceeded to close the
restaurant on December 2, 1993. The PTCC also alleged that Laborte prohibited its own
boatmen from ferrying tourists and allowed another association of boatmen to operate.
RTC ruled in favour of PTCC, CA upheld the ruling

Issue: Whether the CA erred in ruling that Laborte is liable in his personal and official capacity to
the respondents.

Held: No. With respect to Laborte's liability in his official and personal capacity, the Court finds
that Laborte was simply implementing the lawful order of the PTA Management. As a general
rule the officer cannot be held personally liable with the corporation, whether civilly or
otherwise, for the consequences of his acts, if acted for and in behalf of the corporation, within
the scope of his authority and in good faith. Furthermore, the Court also notes that the charges
against petitioners Laborte and the PTA for grave coercion and for the violation of R.A.
671374 have all been dismissed. Thus, the Court finds no basis to hold petitioner Laborte liable.
 MAM Realty Development Corporation vs National Labor Relations Commission
G.R. No. 114787 June 2, 1995
Doctrine: A corporation, being a juridical entity, may act only through its directors, officers and
employees. Obligations incurred by them, acting as such corporate agents, are not theirs but
the direct accountabilities of the corporation they represent. True, solidarily liabilities may at
times be incurred but only when exceptional circumstances warrant such.

Facts: The controversy originated from a labor case filed with the Labor Arbiter by private
respondent Celso B. Balbastro against herein petitioners, MAM Realty Development Corporation
(“MAM”) and its Vice President Manuel P. Centeno, for wage differentials, “ECOLA,” overtime
pay, incentive leave pay, 13th month pay (for the years 1988 and 1989), holiday pay and rest
day pay. Balbastro alleged that he was employed by MAM as a pump operator in 1982 and
had since performed such work at its Rancho Estate, Marikina, Metro Manila. He earned a basic
monthly salary of P1,590.00 for seven days of work a week that started from 6:00 a.m. to up until
6:00 p.m. daily. In a decision, dated 23 December 1991, the Labor Arbiter dismissed the
complaint for lack of merit.
On appeal to it, respondent National Labor Relations Commission (“NLRC”) rendered judgment
(a) setting aside the questioned decision of the Labor Arbiter and (b) referring the case,
pursuant to Article 218(c) of the Labor Code, to Arbiter Cristeta D. Tamayo for further hearing
and submission of a report within 20 days from receipt of the Order. On 21 March 1994,
respondent Commissioner, after considering the report of Labor Arbiter Tamayo, ordered:

“WHEREFORE, the respondents (MAM&Centeno) are hereby directed to pay jointly and severally
complainant the sum of P86,641.05 as above computed.”

Issue: Whether Centeno is solidarily liable with herein petitioner MAM Realty.

Held: No. We agree with petitioners, that the NLRC erred in holding Centeno jointly and severally
liable with MAM. A corporation, being a juridical entity, may act only through its directors,
officers and employees. Obligations incurred by them, acting as such corporate agents, are not
theirs but the direct accountabilities of the corporation they represent. True, solidarily liabilities
may at times be incurred but only when exceptional circumstances warrant such as, generally,
in the following cases:
1. When directors and trustees or, in appropriate cases, the officers of a corporation —
(a) vote for or assent to patently unlawful acts of the corporation;
(b) act in bad faith or with gross negligence in directing the corporate affairs;
(c) are guilty of conflict of interest to the prejudice of the corporation, its stockholders or
members, and other persons.
2. When a director or officer has consented to the issuance of watered stock or who, having
knowledge thereof, did not forthwith file with the corporate secretary his written objection
thereto.
3. When the director, trustee or officer has contractually agreed or stipulated to hold himself
personally and solidarily liable with the Corporation.
4. When a director, trustee or officer is made, by specific provision of law, personally liable for his
corporate action.

In labor cases, for instance, the Court has held corporate directors and officers solidarily liable
with the corporation for the termination of employment of employees done with malice or in
bad faith.
In the case at bench, there is nothing substantial on record that can justify, prescinding from the
foregoing, petitioner Centeno’s solidary liability with the corporation
 HARPOON MARINE SERVICES, INC. AND JOSE LIDO T. ROSIT, PETITIONERS, VS. FERNAN H.
FRANCISCO
G.R. No. 167751, March 02, 2011
Doctrine: The general rule is grounded on the theory that a corporation has a legal personality
separate and distinct from the persons comprising it. 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."

Facts: a company engaged in ship building and ship repair, with petitioner Rosit as its President
and Chief Executive Officer (CEO), originally hired Francisco in 1992 as its Yard Supervisor tasked
to oversee and supervise all projects of the company. In 1998, respondent left for employment
elsewhere but was rehired by petitioner Harpoon and assumed his previous position a year after.
Francisco averred that he was unceremoniously dismissed by petitioner Rosit. He was informed
that the company could no longer afford his salary and that he would be paid his separation
pay and accrued commissions. Respondent nonetheless continued to report for work. A few
days later, however, he was barred from entering the company premises. Relying on the
promise of petitioner Rosit, respondent went to the office on June 30, 2001 to receive his
separation pay and commissions, but petitioner Rosit offered only his separation pay.
Respondent refused to accept it and also declined to sign a quitclaim.

Labor Arbiter ruled that Francisco was validly dismissed due to his unexplained tardiness and
absences and Harpoon abide by the procedural due process required of in terminating
employment. The NLRC overturned the LA’s decision and ruled that Harpoon and Rosit is
solidarily liable for Francisco’s Backwages, 13th month pay, separation pay and commissions. CA
affirmed the ruling

Issue: Whether Rosit should be solidarily liable with Harpoon Marine Services Inc.

Held: No. As held in the case of MAM Realty Development Corporation v. National Labor
Relations Commission, "obligations incurred by [corporate officers], acting as such corporate
agents, are not theirs but the direct accountabilities of the corporation they represent." As such,
they should not be generally held jointly and solidarily liable with the corporation. The Court,
however, cited circumstances when solidary liabilities may be imposed, as exceptions:

1. When directors and trustees or, in appropriate cases, the officers of a corporation -

(a) vote for or assent to [patently] unlawful acts of the corporation;

(b) act in bad faith or with gross negligence in directing the corporate affairs;
(c) are guilty of conflict of interest to the prejudice of the corporation, its stockholders or
members, and other persons.
2. When the director or officer has consented to the issuance of watered stock or who,
having knowledge thereof, did not forthwith file with the corporate secretary his written
objection thereto.
3. When a director, trustee or officer has contractually agreed or stipulated to hold himself
personally and solidarily liable with the corporation.
4. When a director, trustee or officer is made, by specific provision of law, personally liable
for his corporate action.

The general rule is grounded on the theory that a corporation has a legal personality separate
and distinct from the persons comprising it. 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."

In the case at bench, the CA's basis for petitioner Rosit's liability was that he acted in bad faith
when he approached respondent and told him that the company could no longer afford his
salary and that he will be paid instead his separation pay and accrued commissions. This finding,
however, could not substantially justify the holding of any personal liability against petitioner
Rosit. The records are bereft of any other satisfactory evidence that petitioner Rosit acted in bad
faith with gross or inexcusable negligence, or that he acted outside the scope of his authority as
company president. Indeed, petitioner Rosit informed respondent that the company wishes to
terminate his services since it could no longer afford his salary. Moreover, the promise of
separation pay, according to petitioners, was out of goodwill and magnanimity. At the most,
petitioner Rosit's actuations only show the illegality of the manner of effecting respondent's
termination from service due to absence of just or valid cause and non-observance of
procedural due process but do not point to any malice or bad faith on his part. Besides, good
faith is still presumed. In addition, liability only attaches if the officer has assented
to patently unlawful acts of the corporation.

Thus, it was error for the CA to hold petitioner Rosit solidarily liable with petitioner Harpoon for
illegally dismissing respondent.
 SPI Technologies Inc. v. Victoria Mapua
G.R. No. 191154 April 7, 2014
Doctrine: “It is hornbook principle that personal liability of corporate directors, trustees or officers
attaches only when: (a) they assent to a patently unlawful act of the corporation, or when they
are guilty of bad faith or gross negligence in directing its affairs, or when there is a conflict of
interest resulting in damages to the corporation, its stockholders or other persons; (b) they
consent to the issuance of watered down stocks or when, having knowledge of such issuance,
do not forthwith file with the corporate secretary their written objection; (c) they agree to hold
themselves personally and solidarily liable with the corporation; or (d) they are made by specific
provision of law personally answerable for their corporate action.”

Facts: Victoria K. Mapua (Mapua) alleged that she was hired in 2003 by SPI Technologies, Inc.
(SPI) and was the Corporate Development’s Research/Business Intelligence Unit Head and
Manager of the company. Subsequently in August 2006, the then Vice President and Corporate
Development Head, Peter Maquera (Maquera) hired Elizabeth Nolan (Nolan) as Mapua’s
supervisor.
Sometime in October 2006, the hard disk on Mapua’s laptop crashed, causing her to lose files
and data. Mapua informed Nolan and her colleagues that she was working on recovering the
lost data and asked for their patience for any possible delay on her part in meeting deadlines.
On November 13, 2006, Mapua retrieved the lost data with the assistance of National Bureau of
Investigation Anti-Fraud and Computer Crimes Division. Yet, Nolan informed Mapua that she was
realigning Mapua’s position to become a subordinate of co-manager Sameer Raina (Raina)
due to her missing a work deadline. Nolan also disclosed that Mapua’s colleagues were
“demotivated” [sic] because she was “taking things easy while they were working very hard,”
and that she was “frequently absent, under timing, and coming in late every time [Maquera]
goes on leave or on vacation.”
Mapua consulted her work problems with SPI’s Human Resource Director, Lea Villanueva
(Villanueva), and asked if she can be transferred to another department within SPI.
Subsequently, Villanueva informed Mapua that there is an intra-office opening and that she
would schedule an exploratory interview for her. However, due to postponements not made by
Mapua, the interview did not materialize.
On February 28, 2007, Mapua allegedly saw the new table of organization of the Corporate
Development Division which would be renamed as the Marketing Division. The new structure
showed that Mapua’s level will be again downgraded because a new manager will be hired
and positioned between her rank and Raina’s.
On March 21, 2007, Raina informed Mapua over the phone that her position was considered
redundant and that she is terminated from employment effective immediately. Villanueva
notified Mapua that she should cease reporting for work the next day. Her laptop computer and
company mobile phone were taken right away and her office phone ceased to function.
Mapua was shocked and told Raina and Villanueva that she would sue them.

Issue: Whether the corporate officers should be solidarily liable with SPI

Held: NO. “[i]t is hornbook principle that personal liability of corporate directors, trustees or
officers attaches only when: (a) they assent to a patently unlawful act of the corporation, or
when they are guilty of bad faith or gross negligence in directing its affairs, or when there is a
conflict of interest resulting in damages to the corporation, its stockholders or other persons; (b)
they consent to the issuance of watered down stocks or when, having knowledge of such
issuance, do not forthwith file with the corporate secretary their written objection; (c) they agree
to hold themselves personally and solidarily liable with the corporation; or (d) they are made by
specific provision of law personally answerable for their corporate action.”
While the Court finds Mapua’s averments against Villanueva, Nolan, Maquera and Raina as
detailed and exhaustive, the Court takes notice that these are mostly suppositions on her part.
Thus, the Court cannot apply the above-enumerated exceptions when a corporate officer
becomes personally liable for the obligation of a corporation to this case.
 Mirant Corporation and Edgardo Bautista v. Joselito Caro
G.R. No. 181490 April 23, 2014
Doctrine: A corporation has a personality separate and distinct from its officers and board of
directors who may only be held personally liable for damages if it is proven that they acted with
malice or bad faith in the dismissal of an employee. Absent any evidence on record that
petitioner Bautista acted maliciously or in bad faith in effecting the termination of respondent,
plus the apparent lack of allegation in the pleadings of respondent that petitioner Bautista
acted in such manner, the doctrine of corporate fiction dictates that only petitioner corporation
should be held liable for the illegal dismissal of respondent.

Facts: Petitioner Edgardo A. Bautista (Bautista) was the President of petitioner corporation when
respondent was terminated from employment.
Respondent was hired by Mirant Pagbilao on January 3, 1994 as its Logistics Officer. In 2002,
when Southern Company was sold to Mirant, respondent was already a Supervisor of the
Logistics and Purchasing Department of petitioner. At the time of the severance of his
employment, respondent was the Procurement Supervisor of Mirant Pagbilao assigned at
petitioner corporations corporate office. As Procurement Supervisor, his main task was to serve
as the link between the Materials Management Department of petitioner corporation and its
staff, and the suppliers and service contractors in order to ensure that procurement is carried out
in conformity with set policies, procedures and practices. In addition, respondent was put in
charge of ensuring the timely, economical, safe and expeditious delivery of materials at the right
quality and quantity to petitioner corporations plant. Respondent was also responsible for
guiding and overseeing the welfare and training needs of the staff of the Materials
Management Department. Due to the nature of respondents functions, petitioner corporation
considers his position as confidential.

Respondent filed a complaint for illegal dismissal and money claims for 13th and 14th month
pay, bonuses and other benefits, as well as the payment of moral and exemplary damages and
attorneys fees. It is the contention of respondent that he was illegally dismissed by petitioner
corporation due to the latters non-compliance with the twin requirements of notice and
hearing. He asserts that while there was a notice charging him of unjustified refusal to submit to
random drug testing, there was no notice of hearing and petitioner corporations investigation
was not the equivalent of the hearing required under the law which should have accorded
respondent the opportunity to be heard.

In a decision dated August 31, 2005, Labor Arbiter Aliman D. Mangandog found respondent to
have been illegally dismissed. The Labor Arbiter also found that the quitclaim purportedly
executed by respondent was not a bona fide quitclaim which effectively discharged petitioners
of all the claims of respondent in the case at bar. If at all, the Labor Arbiter considered the
execution of the quitclaim as a clear attempt on the part of petitioners to mislead its office into
thinking that respondent no longer had any cause of action against petitioner corporation.
On appeal to the NLRC, petitioners alleged that the decision of the Labor Arbiter was rendered
with grave abuse of discretion for being contrary to law, rules and established jurisprudence,
and contained serious errors in the findings of facts which, if not corrected, would cause grave
and irreparable damage or injury to petitioners. The NLRC, giving weight and emphasis to the
inconsistencies in respondents explanations, considered his omission as unjustified refusal in
violation of petitioner corporations drug policy. Respondent filed a motion for reconsideration,
while petitioners filed a motion for partial reconsideration of the NLRC decision. In a Resolution
dated June 30, 2006, the NLRC denied both motions.

Issue: Whether the Court of Appeals correctly held that Edgardo A. Bautista should be
personally liable for respondent’s dismissal.
Held: NO. First. The policy was not clear on what constitutes "unjustified refusal" when the subject
drug policy prescribed that an employee’s "unjustified refusal" to submit to a random drug test
shall be punishable by the penalty of termination for the first offense. To be sure, the term
"unjustified refusal" could not possibly cover all forms of "refusal" as the employee’s resistance, to
be punishable by termination, must be "unjustified." To the mind of the Court, it is on this area
where petitioner corporation had fallen short of making it clear to its employees – as well as to
management – as to what types of acts would fall under the purview of "unjustified refusal." Even
petitioner corporation’s own Investigating Panel recognized this ambiguity.
The fact that petitioner corporation’s own Investigating Panel and its Vice President for
Operations, Sliman, differed in their recommendations regarding respondent’s case are first-
hand proof that there, indeed, is ambiguity in the interpretation and application of the subject
drug policy. The fact that petitioner corporation’s own personnel had to dissect the intended
meaning of "unjustified refusal" is further proof that it is not clear on what context the term
"unjustified refusal" applies to. It is therefore not a surprise that the Labor Arbiter, the NLRC and
the CA have perceived the term "unjustified refusal" on different prisms due to the lack of
parameters as to what comes under its purview. To be sure, the fact that the courts and entities
involved in this case had to engage in semantics – and come up with different constructions – is
yet another glaring proof that the subject policy is not clear creating doubt that respondent’s
dismissal was a result of petitioner corporation’s valid exercise of its management prerogative.
Second. The penalty of termination imposed by petitioner corporation upon respondent fell short
of being reasonable. Company policies and regulations are generally valid and binding
between the employer and the employee unless shown to be grossly oppressive or contrary to
law – as in the case at bar. Recognizing the ambiguity in the subject policy, the CA was more
inclined to adopt the recommendation of petitioner corporation’s own Investigating Panel over
that of Sliman and the NLRC.
To be sure, the unreasonableness of the penalty of termination as imposed in this case is further
highlighted by a fact admitted by petitioner corporation itself: that for the ten-year period that
respondent had been employed by petitioner corporation, he did not have any record of a
violation of its company policies.
Finally, the petition avers that petitioner Bautista should not be held personally liable for
respondent’s dismissal as he acted in good faith and within the scope of his official functions as
then president of petitioner corporation. We agree with petitioners. Both decisions of the Labor
Arbiter and the CA did not discuss the basis of the personal liability of petitioner Bautista, and yet
the dispositive portion of the decision of the Labor Arbiter - which was affirmed by the appellate
court - held him jointly and severally liable with petitioner corporation.
A corporation has a personality separate and distinct from its officers and board of directors who
may only be held personally liable for damages if it is proven that they acted with malice or bad
faith in the dismissal of an employee. Absent any evidence on record that petitioner Bautista
acted maliciously or in bad faith in effecting the termination of respondent, plus the apparent
lack of allegation in the pleadings of respondent that petitioner Bautista acted in such manner,
the doctrine of corporate fiction dictates that only petitioner corporation should be held liable for
the illegal dismissal of respondent.