March 2011 Philippine Supreme Court Decisions on Commercial Law
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Here are selected March 2011 rulings of the Supreme Court of the Philippines on commercial law:
Corporations; liability of officers in general. 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, except:
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 bad faith is never presumed. Harpoon Marine Services, Inc., et al. v. Fernan H. Francisco, G.R. No. 167751, March 2, 2011.
Corporations; liability of officers for labor claims. The Court of Appeals’ 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 Court of Appeals to hold petitioner Rosit solidarily liable with petitioner Harpoon for illegally dismissing respondent. Harpoon Marine Services, Inc., et al. v. Fernan H. Francisco, G.R. No. 167751, March 2, 2011.
(Hector thanks Gerard Joseph M. Jumamil for his assistance to Lexoterica.)
