Corpo Digest
Corpo Digest
Corpo Digest
The rule is that officers of a corporation are not personally liable for their official acts unless it is shown
that they have exceeded their authority. However, the legal fiction that a corporation has a personality
separate and distinct from stockholders and members may be disregarded if it is used as a means to
perpetuate fraud or an illegal act or as a vehicle for the evasion of an existing obligation, the
FACTS
There were originally 66 complainants in the case before the Labor Arbiter for underpayment,
overtime pay, premium pay for rest day and holiday, service incentive leave pay, damages, attorney's
fees, and 13th month pay. The complainants claimed that they were regular rank and file employees
of the Pamplona Plantation Co., Inc. (petitioner) with different hiring periods, work designations, and
salary rates. Petitioner, however, denied this, alleging that some of the complainants are seasonal
employees, some are contractors, others were hired under the pakyaw system, while the rest were
hired by the Pamplona Plantation Leisure Corporation, which has a separate and distinct entity from
it.
In a Decision dated September 30, 1998, the Labor Arbiter (LA) held petitioner and its manager, Jose
Luis Bondoc, liable for underpayment as complainants were regular employees of petitioner. They
were also held guilty of illegal dismissal with regard to complainants Joselito Tinghil and Pedro
Emperado.
On appeal to the National Labor Relations Commission (NLRC), the LA's Decision was reversed and
another one was entered dismissing all the complaints per Decision dated June 30, 2000. It was the
NLRC's finding that the complaint should have been directed against the Pamplona Plantation Leisure
Corporation since complainants' individual affidavits contained the allegations that their tasks
The Court of Appeals (CA), in turn, vacated and set aside the NLRC's dismissal in its Decision dated
November 26, 2001, and reinstated the LA's Decision with the modification that the award of wage
differentials was limited to the following twenty-two (22) persons, while the finding of illegal
dismissal with regard to Pedro Emparado and the award of attorney's fees were deleted.
ISSUE
Whether or not the respondents are employees of the petitioner thus the corporate veil should be
pierced.
RULING
The Court disagrees. Petitioner is estopped from denying that respondents worked for it. In the first
place, it never raised this defense in the proceedings before the Labor Arbiter. Notably, the defense
it raised pertained to the nature of respondents' employment, i.e., whether they are seasonal
employees, contractors, or worked under the pakyaw system. Thus, in its Position Paper, petitioner
alleged that some of the respondents are coconut filers and copra hookers or sakadors; some are
seasonal employees who worked as scoopers or lugiteros; some are contractors; and some worked
under the pakyaw system. In support of these allegations, petitioner even presented the company's
An examination of the facts reveals that, for both the coconut plantation and the golf course, there is
only one management which the laborers deal with regarding their work. A portion of the plantation
(also called Hacienda Pamplona) had actually been converted into a golf course and other
recreational facilities. The weekly payrolls issued by petitioner-company bore the name "Pamplona
Plantation Co., Inc." It is also a fact that respondents all received their pay from the same person,
Petitioner Bondoc -- the managing director of the company. Since the workers were working for a
firm known as Pamplona Plantation Co., Inc., the reason they sued their employer through that name
True, the Petitioner Pamplona Plantation Co., Inc., and the Pamplona Plantation Leisure Corporation
appear to be separate corporate entities. But it is settled that this fiction of law cannot be invoked to
In the present case, the corporations have basically the same incorporators and directors and are
headed by the same official. Both use only one office and one payroll and are under one management.
In their individual Affidavits, respondents allege that they worked under the supervision and control
of Petitioner Bondoc -- the common managing director of both the petitioner-company and the
leisure corporation. Some of the laborers of the plantation also work in the golf course. Thus, the
attempt to make the two corporations appear as two separate entities, insofar as the workers are
concerned, should be viewed as a devious but obvious means to defeat the ends of the law. Such a
ploy should not be permitted to cloud the truth and perpetrate an injustice.
The Court notes that this defense of separate corporate identity was not raised during the
proceedings before the labor arbiter. The main argument therein raised by petitioners was their
alleged lack of employer-employee relationship with, and power of control over, the means and
methods of work of respondents because of the seasonal nature of the latter's work.
Indeed, it was only after this NLRC Decision was issued that the petitioners harped on the separate
personality of the Pamplona Plantation Co., Inc., vis-à-vis the Pamplona Plantation Leisure
Corporation.
As cited above, the NLRC dismissed the Complaints because of the alleged admission of respondents
in their Affidavits that they had been working at the golf course. However, it failed to appreciate the
rest of their averments. Just because they worked at the golf course did not necessarily mean that
they were not employed to do other tasks, especially since the golf course was merely a portion of
the coconut plantation. Even petitioners admitted that respondents had been hired as coconut filers,
coconut scoopers or charcoal makers. Consequently, NLRC's conclusion derived from the Affidavits
of respondents stating that they were employees of the Pamplona Plantation Leisure
Corporation alone was the result of an improper selective appreciation of the entire evidence.
It is well-settled that the employer has the burden of proving that the dismissal was for a valid and
just cause. Failure to discharge this burden of proof substantially means that the dismissal was not
justified and therefore, illegal. Given petitioner's failure to discharge this burden, the Court sustains
Lastly, petitioner believes that its manager, Jose Luis Bondoc, should not have been held solidarily
liable with the company for the wage differentials awarded to respondents. Petitioner argues that
Bondoc is merely an employee of the company and not a corporate director or officer who can be
The rule is that officers of a corporation are not personally liable for their official acts unless it is
shown that they have exceeded their authority. However, the legal fiction that a corporation has a
personality separate and distinct from stockholders and members may be disregarded if it is used as
a means to perpetuate fraud or an illegal act or as a vehicle for the evasion of an existing obligation,
the circumvention of statutes, or to confuse legitimate issues.
Moreover, a corporate officer is not personally liable for the money claims of discharged corporate
employees unless he acted with evident malice and bad faith in terminating their employment.
Under Section 25 of the Corporation Code, three officers are specifically provided for which a
corporation must have: president, secretary, and treasurer. The law, however, does not limit
corporate officers to these three. Section 25 gives corporations the widest latitude to provide for such
other offices, as they may deem necessary. The by-laws may and usually do provide for such other
In this case, there is no basis from which it may be deduced that Bondoc, as manager of petitioner, is
also a corporate officer such that he may be held liable for the money claims awarded in favor of
respondents. Even assuming that he is a corporate officer, still, there is no showing that he acted with
evident malice and bad faith. Bondoc may have signed and approved the payrolls; nevertheless, it does
not follow that he had a direct hand in determining the amount of respondents' corresponding
salaries and other benefits. Bondoc, therefore, should not have been held liable together with
petitioner.