G.R. No. 182394, 14 September 2011

FACTS:

Respondents Saidali Pasawilan, Wilfredo Verceles and Melchor Bulusan were all employed by petitioner Alert Security and Investigation Agency, Inc. (Alert Security) as security guards. Averring that because they were underpaid, they filed a complaint for money claims against Alert Security and its president and general manager, petitioner Manuel D. Dasig, before Labor Arbiter Ariel C. Santos.

As a result of their complaint, they were relieved from their posts in the DOST and were not given new assignments despite the lapse of six months. They then filed a joint complaint for illegal dismissal against petitioners.

Petitioners, on the other hand, argued that complainants were not illegally dismissed but were only transferred. They claimed that it was the respondents who refused to report for work in their new assignment. The Labor Arbiter found for the respondents which the NLRC reversed. CA rendered the assailed Decision reversing and setting aside the NLRC decision and reinstating the decision of the Labor Arbiter.

Petitioners argue that the CA erred when it reinstated the decision of the labor arbiter. The dispositive portion of said decision ruled that respondents should be paid their monetary awards in solidum by Alert Security and Manuel D. Dasig, its President and General Manager. They argue that Alert Security is a duly organized domestic corporation which has a legal personality separate and distinct from its members or owners. Hence, liability for whatever compensation or money claims owed to employees must be borne solely by Alert Security and not by any of its individual stockholders or officers.

ISSUE:

Whether or not individual stockholders or officers of Alert Security can be held personally liable for their employees’ claims.

RULING:

No. Basic is the rule that a corporation has a separate and distinct personality apart from its directors, officers, or owners. In exceptional cases, courts find it proper to breach this corporate personality in order to make directors, officers, or owners solidarily liable for the companies’ acts. Section 31, Paragraph 1 of the Corporation Code provides:

Sec. 31. Liability of directors, trustees or officers. – Directors or trustees who willfully and knowingly vote for or assent to patently unlawful acts of the corporation or who are guilty of gross negligence or bad faith in directing the affairs of the corporation or acquire any personal or pecuniary interest in conflict with their duty as such directors, or trustees shall be liable jointly and severally for all damages resulting therefrom suffered by the corporation, its stockholders or members and other persons.

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,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.

In the present case, there is no evidence to indicate that Manuel D. Dasig, as president and general manager of Alert Security, is using the veil of corporate fiction to defeat public convenience, justify wrong, protect fraud, or defend crime. Further, there is no showing that Alert Security has folded up its business or is reneging in its obligations. In the final analysis, it is Alert Security that respondents are after and it is also Alert Security who should take responsibility for their illegal dismissal.

*Case Digest by Nikki P. Ebillo, JD-4, Andres Bonifacio Law School, SY 2019-2020