Carag v.
National
Labor Relations
Commission,
G.R. No. 147590, 02 April 2007, (520 SCRA 28)
“
Liability of directors, trustees
or officers.
”
Doctrine:
The rule is that a director is not
personally liable for the debts of the
corporation, which has a separate legal
personality of its own.
FACTS:
National Federation of Labor
Unions (NAFLU)
Mariveles Apparel
vs
Corporation (MAC)
Mariveles Apparel
Corporation Labor Union
(MACLU)
Complaint
1. Without notice of any kind filed, MAC ceased
operations with the intention of completely
closing its shop or factory
2. Employees who have rendered one to two
weeks work were not paid
3. That the closure is perce illegal
COMPLAINANT
*No written NOTICE
*No Good Faith
*The complainants pray that they be allowed
to implead Atty. Antonio Carag and Mr.
Armando David.
Labor Arbiter
*Arbiter Ortiguerra summoned the parties, but the non-appearance of respondents
prompted Arbiter Ortiguerra to declare the case submitted for resolution "based on the
extant pleadings.
*Complainants moved to implead Carag and David. in his official capacity as Chairman
of the Board along with MR. ARMANDO DAVID as President. Both are also owners of
the respondent corporation .
*This inclusion of individual respondents as party respondents in the present case is to
guarantee the satisfaction of any judgment award on the basis of Article 212(c) of the
Philippine Labor Code
Respondents Action
*Atty. Pastores, as counsel for respondents, submitted a position
*The respondents deny having totally closed
*Respondents opposed the impleader of Atty. Antonio C. Carag and Mr.
Armando Davida
*Stated that complainants should not have impleaded Carag and David
because MAC is actually owned by a consortium of banks. Carag and
David own shares in MAC only to qualify them to serve as MAC's officers.
THE RULING:
LABOR ARBITER NLRC APPELLATE COURT
Decided in favor of the Labor Union and held that NLRC Third Division denied the The appellate court found that Carag and David,
Antonio Carag being the owner of the corporation motions to reduce bond. as the most ranking officers of MAC, had a direct
be solidarily liable for the payment of hand at the time in the illegal dismissal of MAC's
separation pay and backwages of the rank and employees.
file employees. Granted complainants' motion for The failure of Carag and David to observe the
consolidation of 2 cases MAC v. NLRC, notice requirement in closing the company shows
In instances where corporate officers dismissed
et al. and David v. Arbiter Ortiguerra, et malice and bad faith, which justifies their
employees in bad faith or wantonly violate labor
al. solidary liability with MAC.
standard laws or when the company had already
ceased operations and there is no way by which a
judgment in favor of employees could be satisfied,
corporate officers can be held jointly and severally Carag questions the appellate court's decision
liable with the company.
MAC, Carag, and David, through Atty. Pastores,
filed their Memorandum before the NLRC.
Respondents also filed separate motions to reduce
bond.
WHETHER OR NOT ANTONIO CARAG
ISSUE BE HELD SOLIDARILY LIABLE FOR
THE PAYMENT OF THE ILLEGALLY
DISMISSED EMPLOYEES.
RULING OF THE SUPREME COURT
No. Section 31 of the Corporation Code lays down the exceptions to the rule, as
follows:
“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.”
*Complainants did not allege
*Complainants did not present
*Neither did Arbiter Ortiguerra make any finding to this effect in her Decision.
*Failure to give notice is a violation of procedural due process but does not amount
to an unlawful or criminal act.
*Article 212(e) of the Labor Code
* The liability of corporate officers for corporate debts remains governed by
Section 31 of the Corporation Code.”
*The rule is that a director is not personally liable for the debts of the corporation,
which has a separate legal personality of its own.
Doctrine:
The rule is that a director is not
personally liable for the debts of the
corporation, which has a separate
legal personality of its own.
