G.R. No. 123358 – 381 Phil. 282 – 324 SCRA 270 – Mercantile Law – Corporation Law – Corporation has identity separate and distinct from incorporators
FCY Construction Group, Inc. (FCY) was awarded a contract by the Department of Public Works and Highways to build a flyover. In 1993, FCY entered into a joint venture agreement with Ley Construction and Development Corporation (LCDC) in order for the latter to help FCY in carrying out the contract. Things however went sour between the two as LCDC later claimed it’s not being paid by FCY. LCDC then filed a collection suit against FCY but it impleaded Francis Yu, the president of FCY in the complaint.
ISSUE: Whether or not Francis Yu should be impleaded.
HELD: As a general rule, a corporate officer like Yu is shielded from the liability of the corporation because the corporation has a personality separate and distinct from its officers. However, this rule admits of some exception. Personal liability of a corporate director, trustee or officer along (although not necessarily) with the corporation may so validly attach, as a rule, only when:
1. He assents (a) to a patently unlawful act of the corporation, or (b) for bad faith or gross negligence in directing its affairs, or (c) for conflict of interest, resulting in damages to the corporation, its stockholders or other persons;
2. He consents to the issuance of watered down stocks or who, having knowledge thereof, does not forthwith file with the corporate secretary his written objection thereto;
3. He agrees to hold himself personally and solidarily liable with the corporation; or
4. He is made, by a specific provision of law, to personally answer for his corporate action.
In this case, Yu’s personal liability cannot be determined because the evidence adduced does not show any of the above circumstances.
