Malayang Samahan ng mga Manggagawa sa M. Greenfield vs Cresencio Ramos

G.R. No. 113907 – 383 Phil. 329 / 409 Phil. 61 – 326 SCRA 428 / 357 SCRA 77 – Mercantile Law – Corporation Law – Veil of Corporate Fiction – Illegal Dismissal Cases 

In February 1990, M. Greenfield, Inc. (MGI), through its officers Saul Tawil, Carlos Javelosa, and Renato Puangco began terminating employees. The corporation closed down one of their plants and so they said they have to retrench the number of employees. Consequently, the Malayang Samahan ng mga Manggagawa sa M. Greenfield (MSMG-UWP) filed an illegal dismissal case against MGI. The National Labor Relations Commission, chaired by Cresencio Ramos, ruled against the union. But on appeal, the decision of the NLRC was reversed and the corporation was ordered, among others, to pay the employees their backwages. The union further appealed as they contend that the officers of the corporation should be held solidarily liable.

ISSUE: Whether or not the officers of the corporation should be held solidarily liable.

HELD: No. A corporation is a juridical entity with legal personality separate and distinct from those acting for and in its behalf and, in general from the people comprising it. The rule is that obligations incurred by the corporation, acting through its directors, officers and employees are its sole liabilities. There is no question that MGI is guilty of illegal dismissal but the officers cannot be held solidarily liable.

It’s true that there’s a plethora of illegal dismissal cases where the SC made corporate officers personally liable but these cases usually involve corporate officers who acted in bad faith in illegally dismissing employees. Corporate directors and officers may be solidarily liable with the corporation for the termination of employment of corporate employees if the same is done with malice or in bad faith.

Read full texts: February 2000 Decision | April 2001 Resolution affirming the February 2000 Decision