Saturday, July 20, 2013

Solidary liability of corporate officers in labor cases.

see -

"x x x.

One last note. The dispositive portion of the Labor Arbiter’s decision, as affirmed and modified by the NLRC, stated that “respondents are ordered to pay” petitioners. This gives the impression that Lopez, Jr. is solidarily liable with Newfield. In Grandteq Industrial Steel Products, Inc. v. Estrella,40 we discussed how corporate agents incur solidary liability, as follows:

There is solidary liability when the obligation expressly so states, when the law so provides, or when the nature of the obligation so requires. In MAM Realty Development Corporation v. NLRC, the solidary liability of corporate officers in labor disputes was discussed in this wise:

“A corporation, being a juridical entity, may act only through its directors, officers and employees. Obligations incurred by them, acting as such corporate agents, are not theirs but the direct accountabilities of the corporation they represent. True, solidary liability may at times be incurred but only when exceptional circumstances warrant such as,
generally, in the following cases:

I. When directors and trustees or, in appropriate cases, the officers of a corporation -

(a) vote for or assent to patently unlawful acts of the corporation;

(b) act in bad faith or with gross negligence in directing the corporate affairs;


In labor cases, tor instance, the Court has held corporate directors and officers solidarily liable with the corporation for the termination of employment of employees done with malice or in bad faith." (Italics, emphasis and underscoring in the original; citations omitted.)

Bad faith does not connote bad judgment or negligence; It Imports
dishonest purpose or some moral obliquity and conscious doing of wrong; it means breach of a known duty through some motive or interest or ill will; it partakes of the nature of fraud. 41 To sustain such a finding, there should be evidence on record that an officer or director acted maliciously or in bad faith in terminating the employee.42

But here, the Labor Arbiter and NLRC have not found Lopez, Jr. guilty of malice or bad faith. Thus, there is no basis to hold Lopez, Jr. solidarily liable with Newfield. Payment of the judgment award is the direct accountability of Newfield.

x x x."