G.R. No. 198782 . October 19, 2016
Allan Bazar, Petitioner, vs. Carlos A. Ruizol, Respondent.

FACTS

Respondent Carlos Ruizol worked as a mechanic for Norkis Distributors, Inc. (NDI) at its Surigao City branch until his termination on March 27, 2002. He filed a complaint for illegal dismissal against NDI and its branch manager, petitioner Allan Bazar. Ruizol alleged he was a regular employee dismissed because Bazar wanted to appoint his own protege. In defense, Bazar and NDI claimed Ruizol was not an employee but an independent franchised mechanic operating under a retainership agreement, performing repair services at his own shop, and that the contract was terminated due to dissatisfaction with his services.
The Labor Arbiter ruled in favor of Ruizol, declaring him a regular employee who was illegally dismissed and ordering NDI to pay monetary awards. NDI did not appeal this decision. Bazar, however, appealed to the NLRC, which reversed the Labor Arbiter, finding no employer-employee relationship and dismissing the case. The Court of Appeals subsequently granted Ruizol’s petition for certiorari, reinstating the Labor Arbiter’s decision. It held that the decision against NDI was final due to its failure to appeal and found Ruizol to be an illegally dismissed employee. The CA, however, also held Bazar solidarily liable with NDI.

ISSUE

The primary issue is whether petitioner Allan Bazar, as a corporate officer, can be held solidarily liable with the corporation, NDI, for the illegal dismissal of respondent Carlos Ruizol.

RULING

The Supreme Court partly granted the petition. It affirmed the Court of Appeals’ finding that Ruizol was a regular employee of NDI who was illegally dismissed, as the Labor Arbiter’s decision against NDI had become final and executory. However, the Court absolved petitioner Allan Bazar from personal solidary liability.
The legal logic is grounded in the doctrine of separate corporate personality. A corporation has a legal identity distinct from its officers and stockholders. Corporate officers are generally not personally liable for corporate obligations unless specific conditions are met. For a corporate officer to be held solidarily liable for a corporate obligation like illegal dismissal, the complainant must both allege and clearly prove that the officer acted in bad faith or with gross negligence in assenting to the unlawful act. In this case, while Ruizol alleged that Bazar dismissed him to hire a protege, this allegation remained unsubstantiated by clear and convincing evidence. The mere act of dismissal and subsequent hiring of a new mechanic, without proof of malicious intent or gross negligence, is insufficient to pierce the corporate veil and impose personal liability on Bazar. Therefore, only the corporation, NDI, is liable for the monetary awards resulting from the illegal dismissal.