G.R. No. 173169 ; September 22, 2010
IRENE MARTEL FRANCISCO, Petitioner, vs. NUMERIANO MALLEN, JR., Respondent.

FACTS

Respondent Numeriano Mallen, Jr. was a waiter at VIPS Coffee Shop and Restaurant. In April 1998, after a series of approved leaves, he applied for a three-day sick leave due to tonsillitis. Instead, management issued a memorandum placing him on a forced leave of approximately three months, citing a need for him to “recharge” and regain physical fitness, and requiring a medical certificate of fitness before returning. Respondent filed a complaint for underpayment with the DOLE in May 1998. In June, he attempted to return with a medical certificate but was refused work. He subsequently filed a complaint for illegal dismissal. The Labor Arbiter ruled in his favor, finding illegal dismissal. The NLRC modified the decision, finding the complaint premature but awarding separation pay due to the supervening closure of the restaurant. The Court of Appeals reinstated the Labor Arbiter’s decision, finding constructive dismissal.

ISSUE

The primary issue is whether petitioner Irene Martel Francisco, as a corporate officer, can be held personally and solidarily liable for the monetary awards arising from respondent’s illegal dismissal.

RULING

The Supreme Court ruled in favor of the petitioner, absolving her of personal liability. The Court reiterated the fundamental doctrine of separate corporate personality. A corporation is a juridical entity distinct from its shareholders, directors, and officers. Consequently, corporate obligations are the sole liabilities of the corporation, not of its individual officers acting in their official capacity. Personal liability for a corporate officer attaches only when there is a clear showing of bad faith or gross negligence, or when the officer acted with malice in carrying out the dismissal. In this case, the Labor Arbiter’s decision, which was reinstated by the Court of Appeals, contained no finding of bad faith or malice on the part of petitioner Irene Francisco. The decision named her in her representative capacity as the owner/operator of the restaurant. The Court emphasized that the illegal dismissal was an act of the corporation, VIPS Coffee Shop. Since there was no evidence that petitioner acted with deliberate intent to violate the law or that she was guilty of bad faith, she could not be held personally liable. The monetary awards are solely the responsibility of the corporate entity. The Court further noted that the corporation’s closure did not automatically transfer its liabilities to its officers. Therefore, the petition was granted, and petitioner was declared not personally liable for the monetary judgment.