JENNIFER M. ENANO-BOTE, VIRGILIO A. BOTE, JAIME M. MATIBAG, WILFREDO L. PIMENTEL, TERESITA M. ENANO, PETITIONERS, VS. JOSE CH. ALVAREZ, CENTENNIAL AIR, INC. AND SUBIC BAY METROPOLITAN AUTHORITY, RESPONDENTS.
FACTS
On February 3, 1999, respondent Subic Bay Metropolitan Authority (SBMA) entered into a five-year Lease Agreement with respondent Centennial Air, Inc. (CAIR), represented by Roberto Lozada, for Building 8324 at Subic Bay Freeport Zone. The monthly rental was US$4,757.50. CAIR became delinquent in its payments. As of December 31, 2002, its overdue debts reached ₱168,405.84. CAIR proposed a payment scheme involving an initial payment and 18 post-dated checks. While the initial payment was made, CAIR never delivered the post-dated checks. SBMA sent a final demand letter on February 7, 2003. The lease expired on January 31, 2004, with CAIR’s obligations remaining unpaid. SBMA filed a complaint for sum of money and damages against CAIR and its officers, including petitioners Jennifer M. Enano-Bote, Virgilio A. Bote, Jaime M. Matibag, Wilfredo L. Pimentel, and Teresita M. Enano, who were members of CAIR’s Board of Directors. Petitioners argued they could not be held personally liable for CAIR’s corporate debts. The Regional Trial Court (RTC) ruled in favor of SBMA, holding CAIR and the individual petitioners solidarily liable. The Court of Appeals (CA) affirmed the RTC decision.
ISSUE
Whether the corporate officers (petitioners) can be held personally and solidarily liable for the unpaid corporate obligations of Centennial Air, Inc. to SBMA.
RULING
No. The Supreme Court ruled that petitioners, as corporate officers, cannot be held personally and solidarily liable for the unpaid corporate debts of CAIR. The Court emphasized the doctrine of separate corporate personality, where a corporation has a legal personality distinct from its stockholders and officers. As a general rule, corporate obligations are the sole liability of the corporation. Personal liability of corporate officers attaches only in specific exceptional cases, such as when they assent to a patently unlawful act of the corporation, act in bad faith or with gross negligence, or are made personally liable by a specific provision of law. The Court found that SBMA failed to prove any exceptional circumstance to pierce the corporate veil and hold petitioners personally liable. The complaint did not allege that petitioners acted in bad faith, were guilty of gross negligence, or that CAIR was formed for fraudulent purposes. The mere non-payment of debt by the corporation is not a ground to hold its officers personally liable. Therefore, the CA and RTC decisions were reversed and set aside insofar as they held petitioners personally and solidarily liable with CAIR. CAIR remains solely liable for its unpaid obligations to SBMA.
