TOPIC: Separate Juridical Personality LUCIA MAGALING,PARALUMAN R. MAGALING,MARCELINA MAGALING-TABLADA & BENITO R.

MAGA LING ( Heirs of the late Reynaldo Magaling) petitioners, vs. PETER ONG, respondent. G.R. No. 173333. August 13, 2008 FACTS: Respondent Ong instituted with the RTC Lipa a complaint of Collection o f Sum of Money in the amount of P 389,000.00 against the herein petitioners. T he complaint alleged among others that spouses Magaling is the controlling stock holders owners of Thermo Loans & Credit Corporation, Mr. Reynaldo Magaling being the President of the corporation; that Reynaldo Magaling induced and obtained a loan from Mr. Ong the amount of P350.000.00 with interest of 2&1/2 a month;that Reynaldo Magaling later on issued seven (7) post dated checks where only two ch ecks were cleared by the bank and the rest were dishonored;that despite demands , spouses Magaling and/or Thermo & Credit Loans failed, refused and neglected to pay;that Ong's prayer for Preliminary Attachment was granted by the Court attac hing the two parcel of land owned by the corporation. In their defense, spouses Magaling argued that Ong at his own risk inves ted the money with Thermo Loans Corporation;that the promissory note was issued by the corporation and they are not signatories in the checks issued by the corp oration. In the first decision of RTC, it ruled in favor of Ong and against the T hermo Loans Corporation. However, in the second decision, the Court absolved spo uses from any obligation or liability. Thus, Ong appealed the case to the Court of appeal wherein the appellate Court reversed the RTC decision and declared spo uses Magaling jointly and severally liable to Peter Ong for the corporation obli gation of Thermo Loans. The Court of Appeals pierced the veil of corporate fiction and hold the spouses Magaling liable with Thermo Loans for the corporate obligations since Re ynaldo Magaling was grossly negligent in managing the affairs of the corporation . Hence, this petition. ISSUE: Whether or not Reynaldo Magaling personally liable for corporate liabili ty of Thermo loans corporation. RULING: Petition is not meritorious. It is basic that the corporation is a jurid ical entity with legal personality separate and distinct from those acting for a nd in its behalf and, in general, from the people comprising it. The general rul e is that obligations incurred by the corporation, acting through its directors, officers and employees, are its sole liabilities and vice versa. However, there are times when solidary liabilities may be incurred and the veil of corporate f iction may be pierced. One of the circumstances warranting the disregard of sepa rate personality is that when directors and trustees or, in appropriate case, th e officers of a corporation acted in bad faith or with gross negligence in direc ting the corporate affairs. Considering that Reynaldo Magaling was grossly negli gent in directing the affairs of Thermo Loans without due regard to the plight o f its investors and thus should be held jointly and severally liable for the cor porate obligation of Thermo Loans to Peter Ong. WHEREFORE, the instant petition is DENIED. The assailed decision both of the Court of Appeals are hereby AFFIRMED. Costs against petitioners, heirs of R aynaldo Magaling.