DLSU Commercial Law Review Digest GO2 (2015-2016)

#50 Ever Electrical Manufacturing, Inc. (EEMI) and Vicente Go and Samahang Manggagawa ng
Ever Electrical/NAMAWU local 224 represented by Felimon Panganiban
G.R. No. 194795, 13 June 2012
Topic: Liability of corporate officers
Ponente: J. Mendoza
Doctrine: As a general rule, corporate officers should not be held solidarily liable with corporation for
separation pay unless there is malice, bad faith, unlawful acts, gross negligence, personal benefit (Section
31 Corporation Code of the Philippines).
Facts:
1. EEMI is a corporation engaged in the business of manufacturing electrical parts and supplies.
Samahang Manggagawa ng Ever Electrical/NAMAWU Local 224 headed by Felimon
Panganiban
2. EEMI closed its business operations on 11 October 2006 resulting in the termination of the
services of its employees.

3. NAMAWU/Samahan filed complaint for illegal dismissal with prayer for payment of 13 th month
pay, separation pay, damages and attorneys fees. They alleged that the closure was made without
any warning notice or memorandum and in full disregard of the requirements of the Labor Code.
4. EEMI explained that it had closed business due to:
1995- it invested in Orient Bank P500M and during the Asian Currency Crisis, various economies in the
South East Asian Region were hurt badly.
EEMI was one of those who suffered huge losses.
November 1996- it obtained a loan in the amount of P121,400,000.00 from UCPB. As security for the
loan, EEMIs land and its improvements, including the factory, were mortgaged to UCPB.
EEMIs business suffered further losses due to the continued entry of cheaper goods from China and other
Asian countries. Orient Bank closed where most of EEMIs resources were invested. EEMI was not able
to meet its loan obligations with UCPB.
5. EEMI, to save the company, entered into a dacion en pago arrangement with UCPB. This
transferred ownership of the companys property to UCPB. UCPB didnt allow to lease property
to EEMI due to its policy that a previous debtor who failed to settle its loan obligation.
6. UCPB agreed to lease it to an affiliate corporation, EGO, and in behalf of EEMI.
7. 2 February 2002- lease agreement was entered into between UCPB and EGO.
8. UCPB instituted an unlawful detainer suit against EGO before MeTC Makati.

9. 11 August 2006- MeTC ruled in favor of UCPB and ordered EGO to vacate and pay rentals of
P21,473,843.65
10. 19 September 2006- writ of execution was issued
11. 11 October 2006- Sheriff implemented writ by closing the premises and EEMI employees were
prevented from entering the factory
12. 27 April 2007- LA ruled the respondents were not illegally dismissed. It however, ordered EEMI
and its President, Vicente Go to pay their employees separation pay and 13 th month pay,
respectively.
13. 15 September 2008- NLRC reversed
14. 31 August 2010- CA granted petition; nullified the decision of NLRC and reinstated LA decision.
Issue: Whether or not CA erred in finding Vicente Go solidarily liable with EEMI.
Ruling:
Yes. As a general rule, corporate officers should not be held solidarily liable with corporation for
separation pay unless there is malice or bad faith (Section 31 Corporation Code of the Philippines). In
this case, Vicente Go may have acted in behalf of EEMI but the latters failure to operate cannot be
equated to bad faith. It was brought about by various causes like mismanagement, lack of demand,
negligence, or lack of business foresight. Therefore, he cannot be held jointly and solidarily liable.
Disposition: Petition partially granted. CA decision 31 August 2010 affirmed with modification.
Vicente Go not solidarily liable with EEMI.