[15] MALAYANG SAMAHAN NG MGA MANGGAGAWA SA M.
who, having knowledge thereof, did not forthwith file with the corporate
GREENFIELD (MSMG-UWP) v. RAMOS (Recio)
April 20, 2001 | GONZAGA-REYES, J. | When Solidarity Liability May Be Incurred
PETITIONER​: MALAYANG SAMAHAN NG MGA MANGGAGAWA SA
M. GREENFIELD (MSMG-UWP), including its President and Officers , etc
(SOBRANG DAMI as in it takes up 50% of the case already; more than 50-60
names)
RESPONDENTS​: HON. CRESENCIO J. RAMOS, NATIONAL LABOR
RELATIONS COMMISSION, M. GREENFIELD (B), INC., SAUL TAWIL,
CARLOS T. JAVELOSA, RENATO C. PUANGCO, WINCEL LIGOT,
MARCIANO HALOG, GODOFREDO PACENO, SR., GERVACIO
CASILLANO, LORENZO ITAOC, ATTY. GODOFREDO PACENO, JR.,
MARGARITO CABRERA, GAUDENCIO RACHO, SANTIAGO IBANEZ,
AND RODRIGO AGUILING
SUMMARY​: This case is an MR filed by MSMG-UWP employees. In the
original decision by the Supreme Court, the SC ruled in favor of the said
employees and ordered M. Greenfield to reinstate them and pay backwages. In
this MR, MSMG-UWP employees argue that the SC committed a palpable error
when it did NOT hold M. Greenfield’s officers personally and solidarily liable
for damages to be awarded to the employees, because records show that M.
Greenfield’s officers have caused the hasty, arbitrary and unlawful dismissal of
petitioners from work. MSMG-UWP employees allege that while this case was
pending, M. Greenfield began diverting jobs intended for regular employees to
certain satellite companies, and that some M. Greenfield’s officers were also the
incorporators of the said satellite companies. WoN M. Greenfield officials
should be personally made liable for damages on account of MSMG-UWP
employees illegal dismissal. - ​NO, because there is nothing substantial on
record to show that M. Greenfield officers acted in patent bad faith or were
guilty of gross negligence in terminating the services of MSMG-UWP
employees so as to warrant personal liability. The Court ruled that absent
fraud or bad faith, a company retains its separate and juridical personality,
subject to certain exceptions [SEE DOCTRINE].
DOCTRINE​: Solidary liabilities may at times be incurred but only when
exceptional circumstances warrant such as, generally, in the following cases:
(1) When directors and trustees or, in appropriate cases, the officers of a
corporation
a. Vote for or assent to patently unlawful acts of the corporation;
b. act in bad faith or with gross negligence in directing the corporate affairs;
c. are guilty of conflict of interest to the prejudice of the corporation, its
stockholders or members, and other persons.
(2) When a director or officer has consented to the issuance of watered stocks or
secretary his written objection thereto;
(3) When a director, trustee or officer as contractually agreed or stipulated to
hold himself personally and solidarily liable with the Corporation.
(4) When a director, trustee or officer is made, by specific provision of law,
personally liable for his corporate action.
FACTS:
1. Before the Court is petitioner’s Motion for Partial Reconsideration of the
SC’s decision which granted herein petitioner Malayang Samahan ng Mga
Manggagawa sa M. Greenfield (MSMG-UWP)’s petition and ordered
respondent company M. Greenfield, Inc. to reinstate the numerous
MSMG-UWP employees. The Court also ordered M. Greenfield, Inc. to pay
the MSMG-UWP employees full backwages.
2. Petitioner MSMG-UWP employees allege the ff:
a. That the Court committed palpable ​error in holding that the
respondent company officials cannot be held personally liable
for damages on account of employees’ dismissal because the
employer corporation has a personality separate and distinct
from its officers, whereas the records clearly show that
respondent company officers ​Saul Tawil, Carlos T. Javelosa
and Renato C. Puangco have caused the hasty, arbitrary and
unlawful dismissal of petitioners from work​.
b. That ​as top officials of M. Greenfield who handed down the
decision dismissing the petitioners, they are responsible for acts of
unfair labor practice;
c. That while the case was pending, M. Greenfield began removing
its machineries and equipment form its plant and began diverting
jobs intended for regular employees to its satellite branches;
i. That the M. Greenfield officials are also the officers and
incorporators of these satellite companies as shown in
their articles of incorporation and the general information
sheet;
d. That during their ocular inspection of M. Greenfield’s plantsite,
MSMG-UWP employees found that the same is being used by
other unnamed business entities ​also engaged in the manufacture
of garments​.
e. That M. Greenfield’s no longer operates its plant as “M.
Greenfield” anymore.
f. Finally, the MSMG-UWP employees pray for the inclusion for:
i. MORE names which were merely omitted in the caption
of the case
ii. Correction of typographical errors on several names
(again, sobrang daming pangalan HAHA more than 50).
 iii. The inclusion of the names of those allegedly similarly
situated, but were not included in the original petition.
3. SolGen did not interpose any objection.
4. Private M. Greenfield officials Carlos Javelosa and Remedios Caoleng
allege:
a. Considering that MSMG-UWP employees admitted having
knowledge of the fact that private respondent officers are also
holding key positions in the alleged satellite companies, they
should have presented the pertinent evidence with the lower courts;
thus, it is too late for said employees to require the SC to admit
evidence not presented during the trial;
b. M. Greenfield officials interpose no objection to the inclusion of
the names of other employees inadvertently exclusded in the
caption.
5. M. Greenfield itself failed to file its Comment.
ISSUE:
1. WoN M. Greenfield officials should be personally made liable for damages
on account of MSMG-UWP employees illegal dismissal. - ​NO, because
there is nothing substantial on record to show that M. Greenfield
officers acted in patent bad faith or were guilty of gross negligence in
terminating the services of MSMG-UWP employees so as to warrant
personal liability.
2. (not impt) WoN MSMG-UWP’s request for inclusion of names should be
granted. - YES, except for those employees allegedly similarly situated but
whose names weren’t included.
RULING: WHEREFORE, petitioners' motion for reconsideration is partially
granted so as to include the names of employees listed in Annex "D" which
petitioners inadvertently omitted in the caption of this case.
RATIO:
Issue 1: ​MSMG-UWP employee’s contention is bereft of merit.
1. A corporation is a juridical entity with legal personality separate and
distinct from those acting for and in its behalf and, in general from the
people comprising it.
2. The rule is that obligations incurred by the corporation, acting through its
directors, officers and employees are its sole liabilities.
3. Solidary liabilities may at times be incurred but only when exceptional
circumstances warrant such as, generally, in the following cases:
a. (1) When directors and trustees or, in appropriate cases, the
officers of a corporation
a. Vote for or assent to patently unlawful acts of the
corporation;
b. act in bad faith or with gross negligence in directing the
corporate affairs;
c. are guilty of conflict of interest to the prejudice of the
corporation, its stockholders or members, and other persons.
b. (2) When a director or officer has consented to the issuance of
watered stocks or who, having knowledge thereof, did not
forthwith file with the corporate secretary his written objection
thereto;
c. (3) When a director, trustee or officer as contractually agreed
or stipulated to hold himself personally and solidarily liable
with the Corporation.
d. (4) When a director, trustee or officer is made, by specific
provision of law, personally liable for his corporate action.
4. In labor cases, particularly, the Court has held corporate directors and
officers solidarily liable with the corporation for the termination of
employment of corporate employees done with malice or in bad faith.
a. Bad faith or negligence is a question of fact and is evidentiary.
b. It has been held that bad faith does not connote bad judgement or
negligence; it imports a dishonest purpose or some moral obliquity
and conscious doing of wrong; it means breach of known duty thru
some motive or interest or ill will; it partakes of the nature of
fraud.
5. In the instant case, ​there is nothing substantial on record to show that M.
Greenfield officers acted in patent bad faith or were guilty of gross
negligence in terminating the services of MSMG-UWP employees so as
to warrant personal liability.
6. Sunio v. NLRC​: It is basic that a corporation is invested by law with a
personality separate and distinct from those of the persons composing it as
well as from that of any other legal entity to which it may be related.
7. FURTHERMORE, MSMG-UWP employees’ claim that the job intended
for M. Greenfield’s regular employees were diverted to its satellite
companies where the M. Greenfield officers are holding key positions is
NOT substantiated and was raised for the first time in this MR​.
a. Even assuming arguendo that M. Greenfield officials are also
officers and incorporators of the said satellite companies, ​such
circumstance does not itself amount to fraud​.
b. In fact, the Court found that the these satellite companies were
established prior to the filing of MSMG-UWP employees’
complaint against M. Greenfield in DOLE.
c. Substantial identity of incorporators between respondent
company and these satellite companies does not necessarily
imply fraud.
8. Although there were earlier decision of the SC in labor cases where
corporate officers were held to be perosnally liable for the payment of
wages and other money claims to its employees, we find those rulings
 inapplicable to this case. (I dont think this is important, but just in case he
asks!)
a. La Campana Coffee Factory Inc. v. KKM​: La Campana Coffee
Factory, Inc. and La Campana Gaugau Packing were substantially
owned by the same person.
b. Claparols v. CIR:​ Both corporations were substantially owned and
controlled by the same person and there was no break or cessation
in operations. Moreover, all the assets of the steel and nail pant
were transferred to the new corporation.
9. Notably, in the above-mentioned cases, a new corporation was created,
owned by the same family, engaged in the same business and operating in
the same compound, a situation which is not obtaining in the instant case.
10. Finally, in ​AC Ransom Labor Union v. NLRC:​ ​Under the Minimum Wage
Law, the responsible officer of an employer corporation can be held
personally liable for non-payment of backwages for "if the policy of the
law were otherwise, the corporation employer would have devious ways
for evading of back wages."
a. Clearly, the situation in AC Ransom does not obtain in this case,
where the alleged satellite companies were established even prior
to the filing of petitioners' complaint with the Department of
Labor.

Issue 2: A judgement cannot bind person who are not parties to the action.
1. Petitioners' prayer for the inclusion of employees listed in Annex "D"
whose names were admittedly inadvertently excluded in the caption of the
case and for the correction of typographical errors of the employees' names
appearing in the caption, is well taken and is hereby granted.
2. However, petitioners' prayer for the inclusion of other employees allegedly
similarly situated but whose names were not included either in Annex "D"
or in the caption of the case must be denied.
a. A judgment cannot bind persons who are not parties to the action.