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Co, Calvin O.

I. SHORT TITLE: PABALAN V. NLRC

II. FULL TITLE: Jaime Pabalan and Eduardo Lagdameo versus National Labor Relations
Commission, Labor Arbiter Ambrosio Sison, Elizabeth Roderos, et al., and
The Sheriff of The National Labor Relations Commission - G.R. No.
89879, April 20, 1990, J. Gancayco

III. TOPIC: Corporate Juridical Personality

IV. STATEMENT OF FACTS:

Eighty-four (84) workers of the Philippine Inter-Fashion, Inc. (PIF) filed a complaint against the
latter for illegal transfer simultaneous with illegal dismissal without justifiable cause and in violation
of the provision of the Labor Code on security of tenure as well as the provisions of Batas
Pambansa Blg. 130.

V. STATEMENT OF THE CASE:

PIF, through its General Manager, was notified about the complaint and summons for the hearing
which was reset for failure of the petitioners to appear. The hearings were continually re-set for
failure of its officers (petitioners herein) to appear. Complainant workers thus moved to implead
petitioners as officers of PIF in the complaint for their illegal transfer to a new firm.

The Labor Arbiter ruled to reinstate 62 workers and made the officers jointly and severally liable
with PIF to pay them their benefits. The NLRC dismissed the appeal of the petitioners for lack of
merit. Hence, a petition for certiorari was filed to the Supreme Court.

VI. ISSUE:

Whether or not the petitioners as officers are jointly and severally liable with PIF
for its liability

VII. RULING:

No. The settled rule is that the corporation is vested by law with a personality separate and distinct
from the persons composing it, including its officers as well as from that of any other legal entity to
which it may be related. Thus, a company manager acting in good faith within the scope of his
authority in terminating the services of certain employees cannot be held personally liable for
damages. However, the legal fiction that a corporation has a personality separate and distinct from
stockholders and members may be disregarded when the notion of legal entity is used as a means
to perpetrate fraud or an illegal act or as a vehicle for the evasion of an existing obligation, the
circumvention of statutes, and or (to) confuse legitimate issues the veil which protects the
corporation will be lifted.
In this particular case complainants did not allege or show that petitioners, as officers of the
corporation deliberately and maliciously designed to evade the financial obligation of the
corporation to its employees, or used the transfer of the employees as a means to perpetrate an
illegal act or as a vehicle for the evasion of existing obligations, the circumvention of statutes, or to
confuse the legitimate issues.

Not one of the above circumstances has been shown to be present. Hence petitioners cannot be
held jointly and severally liable with the PIF corporation under the questioned decision and
resolution of the public respondent.

VIII. DISPOSITIVE PORTION:

WHEREFORE, the petition is GRANTED and the questioned resolution of the public
respondent dated June 30, 1989 is hereby modified by relieving petitioners of any liability as
officers of the PIF and holding that the liability shall be solely that of Philippine Inter-Fashion, Inc.
No costs.

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