MAM REALTY VS NLRC (G.R. NO.

114787 JUNE 2, 1995)

Doctrine: The separate juridical personality of the corporation enables it to act as though it were a
person. As an artificial being, it may own properties, transact and commit acts expressly authorized by
law or incidental to its existence. Consequently, as an artificial being, a corporation has a personality
separate and distinct from its stockholders. Hence, the general rule is that a corporation may not be made
to answer for acts or liabilities of its stockholders and vice versa.

Facts: The cases originated from a complaint filed with the Labor Arbiter by private respondent Celso B.
Balbastro against herein petitioners, MAM Realty Development Corporation (“MAM”) and its Vice
President Manuel P. Centeno, for wage differentials, “ECOLA,” overtime pay, incentive leave pay, 13th
month pay (for the years 1988 and 1989), holiday pay and rest day pay. Balbastro alleged that he was
employed by MAM as a pump operator in 1982 and had since performed such work at its Rancho Estate,
Marikina, Metro Manila. He earned a basic monthly salary of P1,590.00 for seven days of work a week
that started from 6:00 a.m. to up until 6:00 p.m. daily.

On appeal to it, respondent National Labor Relations Commission (“NLRC”) rendered judgment (a)
setting aside the questioned decision of the Labor Arbiter and (b) referring the case, pursuant to Article
218(c) of the Labor Code, to Arbiter Cristeta D. Tamayo for further hearing and submission of a report
within 20 days from receipt of the Order. On 21 March 1994, respondent Commissioner, after considering
the report of Labor Arbiter Tamayo, ordered:

“WHEREFORE, the respondents are hereby directed to pay jointly and severally complainant the sum of
P86,641.05 as abovecomputed.”

Issue: Whether or not Centeno is solidarily liable with herein petitioner MAM Realty.

Held: No. We agree with petitioners, however, that the NLRC erred in holding Centeno jointly and
severally liable with MAM. A corporation, being a juridical entity, may act only through its directors,
officers and employees. Obligations incurred by them, acting as such corporate agents, are not theirs but
the direct accountabilities of the corporation they represent. True, solidarily 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 stock or who, having knowledge
thereof, did not forthwith file with the corporate secretary his written objection thereto.

3. When the director, trustee or officer has 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.

In labor cases, for instance, the Court has held corporate directors and officers solidarily liable with the
corporation for the termination of employment of employees done with malice or in bad faith.

In the case at bench, there is nothing substantial on record that can justify, prescinding from the
foregoing, petitioner Centeno’s solidary liability with the corporation.