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    Carag V NLRC Digest

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    Trisha Paola Tangan
    1) Employees of Mariveles Apparel Corporation filed a complaint for illegal dismissal against the company due to its illegal closure without proper notice. 2) The employees sought to implead the company's directors, Antonio Carag and Armando David, to assure satisfaction of any judgment awarded to the employees. 3) The issue was whether corporate directors could be held personally liable for a corporation's debts. The Supreme Court ruled that directors are generally not personally liable, but could be if they assented to unlawful acts, acted with bad faith or gross negligence, or incurred conflict of interest resulting in damages. However, in this case the employees failed to allege that Carag committed any unlawful acts.

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    Carag V NLRC Digest

    Uploaded by

    Trisha Paola Tangan
    100 views2 pages
    1) Employees of Mariveles Apparel Corporation filed a complaint for illegal dismissal against the company due to its illegal closure without proper notice. 2) The employees sought to implead the company's directors, Antonio Carag and Armando David, to assure satisfaction of any judgment awarded to the employees. 3) The issue was whether corporate directors could be held personally liable for a corporation's debts. The Supreme Court ruled that directors are generally not personally liable, but could be if they assented to unlawful acts, acted with bad faith or gross negligence, or incurred conflict of interest resulting in damages. However, in this case the employees failed to allege that Carag committed any unlawful acts.

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    Corporation Law

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    Carag v Nlrc Digest

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    1) Employees of Mariveles Apparel Corporation filed a complaint for illegal dismissal against the company due to its illegal closure without proper notice. 2) The employees sought to implead the company's directors, Antonio Carag and Armando David, to assure satisfaction of any judgment awarded to the employees. 3) The issue was whether corporate directors could be held personally liable for a corporation's debts. The Supreme Court ruled that directors are generally not personally liable, but could be if they assented to unlawful acts, acted with bad faith or gross negligence, or incurred conflict of interest resulting in damages. However, in this case the employees failed to allege that Carag committed any unlawful acts.

    Copyright:

    © All Rights Reserved
    Download as DOCX, PDF, TXT or read online from Scribd
    Download as docx, pdf, or txt
    100 views2 pages

    Carag V NLRC Digest

    Uploaded by

    Trisha Paola Tangan
    1) Employees of Mariveles Apparel Corporation filed a complaint for illegal dismissal against the company due to its illegal closure without proper notice. 2) The employees sought to implead the company's directors, Antonio Carag and Armando David, to assure satisfaction of any judgment awarded to the employees. 3) The issue was whether corporate directors could be held personally liable for a corporation's debts. The Supreme Court ruled that directors are generally not personally liable, but could be if they assented to unlawful acts, acted with bad faith or gross negligence, or incurred conflict of interest resulting in damages. However, in this case the employees failed to allege that Carag committed any unlawful acts.

    Copyright:

    © All Rights Reserved
    Download as DOCX, PDF, TXT or read online from Scribd
    Download as docx, pdf, or txt
    of 2

    CARAG v.

    NLRC
    ANTONIO CARAG v. NATIONAL LABOR RELATIONS COMMISSION, ISABEL G.
    PANGANIBAN-ORTIGUERRA, as Executive Labor Arbiter, NAFLU, and
    MARIVELES APPAREL CORPORATION LABOR UNION

    FACTS:
    Respondents National Federation of Labor Union (NAFLU) and Mariveles
    Apparel Corporation Labor Union, on behalf of the rank-and-file employees, filed a
    complaint for illegal dismissal against the MARIVELES APPRAREL CORPORATION
    brought about by its illegal closure of business.
    The complainants aver that respondent company prior to its closure did not even
    bother to serve written notice to employees and to the Department of Labor and
    Employment at least one month before the intended date of closure. The respondents
    did not even establish that its closure was done in good faith. Moreover, the
    respondents did not pay the affected employees separation pay, the amount of which is
    provided in the existing Collective Bargaining Agreement between the complainants and
    the respondents.
    The complainants prayed to implead Atty. Antonio Carag and Mr. Armando
    David, as owners and responsible officers of respondent corporation to assure the
    satisfaction of the judgment, should a decision favorable to them be rendered.
    The complainants invoked the ruling laid down by the Supreme Court in the case
    of A.C. Ransom Labor Union CCLU vs. NLRC, where it was held that a corporate
    officer can be held liable for acting on behalf of the corporation when the latter is
    no longer in existence and there are valid claims of workers that must be
    satisfied.
    Respondents opposed the impleader petitioner Atty. Antonio C. Carag and Mr.
    Armando David since they are not the owners of Mariveles Apparel Corporation, and
    they are only minority stockholders holding qualifying shares. Piercing the veil of
    corporate fiction cannot be done in the present case for such remedy can only be
    availed of in case of closed or family owned corporations.
    ISSUE:  Whether or not a corporate director could be held personally liable for the
    debts of a corporation.

    RULING:
    No, the corporate director could not be held personally liable for the debt of
    a corporation.
    Generally, a director is NOT personally liable for the debts of a corporation, which has a
    separate legal personality of its own. However, Section 31 of the Corporation Code
    provides that, the personal liability of corporate officers validly attaches only
    when:
    (a) they assent to a patently unlawful act of the corporation; or
    (b) they are guilty of bad faith or gross negligence in directing its affairs; or
    (c) they incur conflict of interest, resulting in damages to the corporation, its
    stockholders or other persons.
    In this case, the complainants failed to allege in their complaint that Carag wilfully
    and knowingly voted for or assented to any patently unlawful act of MAC. Complainants
    also did not present any evidence showing that Carag wilfully and knowingly voted for or
    assented to any patently unlawful act of MAC. Neither did Arbiter Ortiguerra make any
    finding to this effect in her Decision. Therefore, petitioners, as directors cannot be held
    liable.

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