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G.R. No.

111008 November 7, 1994

TRAMAT MERCANTILE, INC. AND DAVID ONG, petitioners,


vs.
HON. COURT OF APPEALS AND MELCHOR DE LA CUESTA, respondents.

FACTS: Melchor De la Cuesta sold a tractor to Tramat corporation. David Ong (president of Tramat)
paid Melchor de la Cuesta via a check. Tramat modified the tractor and made it into a lawn mower and
subsequently sold the same to NAWASA. NAWASA refused to pay Tramat for the tractor saying
that it had defects and that the tractor engine is reconditioned. Tramat through David Ong
subsequently caused a stop payment of the check paid to Dela Cuesta.

Dela Cuesta of course sued Tramat for non-payment and asked that Tramat and David Ong be
solidarily held liable. The RTC granted this and asked the above mentioned to pay jointly and severally. The
CA said the same.

ISSUES: Whether or not petitioners should be held solidarily liable? and in what instances does personal
liability of a corporate director, trustee or officer validly attach together with corporate liability?

HELD: No. The Supreme Court generally agreed that Tramat should pay however in the case of David Ong
being merely the President of the company corporation, he should not be held personally liable for
transactions carried in the name of the corporation. It must be remembered that the corporation has a
separate and distinct personality from its officers (even its president) and the liability incurred by the
corporation is to be born by the corporation. The court said essentially the same:

Ong had there so acted, not in his personal capacity, but as an officer of a
corporation, TRAMAT, with a distinct and separate personality. As such, it should only be
the corporation, not the person acting for and on its behalf, that properly could be made liable
thereon.

Personal liability of a corporate director, trustee or officer along (although not necessarily) with the corporation
may so validly attach, as a rule, only when —

1. He assents (a) to a patently unlawful act of the corporation, or (b) for bad faith, or
gross negligence in directing its affairs, or (c) for conflict of interest, resulting in damages
to the corporation, its stockholders or other persons; [See Section 31, Corporation Code.]

2. He consents to the issuance of watered stocks or who, having knowledge thereof, does not
forthwith file with the corporate secretary his written objection thereto; [See Section 65, Corporation Code.]

3. He agrees to hold himself personally and solidarily liable with the corporation; or [See De
Asis & Co., Inc. vs. Court of Appeals, 136 SCRA 599.]

4. He is made, by a specific provision of law, to personally answer for his corporate


action. [Exemplified in Article 144, Corporation Code; see also Sec. 13, Presidential Decree 115 (Trust Receipts Law).]

Clearly Ong has not committed any of the abovementioned and shouldn’t be held personally liable.