Girly G.

Ico
v.
Systems Technology Institute, Inc., Monico V. Jacob, And Peter L. Fernandez
G.R. No. 185100
July 9, 2014

Facts:

The Labor Arbiter in an illegal dismissal case filed by the petitioner held the respondents
who are the President and CEO of Systems Technology Institute (STI) solidarily liable with the
latter for the payment of backwages and other damages in favor the petitioner. The petitioner
was a former COO and School administrator of STI-Makati before it was merged with STI, the
latter as surviving corporation, before she was allegedly demoted after a reorganization was
implemented. On appeal with the NLRC, it vacated the Labor Arbiter’s decision holding that the
respondents were not liable as the reorganization was a management prerogative pursuant to
the merger. CA affirmed the decision, hence this petition.

Issue: Whether or not the officers of a corporation can be held personally liable for their official
acts as ruled by the Labor Arbiter.

Ruling: No.

The Court found that the respondent’s acts constitute illegal dismissal because of causing
petitioner’s hardships and suffering; but found that only Fernandez was responsible for the
malice and bad faith. He alone is guilty of persecuting petitioner, and some of his actions were
committed outside of the authority given to him by the school; they bordered on the personal,
rather than official.

Nevertheless, a corporation, as a juridical entity, may act only through its directors,
officers and employees. Obligations incurred as a result of the directors’ and officers’ acts as
corporate agents, are not their personal liability but the direct responsibility of the corporation
they represent. As a rule, they are only solidarily liable with the corporation for the illegal
termination of servicesof employees if they acted with malice or bad faith.To hold a director or
officer personally liable for corporate obligations, two requisites must concur: (1) it must be
alleged in the complaint that the director or officer assented to patently unlawful acts of the
corporation or that the officer was guilty of gross negligence or bad faith; and (2) there must be
proof that the officer acted in bad faith.