Directors personally liable for corporate obligations

The general rule is that a corporation is invested by law with a personality separate and distinct from that of the persons composing it, or from any other legal entity that it may be related to.[1] The obligations of a corporation, acting through its directors, officers, and employees, are its own sole liabilities.[2] Therefore, the corporation's directors, officers, or employees are generally not personally liable for the obligations of the corporation.[3]However, to hold a director or officer personally liable for corporate obligations, two requisites must concur: (1) complainant must allege 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) complainant must clearly and convincingly prove such unlawful acts, negligence or bad faith.[4] To hold a director personally liable for debts of the corporation, and thus pierce the veil of corporate fiction, the bad faith or wrongdoing of the director must be established clearly and convincingly.[5]

[1] Garcia v. Social Security Commission Legal and Collection, SSS, 565 Phil. 193 (2007).

[2] Id.

[3] Id.

[4] Francisco v. Mallen, Jr., 645 Phil. 369 (2010).

[5] Id.

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