Marc II Marketing v. Alfredo Joson

TOPICS:

Original and exclusive Jurisdiction of Labor Arbiter - cases involving termination or dismissal of workers;

Jurisdiction of RTC - cases involving termination or dismissal of a corporate officer;

A corporate officers are those officers of a corporation who are given that character either by the Corporation Code or by the corporation's by-laws. Under the Corporation Code, corporate officers are 1) president; (2) secretary; (3) treasurer; and (4) such other officers as may be provided for in the by-laws;

The corporate officers enumerated in the by-laws are the exclusive Officers of the corporation and the Board has no power to create other Offices without amending first the corporate by-laws.

FACTS:

Alfredo Joson was the General Manager, incorporator, director and stockholder of Marc II Marketing which took over Marc Marketing. He was employed by Lucila Joson, President of Marc Marketing through a Management Contract. 

Thereafter, Marc II Mktg. decided to stop its operation and apprised Respondent of the termination of his services as GM. Respondent filed a complaint for reinstatement and money claim against Marc II. 

Lucila Joson moved to dismiss the complaint on the ground that the Labor Arbiter lacks jurisdiction as the case involved an intra-corporate controversy, which jurisdiction belongs to the SEC [now with the Regional Trial Court (RTC).

LA’s Decision:

LA favored the respondent. There was an employer-employee relationship between Lucila Joson and Alfredo Joson. Respondent was illegally dismissed.

NLRC’s Decision:

NLRC ruled in favor of petitioner Corp. Respondent was a corporate officer whose dismissal involved a purely intra-corporate controversy.

CA’s Decision:

CA upheld LA’s decision. The respondent was a mere employee of petitioner corporation, who has been illegally dismissed from employment without valid cause and without due process.

ISSUES:

1) WON Alfredo Joson is a corporate officer, which case automatically falls within the jurisdiction of the RTC and not with the Labor Arbiter.

2) WON Lucila Joson can be made joint and severally liable with the petitioner corporation.

RULING:

I.

Alfredo Joson is not a corporate officer.

Under the law, corporate officers are those expressly mentioned by the Corporation Code or by the corporation’s by-laws, while the rest are considered only as employees or subordinate officials. The board of directors has no power to create other corporate offices without first amending the corporate by-laws so as to include therein the newly created corporate office. The dismissal of a corporate officer is always regarded as a corporate act and/or an intra-corporate controversy which falls under the jurisdiction of the RTC. 

In this case, the petitioner Corporation’s by laws did not explicitly reveal the position of a General Manager as one of its corporate officers. Hence, the respondent can only be regarded as an employee or subordinate.

Therefore, being an employee, his case falls within the jurisdiction of the LA and not with the RTC. 

II.

Lucila Joson is jointly and solidariy liable with the petitioner corporation.

Under the law, the corporation has a personality separate and distinct from its officers, stockholders, however its corporate veil can be pierced when the notion of its legal entity is used as a means to perpetrate fraud, illegal act, used as a vehicle for the evasion of an existing obligation, and to confuse legitimate issues.

In this case, Lucila Joson, the President of the corporation acted in bad faith and with malice in effecting the abrupt dismissal of the Respondent without prior notice and without separation pay considering that his termination was not due to business losses or financial reverses. 

Therfore, Lucica Joson can be made personally liable. 

ABSCBN Broadcasting v. CA

FACTS:

ABSCBN entered into a Film Exhibition Agreement with Viva Production, Inc., where the former was given an exclusive right to exhibit some Viva films. However, there are two versions of the agreement:

1) Mr. Eugenio Lopez III, General Manager of ABSCBN, asserted that ABSCBN was granted with a film rights to fourteen (14) films for a total consideration of P36 million. 

2) However, Mr. Vicente Del Rosario insisted that the agreement covers 104 films for a total price of P60 million.

A counterproposal from Mrs. Charo Concio covering 53 films  for a consideration of P35 million was then rejected by Viva’s Board of Directors. 

Following the rejection, the 104 Viva-produced films were granted to RBS, which prompted ABSCBN to file for a TRO against the RBS, Viva Production, and Del Rosario. This resulted to the non-showing of the film “Maging Sino Ka Man” in RBS on the day of its supposed showing.  

The RTC and CA ruled that the contract was not perfected and granted RBS damages due to ABSCBN’s complaint.  

ISSUES:

I. WON there was a perfected contract between VIVA and ABS-CBN.

II. WON RBS is entitled to damages.

RULING:

I.

The contract between Viva Productions, Inc. and ABSCBN was not binding.

Under the law, corporate powers, such as the power to enter into contracts, are exercised by the Board of Directors, which power may be delegated to either an executive committee or officials or contracted managers. 

In this case, Del Rosario has no authority to bind a contract with ABS CBN until Viva’s BoD approves it. In fact, Viva’s Board of Director rejected ABS-CBN's counter-offer and insisted that the film package for 140 films be maintained. 

Therefore, the contract was not binding. 

II.

RBS is not entitled for moral damages and exemplary damages.

Under the law, the award of moral damages cannot be granted in favor of a corporation because, being an artificial person and having existence only in legal contemplation, it has no feelings, no emotions, no senses, It cannot, therefore, experience physical suffering and mental anguish, which can be experienced only by one having a nervous system.

In this case, it is RBS who claimed for moral damages. Hence, as a corporation, it cannot be entitled for such.  

Moreover, the claims for moral and exemplary damages are favored when there is an abuse of right on the part of the defendant. The elements of the abuse of right doctrine are: (1) the existence of a legal right or duty, (2) which is exercised in bad faith, and (3) for the sole intent of prejudicing or injuring another.

In this case, there is no adequate proof that ABS-CBN was inspired by malice or bad faith.

Therefore, RBS is not entitled for any damages. 

Yao Ka Sin Trading v. CA

TOPICS:

single proprietorship v. corporation;

all functions emanate from the BOD, unless those which are delegated to certain individuals for practicality;

constitution covers the illegal acts (even if not in the AOI)

FACTS:

Constancio Maglana, President and Chairman of the Board of Prime White Cement Corporation (PWCC) presented a letter-offer to Yao Ka Sin Trading through its manager, Henry Yao. 

The letter-offer regarding the sale of 45,000 bags of prime white cement was accepted by YKS. However, after its signing, the Board of Directors of PWCC disapproved the same. PWCC informed YKS regarding the disapproval. 

Notwithstanding the issue regarding the letter-offer, PWCC delivered only 10,000 bags of white cement to YKS under a new and separate contract (not as what was stated in the letter-offer). 

PWCC only committed the delivery of 10,000 bags but YKS insisted on the delivery of 45,000 bags.

YKS filed a Specific Performance with Damages against PWCC. In the Answer, PWCC alleged that YKS has no legal personality to sue; the letter-offer was rejected by its BoD, hence it was never consummated, but instead only agreed to sell 10,000 bags of white cement under a separate contract. 

RTC Decision:

Defendant was ordered to complete the delivery of 45,000 bags. Under the By-Laws of PWCC, the President (Maglana) was granted by the BoD to enter into an agreement or contract. Such contract or agreement is not be subject to the ratification of the BoD, but subject only to the declared objects and purpose of the corporation and existing laws. Hence, it was validly entered. 

CA Decision:

CA reversed the decision. The letter-offer was rejected by PWCC’s BOD. Maglana and Yao entered an unauthorized contract as Maglana was not authorized by the BoD nor was his action ratified by the BoD. Nowhere in the AOI nor By-Laws was he empowered to enter into a contract. Having no cause of action, YKS is not entitled to any relief. 

ISSUE:

I. WON Plaintiff Henry Yao has the capacity to sue on behalf of YKS. - No

II. WON the letter-offer is binding with the respondent. - No

RULING:

I.  

No, Henry Yao lacks the capacity to sue.

Under the law, only natural or juridical persons or entities authorized by law may be parties in a civil action and sole proprietorship is neither a natural person nor a juridical person. A sole proprietorship as a form of business organization conducted for profit by a single individual, and requires the proprietor or owner thereof to secure licenses and permits, register the business name, and pay taxes to the national government. It does not vest juridical or legal personality upon the sole proprietorship nor empower it to file or defend an action in court. 

Here, Henry Yao filed the complaint being the manager of Yao Ka Sin Trading, which is a sole proprietorship. Hence, the proper party should be Yao Ka Sin, whose personality is not separate nor distinct from the sole proprietorship. 

Therefore, Henry Yao has no capacity to sue and Yao Ka Sin should be impleaded as a complainant.

II.

No, the letter-offer did not bind the respondent.

Under the law, a corporation can act only through its officers and agents who can bind the corporation in transactions with third persons to the extent of the authority conferred upon them. Based on PWCC’s By-Laws, the President can execute and sign for and in behalf of the corporation all contracts and agreements which the corporation may enter. The power to execute and sign presupposes a prior act of the corporation through the BoD. 

In this case, Mr. Maglana, the President of PWCC, entered into a contract with YKS for the corporation independently from the BOD or without prior Board approval. Maglana also failed to prove that he has the apparent authority to execute the contract.

Therefore, the contract was not binding with PWCC.

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The petitioner agreed to a new transaction after receiving the notification and accepted without any protest the delivery covering 10,000 bags. 

Tan v. Del Rosario

FACTS:

Petitioners, in one case, are taxpayers who claim that the RA 7496, aka Simplified Net Income Taxation Scheme ("SNIT"), is violative of the Constitution, based on the following grounds:

1. Every bill shall embrace only one subject (Art. VI, Sec. 26 [1]). This is because the House Bill of SNIT is entitled, "Simplified Net Income Taxation Scheme for the Self-Employed and Professionals Engaged in the Practice of their Profession"

2. The rule of taxation shall be uniform and equitable and the Congress shall evolve a progressive system of taxation. (Art. VI, Sec. 28 [1]). This is because of the imbalance between the tax liabilities covered by the amendatory law and those who are not.  

3. No person shall be deprived of property without due process of law, nor shall any person be denied the equal protection of the laws. (Art. III, Sec. 1). This is because the law attempted to tax single proprietorships and professionals differently from the manner it imposes the tax on corporations and partnerships.

In another case, the petitioners argue that the respondents exceeded in their rule-making authority in applying SNIT to general professional partnerships (GPP).

ISSUE:

Whether the SNIT Scheme is violative of the Constitution.

RULING: 

No, the SNIT Scheme does not violate the Constitution.

1. Every bill shall embrace only one subject. The purpose of this provision is to (1) prevent log-rolling legislation; (2) avoid surprises or even fraud; and (3) fairly apprise the people. In this case, the objectives are met. 

2. The rule of taxation shall be uniform and equitable. Uniformity of taxation requires that all subjects or objects of taxation, similarly situated, are to be treated alike both in privilege and liabilities. However, it is with the discretion of the legislature to determine the nature (kind), object (purpose), extent (rate), coverage (subjects) and situs (place) of taxation and the court cannot freely delve into those matters, save where the tax measure becomes unconscionable and unjust as to amount to confiscation of property. 

3. No person shall be deprived of property without due process of law. Nor shall any person be denied the equal protection of the laws. Uniformity in the classification means that (1) there is a substantial distinction; (2) the distinction is germane to the purpose of the law; (3) the law must apply to both present and future conditions; and (4) the law applies equally to all belonging to the same class. The due process clause may correctly be invoked only when there is a clear contravention of inherent or constitutional limitations in the exercise of the tax power

Moreover, as decided in another case, the SC held that a general professional partnership is not income taxpayer (unlike in ordinary business partnership which is treated as a corporation for income tax purposes and so subject to CIT). 

The income tax is imposed not on the GPP, which is tax exempt, but on the partners themselves in their individual capacity computed on their distributive shares in the net profit of their GPP, whether distributed or not.

In determining the partner’s distributive share in the net income of the partnership, each partner (1) shall take into account separately his distributive share of the partnership’s income, gain, loss, deduction, or credit, and (2) shall be deemed to have elected the itemized deductions.

NOTES:

The Code classifies taxpayers into four main groups, namely: (1) Individuals, (2) Corporations, (3) Estates under Judicial Settlement and (4) Irrevocable Trusts (irrevocable both as to corpus and as to income).

Taxable Partnerships - Ordinarily, partnerships, no matter how created or organized, are subject to income tax, for being legally contemplated as corporations. 

Exempt Partnerships – General Professional Partnerships are not similarly identified as corporations nor even considered as independent taxable entities for income tax purposes. The partners themselves, not the partnership (although it is still obligated to file an income tax return [mainly for administration and data]), are liable for the payment of income tax in their individual capacity computed on their respective and distributive shares of profits

Spouses Marcelian and Alice Tapayan v. Martinez

PRINCIPLES: 

Courts are not precluded to accept in evidence a mere photocopy presented as a documentary evidence, when no objection was raised when it was formally offered;

A clear and convincing evidence is necessary to rebut the conclusive presumption of the due execution of a Deed acknowledged before a notary public.

PARTIES:

Petitioners - Spouses Marcelian and Alice Tapayan

Respondent - Ponceda Martinez 

FACTS 

Respondent is the registered owner of a parcel of land named as Pingol Property in Ozamis City. Two (2) mortgages were contracted over her property:

1. PNB mortgage – P100K in the name of Respondent

2. DBP mortgage – P1M renewable credit line in the name of Petitioners

As agreed, a portion of the DBP loan was utilized to settle the remaining balance of PNB loan amounting to P65,320.55. Subsequently, a Deed of Undertaking among the parties was made.

Based on the Undertaking, the Petitioners shall execute a second mortgage in favor of the Respondent over their Carangan Property in Ozamis City. Moreover, should the Petitioners fail pay the DBP loan and the property of the Respondent is foreclosed and is not redeemed by the Petitioners within 1 year redemption period or in case the loan shall be paid by the Respondent just to save her property from being foreclosed, the Petitioners shall acknowledge as his indebtedness the amount due to the DBP upon foreclosure or the amount paid by the Respondent in paying the loan, but in either case shall be deducted therefrom the amount of P65,320.55 plus interests and fees paid by the Petitioners to the PNB in favor of the Respondent’s remaining balance. 

The DBP loan was not paid when it fell due. 

The Respondent filed a complaint for Specific Performance with Damages against Petitioners compelling them to constitute a mortgage over their house and lot, the Carangan Property.

The Petitioners claimed that the Undertaking is a falsity. The DBP loan were used as a capital for the construction business of petitioner and Respondent’s son in a Joint Venture. 

Petitioners’ allegations:

1. The copy of the Deed of Undertaking was inadmissible as proof of its contents.

2. The Deed of Undertaking was a falsity.

3. The petitioners are accommodation borrowers; hence they are not liable but the alleged Joint Venture.

4. Should the petitioners execute a mortgage of their Carangan Property, it should be deducted from the amount they paid to PNB mortgage in favor of Respondent. 

RTC Decision:

The RTC decided in favor of Respondent and ordered the Petitioner-spouses to execute a mortgage over their Carangan property in favor of the respondent, unless they reimburse the respondent for the total amount of P1,180,200.10 paid by her to the DBP for the redemption of the mortgage plus P20K attorney’s fees. 

The RTC noted that the Undertaking was acknowledged before Atty. Emmanuel Chiong who enjoys the presumption of having performed his duties regularly. Therefore, the alleged falsity must be rejected as it is valid and binding. 

CA Decision:

Affirmed the decision of the RTC.

ISSUES:

Whether or not CA erred in affirming the RTC Decision to execute a mortgage over their Carangan Property in favor of the respondent. 

RULING

I. The Deed of Undertaking was admissible as proof of its contents

The objection of the petitioners over the admission of the Undertaking should not be granted. 

Under the law, a proper and timely objection over the documentary evidence presented is necessary; otherwise, it is deemed waived.

Although Best Evidence Rule requires that the original documents must be produced whenever its contents are the subject of inquiry, Courts are not precluded to accept in evidence a mere photocopy of a document when no objection was raised when it was formally offered. Offer is made after all the witnesses of the party making the offer have testified, specifying the purpose for which the evidence is being offered. It is only at this time, and not at any other, that objection to the documentary evidence may be made. 

In this case, the Petitioners failed to object to the admission of the plain copy of the Deed of Undertaking at the time it was formally offered in evidence before the RTC, in fact, they only raised this objection for the first time before the CA. 

Therefore, the Deed of Undertaking was admissible.

II. The Deed of Undertaking was genuine and was duly executed.

The contention of the petitioners that the Deed was a falsity is without merit. 

Under the law, a document acknowledged before a notary public is a public document that enjoys the presumption of regularity. It is a prima facie evidence of the truth of the facts stated therein and a conclusive presumption of its existence and due execution. To overcome this presumption, there must be presented evidence that is clear and convincing.

In this case, the petitioners' denials without clear and convincing evidence to support their claim of fraud and falsity were not sufficient to overthrow the above-mentioned presumption. They have not even supported their claim that their signatures thereon were forged.

Therefore, the authenticity, due execution and the truth of the facts stated in the "Bilihan ng Lupa" are upheld.

III. The petitioners were not accommodation borrowers. 

The allegation of the petitioners that they are accommodation borrowers who applied for the DBP Loan for and on behalf of the Joint Venturers, who should assume the liability, based on the Joint Affidavit of the Joint Venturers should be denied. 

The statements in the Joint Venture were only corroborated by the petitioner’s self-serving declarations and the Court finds no other evidence on record to support the existence of the alleged joint venture, and the verbal agreement of the Joint Venturers in respect of the DBP Loan. 

In this case, Petitioners paid the interest on the DBP Loan, insurance premiums, and other incidental fees without seeking reimbursement from the alleged Joint Venturers, establishing Petitioners’ benefit. 

Therefore, Petitioners must bear the liability and comply the obligations imposed by the Deed of Undertaking. 

IV. The amount paid to PNB must be deducted from Petitioners’ total liability in accordance with the provisions of the Deed (the only issue which the SC deviated from the lower courts’ decision).

The Court ordered the petitioners to execute a mortgage over their Carangan Property and such mortgage should only be made to secure the amount of P1,114,879.55 – the amount paid by the Respondent to DBP to avert the foreclosure of the DBP Mortgage. 

Contrary to the P1,180,200.10 amount directed by the lower courts, the SC reasoned that the P65,320.55 should be deducted from Petitioners' total liability, representing the reimbursement they paid to PNB as the remaining balance of the Respondent over the first mortgage.