Government of the Philippine Islands v. El Monte De Piedad

TOPICS: parens patriae

FACTS: 

In 1863 the inhabitants of the Spanish dominions contributed funds for the relief of those damaged by an earthquake in the Philippine Islands and the money worth $80,000.00 was remitted to the Philippines to be distributed by a central relief board.

Part of the funds contributed were turned over to the board. Part of the funds contributed were turned over to the "Monte de Piedad," an institution under the control of the church, to be held at the disposal of the relief board. Subsequently, Spain relinquished Philippines to the United States  through the Treaty of Paris. However, the money was not passed to the USA.  

ISSUE:

WON the Philippine government is proper party to maintain an action to recover the funds. 

RULING:

Yes, the Philippine Government is the proper party to maintain an action to recover the funds thus loaned or deposited for the purpose of carrying out the intention of the contributors. 

The State as a sovereign, is the parens patriae. It has the right to enforce all charities of public nature by virtue of its general superintending authority over the public interests, where no other person is entrusted with it. It is the most beneficient function, and often necessary to be exercised in the interest of humanity, and for the prevention of injury to those who cannot protect themselves.

In this case, the contributors of the money, who could claim to be damaged by the payment to the Monte, do not appear on record. The beneficiaries, consisting of the original sufferers and their heirs, are numerous. A large number of original victims died and their heirs can no longer be ascertained. Hence, it is the Philippine government, in view of parens patriae, who could enforce all charities. 

Therefore, the Philippine government is proper party to maintain an action to recover the funds

Philippine Virginia Tobacco Administration v. CIR

TOPICS: Laissez faire concept; Welfare state concept; Rejection of the traditional classifications of constituent and ministrant governmental functions

FACTS: 

Respondents are claimants of overtime pay due to them from their employer, Philippine Virginia Tobacco Administration or PVTA.

PVTA denied the allegations and raised a defense that the court lacks jurisdiction as it is exercising governmental functions and thus, exempt from the payment of overtime compensation. 

ISSUE:

I. WON PVTA is exercising governmental functions.

II. WON PVTA is exempted from the payment of the overtime compensation.

RULING:

I.

Yes, PVTA performs governmental functions. 

Under a welfare state concept, the government has an expanded responsibility which includes the power of control over economic affairs. In this concept, the government may interfere in the affairs of industry and agriculture as well as to compete with existing business.

In this case, the economic policy of PVTA aims to encourage the production of local Virginia tobacco, establish its industry, and improve the quality of locally manufactured cigarettes. Hence, given the power to control economic affairs, which the government undertakes in its sovereign capacity, PVTA is performing a governmental function.  

II.

No.

The Eight-Hour Labor Law shall apply to all persons employed in any industry or occupation, whether public or private. 

In this case, the petitioner need not have required the private respondents to render overtime services. Thus, the private respondents deserve payment for overtime services. 

Therefore, the petitioner is not exempted from the payment of overtime compensation. 

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DISCUSSION:

Welfare state concept is antithetical to the laissez faire concept. 

Under a welfare state concept, the government is called upon to undertake in its sovereign capacity the areas which used to be left to private enterprise, such as the promotion of the welfare, progress, and prosperity of the people - traditionally identified as ministrant functions of the government. It entrusted to our government the responsibility of coping with social and economic problems with the commensurate power of control over economic affairs.

A laissez faire concept provides that economic affairs should be reserved or be left under the invisible hands of the private enterprises. 

The 1935 Constitution rejected the doctrine of laissez-faire when it entrusted to our government the responsibility of coping with social and economic problems with the commensurate power of control over economic affairs. 

The traditional classification of constituent and ministrant functions of the government under the Bacani ruling was declared unrealistic and obsolete due to the growing complexities of modern society. The government must undertake in its sovereign capacity some areas which used to be left to private enterprise if it is to meet the increasing social challenges of the times towards a greater socialization of economic forces. 

Bacani v. NACOCO

TOPICS: Government of the Philippine Islands; Government; Institutions which the government functions are exercised; Two-fold functions of the government; GOCCs 

FACTS: 

National Coconut Corp. requested for a transcript of the stenographic notes during the hearing in its civil case. NACOCO paid for the transcript at the rate of P1.00 per page. However, Auditor General disallowed the payment of fees and sought for its recovery as NACOCO was a government entity and thus, exempt from the payment of the fees. 

The trial court ruled that NACOCO is not a government entity and NACOCO’s payment for the transcript was valid.

ISSUE:

WON NACOCO is a government entity and thus exempted from the payment of the transcript of stenographic notes.

RULING:

I.

No, NACOCO is not a government entity and it is not exempted from the payment of the transcript of stenographic notes.

Government of the Philippine Island refers to the corporate governmental entity through which the functions of government are exercised throughout the Philippine Islands [as an attribute of sovereignty], including, save as the contrary appears from the context, the various arms through which political authority is made effective in said Islands, whether pertaining to the central Government or to the provincial or municipal branches or other form of local government

In this case, NACOCO was organized to realize the function of the government in promoting the coconut industry. The mere fact that the Government happens to be a majority stockholder does not make it a public corporation or under the classification of municipal or public corporation. It was given a corporate power separate and distinct from our government. It may sue and be sued like any other private corporation. Thus, it is not a government entity.

Thus, NACOCO is not exempted from payment of the transcript of stenographic notes. 

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DISCUSSION:

Government of the Philippine Island refers to the corporate governmental entity through which the functions of government are exercised throughout the Philippine Islands, including, save as the contrary appears from the context, the various arms through which political authority is made effective in said Islands, whether pertaining to the central Government or to the provincial or municipal branches or other form of local government.

Government - that institution or aggregate of institutions by which an independent society makes and carries out those rules of action which are necessary to enable men to live in a social state, or which are imposed upon the people forming that society by those who possess the power or authority of prescribing them. 

The institutions, when referring to the national government, are what the Constitution has established - the legislative, executive, and judicial departments, through which the functions of the government are exercised. 

The functions of the government are two fold:

Constituent - refers to those which constitute the very bonds of society and are compulsory in nature.

Ministrant - refers to those that are undertaken only by advancing the general interests of society, and are merely optional.  

Test to determine whether or not a government shall exercise certain of these optional functions:

• that a government should do for the public welfare those things which private capital would not naturally undertake

• that a government should do these things which by its very nature it is better equipped to administer for the public welfare than is any private individual or group of individuals

Constituent functions of the government according to President Wilson (these are functions which our government is required to exercise to promote its objectives as expressed in our Constitution and which are exercised by it as an attribute of sovereignty):

1. The keeping of order and providing for the protection of persons and property from violence and robbery

2. The fixing of the legal relations between man and wife and between parents and children.

3. The regulation of the holding, transmission, and interchange of property, and the determination of its liabilities for debt or for crime.

4. The determination of contract rights between individuals.

5. The definition and punishment of crime.

6. The administration of justice in civil cases.

7. The determination of the political duties, privileges, and relations of citizens.

8. Dealings of the state with foreign powers: the preservation of the state from external danger or encroachment and the advancement of its international interests

The most important ministrant functions are (these are exercised to promote merely the welfare, progress and prosperity of the people):

1. Public works

2. Public education

3. Public charity

4. Health and safety regulations

5. Regulations of trade and industry

Pursuant to the ministrant functions, government-owned and controlled corporations (GOCCs) are formed to promote certain aspects of the economic life of our people. They take on the form of a private enterprise or one organized with powers and formal characteristics of a private corporations under the Corporation Law. 

BPI v. Casa Montessori

FACTS: 

Casa Montessori discovered that 9 of its checks had been encashed by a certain Sonny Santos, a fictitious name used by Leonardo Yabut. Yabut admitted that he forged the signature of Ms. Lebron, Casa Montessori’s President, and encashed the checks. 

The CA took into account CASA’s contributory negligence that resulted in the undetected forgery. Hence, both Yabut and BPI were ordered to reimburse CASA. However, it disallowed attorney’s fees and moral and exemplary damages. 

ISSUE:

I. WON CASA is entitled moral damages.

RULING:

I.

No, CASA cannot claim for moral damages. 

Under the law, a corporation -- being an artificial person without feelings, emotions and senses, and having existence only in legal contemplation -- is not entitled to moral damages, because it cannot experience physical suffering and mental anguish. However, for breach of the fiduciary duty required of a bank, a corporate client may claim such damages when its good reputation is besmirched by such breach, and social humiliation results. therefrom

In this case, CASA, is a corporation. Hence, it cannot be entitled to moral damages. Moreover, CASA was unable to prove that BPI had debased its good reputation of, and consequently caused its incalculable embarrassment.  

Therefore, CASA cannot claim for moral damages.

Cosare v. Broadcom Asia, Inc.

TOPICS:

Intra-corporate Controversies; Corporate Officer; Office v. Employee

FACTS:

Cosare was employed as salesman by Arevalo who set up Broadcom. Cosare was named an incorporator of Broadcom and was promoted to the position of Assistant VP for Sales. 

Thereafter, Cosare was replaced by Alex Abiog as VP for Sales. Cosare also sent a confidential memo to Arevalo about the anomalies allegedly committed by Abiog. However, instead of acting on the accusation, Cosare was asked to tender his resignation in exchange for financial assistance in the amount of php 300,000.00. 

Cosare was precluded from reporting to work and barred from entering the company premises. He filed the subject labor complaint.

LA’s Decision:

Cosare’s complaint was dismissed for failure to establish illegal dismissal.

NLRC’s Decision:

Cosare was constructively dismissed. He was awarded in the amount of 100K. 

CA’s Decision:

The case involves an intra-corporate controversy which was within the jurisdiction of the RTC, not LA. Cosare was a stockholder and he was listed as one of its directors. 

ISSUES:

I. WON the Cosare is a corporate officer.

II. WON the LA has a jurisdiction over the case.

III. WON the case involves an intra-corporate controversy. 

RULING:

I.

No, Cosare is not a corporate officer. 

Under the law, a corporate officer is one whose position is created under the corporation’s charter or by-laws and that the election of the officer is by the directors or stockholders. The complaint for illegal dismissal of a corporate officer is lodged with the RTC. 

In this case, Broadcom’s by-laws only created the office of the President, Vice-President, Treasurer, and Secretary. Hence, his position could only be deemed a regular office. 

Therefore, Cosare is not a corporate officer, but a regular employee. 

II.

LA has the jurisdiction over the complaint.

Under the law, the illegal dismissal of a regular employee is cognizable under the LA. 

In this case, Cosare is not a corporate officer since his position as VP for Sales is not one among those offices created in the corporate by-laws. Hence, he is deemed a regular employee. 

Therefore, his complaint is cognizable in the LA. 

III.

The case does not involve an intra-corporate controversy. 

Under the controversy test, the controversy, to qualify as an intra-corporate controversy, must not only be rooted in the existence of an intra-corporate relationship, but must as well pertain to the enforcement of the parties’ correlative rights and obligations under the Corporation Code and the internal and intra-corporate regulatory rules of the corporation.

In this case, the issue pertains to Cosare’s rights and obligations as a regular officer, instead of a stockholder of the corporation. 

Hence, the case does not involve an intra-corporate controversy.

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Additional Notes:

INTRA-CORPORATE CONTROVERSY

An intro-corporate controversy which falls within the jurisdiction of regular courts pertains to disputes that involves any of the following relationships:

(1) between the corporation, partnership or association and the public;

(2) between the corporation, partnership or association and the state in so far as its franchise, permit or license to operate is concerned;

(3) between the corporation, partnership or association and its stockholders, partners, members or officers; and 

(4) among the stockholders, partners or associates, themselves.

Under the nature of the controversy test, the incidents of that relationship must also be considered for the purpose of ascertaining whether the controversy itself is intra-corporate. The controversy must not only be rooted in the existence of an intra-corporate relationship, but must as well pertain to the enforcement of the parties’ correlative rights and obligations under the Corporation Code and the internal and intra-corporate regulatory rules of the corporation.

CORPORATE OFFICER

There are two circumstances which must concur in order for an individual to be considered a corporate officer, as against an ordinary employee or officer, namely:

(1) the creation of the position is under the corporation’s charter or by-laws; and

(2) the election of the officer is by the directors or stockholders

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.

OFFICE V. EMPLOYEE

It has been held that an "office" is created by the charter of the corporation and the officer is elected by the directors and stockholders. On the other hand, an "employee" usually occupies no office and generally is employed not by action of the directors or stockholders but by the managing officer of the corporation who also determines the compensation to be paid to such employee.