The Supreme Court held that the proscription against granting

compensation to directors/trustees of a corporation is not a sweeping rule. The

FIRST DIVISION implication under Sec. 30 of the Corporation Code is that members of the
board may receive compensation in addition to reasonable per diems when
they render services to the corporation in a capacity other than as
[G.R. No. 113032. August 21, 1997.]
directors/trustees. Resolution No. 4 s. 1986 granted compensation to private
respondents not in their capacity as members of the board but rather as
WESTERN INSTITUTE OF TECHNOLOGY, INC., officers of the corporation. The instant case which is merely an appeal on the
HOMERO L. VILLASIS, DIMAS ENRIQUEZ, PRESTON F. civil aspect of the criminal cases for estafa and falsification of public document,
VILLASIS & REGINALD F. VILLASIS,petitioners, vs. is not a derivative suit. Even if the case is a derivative suit, the same was
RICARDO T. SALAS, SALVADOR T. SALAS, SOLEDAD wrongfully filed in the regular court as the proper forum is the Securities and
SALAS-TUBILLEJA, ANTONIO S. SALAS, RICHARD S. Exchange Commission which exercises original and exclusive jurisdiction over
SALAS & HON. JUDGE PORFIRIO intra-corporate disputes. The acquittal in the criminal cases is not merely
PARIAN, respondents. based on reasonable doubt but rather on a finding that the accused-private
respondents did not commit action ex delicto cannot prosper.
Petition denied.
Tranquilino R. Gale for petitioners.
Quisumbing Torres & Evangelista for Western Institute of Technology.
SYLLABUS
Teodulfo L.C. Castro for private respondents.

1. COMMERCIAL LAW; CORPORATION LAW; BOARD OF

SYNOPSIS DIRECTORS; GENERAL RULE ON COMPENSATION; EXCEPTION; CASE
AT BAR. — There is no argument that directors or trustees, as the case may
be, are not entitled to salary or other compensation when they perform nothing
Private respondents, majority and controlling members of the Board more than the usual and ordinary duties of their office. This rule is founded
of Trustees of Western Institute of Technology, Inc. were acquitted of the upon a presumption that directors/trustees render service gratuitously, and
crimes of estafa and falsification of public document. The falsification charge that the return upon their shares adequately furnishes the motives for service,
was anchored on private respondents submission of the school's income without compensation. Under the foregoing section, there are only two (2)
statement for fiscal year 1985-1986 with the Securities and Exchange ways by which members of the board can be granted compensation apart from
Commission reflecting therein the disbursement of corporate funds for the reasonable per diems: (1) when there is a provision in the by-laws fixing their
compensation of private respondents based on Resolution No. 4, series of compensation; and (2) when the stockholders representing a majority of the
1986, and making it appear that the Resolution was passed by the board on outstanding capital stock at a regular or special stockholders' meeting agree
March 30, 1986, when in truth the same was actually passed on June 1, 1986, to give it to them. The proscription, however, against granting compensation
a date not covered by the corporation's fiscal year. The charge of estafa is to directors/trustees of a corporation is not a sweeping rule. Worthy of note is
based on private respondent's having disbursed funds of the corporation by the clear phraseology of Section 30 which states: " . . . [T]he directors shall not
effecting payment of their retroactive salaries of P186,470.00 and receive any compensation, as such directors, . . . ." The phrase as such
subsequently paying themselves every 15th and 30th of the month starting directors is not without significance for it delimits the scope of the prohibition
June 15, 1986 in the amount of P19,500.00 per month. After trial, the court to compensation given to them for services performed purely in their capacity
acquitted the private respondents on both counts without imposing any civil as directors or trustees. The unambiguous implication is that members of the
liability against them. The individual petitioners, minority stockholders of the board may receive compensation, in addition to reasonable per diems; when
corporation, thus seek to hold the private respondents civilly liable despite their they render services to the corporation in a capacity other than as directors/
acquittal based on the alleged illegal issuance by private respondents of trustees. In the case at bench, Resolution No. 48, s. 1986 granted monthly
Resolution No. 4, series of 1986, ordering the disbursement of corporate funds compensation to private respondents not in their capacity as members of the
and that the grant of compensation to private respondents is proscribed under board, but rather as officers of the corporation, more particularly as Chairman,
Sec. 30 of the Corporation Code. Vice Chairman, Treasurer and Secretary of Western Institute of Technology.
Thus, the prohibition with respect to granting compensation to corporate New Rules on Criminal Procedure and last paragraph of Section 2, Rule 120,
directors/trustees as such under Section 30 is not violated in this particular and settled jurisprudence, any civil action ex delicto cannot prosper. Acquittal
case. HDCAaS in a criminal action bars the civil action arising therefrom where the judgment
of acquittal holds that the accused did not commit the criminal acts imputed to
2. ID.; ID.; DERIVATIVE SUIT; NOT THE CASE AT BAR WHICH IS them.
MERELY AN APPEAL ON THE CIVIL ASPECT OF A CRIMINAL CASE. — A
derivative suit is an action brought by minority shareholders in the name of the
corporation to redress wrongs committed against it, for which the directors
refuse to sue. It is a remedy designed by equity and has been the principal DECISION
defense of the minority shareholders against abuses by the majority. Here,
however, the case is not a derivative suit but is merely an appeal on the civil
aspect of Criminal Cases Nos. 37097 and 37098 filed with the RTC of Iloilo for
estafa and falsification of public document. Among the basic requirements for HERMOSISIMA, JR., J p:
a derivative suit to prosper is that the minority shareholder who is suing for and
on behalf of the corporation must allege in his complaint before the proper Up for review on certiorari are: (1) the Decision dated September 6,
forum that he is suing on a derivative cause of action on behalf of the 1993 and (2) the Order dated November 23, 1993 of Branch 33 of the Regional
corporation and all other shareholders similarly situated who wish to join. This Trial Court of Iloilo City in Criminal Cases Nos. 37097 and 37098 for estafa
is necessary to vest jurisdiction upon the tribunal in line with the rule that it is and falsification of a public document, respectively. The judgment acquitted
the allegations in the complaint that vests jurisdiction upon the court or quasi- the private respondents of both charges, but petitioners seek to hold them
judicial body concerned over the subject matter and nature of the action. This civilly liable. cdphil
was not complied with by the petitioners either in their complaint before the
court a quo nor in the instant petition. By no amount of equity considerations, Private respondents Ricardo T. Salas, Salvador T. Salas, Soledad
if at all deserve, can a mere appeal on the civil aspect of a criminal case be Salas-Tubilleja, Antonio S. Salas, and Richard S. Salas, belonging to the same
treated as a derivative suit. family, are the majority and controlling members of the Board of Trustees of
Western Institute of Technology, Inc. (WIT, for short), a stock corporation
3. ID.; ID.; ID.; JURISDICTION; SECURITIES AND EXCHANGE engaged in the operation, among others, of an educational institution.
COMMISSION. — Granting, for purposes of discussion, that this is a derivative According to petitioners, the minority stockholders of WIT, sometime on June
suit, the same is outrightly dismissible for having been wrongfully filed in the 1, 1986 in the principal office of WIT at La Paz, Iloilo City, a Special Board
regular court devoid of any jurisdiction to entertain the complaint. The case Meeting was held. In attendance were other members of the Board including
should have been filed with the Securities and Exchange Commission (SEC) one of the petitioners Reginald Villasis. Prior to aforesaid Special Board
which exercises original and exclusive jurisdiction over derivative suits, they Meeting, copies of notice thereof, dated May 24, 1986, were distributed to all
being intra-corporate disputes, per Section 5(b) of P.D. No. 902-A.. Once the Board Members. The notice allegedly indicated that the meeting to be held on
case is decided by the SEC, the losing party may file a petition for review June 1, 1986 included Item No. 6 which states:
before the Court of Appeals raising questions of fact, of law, or mixed
questions of fact and law. It is only after the case has ran this course, and not "Possible implementation of Art. III, Sec. 6 of the
earlier, can it be brought to us via a petition for review oncertiorari under Rule Amended By-Laws of Western Institute of Technology, Inc.
45 raising only pure questions of law. on compensation of all officers of the corporation." 1

4. REMEDIAL LAW; CRIMINAL PROCEDURE; ACQUITTAL FOR In said meeting, the Board of Trustees passed Resolution No. 48, s.
NOT COMMITTING CRIME IMPUTED BARS CIVIL ACTION. — As an appeal 1986, granting monthly compensation to the private respondents as corporate
on the civil aspect of Criminal Cases Nos. 37097 and 37098 for falsification of officers retroactive June 1, 1985, viz.:
public document and estafa, which this petition truly is, we have to deny the "Resolution No. 48 s. 1986.
petition just the same. From the factual findings, which we find to be amply
substantiated by the records, it is evident that there is simply no basis to hold On the motion of Mr. Richard Salas (accused), duly
the accused, private respondents herein, civilly liable. The acquittal in Criminal seconded by Mrs. Soledad Tubilleja (accused), it was
Cases Nos. 37097 and 37098 is not merely based on reasonable doubt but unanimously resolved that:
rather on a finding that the accused-private respondents did not commit the
criminal acts complained of. Thus, pursuant to Section 2(b) of Rule III of the
 'The Officers of the Corporation be granted DOCUMENT, Art. 171 of the Revised Penal Code,
monthly compensation for services rendered as committed as follows:
follows: Chairman 9,000.00/month, Vice Chairman
P3,500.00/month, Corporate Treasurer That on or about the 10th day of June,
P3,500.00/month and Corporate Secretary 1986, in the City of Iloilo, Philippines and within the
P3,500.00/month, retroactive June 1, 1985 and the jurisdiction of this Honorable Court, the above-
ten percentum of the net profits shall be distributed named accused, being then the Chairman, Vice-
equally among the ten members of the Board of Chairman, Treasurer, Secretary, and Trustee (who
Trustees. This shall amend and superceed (sic) any later became Secretary), respectively, of the board
previous resolution.' of trustees of the Western Institute of Technology,
Inc., a corporation duly organized and existing
There were no other business. under the laws of the Republic of the Philippines,
conspiring and confederating together and mutually
The Chairman declared the meeting adjourned at helping one another, to better realized (sic) their
5:11 P.M. purpose, did then and there wilfully, unlawfully and
This is to certify that the foregoing minutes of the criminally prepare and execute and subsequently
regular meeting of the Board of Trustees of Western cause to be submitted to the Securities and
Institute of Technology, Inc. held on March 30, 1986 is true Exchange Commission an income statement of the
and correct to the best of my knowledge and belief. corporation for the fiscal year 1985-1986, the same
being required to be submitted every end of the
(Sgd.) ANTONIO S. corporation fiscal year by the aforesaid
SALAS Commission, and therefore, a public document,
including therein the disbursement of the
Corporate retroactive compensation of accused corporate
Secretary" 2 officers in the amount of P186,470.70, by then and
A few years later, that is, on March 13, 1991, petitioners Homero there making it appear that the basis thereof
Villasis, Preston Villasis, Reginald Villasis and Dimas Enriquez filed an Resolution No. 4, Series of 1986 was passed by the
affidavit-complaint against private respondents before the Office of the City board of trustees on March 30, 1986, a date
Prosecutor of Iloilo, as a result of which two (2) separate criminal informations, covered by the corporation's fiscal year 1985-1986,
one for falsification of a public document under Article 171 of the Revised (i.e., from May 1, 1985 to April 30, 1986) when in
Penal Code and the other for estafa under Article 315, par. 1(b) of the RPC, truth and in fact, as said accused well knew, no
were filed before Branch 33 of the Regional Trial Court of Iloilo City. The such Resolution No. 48, Series of 1986 was passed
charge for falsification of public document was anchored on the private on March 30, 1986.
respondents' submission of WIT's income statement for the fiscal year 1985- CONTRARY TO LAW.
1986 with the Securities and Exchange Commission (SEC) reflecting therein
the disbursement of corporate funds for the compensation of private Iloilo City, Philippines, November 22,
respondents based on Resolution No. 4, series of 1986, making it appear that 1991." 3 [Emphasis ours].
the same was passed by the board on March 30, 1986, when in truth, the same
was actually passed on June 1, 1986, a date not covered by the corporation's The Information, on the other hand, for estafa reads:
fiscal year 1985-1986 (beginning May 1, 1995 and ending April 30, 1986). The "The undersigned City Prosecutor accuses
Information for falsification of a public document states: RICARDO SALAS, SALVADOR T. SALAS, SOLEDAD
"The undersigned City Prosecutor accuses SALAS-TUBILLEJA, ANTONIO S. SALAS, RICHARD S.
RICARDO T. SALAS, SALVADOR T. SALAS, SOLEDAD SALAS (whose dates and places of birth cannot be
SALAS-TUBILLEJA, ANTONIO S. SALAS and RICHARD ascertained) of the crime of ESTAFA, Art. 315, par. 1 (b) of
S. SALAS (whose dates and places of birth cannot be the Revised Penal Code, committed as follows:
ascertained) of the crime of FALSIFICATION OF A PUBLIC
 That on or about the 1st day of June, 1986, Significantly on December 8, 1994, a Motion for Intervention, dated
in the City of Iloilo, Philippines, and within the December 2, 1994, was filed before this Court by Western Institute of
jurisdiction of this Honorable Court, the above- Technology, Inc., supposedly one of the petitioners herein, disowning its
named accused, being then the Chairman, Vice- inclusion in the petition and submitting that Atty. Tranquilino R. Gale, counsel
Chairman, Treasurer, Secretary, and Trustee (who for the other petitioners, had no authority whatsoever to represent the
later became Secretary), respectively, of the Board corporation in filing the petition. Intervenor likewise prayed for the dismissal of
of Trustees of Western Institute of Technology, Inc., the petition for being utterly without merit. The Motion for Intervention was
a corporation duly organized and existing under the granted on January 16, 1995. 8
laws of the Republic of the Philippines, conspiring
and confederating together and mutually helping Petitioners would like us to hold private respondents civilly liable
one another to better realize their purpose, did then despite their acquittal in Criminal Cases Nos. 37097 and 37098. They base
and there wilfully, unlawfully and feloniously their claim on the alleged illegal issuance by private respondents of Resolution
defraud the said corporation (and its stockholders) No. 48, series of 1986 ordering the disbursement of corporate funds in the
in the following manner, to wit: herein accused, amount of P186,470.70 representing retroactive compensation as of June 1,
knowing fully well that they have no sufficient 1985 in favor of private respondents, board members of WIT, plus
authority to disburse — let alone violation of P1,453,970.79 for the subsequent collective salaries of private respondents
applicable laws and jurisprudence, disbursed the every 15th and 30th of the month until the filing of the criminal complaints
funds of the corporation by effecting payment of against them on March 1991. Petitioners maintain that this grant of
their retroactive salaries in the amount of compensation to private respondents is proscribed under Section 30 of the
P186,470.00 and subsequently paying themselves Corporation Code. Thus, private respondents are obliged to return these
every 15th and 30th of the month starting June 15, amount to the corporation with interest.
1986 until the present, in the amount of P19,500.00 We cannot sustain the petitioners. The pertinent section of the
per month, as if the same were their own, and when Corporation Code provides:
herein accused were informed of the illegality of
these disbursements by the minority stockholders "Sec. 30. Compensation of directors. — In the
by way of objections made in annual stockholders' absence of any provision in the by-laws fixing their
meeting held on June 14, 1986 and every year compensation, the directors shall not receive any
thereafter, they refused, and still refuse, to rectify compensation, as such directors, except for reasonable per
the same to the damage and prejudice of the diems: Provided, however, That any such compensation
corporation(and its stockholders) in the total sum of (other than per diems) may be granted to directors by the
P1,453,970.79 as of November 15, 1991. vote of the stockholders representing at least a majority of
the outstanding capital stock at a regular or special
CONTRARY TO LAW. stockholders' meeting. In no case shall the total yearly
Iloilo City, Philippines, November 22, compensation of directors, as such directors, exceed ten
1991." 4 [Emphasis ours] (10%) percent of the net income before income tax of the
corporation during the preceding year." [Emphasis ours]
Thereafter, trial for the two criminal cases, docketed as Criminal
Cases Nos. 37097 and 37098, was consolidated. After a full-blown hearing, There is no argument that directors or trustees, as the case may be,
Judge Porfirio Parian handed down a verdict of acquittal on both are not entitled to salary or other compensation when they perform nothing
counts 5 dated September 6, 1993 without imposing any civil liability against more than the usual and ordinary duties of their office. This rule is founded
the accused therein. cdpr upon a presumption that directors/trustees render service gratuitously, and
that the return upon their shares adequately furnishes the motives for service,
Petitioners filed a Motion for Reconsideration 6 of the civil aspect of without compensation. 9 Under the foregoing section, there are only two (2)
the RTC Decision which was, however, denied in an Order dated November ways by which members of the board can be granted compensation apart from
23 1993. 7 reasonable per diems: (1) when there is a provision in the by-laws fixing their
compensation; and (2) when the stockholders representing a majority of the
Hence, the instant petition.
outstanding capital stock at a regular or special stockholders' meeting agree Secretary" 11 [Emphasi
to give it to them. s ours]
This proscription, however, against granting compensation to Clearly, therefore, the prohibition with respect to granting
director/trustees of a corporation is not a sweeping rule. Worthy of note is the compensation to corporate directors/trustees as such under Section 30 is not
clear phraseology of Section 30 which state: ". . . [T]he directors shall not violated in this particular case. Consequently, the last sentence of Section 30
receive any compensation, as such directors, . . ." The phrase as such which provides:
directors is not without significance for it delimits the scope of the prohibition
to compensation given to them for services performed purely in their capacity ". . . In no case shall the total yearly compensation
as directors or trustees. The unambiguous implication is that members of the of directors, as such directors, exceed ten (10%) percent of
board may receive compensation, in addition to reasonable per diems, when the net income before income tax of the corporation during
they render services to the corporation in a capacity other than as the preceding year." [Emphasis ours]
directors/trustees. 10 In the case at bench, resolution No. 48, s. 1986 granted does not likewise find application in this case since the compensation
monthly compensation to private respondents not in their capacity as members is being given to private respondents in their capacity as officers of WIT and
of the board, but rather as officers of the corporation, more particularly as not as board members.
Chairman, Vice-Chairman, Treasurer and Secretary of Western Institute of
Technology. We quote once more Resolution No. 48, s. 1986 for easy Petitioners assert that the instant case is a derivative suit brought by
reference, viz.: them as minority shareholders of WIT for and behalf of the corporation to
annul Resolution No. 48, s. 1986 which is prejudicial to the corporation.
"Resolution No. 48 s. 1986.
We are unpersuaded. A derivative suit is an action brought by minority
On the motion of Mr. Richard Salas (accused), duly shareholders in the name of the corporation to redress wrongs committed
seconded by Mrs. Soledad Tubilleja (accused), it was against it, for which the directors refuse to sue. 12 It is a remedy designed by
unanimously resolved that: equity and has been the principal defense of the minority shareholders against
abuses by the majority. 13 Here, however, the case is not a derivative suit but
'The Officers of the Corporation be granted
is merely an appeal on the civil aspect of Criminal Cases Nos. 37097 and
monthly compensation for services rendered as
37098 filed with the RTC of Iloilo for estafa and falsification of public document.
follows: Chairman — 9,000.00/month, Vice Among the basic requirements for a derivative suit to prosper is that the
Chairman — P3,500.00/month, Corporate minority shareholder who is suing for and on behalf of the corporation must
Treasurer — P3,500.00/month and Corporate
allege in his complaint before the proper forum that he is suing on a derivative
Secretary — P3,500.00/month, retroactive June 1,
cause of action on behalf of the corporation and all other shareholders similarly
1985 and the ten percentum of the net profits shall
situated who which to join. 14 This is necessary to vest jurisdiction upon the
be distributed equally among the ten members of
tribunal in line with the rule that it is the allegations in the complaint that vests
the Board of Trustees. This shall amend and jurisdiction upon the court or quasi-judicial body concerned over the subject
superceed (sic) any previous resolution.' matter and nature of the action. 15 This was not complied with by the
There were no other business. petitioners either in their complaint before the court a quo nor in the instant
petition which, in part, merely states that "this is a petition for review
The Chairman declared the meeting adjourned at oncertiorari on pure questions of law to set aside a portion of the RTC decision
5:11 P.M. in Criminal Cases Nos. 37097 and 37098" 16 since the trial court's judgment
of acquittal failed to impose any civil liability against the private respondents.
This is to certify that the foregoing minutes of the
By no amount of equity considerations, if at all deserved, can a mere appeal
regular meeting of the Board of Trustees of Western
on the civil aspect of a criminal case be treated as a derivative suit. prcd
Institute of Technology, Inc. held on March 30, 1986 is true
and correct to the best of my knowledge and belief. Granting, for purposes of discussion, that this is a derivative suit as
insisted by petitioners, which it is not, the same is outrightly dismissible for
(Sgd.) ANTONIO S.
having been wrongfully filed in the regular court devoid of any jurisdiction to
SALAS
entertain the complaint. The case should have been filed with the Securities
Corporate
and Exchange Commission (SEC) which exercises original and exclusive
jurisdiction over derivative suits, they being intra-corporate disputes, March 30, 1986. It only presented in evidence
per Section 5 (b) of P.D. No. 902-A: Exh. 'C' which is page 5 or the last page of the said minutes.
Had the complete minutes (Exh. '1' ') consisting of five (5)
"In addition to the regulatory and adjudicative pages, been submitted it can be readily seen and
functions of the Securities and Exchange Commission over understood that Resolution No. 48, Series of 1986 (Exh. '1-
corporations, partnerships and other forms of associations E-1' ) giving compensation to corporate officers, was indeed
registered with it as expressly granted under existing laws included in Other Business, No. 6 of the Agenda, and was
and decrees, it shall have original and exclusive jurisdiction taken up and passed on March 30, 1986. The mere fact of
to hear and decide cases involving: existence of Exh. C also proves that it was passed on March
xxx xxx xxx 30, 1986 for Exh. C is part and parcel of the whole minutes
of the Board of Trustees Regular Meeting on March 30,
b) Controversies arising out of intra-corporate or 1986. No better and more credible proof can be considered
partnership relations, between and among stockholders, other than the Minutes (Exh. '1' ) itself of the Regular
members, or associates; between any or all of them and the Meeting of the Board of Trustees on March 30, 1986. The
corporation, partnership or association of which they are imputation that said Resolution No. 48 was neither taken up
stockholders, members or associates, respectively; and nor passed on March 30, 1986 because the matter
between such corporation, partnership or association and regarding compensation was not specifically stated or
the State insofar as it concerns their individual franchise or written in the Agenda and that the words 'possible
right to exist as such entity; implementation of said Resolution No. 48, was expressly
written in the Agenda for the Special Meeting of the Board
xxx xxx xxx." [Emphasis ours] on June 1, 1986, is simply an implication. This evidence by
Once the case is decided by the SEC, the losing party may file a implication to the mind of the court cannot prevail over the
petition for review before the Court of Appeals raising questions of fact, of law, Minutes (Exh. '1') and cannot ripen into proof beyond
or mixed questions of fact and law. 17 It is only after the case has ran this reasonable doubt which is demanded in all criminal
course, and not earlier, can it be brought to us via a petition for review prosecutions.
on certiorari under Rule 45 raising only pure questions of law. 18 Petitioners, This Court finds that under the Eleventh Article
in pleading that we treat the instant petition as a derivative suit, are trying to (Exh. '3-D-1') of the Articles of Incorporation (Exh. '3-B') of
short-circuit the entire process which we cannot here sanction. the Panay Educational Institution, Inc., now the Western
As an appeal on the civil aspect of Criminal Cases Nos. 37097 and Institute of Technology, Inc., the officers of the corporation
37098 for falsification of public document and estafa, which this petition shall receive such compensation as the Board of Directors
truly is, we have to deny the petition just the same. It will be well to quote may provide. These Articles of Incorporation was adopted
the respondent court's ratiocinations acquitting the private respondents on May 17, 1957 (Exh. '3-E'). The Officers of the corporation
on both counts: and their corresponding duties are enumerated and stated
in Sections 1, 2, 3 and 4 of Art. III of the Amended By-Laws
"The prosecution wants this Court to believe and of the Corporation (Exh. '4-A') which was adopted on May
agree that there is falsification of public document because, 31, 1957. According to Sec. 6, Art. III of the same By-Laws,
as claimed by the prosecution, Resolution No. 48, Series of all officers shall receive such compensation as may be fixed
1986 (Exh. '1-E-1') was not taken up and passed during the by the Board of Directors.
Regular Meeting of the Board of Trustees of the Western
Institute of Technology (WIT), Inc. on March 30, 1986, but It is the perception of this Court that the grant of
on June 1, 1986 special meeting of the same board of compensation or salary to the accused in their capacity as
trustees. officers of the corporation, through Resolution No. 48,
enacted on March 30, 1986 by the Board of Trustees, is
This Court is reluctant to accept this claim of authorized by both the Articles of Incorporation and the By-
falsification. The prosecution omitted to submit the complete Laws of the corporation. To state otherwise is to depart from
minutes of the regular meeting of the Board of Trustees on the clear terms of the said articles and by-laws. In their
 defense the accused have properly and rightly asserted that where the judgment of acquittal holds that the accused did not commit the
the grant of salary is not for directors, but for their being criminal acts imputed to them. 20
officers of the corporation who oversee the day to day
activities and operations of the school. WHEREFORE, the instant petition is hereby DENIED with costs
against petitioners. LLpr
xxx xxx xxx
SO ORDERED.
. . . [O]n the question of whether or not the accused
can be held liable for estafa under Sec. 1 (b) of Art. 315 of ||| (Western Institute of Technology, Inc. v. Salas, G.R. No. 113032, [August
the Revised Penal Code, it is perceived by this Court that 21, 1997], 343 PHIL 742-757)
the receipt and the holding of the money by the accused as
salary on basis of the authority granted by the Articles and
By-Laws of the corporation are not tainted with abuse of FIRST DIVISION
confidence. The money that received belongs to them and
cannot be said to have been converted and/or
misappropriated by them. [G.R. No. 101699. March 13, 1996.]

xxx xxx xxx." 19 [Emphasis ours]

BENJAMIN A. SANTOS, petitioner, vs. NATIONAL
From the foregoing factual findings, which we find to be amply LABOR RELATIONS COMMISSION, HON. LABOR
substantiated by the records, it is evident that there is simply no basis to hold ARBITER FRUCTUOSO T. AURELLANO and MELVIN D.
the accused, private respondents herein, civilly liable. Section 2(b) of Rule 111 MILLENA, respondents.
on the New Rules on Criminal Procedure provides:
"SEC. 2. Institution of separate civil action. Norberto B. Tria for petitioner.
xxx xxx xxx The Solicitor General for respondents.
(b) Extinction of the penal action does not carry with
it extinction of the civil, unless the extinction proceeds from
SYLLABUS
a declaration in a final judgment that the fact from which the
civil might arise did not exist." [Emphasis ours]
1. REMEDIAL LAW; CIVIL PROCEDURE; JURISDICTION OVER
Likewise, the last paragraph of Section 2, Rule 120 reads:
THE PERSON OF THE DEFENDANT; ACQUIRED BY VOLUNTARY
"SEC. 2. Form and contents of judgment. APPEARANCE BY A LEGAL ADVOCATE. — The fact that Atty. Romeo B.
Perez has been able to timely ask for a deferment of the initial hearing on 14
xxx xxx xxx November 1986, coupled with his subsequent active participation in the
proceedings, should disprove the supposed want of service of legal process.
In case of acquittal, unless there is a clear showing
Although as a rule, modes of service of summons are strictly followed in order
that the act from which the civil liability might arise did not
that the court may acquire jurisdiction over the person of a defendant, such
exist, the judgment shall make a finding on the civil liability
procedural modes, however, are liberally construed in quasi-judicial
of the accused in favor of the offended party." [Emphasis
proceedings, substantial compliance with the same being considered
ours]
adequate. Moreover, jurisdiction over the person of the defendant in civil cases
The acquittal in Criminal Cases Nos. 37097 and 37098 is not merely is acquired not only by service of summons but also by voluntary appearance
based on reasonable doubt but rather on a finding that the accused-private in court and submission to its authority. "Appearance" by a legal advocate is
respondents did not commit the criminal acts complained of. Thus, pursuant such "voluntary submission to a court's jurisdiction." It may be made not only
to the above rule and settled jurisprudence, any civil action ex delicto cannot by actual physical appearance but likewise by the submission of pleadings in
prosper. Acquittal in a criminal action bars the civil action arising therefrom compliance with the order of the court or tribunal. To say that petitioner did not
authorize Atty. Perez to represent him in the case is to unduly tax credulity.
Like the Solicitor General, the Court likewise considers it unlikely that Atty. insurgency problem in Sorsogon and the lack of funds to further support the
Perez would have been so irresponsible as to represent petitioner if he were mining operation in Gatbo.
not, in fact, authorized. Atty. Perez is an officer of the court, and he must be
presumed to have acted with due propriety. The employment of a counsel or 5. ID.; ID.; CORPORATE OFFICERS; WHEN PERSONALLY
the authority to employ an attorney, it might be pointed out, need not be proved ACCOUNTABLE FOR THE PAYMENT OF WAGES AND MONEY CLAIMS
in writing; such fact could be inferred from circumstantial evidence. Petitioner TO ITS EMPLOYEES. — It is true, there were various cases when corporate
was not just an ordinary official of the MMDC; he was the President of the officers were themselves held by the Court to be personally accountable for
company. the payment of wages and money claims to its employees. In A.C. Ransom
Labor Union-CCLU vs. NLRC, for instance, the Court ruled that under the
2. COMMERCIAL LAWS; CORPORATION; LIFTING OF Minimum Wage Law, the responsible officer of an employer corporation could
CORPORATE VEIL; CONCEPT. — A corporation is a juridical entity with legal be held personally liable for nonpayment of backwages for "(i)f the policy of
personality separate and distinct from those acting for and in its behalf and, in the law were otherwise, the corporation employer (would) have devious ways
general, from the people comprising it. The rule is that obligations incurred by for evading payment of back wages." In the absence of a clear identification of
the corporation, acting through its directors, officers and employees, are its the officer directly responsible for failure to pay the backwages, the Court
sole liabilities. Nevertheless, being a mere fiction of law, peculiar situations or considered the President of the corporation as such officer. The case was cited
valid grounds can exist to warrant, albeitdone sparingly, the disregard of its in Chua vs. NLRC (182 SCRA 353) in holding personally liable the vice-
independent being and the lifting of the corporate veil. As a rule, this situation president of the company, being the highest and most ranking official of the
might arise when a corporation is used to evade a just and due obligation or corporation next to President who was dismissed, for the latter's claim for
to justify a wrong, to shield or perpetrate fraud, to carry out similar other unpaid wages. The basic rule is still that which can be deduced from the
unjustifiable aims or intentions, or as a subterfuge to commit injustice and so Court's pronouncement in Sunio vs. National Labor Relations
circumvent the law. Commission (127 SCRA 390, 397-398); thus: "We come now to the personal
liability of petitioner, Sunio, who was made jointly and severally responsible
3. ID.; ID.; ID.; INSTANCES WHEN PERSONAL CIVIL LIABILITY with petitioner company and CIPI for the payment of the backwages of private
CAN BE LAWFULLY ATTACHED TO A CORPORATE DIRECTOR, respondents. This is reversible error. The Assistant Regional Director's
TRUSTEE OR OFFICER. — InTramat Mercantile, Inc. vs. Court of Appeals, Decision failed to disclose the reason why he was made personally liable.
(238 SCRA 14, 19) the Court has collated the settled instances when, without Respondents, however, alleged as grounds thereof, his being the owner of
necessarily piercing the veil of corporate fiction, personal civil liability can also one-half (1/2) interest of said corporation, and his alleged arbitrary dismissal
be said to lawfully attach to a corporate director, trustee or officer; to wit: When of private respondents." Petitioner Sunio was impleaded in the Complaint in
— "(1) He assents (a) to a patently unlawful act of the corporation, or (b) for his capacity as General Manager of petitioner corporation. There appears to
bad faith or gross negligence in directing its affairs, or (c) for conflict of interest, be no evidence on record that he acted maliciously or in bad faith in terminating
resulting in damages to the corporation, its stockholders or other persons; (2) the services of private respondents. His act, therefore, was within the scope of
He consents to the issuance of watered stocks or who, having knowledge his authority and was a corporate act. "It is basic that a corporation is invested
thereof, does not forthwith file with the corporate secretary his written objection by law with a personality separate and distinct from those of the persons
thereto; (3) He agrees to hold himself personally and solidarily liable with the composing it as well as from that of any other legal entity to which it may be
corporation; or (4) He is made, by a specific provision of law, to personally related. Mere ownership by a single stockholder or by another corporation of
answer for his corporate action." all or nearly all of the capital stock of a corporation is not of itself sufficient
4. ID.; ID.; ID.; ID.; NOT APPLICABLE IN CASE IT WAS NOT ground for disregarding the separate corporate personality. Petitioner Sunio,
SHOWN THAT THE OFFICER HAS HAD A DIRECT HAND IN THE therefore, should not have been made personally answerable for the payment
DISMISSAL OF EMPLOYEES. — The case of petitioner is way off these of private respondents' back salaries."
exceptional instances. It is not even shown that petitioner has had a direct
hand in the dismissal of private respondent enough to attribute to him
(petitioner) a patently unlawful act while acting for the corporation. Neither can
DECISION
Article 289 of the Labor Code be applied since this law specifically refers only
to the imposition of penalties under the Code. It is undisputed that the
termination of petitioner's employment has, instead, been due, collectively, to
the need for a further mitigation of losses, the onset of the rainy season, the VITUG, J p:
 In a petition for certiorari under Rule 65 of the Rules of Court, the "advances" he had made for the company and be paid his "accrued
petitioner Benjamin A. Santos, former President of the Mana Mining and salaries/claims." 3
Development Corporation ("MMDC"), questions the resolution of the National
Labor Relations Commission ("NLRC") affirming the decision of the Labor The claim was not heeded; on 20 October 1986, private respondent
Arbiter Fructuoso T. Aurellano who, having held illegal the termination of filed with the NLRC Regional Arbitration, Branch No. V, in Legazpi City, a
employment of private respondent Melvin D. Millena, has ordered petitioner complaint for illegal dismissal, unpaid salaries, 13th month pay, overtime pay,
MMDC, as well as its president (herein petitioner) and the executive vice- separation pay and incentive leave pay against MMDC and its two top officials,
president in their personal capacities, to pay Millena his monetary claims. namely, herein petitioner Benjamin A. Santos (the President) and Rodillano A.
Velasquez (the executive vice-president). In his complaint-affidavit (position
Private respondent, on 01 October 1985, was hired to be the project paper), submitted on 27 October 1986, Millena alleged, among other things,
accountant for MMDC's mining operations in Gatbo, Bacon, Sorsogon. On 12 that his dismissal was merely an offshoot of his letter of 12 August 1986 to
August 1986, private respondent sent to Mr. Gil Abaño, the MMDC corporate Abaño about the company's inability to pay its workers and to remit withholding
treasurer, a memorandum calling the latter's attention to the failure of the taxes to the BIR. 4
company to comply with the withholding tax requirements of, and to make the
corresponding monthly remittances to, the Bureau of Internal Revenue ("BIR") A copy of the notice and summons was served on therein respondent
on account of delayed payments of accrued salaries to the company's laborers (MMDC, Santos and Velasquez) on 29 October 1986. 5 At the initial hearing
and employees. 1 on 14 November 1986 before the Labor Arbiter, only the complainant, Millena,
appeared; however, Atty. Romero Perez, in representation of the respondents,
In a letter, dated 08 September 1986, Abaño advised private requested by telegram that the hearing be reset to 01 December 1986.
respondent thusly: Although the request was granted by the Labor Arbiter, private respondent was
allowed, nevertheless, to present his evidence ex parte at that initial hearing.
"Regarding Gatbo operations, as you also are
aware, the rainy season is now upon us and the peace and The scheduled 01st December 1986 hearing was itself later reset to
order condition in Sorsogon has deteriorated. It is therefore, 19 December 1986. On 05 December 1986, the NLRC in Legazpi City again
the board's decision that it would be useless for us to received a telegram from Atty. Perez asking for fifteen (15) days within which
continue operations, especially if we will always be in the to submit the respondents' position paper. On 19 December 1986, Atty. Perez
'hole', so to speak. Our first funds receipts will be used to sent yet another telegram seeking a further postponement of the hearing and
pay all our debts. We will stop production until the advent of asking for a period until 15 January 1987 within which to submit the position
the dry season, and until the insurgency problem clears. We paper.
will undertake only necessary maintenance and repair work
and will keep our overhead down to the minimum On 15 January 1987, Atty. Perez advised the NLRC in Legazpi City
manageable level. Until we resume full-scale operations, we that the position paper had finally been transmitted through the mail and that
will not need a project accountant as there will be very little he was submitting the case for resolution without further hearing. The position
paper work at the site, which can be easily handled at paper was received by the Legazpi City NLRC office on 19 January 1987.
Makati. Complainant Millena filed, on 26 February 1987, his rejoinder to the position
paper.
"We appreciate the work you have done for Mana
and we will not hesitate to take you back when we resume On 27 July 1988, Labor Arbiter Fructuoso T. Aurellano, finding no valid
work at Gatbo. However it would be unfair to you if we kept cause for terminating complainant's employment, ruled, citing this Court's
you in the payroll and deprive you of the opportunity to earn pronouncement in Construction & Development Corporation of the Philippines
more, during this period of Mana's crisis." 2 vs. Leogardo, Jr. 6 that a partial closure of an establishment due to losses was
a retrenchment measure that rendered the employer liable for unpaid salaries
Private respondent expressed "shock" over the termination of his and other monetary claims. The Labor Arbiter adjudged:
employment. He complained that he would not have resigned from the Sycip,
Gorres & Velayo accounting firm, where he was already a senior staff auditor, "WHEREFORE, the respondents are hereby
had it not been for the assurance of a "continuous job" by MMDC's Eng. ordered to pay the petitioner the amount of P37,132.25
Rodillano E. Velasquez. Private respondent requested that he be reimbursed corresponding to the latter's unpaid salaries and advances:
P5,400.00 for petitioner's 13th month pay; P3,340.95 as
service incentive leave pay; and P5,400.00 as separation
 pay. The respondents are further ordered to pay the In the instant petition for certiorari, petitioner Santos reiterates that he
petitioner 10% of the monetary awards as attorney's fees. should not have been adjudged personally liable by public respondents, the
latter not having validly acquired jurisdiction over his person whether by
"All other claims are dismissed for lack of sufficient personal service of summons or by substituted service under Rule 19 of the
evidence. Rules of Court.
"SO ORDERED." 7 Petitioner's contention is unacceptable. The fact that Atty. Romeo B.
Alleging abuse of discretion by the Labor Arbiter, the company and its Perez has been able to timely ask for a deferment of the initial hearing on 14
co-respondents filed a "motion for reconsideration and/or appeal." 8 The November 1986, coupled with his subsequent active participation in the
motion/appeal was forthwith indorsed to the Executive Director of the NLRC in proceedings, should disprove the supposed want of service of legal process.
Manila. Although as a rule, modes of service of summons are strictly followed in order
that the court may acquire jurisdiction over the person of a defendant, 17 such
In a resolution, dated 04 September 1989, the NLRC 9 affirmed the procedural modes, however, are liberally construed in quasi-judicial
decision of the Labor Arbiter. It held that the reasons relied upon by MMDC proceedings, substantial compliance with the same being considered
and its co-respondents in the dismissal of Millena, i.e., the rainy season, adequate. 18 Moreover, jurisdiction over the person of the defendant in civil
deteriorating peace and order situation and little paperwork, were "not causes cases is acquired not only by service of summons but also by voluntary
mentioned under Article 282 of the Labor Code of the Philippines" and that appearance in court and submission to its authority. 19 "Appearance" by a
Millena, being a regular employee, was "shielded by the tenurial clause legal advocate is such "voluntary submission to a court's jurisdiction." 20 It
mandated under the law." 10 may be made not only by actual physical appearance but likewise by the
submission of pleadings in compliance with the order of the court or tribunal.
A writ of execution correspondingly issued; however, it was returned
unsatisfied for the failure of the sheriff to locate the offices of the corporation To say that petitioner did not authorize Atty. Perez to represent him in
in the address indicated. Another writ of execution and an order of garnishment the case 21 is to unduly tax credulity. Like the Solicitor General, the Court
was thereupon served on petitioner at his residence. likewise considers it unlikely that Atty. Perez would have been so irresponsible
as to represent petitioner if he were not, in fact, authorized. 22 Atty. Perez is
Contending that he had been denied due process, petitioner filed a an officer of the court, and he must be presumed to have acted with due
motion for reconsideration of the NLRC's resolution along with a prayer for the propriety. The employment of a counsel or the authority to employ an attorney,
quashal of the writ of execution and order of garnishment. He averred that he it might be pointed out, need not be proved in writing; such fact could be
had never received any notice, summons or even a copy of the complaint; inferred from circumstantial evidence. 23 Petitioner was not just an ordinary
hence, he said, the Labor Arbiter at no time had acquired jurisdiction over him. official of the MMDC; he was the President of the company.
On 16 August 1991, the NLRC 11 dismissed the motion for Petitioner, in any event, argues that public respondents have gravely
reconsideration. Citing Section 2, Rule 13 12 and Section 13, Rule 14, 13 of abused their discretion "in finding petitioner solidarily liable with MMDC even
the Rules of Court, it ruled that the Regional Arbitration office had not, in fact, (in) the absence of bad faith and malice on his part." 24 There is merit in this
been remiss in the observance of the legal processes for acquiring jurisdiction plea.
over the case and over the persons of the respondents therein. The NLRC was
also convinced that Atty. Perez had been the authorized counsel of MMDC A corporation is a juridical entity with legal personality separate and
and its two most ranking officers. distinct from those acting for and in its behalf and, in general, from the people
comprising it. The rule is that obligations incurred by the corporation, acting
In holding petitioner personally liable for private respondent's claim, through its directors, officers and employees, are its sole liabilities.
the NLRC cited Article 289 14 of the Labor Code and the ruling in A.C. Nevertheless, being a mere fiction of law, peculiar situations or valid grounds
Ransom Labor Union-CCLU vs. NLRC 15 to the effect that "(t)he responsible can exist to warrant, albeit done sparingly, the disregard of its independent
officer of an employer corporation (could) be held personally, not to say even being and the lifting of the corporate veil. 25 As a rule, this situation might arise
criminally, liable for non-payment of backwages," and that of Gudez vs. when a corporation is used to evade a just and due obligation or to justify a
NLRC 16 which amplified that "where the employer corporation (was) no wrong, 26 to shield or perpetrate fraud, 27 to carry out similar other
longer existing and unable to satisfy the judgment in favor of the employee, unjustifiable aims or intentions, or as a subterfuge to commit injustice and so
the officer should be liable for acting on behalf of the corporation." circumvent the law. 28 In Tramat Mercantile, Inc., vs. Court of Appeals, 29 the
Court has collated the settled instances when, without necessarily piercing the
veil of corporate fiction, personal civil liability can also be said to lawfully attach evade its just and due obligations. The doctrine of "piercing the veil of
to a corporate director, trustee or officer; to wit: When — corporate fiction" was thus clearly appropriate. Chua likewise involved another
family corporation, and this time the conflict was between two brothers
"(1) He assents (a) to a patently unlawful act of the occupying the highest ranking positions in the company. There were
corporation, or (b) for bad faith or gross negligence in incontrovertible facts which pointed to extreme personal animosity that
directing its affairs, or (b) for conflict of interest, resulting in resulted, evidently in bad faith, in the easing out from the company of one of
damages to the corporation, its stockholders or other the brothers by the other.
persons;
The basic rule is still that which can be deduced from the Court's
"(2) He consents to the issuance of watered stocks pronouncement in Sunio vs. National Labor Relations Commission; 33 thus:
or who, having knowledge thereof, does not forthwith file
with the corporate secretary his written objection thereto; "We come now to the personal liability of petitioner,
Sunio, who was made jointly and severally responsible with
"(3) He agrees to hold himself personally and petitioner company and CIPI for the payment of the
solidarily liable with the corporation; or backwages of private respondents. This is reversible error.
"(4) He is made, by a specific provision of law, to The Assistant Regional Director's Decision failed to disclose
personally answer for his corporate action." the reason why he was made personally liable.
Respondents, however, alleged as grounds thereof, his
The case of petitioner is way off these exceptional instances. It is not being the owner of one-half (1/2) interest of said
even shown that petitioner has had a direct hand in the dismissal of corporation, and his alleged arbitrary dismissal of private
private respondent enough to attribute to him (petitioner) a patently respondents.
unlawful act while acting for the corporation. Neither can Article 289 30 of
the Labor Code be applied since this law specifically refers only to the "Petitioner Sunio was impleaded in the Complaint
imposition of penalties under the Code. It is undisputed that the in his capacity as General Manager of petitioner
termination of petitioner's employment has, instead, been due, corporation. There appears to be no evidence on record that
collectively, to the need for a further mitigation of losses, the onset of the he acted maliciously or in bad faith in terminating the
rainy season, the insurgency problem in Sorsogon and the lack of funds services of private respondents. His act, therefore, was
to further support the mining operation in Gatbo. within the scope of his authority and was a corporate act.

It is true, there were various cases when corporate officers were "It is basic that a corporation is invested by law with
themselves held by the Court to be personally accountable for the payment of a personality separate and distinct from those of the
wages and money claims to its employees. In A.C. Ransom Labor Union- persons composing it as well as from that of any other legal
CCLU vs. NLRC, 31 for instance, the Court ruled that under the Minimum entity to which it may be related. Mere ownership by a single
Wage Law, the responsible officer of an employer corporation could be held stockholder or by another corporation of all or nearly all of
personally liable for nonpayment of backwages for "(i)f the policy of the law the capital stock of a corporation is not of itself sufficient
were otherwise, the corporation employer (would) have devious ways for ground for disregarding the separate corporate personality.
evading payment of backwages." In the absence of a clear identification of the Petitioner Sunio, therefore, should not have been made
officer directly responsible for failure to pay the backwages, the Court personally answerable for the payment of private
considered the President of the corporation as such officer. The case was cited respondents' back salaries."
in Chua vs. NLRC 32 in holding personally liable the vice-president of the
The Court, to be sure, did appear to have deviated somewhat
company, being the highest and most ranking official of the corporation next
in Gudez vs. NLRC; 34 however, it should be clear from our recent
to the President who was dismissed for the latter's claim unpaid wages.
pronouncement in Mam Realty Development Corporation and Manuel
A review of the above exceptional cases would readily disclose the Centeno vs. NLRC 35 that the Sunio doctrine still prevails.
attendance of facts and circumstances that could rightly sanction personal
WHEREFORE, the instant petition for certiorari is given DUE
liability on the part of the company officer. in A.C. Ransom, the corporate entity
was a family corporation and execution against it could not be implemented COURSE and the decision of the Labor Arbiter, affirmed by the NLRC, is
because of the disposition posthaste of its leviable assets evidently in order to hereby MODIFIED insofar as it holds herein petitioner Benjamin Santos
personally liable with Mana Mining and Development Corporation, which
portion of the questioned judgment is now SET ASIDE. In all other respects, (P200,000.00) for the cost of the design; and (c) the construction of the building
the questioned decision remains unaffected. No costs. shall be completed within nine (9) months after securing the building permit.
SO ORDERED. The completion of the construction was initially scheduled on or before
July 16, 1998 but was extended to November 15, 1998 upon agreement of the
Padilla, Bellosillo, Kapunan and Hermosisima, Jr., JJ., concur. parties. It appears, however, that petitioners failed to follow the specifications
||| (Santos v. National Labor Relations Commission, G.R. No. 101699, and plans as previously agreed upon. Respondents demanded the correction
[March 13, 1996], 325 PHIL 145-160) of the errors but petitioners failed to act on their complaint. Consequently,
respondents rescinded the contract on October 31, 1998, after paying 74.84%
of the cost of construction.
SECOND DIVISION Respondents then engaged the services of another contractor, RRA
and Associates, to inspect the project and assess the actual accomplishment
of petitioners in the construction of the building. It was found that petitioners
[G.R. No. 159795. July 30, 2004.] revised and deviated from the structural plan of the building without notice to
or approval by the respondents. 1
SPOUSES ROBERTO & EVELYN DAVID and
Respondents filed a case for breach of contract against petitioners
COORDINATED GROUP, INC., petitioners, vs.
before the Regional Trial Court (RTC) of Manila. At the pre-trial conference,
CONSTRUCTION INDUSTRY AND ARBITRATION
the parties agreed to submit the case for arbitration to the CONSTRUCTION
COMMISSION and SPS. NARCISO & AIDA
INDUSTRY ARBITRATION COMMISSION (CIAC). Respondents filed a
QUIAMBAO, respondents.
request 2 for arbitration with the CIAC and nominated Atty. Custodio O.
Parlade as arbitrator. Atty. Parlade was appointed by the CIAC as sole
arbitrator to resolve the dispute. With the agreement of the parties, Atty.
DECISION Parlade designated Engr. Loreto C. Aquino to assist him in assessing the
technical aspect of the case. The RTC of Manila then dismissed the case and
transmitted its records to the CIAC. 3

PUNO, J p: After conducting hearings and two (2) ocular inspections of the
construction site, the arbitrator rendered judgment against petitioners, thus:
This is a petition for review on certiorari under Rule 45 of the Revised AWARD
Rules of Court, assailing the Decision and Resolution of the Court of Appeals,
dated June 30, 2003 and August 27, 2003, respectively, in CA-G.R. SP No. In summary, award is hereby made in favor of the
72736. Quiambaos against the Respondents, jointly and severally,
as follows:
Petitioner COORDINATED GROUP, INC. (CGI) is a corporation
engaged in the construction business, with petitioner-spouses ROBERTO and
EVELYN DAVID as its President and Treasurer, respectively. Lost Rentals - P1,680,000.00
The records reveal that on October 7, 1997, respondent-spouses Cost to Complete, Rectification, etc. - 2,281,028.71
NARCISO and AIDA QUIAMBAO engaged the services of petitioner CGI to Damages due to erroneous staking - 117,000.00
design and construct a five-storey concrete office/residential building on their Professional fees for geodetic
land in Tondo, Manila. The Design/Build Contract of the parties provided that:
(a) petitioner CGI shall prepare the working drawings for the construction surveys, etc. - 72,500.00
project; (b) respondents shall pay petitioner CGI the sum of Seven Million Misc. expenses/ professional
Three Hundred Nine Thousand Eight Hundred Twenty-One and 51/100 Pesos fees of engineers - 118,642.50
(P7,309,821.51) for the construction of the building, including the costs of
labor, materials and equipment, and Two Hundred Thousand Pesos Bills for water and electricity, PLDT - 15,247.68
 Attorney's Fees - 100,000.00 Each party is hereby directed to pay to the
Moral Damages - 250,000.00 Commission P15,000.00 as such party's share in the
expert's fees paid to Engr. Loreto C. Aquino.
Exemplary Damages - 250,000.00
–––––––––– SO ORDERED. 4
TOTAL - P4,884,418.89 Petitioners appealed to the Court of Appeals which affirmed the
There is likewise an award in favor of the arbitrator's Decision but deleted the award for lost rentals. 5
Respondents (petitioners herein) and against the Claimants Unsatisfied, petitioners filed this petition for review on certiorari,
(respondents herein) for the value of the materials and
raising the following issues:
equipment left at (the) site (in) the amount of P238,372.75.
Respondent CGI is likewise credited with an 80% I. THERE WAS NO BASIS, IN FACT AND IN LAW,
accomplishment having a total value of TO ALLOW RESPONDENTS TO UNILATERALLY
P5,847,857.20. cHDAIS RESCIND THE DESIGN/BUILT CONTRACT, AFTER
PETITIONERS HAVE (SIC) SUBSTANTIALLY
All other claims and counterclaims are hereby
PERFORMED THEIR OBLIGATION UNDER THE SAID
dismissed for lack of merit.
CONTRACT.
II. THE HONORABLE COURT OF APPEALS
To recapitulate: Payments already ERRED IN FINDING PETITIONERS JOINTLY AND
made to CGI - P5,275,041.00 SEVERALLY LIABLE WITH CO-PETITIONER
COORDINATED (GROUP, INC.), IN CLEAR VIOLATION
Amount awarded
OF THE DOCTRINE OF SEPARATE JURIDICAL
above to Claimants - 4,864,418.89 PERSONALITY.
–––––––––––
We find no merit in the petition.
Total: - P10,159,459.89
Payments due CGI for 80% Executive Order No. 1008 entitled, "Construction Industry Arbitration
Law" provided for an arbitration mechanism for the speedy resolution of
work accomplishment - P5,847,857.20 construction disputes other than by court litigation. It recognized the role of the
Cost of materials and construction industry in the country's economic progress as it utilizes a large
equipment - 238,372.75 segment of the labor force and contributes substantially to the gross national
product of the country. 6 Thus, E.O. No. 1008 vests on the Construction
–––––––––– Industry Arbitration Commission (CIAC) original and exclusive jurisdiction over
Total: P6,086,299.95 disputes arising from or connected with construction contracts entered into by
Deducting this amount of P6,086,229.95 from parties who have agreed to submit their case to voluntary arbitration. Section
P10,159,459.89, the result is a net award in favor the 19 of E.O. No. 1008 provides that its arbitral award shall be appealable to the
Claimants of (sic) the amount of P4,073,229.94. Supreme Court only on questions of law. 7

WHEREFORE, the Respondents are hereby There is a question of law when the doubt or difference in a given case
ordered to pay, jointly and severally, the Claimants the arises as to what the law is on a certain set of facts, and there is a question of
amount of P4,073,229.94 with interest at 6% per annum factwhen the doubt arises as to the truth or falsity of the alleged facts. 8 Thus,
from the date of the promulgation of this Award, and 12% for a question to be one of law, it must not involve an examination of the
per annum of the net award, including accrued interest, from probative value of the evidence presented by the parties and there must be no
the time it becomes final and executory until it is fully paid. doubt as to the veracity or falsehood of the facts alleged. 9
In the case at bar, it is readily apparent that petitioners are raising
questions of fact. In their first assigned error, petitioners claim that at the time
of rescission, they had completed 80% of the construction work and still have
15 days to finish the project. They likewise insist that they constructed the corrected prior to completion and turn-over of the Building
building in accordance with the contract and any modification on the plan was had the Contract not been terminated by the
with the consent of the respondents. Claimants(respondents here). . . . Thus, . . . (petitioner) CGI
argued that: "In any construction work, before a contractor
These claims of petitioners are refuted by the evidence on record. In turns-over the project to the owner, punchlisting of defects
holding that respondents were justified in rescinding the contract, the Court of is done so as to ensure compliance and satisfaction of both
Appeals upheld the factual findings of the sole arbitrator, thus: the contractor and the owner. Punch listing means that the
xxx xxx xxx contractor will list all major and minor defects and rectifies
them before the turnover of the project to the owner. After
(A)s the Building was taking shape, they noticed all defects had been arranged, the project is now turned
deviations from the approved plans and specifications for over to the owner. For this particular project, no turn over
the Building. Most noticeable were two (2) concrete was made by the contractor to the owner yet. Actually, we
columns in the middle of the basement which effectively and were already pinpointing these defects for punch listing
permanently obstructed the basement for the parking of before we were terminated illegally. As alleged by the
vehicles . . . In addition, three (3) additional concrete owner, the deficiencies mentioned are stubouts of water
columns were constructed from the ground floor to the roof closets at toilets, roofing and framing, doors, cabinets,
deck . . . which affected the overall dimension of the ceiling and stairs and others were not yet completed and
building such as altering the specified beam depths, rectified by us. In fact we were counting on our project
passageways and windows. In addition, Mrs. Quiambao engineer in charge . . . to do this in as much as this is one
provided a virtual litany of alleged defects, to wit: (a) the of his duties to do for the company. . . ." Confirmatory of this
Building was not vertically plumbed . . .; (b) provisions for assertion of CGI that it was willing to undertake the
many architectural members were not provided for, such as, appropriate corrective works (whether or not the items are
(i) the recesses for window plant boxes are lacking . . ., (ii) punch-list items) is Exhibit C-88 which is a letter prepared
provisions for precast molding are lacking . . ., (iii) canopies by CGI's Windell F. Vizconde, checked by CGI's Gary M.
are also lacking . . .; (c) misaligned walls, ugly discrepancies Garcia and noted by CGI's Benjie Lipardo, addressed to the
and gaps; (d) skewed walls to floors/landings; (e) low head Quiambaos which stated that:
clearances and truncated beams . . .; (f) narrow and
disproportionate stairs . . . one (1) instead of two (2)
windows at the fire exit . . ., (g) absence of water-proofing "As per our discussion during the last meeting
along the basement wall . . . and at the roof deck which dated Sept. 28, 1998 the following items was (sic)
caused leaks that damages the mezzanine floor . . .; (h) the confirmed and clarified. These are described as follows:
use of smaller diagonal steel trusses at the penthouse. . . .
There were others which were shown during the site "1. All ceiling cornices shall be installed as per plan
inspection such as: (1) L-shaped kitchen counters instead specification which is 1" x 4" in size.
of the required U-shaped counters . . .; (2) failure to provide
marble tops for the kitchen counters; (3) installation of "2. All baseboards shall be installed as per plan
single-tub sinks where the plans called for double-type specification which is wood 1" x 4" in size.
stainless kitchen sinks . . .; (4) installation of much smaller "3. Electrical Meter center and main panel breaker
windows than those required; (5) misaligned window should be retained to its present location.
easements to wall, (6) floors were damaged by roof leaks,
(6) poor floor finish, misaligned tiles, floors with "kapak" and "4. Elevation of office, dining and stair lobby of
disproportionate drawers and cabinets. A more ground floor shall be 4" higher than the elevation of parking
comprehensive list of alleged defects, deviations and area (subject for verification).
complaints of the Quiambaos is found in a report marked
Exhibit C-144. Many of these defects were seen during the "5. All door jambs at C.R. has (sic) to be replaced
site inspection and the only defense and comment of CGI with concrete framing jambs.
was that these were punch-list items which could have been
 "6. All ceilings mailers should be 2 x 2 in size. materials supplied by the manufacturer to CGI for the
Building formed part of the steel materials, part of which was
"7. All plywood ceiling that was damaged by rain tested.
water shall be replaced.
xxx xxx xxx
"8. Provide a pipe chase for the enclosure of soil
stack pipe and water line pipe at the ground floor level Regarding the additional columns at the basement
between grid line 3–4 along the light well area. and at the first floor to the roof deck of the Building, which
effectively restricted the use of the basement as a parking
"9. Front side elevation view shall be follow (sic) as area, and likewise reduced the area which could be used by
per plan specialy (sic) at 4th flr. the Quiambaos in the different floors of the Building,
"10. One column at basement floor along grid line Engr. Roberto J. David admitted that these represented a
2# B has to be verified by the structural designer if ever it is design change which was made and implemented by CGI
safe to removed (sic) the column and what will be their (sic) without the conformity of the Claimants. The Contract
recommendation to support the load. specifically provided in Article II that "the CONTRACTOR
shall submit to the OWNER all designs for the OWNER'S
"11. Existing doors D-2 and D-3 shall be replaced a approval." This implies necessarily that all changes in the
(sic) new one." approved design shall likewise be submitted to the OWNER
for approval. This change, in my view, is the single most
While Mrs. Quiambao appeared not to have given serious breach of the Contract committed by CGI which
her conformity, this document from CGI is an admission by justified the decision of the Claimants to terminate the
CGI of the deficiencies in the construction of the Building Contract. . . . (T)here is no evidence to show that the
which needed to be corrected. Quiambaos approved the revision of the structural plans to
It appears that concrete samples taken from the provide for the construction of the additional columns. . . .
basement, ground floor, mezzanine and 2nd floor of the . . . Engr. Villasenor defended his structural design
Building were subjected to a concrete core test by as adequate. He admitted that the revision of the plans
Geotesting International, Inc., geotechnical and materials which resulted in the construction of additional columns was
testing engineers. A report dated January 20, 1999 . . . in pursuance of the request of Engr. David to revise the
showed . . . that (5) samples . .. failed the test. Sample S2 structural plans to provide for a significant reduction of the
while it showed a comprehensive strength of 3147 psi, the cost of construction. When Engr. David was asked for the
corrective strength in psi was below the specified justification for the revision for the plans, he confirmed that
comprehensive strength of 3000 psi. CGI failed to produce he wanted to reduce the cost of construction. In any case,
evidence of similar tests during the construction of the whether the cause of revision of the plans was the under-
Building although it is normal construction practice for the design of the foundation or for reasons of economy, it is CGI
contractor to provide samples for concrete core tests. which is at fault. CGI prepared the structural plans and
Deformed reinforcing steel bar specimens from the quoted the price for constructing the Building. The
building were subjected to physical tests. These tests were Quiambaos accepted both the plans and the price. If CGI
conducted at the Materials Testing Laboratory of the made a mistake in designing the foundation or in estimating
Department of Civil Engineering, College of Engineering, the cost of construction, it was at fault. It cannot correct that
University of the Philippines. . . . There were 18 samples mistake by revising the plans and implementing the
and . . . 8 failed the testalthough all of them passed the cold revisions without informing the Quiambaos and obtaining
bend test. . . . CGI submitted Quality Test Certificates issued their unequivocal approval of such changes. DHacTC
by Steel Asia certifying to the mechanical test results and In addition, CGI admitted that no relocation survey
chemical composition of the steel materials tested . . . was made by it prior to the construction of the Building.
However, the samples were provided by the manufacturer, Consequently, a one-meter portion of the Building was
not by CGI, to Steel Asia, and there is no showing that the constructed beyond the property line. In justification, Engr.
 Barba V. Santos declared that CGI made the layout of the The second assigned error likewise involves a question of fact. It is
proposed structure based on the existing fence. . . . (I)t is contended that petitioner-spouses David cannot be held jointly and severally
understood that a contractor, in constructing a building, liable with petitioner CGI in the payment of the arbitral award as they are
must first conduct a relocation survey before construction merely its corporate officers.
precisely to avoid the situation which developed here, that
the Building was not properly constructed within the owner's At first glance, the issue may appear to be a question of law as it would
property line. . . . This resulted in the under-utilization of the call for application of the law on the separate liability of a corporation. However,
property, small as it is, and the exposure of the Quiambaos the law can be applied only after establishing a factual basis, i.e., whether
to substantial damages to the owner of the adjoining petitioner-spouses as corporate officers were grossly negligent in ordering the
property encroached upon. revisions on the construction plan without the knowledge and consent of the
respondent-spouses. On this issue, the Court of Appeals again affirmed the
A third major contested issue concerned the factual findings of the arbitrator, thus:
construction of the cistern. . . . A cistern is an underground
tank used to collect water for drinking purposes. The As a general rule, the officers of a corporation are
contentious points regarding the construction of the cistern not personally liable for their official acts unless it is shown
are: first, that the cistern was designed to accumulate up to that they have exceeded their authority. However, the
10,000 gallons of water; as constructed, its capacity was personal liability of a corporate director, trustee or officer,
less than the design capacity. Second, there is no internal along with corporation, may so validly attach when he
partition separating the cistern from the sump pit. . . . assents to a patently unlawful act of the corporation or for
bad faith or gross negligence in directing its affairs.
Considering that the cistern is a receptacle for the
collection of drinking water, it is incomprehensible why the The following findings of public respondent (CIAC)
Respondents (herein petitioners), in the design and would support its ruling in holding petitioners severally and
construction of the cistern, has (sic) not taken the necessary jointly liable with the Corporation:
measures to make certain that the water in the cistern will ". . . When asked whether the Building was
be free from contamination. . . . underdesigned considering the poor quality of the
Thus, granting the arguments of the Respondents soil, Engr. Villasenor defended his structural design
(herein petitioners) that the observed defects in the Building as adequate. He admitted that the revision of the
could be corrected before turn-over and acceptance of the plans which resulted in the construction of
Building if CGI had been allowed to complete its additional columns was in pursuance of the request
construction, the construction of additional columns, the of Engr. David to revise the structural plans to
construction of the Building such that part of it is outside the provide for a significant reduction of the cost of
property line established a sufficient legal and factual basis construction. When Engr. David was asked for the
for the decision of the Quiambaos to terminate the Contract. justification for the revision of the plans, he
The fact that five (5) of nine (9) the (sic) concrete samples confirmed that he wanted to reduce the cost of
subjected to a core test, and eight (8) of eighteen (18) construction. . . ." (emphases supplied) 11
deformed reinforcing steel bar specifics subjected to Clearly, the case at bar does not raise any genuine issue of law. We
physical tests failed the tests and the under-design of the reiterate the rule that factual findings of construction arbitrators are final and
cistern was established after the Contract was terminated conclusive and not reviewable by this Court on appeal, except when the
also served to confirm the justified suspicion of the petitioner proves affirmatively that: (1) the award was procured by corruption,
Quiambaos that the Building was defective or was not fraud or other undue means; (2) there was evident partiality or corruption of
constructed according to approved plans and the arbitrators or of any of them; (3) the arbitrators were guilty of misconduct
specifications.10 (emphases supplied) in refusing to postpone the hearing upon sufficient cause shown, or in refusing
These are technical findings of fact made by expert witnesses and to hear evidence pertinent and material to the controversy; (4) one or more of
affirmed by the arbitrator. They were also affirmed by the Court of the arbitrators were disqualified to act as such under section nine of Republic
Appeals. We find no reason to revise them. Act No. 876 and willfully refrained from disclosing such disqualifications or of
any other misbehavior by which the rights of any party have been materially arbitration and chose the arbitrators themselves; they must
prejudiced; or (5) the arbitrators exceeded their powers, or so imperfectly have had confidence in such arbitrators. The Court will not,
executed them, that a mutual, final and definite award upon the subject matter therefore, permit the parties to relitigate before it the issues
submitted to them was not made. 12 Petitioners failed to show that any of of facts previously presented and argued before the Arbitral
these exceptions applies to the case at bar. Tribunal, save only where a clear showing is made that, in
reaching its factual conclusions, the Arbitral Tribunal
committed an error so egregious and hurtful to one party as
Finally, it bears to remind petitioners of this Court's ruling in the 1993 to constitute a grave abuse of discretion resulting in lack or
case of Hi-Precision Steel Center, Inc. vs. Lim Kim Steel Builders, loss of jurisdiction. Prototypical examples would be factual
Inc. 13 which emphasized the rationale for limiting appeal to legal questions in conclusions of the Tribunal which resulted in deprivation of
construction cases resolved through arbitration, thus: one or the other party of a fair opportunity to present its
position before the Arbitral Tribunal, and an award obtained
. . . Consideration of the animating purpose of through fraud or the corruption of arbitrators. Any other
voluntary arbitration in general, and arbitration under the more relaxed rule would result in setting at naught the basic
aegis of the CIAC in particular, requires us to apply objective of a voluntary arbitration and would reduce
rigorously the above principle embodied in Section 19 that arbitration to a largely inutile institution. (emphases
the Arbitral Tribunal's findings of fact shall be final and supplied)
inappealable (sic).
IN VIEW WHEREOF, the petition is DISMISSED for lack of merit.
Voluntary arbitration involves the reference of a Costs against petitioners.
dispute to an impartial body, the members of which are
chosen by the parties themselves, which parties freely SO ORDERED.
consent in advance to abide by the arbitral award issued Austria-Martinez, Callejo, Sr., Tinga and Chico-Nazario, JJ ., concur.
after proceedings where both parties had the opportunity to
be heard. The basic objective is to provide a speedy and
inexpensive method of settling disputes by allowing the
parties to avoid the formalities, delay, expense and ||| (Spouses David v. Construction Industry and Arbitration Commission, G.R.
aggravation which commonly accompany ordinary litigation, No. 159795, [July 30, 2004], 479 PHIL 578-592)
especially litigation which goes through the entire hierarchy
of courts. Executive Order No. 1008 created an arbitration
facility to which the construction industry in the Philippines THIRD DIVISION
can have recourse. The Executive Order was enacted to
encourage the early and expeditious settlement of disputes
in the construction industry, a public policy the [G.R. No. 113907. April 20, 2001.]
implementation of which is necessary and important for the
realization of the national development goals. MALAYANG SAMAHAN NG MGA MANGGAGAWA SA
Aware of the objective of voluntary arbitration in the M. GREENFIELD (MSMG-UWP), ITS PRESIDENT BEDA
labor field, in the construction industry, and in other area for MAGDALENA VILLANUEVA, MARIO DAGANIO,
that matter, the Court will not assist one or the other or even DONATO GUERRERO, BELLA P. SANCHEZ, ELENA
both parties in any effort to subvert or defeat that objective TOBIS, RHODA TAMAYO, LIWAYWAY MALLILIN,
for their private purposes. The Court will not review the ELOISA SANTOS, DOMINADOR REBULLO, JOSE
factual findings of an arbitral tribunal upon the artful IRLAND, TEOFILA QUEJADA, VICENTE SAMONTINA,
allegation that such body had "misapprehended facts" and FELICITAS DURIAN, ANTONIO POLDO, ANGELINA
will not pass upon issues which are, at bottom, issues of TUGNA, SALVADOR PENALOSA, LUZVIMINDA TUBIG,
fact, no matter how cleverly disguised they might be as ILUMINADA RIVERA, ROMULO SUMILANG, NENITA
"legal questions." The parties here had recourse to BARBELONIA, LEVI BASILIA, RICARDO PALAGA,
MERCY ROBLES, LEODEGARIO GARIN, DOMINGO ALFERES, LORNA AMANTE, FLORENTINA AMBITO,
ECLARINAL, MELCHOR GALLARDO, MARCELO JULIETA AMANONCO, CARMEN AMARILLO,
GARIN, ROSALINA BAUTISTA, MARY ANN JOSEFINA AMBAGAN, ZENAIDA ANAYA, MARIA
TALIGATOS, ALEJANDRO SANTOS, ANTONIO FRAGA, ANGLO, EDITHA ANTA ZO, MARY JANE ANTE,
LUZ GAPULTOS, MAGDALENA URSUA, EUGENIO ANDREA AQUINO, ROWENA ARABIT, MARIETA
ORDAN, LIGAYA MANALO, PEPITO DELA PAZ, ARAGON, REBECCA ARCENA, LYDIA ARCIDO,
PERLITA DIMAQUIAT, MYRNA VASQUEZ, FERNANDO ARENAS, GREGORIO ARGUELLES,
FLORENTINA SAMPAGA, ARACELI FRAGA, MAXIMINA EDITHA ARRIOLA, EMMA ATIENZA, EMMA ATIENZA,
FAUSTINO, MARINA TAN, OLIGARIO LOMO, PRECILA TEODY ATIENZA, ELIZABETH AUSTRIA, DIOSA
EUSEBIO, SUSAN ABOGANO, CAROLINA MANINANG, AZARES, SOLIDA AZAINA, MILAGROS BUAG, MARIA
GINA GLIFONIA, OSCAR SOTTO, CELEDONA BANADERA, EDNALYN BRAGA, OFELIA BITANGA,
MALIGAYA, EFREN VELASQUEZ, DELIA ANOVER, FREDISMINDA BUGUIS, VIOLETA BALLESTEROS,
JOSEPHINE TALIMORO, MAGDALENA TABOR, ROSARIO BALLADJAY, BETTY BORIO, ROMANA
NARCISA SARMIENTO, SUSAN MACASIEB, BAUTISTA, SUSARA BRAVO, LILIA BAHINGTING,
FELICIDAD SISON, PRICELA CARTA, MILA ENIETA BALDOZA, DAMIANA BANGCORE, HERMINIA
MACAHILIG, CORAZON NUNALA, VISITACION BARIL, PETRONA BARRIOS, MILAGROS
ELAMBRE, ELIZABETH INOFRE, VIOLETA BARTE, BARRAMEDA, PERLA BAUTISTA, CLARITA
LUZVIMINDA VILLOSA, NORMA SALVADOR, BAUTISTA, ROSALINA BAUTISTA, ADELINA BELGA,
ELIZABETH BOGATE, MERLYN BALBOA, EUFRECINA CONSOLACION BENAS, MARIA BEREZO, MERCEDES
SARMIENTO, SIMPLICIA BORLEO, MATERNIDAD BEREBER, VIOLETA BISCOCHO, ERNESTO BRIONES,
DAVID, LAILA JOP, POTENCIANA CULALA, LUCIVITA ALVINA BROSOTO, AGUSTINA BUNYI, CARMEN
NAVARRO, ROLANDO BOTIN, AMELITA MAGALONA, BUGNOT, ERLINDA BUENAFLOR, LITA BAQUIN,
AGNES CENA, NOLI BARTOLAY, DANTE AQUINO, CONSEJO BABOL, CRISANTA BACOLOD, CELIA DE
HERMINIA RILLON, CANDIDA APARIJADO, LYDIA BACTAT, MAZIMA BAGA, ELENA BALADAD, ROSARIO
JIMENEZ, ELIZABETH ANOCHE, ALDA MURO, TERESA BALADJAY, AMALIA BALAGTAS, ANITA BALAGTAS,
VILLANUEVA, TERESITA RECUENCO, ELIZA MARIA BALAKIT, RUFINA BALATAN, REBECCA
SERRANO, ESTELLA POLINAR, GERTRUDES NUNEZ, BALDERAMA, AMELIA BALLESTER, BELEN BARQUIO,
FELIPE BADIOLA, ROSLYN FERNANDEZ, OSCAR BERNANDITA BASILIDES, HELEN BATO, HELEN
PAGUTA, NATIVIDAD BALIWAS, ELIZABETH BAUTISTA, ROMANA BAUTISTA, ALMEDA BAYTA,
BARCIBAL, CYNTHIA ESTELLER, TEODORA SANTOS, AVELINA BELAYON, NORMA DE BELEN, THELMA DE
ALICIA PILAR, MILA PATENO, GLORIA CATRIZ, MILA BELEN, JOCELYN BELTRAN, ELENA BENITEZ,
MACAHILIG, ADELAIDA DE LEON, ROSENDO EDILO, VIRGINIA BERNARDINO, MERLINA BINUYAG, LINA
ARSENIA ESPIRITU, NUMERIANO CABRERA, BINUYA, BLESILDA BISNAR, SHIRLEY BOLIVAR,
CONCEPCION ARRIOLA, PAULINA DIMAPASOK, CRESENTACION MEDLO, JOCELYN BONIFACIO,
ANGELA SANGCO, PRESILA ARIAS, ZENAIDA NUNES, AMELIA BORBE, AMALIA BOROMEO, ZENAIDA
EDITHA IGNACIO, ROSA GUIRON, TERESITA CANETA, BRAVO, RODRIGO BEULDA, TERESITA MENDEZ,
ALICIA ARRO, TEOFILO RUWETAS, CARLING ELENA CAMAN, LALIANE CANDELARIA, MARRY
AGCAOILI, ROSA NOLASCO, GERLIE PALALON, CARUJANO, REVELINA CORANES, MARITESS
CLAUDIO DIRAS, LETICIA ALBOS, AURORA ALUBOG, CABRERA, JUSTINA CLAZADA, APOLONIA DELA
LOLITA ACALEN, GREGORIO ALIVIO, GUILLERMO CRUZ, VICTORIA CRUZ, JOSEFINA DELA CRUZ,
ANICETA, ANGELIE ANDRADA, SUSAN ANGELES, MARITESS CATANGHAL, EDNA CRUZ, LUCIA DE
ISABELITA AURIN, MANUELA AVELINA, CARLING CASTRO, JOSIE CARIASO, OFELIA CERVANTES,
AGCAOILI, TERESITA ALANO, LOLITA AURIN, MEDITA CORTADO, AMALIA CASAJEROS, LUCINA
EMMABETH ARCIAGA, CRESENCIA ACUNA, CASTILIO, EMMA CARPIO, ANACORITA CABALES,
LUZVIMINDA ABINES, FLORENCIA ADALID, OLIVIA YOLANDA CAMO, MILA CAMAZUELA, ANITA CANTO,
AGUSTIN, EVANGELINE ALCORAN, ROSALINA ESTELA CANCERAN, FEMENCIA CANCIO, CYNTHIA
CAPALAD, MERLE CASTILLO, JESUSA CASTRO, NENITA FUENTES, MARILOU GOLINGAN, JUANITA
CECILIA CASTILLO, SILVERITA CASTRODES, VIVIAN GUERRERO, LYDIA GUEVARRA, SOCCORRO
CELLANO, NORMA CELINO, TERESITA CELSO, GONZAGA. PATRICIA GOMEO, ROSALINDA GALAPIN,
GLORIA COLINA, EFIPANIA CONSTANTINO, CARMELITA GALVEZ, TERESA GLE, SONIA
SALVACION CONSULTA, MEDITA CORTADO, AIDA GONZALES, PRIMITA GOMEZ, THERESA GALUA,
CRUZ, MARISSA DELA CRUZ, EDITO CORCILLES, JOSEFINA GELUA, BRENDA GONZAGA, FLORA
JELYNE CRUZ, ROSA CORPOS, ROSITA CUGONA, GALLARDO, LUCINDA GRACILLA, VICTORIA GOZUM,
ELSE CABELLES, EMMA CADUT, VICTORIA CALANZA, NENITA GAMAO, EDNA GARCIA, DANILO GARCIA,
BARBARA CALATA, IMELDA CALDERON, CRISTINA ROSARIO GIRAY, ARACELI GOMEZ, JOEMARIE
CALIDGUID, EMMALINDA CAMALON, MARIA GONZAGA, NELIA GONZAGA, MARY GRACE GOZON,
CAMERINO, CARMENCITA CAMPO, CONNIE CANEZO, CARMEN GONZALES, MERLITA GREGORIO,
LOURDES CAPANANG, MA. MILAGROS CAPILI, HERMINIA GONZALES, CARLITA DE GUZMAN,
MYRNA T. CAPIRAL, FLOR SAMPAGA, SUSAN B. MODESTA GABRENTINA, EDITHA GADDI, SALVACIO
CARINO, ROSARIO CARIZON, VIRGINIA DEL CARMEN, GALIAS, MERLINDA GALIDO, MELINDA GAMIT,
EMMA CARPIO, PRESCILA CARTA, FE CASERO, LUZ JULIETA GARCIA, EMELITA GAVINO, CHARITO
DE CASTRO, ANNA CATARONGAN, JOSEFINA GILLIA, GENERA GONEDA, CRESTITA GONZALES,
CASTISIMO, JOY MANALO, EMMIE CAWALING, HERMINIA GONZALES, FRANCISCA GUILING, JULIAN
JOVITA CARA, MARINA CERBITO, MARY CAREJANO, HERNANDEZ, GLECERIA HERRADURA, SUSANA
ESTELA R. CHAVEZ, CONCEPCION PARAJA, GINA HIPOLITO, NERISSA HAZ, SUSAN HERNAEZ,
CLAUDIO, FLORDELIZA CORALES, EDITO APOLONIA ISON, SUSAN IBARRA, LUDIVINA IGNACIO,
CORCIELER, ROSA C. CORROS, AMELIA CRUZ, CHOLITA INFANTE, JULETA ITURRIOS, ANITA IBO,
JELYNE CRUZ, WILFREDO DELA CRUZ, REINA MIRASOL INGALLA, JULIO JARDINIANO, MERLITA
CUEVAS, MARILOU DEJECES, JOSEPHINE JULAO, JULIETA JULIAN, MARIBETH DE JOSE,
DESACULA, EDITHA DEE, EDITHA DIAZ, VIRGE JOSEPHINE JENER, IMELDA JATAP, JULIETA JAVIER,
DOMONDON, CELSA DOROPAW, VIOLETA DUMELINA, SALOME JAVIER, VICTORIA JAVIER, SALVACION
MARIBEL DIMATATAC, ELBERTO DAGANIO, LETECIA JOMOLO, EDNA JARNE, LYDIA JIMENEZ, TERESITA
DAGOHOY, DINDO DALUZ, ANGELITA DANTES, DE JUAN, MARILYN LUARCA, ROSITA LOSITO,
GLORIA DAYO, LUCIA DE CASTRO, CARLITA DE ROSALINA LUMAYAG, LORNA LARGA, CRESTETA DE
GUZMAN, CARMEN DELA CRUZ, MERCY DE LEON, LEON, ZENAIDA LEGASPI, ADELAIDA LEON, IMELDA
MARY DELOS REYES, MARIETA DEPILO, MATILDE DE LEON, MELITINA LUMABI, LYDIA LUMABI,
DIBLAS, JULETA DIMAYUGA, TEODORA DIMAYUGA, ASUNCION LUMACANG, REGINA LAPIADRIO,
YOLANDA DOMDOM, LUCITA DONATO, NELMA MELANIA LUBUGUAN, EVANGELINE LACAP, PELAGIA
DORADO, RITA DORADO, SUSAN DUNTON, HERMINIA LACSI, LORNA LAGUI, VIRGIE LAITAN, VIRGINIA LEE,
SAN ESTEBAN, AMALI EUGENIO, OLIVIA EUSOYA, CRESTELITA DE LEON, FELICISIMA LEONERO, DIOSA
ERNESTO ESCOBIN, EVELYN ESCUREL, LYDIA LOPE, ANGELITA LOPEZ, TERESITA LORICA,
ESCOBIN, VICENTE E. ELOIDA, ELENA EGAR, GLORIA JUANITA MENDIETA, JUANITA MARANQUEZ, JANET
ERENO, NORMA ESPIRIDION, ARSENIA ESPIRITU, MALIFERO, INAS MORADOS, MELANE MANING,
AURORA ESTACIO, DEMETRIA ESTONELO, LUCENA MABANGLO, CLARITA MEJIA, IRENE
MILAGROS FONSEGA, LYDIA FLORENTINO, JULIA MENDOZA, LILIA MORTA, VIRGINIA MARAY, CHARITO
FARABIER, TRINIDAD FATALLA, IMELDA FLORES, MASINAHON, FILMA MALAYA, LILIA MORTA, VIRGINIA
JESSINA FRANCO, MA. CRISTINA FRIJAS, MARAY, CHARITO MASINAHON, FILMA MALAYA, LILIA
ESPECTACION FERRER, BERDENA FLORES, MORTA, ROSITA MATIBAG, LORENZA MLINA, SABINA
LEONILA FRANCISCO, BERNARDA FAUSTINO, DEL MUNDO, EDITHA MUYCO, NARCISA MABEZA, MA.
DOLORES FACUNDO, CRESTITA FAMILARAN, FE MACATANGAY, CONCEPCION MAGDARAOG,
EMELITA FIGUERAS, MA. VIRGINIA FLORENDO, IMELDA MAHIYA, ELSA MALLARI, LIGAYA MANAHAN,
AURORA FRANCISCO, MA. JESUSA FRANCISCO, SOLEDA MANLAPAS, VIRGINIA MAPA, JOSEI
MARCOS, LIBRADA MARQUEZ, VIRGINIA MAZA, ROBERTO, DELIA ROCHA, EDILTRUDES ROMERO,
JULLANITA MENDETA, EDILBERTA MENDOZA, IRENE MELECIA ROSALES, ZENAIDA ROTAO, BELEN RUBIS,
MERCADO, HELEN MEROY, CRISTINA MEJARES, FE RUEDA, SYLVIA SONGCAYAWON, CRISTINA
CECILIA MILLET, EMELITA MINON, JOSEPHINE SANANO, NERCISA SARMIENTO, HELEN SIBAL,
MIRANA, PERLITA MIRANO, EVANGELINE MISBAL, ESTELITA SANTOS, NORMA SILVESTRE, DARLITA
ELEANOR MORALES, TERESITA MORILLA, LYDIA SINGSON, EUFROCINA SARMIENTO, MYRNA
NUDO, MYRNA NAVAL, CAROLINA NOLIA, ALICIA SAMSON, EMERLINA SADIA, LORNA SALAZAR,
NUNEZ, MAGDALENA NAGUIDA, ELSA NICOL, LILIA AVELINA SALVADOR, NACIFORA SALAZAR, TITA
NACIONALES, MA. LIZA MABO, REMEDIOS NIEVES, SEUS, MARIFE SANTOS, GRACIA SARMIENTO,
MARGARITA NUYLAN, TERESITA NIEVES, PORFERIA ANGELITA SUMANGIL, ELIZABETH SICAT, MA.
NARAG, RHODORA NUCASA, CORAZON OCRAY, VICTORIA SIDELA, ANALITA SALVADOR, MARITES
LILIA OLIMPO, VERONA OVERENCIA, FERMIN OSENA, SANTOS, VIRGINIA SANTOS, THELMA SARONG,
FLORENCIA OLIVAROS, SOLEDAD OBEAS, NARISSA NILDA SAYAT, FANCITA SEGUNDO, FYNAIDA SAGUI,
OLIVEROS, PELAGIA ORTEGA, SUSAN ORTEGA, EDITHA SALAZAR, EDNA SALZAR, EMMA
CRISTINA PRENCIPE, PURITA PENGSON, REBECCA SALENDARIO, SOLEDAD SAMSON, EDNA SAN DIEGO,
PACERAN, EDNA PARINA, MARIETA PINAT, EPIFANIA TERESITA SAN GABRIEL, GERTRUDES SAN JOSE,
PAJERLAN, ROSALINA PASIBE, CECILIA DELA PAZ, EGLECERIA SANCHEZ, ESTRELLA SANCHEZ,
LORETA PENA, APOLONIA PALCONIT, FRANCISCO CECILIA DELOS SANTOS, LUISA SEGOVIA, JOCELYN
PAGUIO, LYDIA PAMINTAHON, ELSIE PACALDO, SENDING ELENA SONGALIA, FELICITAS SORIANO,
TERESITA PADILLA, MYRNA PINEDA, MERCEDITA OFELIA TIBAYAN, AIDA TIRNIDA, MONICA TIBAYAN,
PEREZ, NOVENA PORLUCAS, TERESITA PODPOD, CRISTETA TAMBARAN, GLORIA TACDA, NENVINA,
ADORACION PORNOBI, ALICIA PERILLO, HELEN JOY FELINA TEVES, ANTONINA DELA TORRE, MAXIMA
PENDAL, LOURDES PACHECO, LUZVIMINDA PAGALA, TANILON, NENA TABAT, ZOSIMA TOLOSA, MARITA
LORETA PAGAPULAN, FRANCISCO PAGUIO, PRISCO TENOSO, IMELDA TANIO, LUZ TANIO, EVANGELINE
PALACA, FLORA PAMINTUAN, NOEMI PARISALES, TAYO, JOSEFINA TINGTING, ARSENIA TISOY,
JOSEPHINE PATRICIO, CRISTINA PE BENITO, ARSENIA MAGDALENA TRAJANO, JOSEFINA
ANGELA PECO, ANGELITA PENA, ESTER PENONES, UBALDE, GINA UMALI, IRMA VALENZUELA, FELY
NORMA PEREZ, MAURA PERSEVERANCIA, MARINA VALDEZ, PAULINA VALEZ, ROSELITA VALLENTE,
PETILLA, JOSE PIA, ZULVILITA PIODO, REBECCA LOURDES VELASCO, AIDA VILLA, FRANCISCA
PACERAN, CLARITA POLICARPIO, MAXIMO VILLARITO, ZENAIDA VISMONTE, DELIA VILLAMIEL,
POTENTO, PORFIRIO POTENTO, FLORDELIZA NENITA VASQUEZ, JOCELYN VILLASIS,
PUMARAS, FERNANDO QUEVEDO, JULIANA FERMARGARITA VARGAS, CELIA VALLE, MILA
QUINDOZA, CHARITO QUIROZ, CARMELITA ROSINO, CONCEPCION VIRAY, DOMINGA VALDEZ,
RODELIA RAYONDOYON, FLORENCIA RAGOS, LUZVIMINDA VOCINA, MADELINE VIVERO, RUFINA
REBECCA ROSALES, ROSALYN RIVERO, FRANCISCO VELASCO, AUREA VIDALEON, GLORIA DEL VALLE,
RUIZ, FRANCIA ROSERO, EMELY RUBIO, EDILBERTO THELMA VALLOYAS, CYNTHIA DELA VEGA, ADELA
RUIO, JUANA RUBY, RAQUEL REYES, MERCY VILLAGOMEZ, TERESITA VINLUAN, EUFEMIA VITAN,
ROBLES, ESTELA RELANO, ROSITA REYES NIMFA GLORIA VILLAFLORES, EDORACION VALDEZ,
RENDON, EPIFANIO RAMIRO, MURIEL REALCO, ANGELITA VALDEZ, ILUMINADA VALENCI, MYRNA
BERNARDITA RED, LEONITA RODIL, BENITA REBOLA, VASQUEZ, EVELYN VEJERAMO, TEODORA
DELMA REGALARIO, LENY REDILLAS, JULIETA DELA VELASQUEZ, EDAN VILLANUEVA, PURITA
ROSA, FELICITAS DELA ROSA, SUSAN RAFALLO, VILLASENOR, SALVADOR WILSON, EMELINA YU,
ELENA RONDINA, NORMA RACELIS, JOSEPHINE ADELFA YU, ANA ABRIGUE, VIRGINIA ADOBAS,
RAGEL, ESPERANZA RAMIREZ, LUZVIMINDA VICTORIA ANTIPUESTO, MERCEDITA CASTILLO,
RANADA, CRISTINA RAPINSAN, JOCELYN RED, JOCELYN CASTRO, CREMENIA DELA CRUZ,
ORLANDO REYES, TERESITA REYES, ANGELITA JOSEPHINE IGNACIO, MELITA ILILANGOS, LIGAYA
LUMAYAT, DELIA LUMBES, ROSITA LIBRADO, DELIA CALUBAD, EMELITA CABERA, CRISTETA CRUZ,
LAGRAMADA, GEMMA MAGPANTAY, EMILY ERLINDA COGADAS, IMELDA CALDERON, SUSIE LUZ
MENDOZA, FIDELA PANGANIBAN, LEONOR RIZALDO, CEZAR, ESTELA CHAVEZ, NORMA CABRERA, ELDA
ILUMINDA RIVERA, DIVINA SAMBAYAN, ELMERITA DAGATAN, LEONISA DIMACUNA, ERNA DUGTONG,
SOLAYAO, NANCY SAMALA, JOSIE SUMARAN, FLORDELISA DIGMA, VIRGILIO DADIOS, LOLITA
LUZVIMINDA ABINES, ALMA ACOL, ROBERTO DAGTA, ADELAIDA DORADO, CELSA DATUMANONG,
ADRIATICO, GLORIA AGUINALDO, ROSARIO ALEYO, VIRGINIA DOCTOLERO, EDNA SAN DIEGO, JULIETA
CRISTETA ALEJANDRO, LILIA ALMOGUERA, CARMEN DANG, JULIETA DORANTINAO, LOLITA DAGANO,
AMARILLO, TRINIDAD ARDANIEL, CERINA JUDITH DIAZ, MARIA ENICANE, MARITA ESCARDE,
AVENTAJADO, ZENAIDA AVAYA, LOLITA ARABIS, ENRIMITA ESMAYOR, ROSARIO EPIRITU, REMEDIOS
MARIA ARSENIA, SOFIA AGUINALDO, SALVE ABAD, EMBOLTORIO, IRENE ESTUITA, TERESITA ERESE,
JOSEFINA AMBANGAN EMILIA AQUINO, JOSEFINA ERMELINDA ELEZO, MARIA ESTAREJA, MERLITA
AQUINO, JULIANA AUSAN, AMERCIANA ACOSTA, ESQUERRA, YOLANDA FELICITAS, FRUTO FRANCIA,
CONCEPCION ALEROZA, DIANA ADOVOS, FELY MARTHA FRUTO, LILIA FLORES, SALVACION
ADVINCULA, SEOMINTA ARIAS, JOSEPHINE ARCEDE, FORTALESA, JUDITH FAJARDO, SUSANA
NORMA AMISTOSO, PRESENTACION ALONOS, EMMA FERNANDO, EDWIN FRANCISCO, NENITA GREGORY,
ATIENZA, LEONIDA AQUINO, ANITA ARILLON, ROSA CAMILO, MARIVIC GERRARDO, CHARITA
ADELAIDA ARELLANO, NORMA AMISTOSO, GOREMBALEM, NORMA GRANDE, DOLORES
JOSEPHINE ARCEDE, SEMIONITA ARIAS, JOSEFINA GUTIERREZ, CHARLIE GARCIA, LUZ GALVEZ,
BANTUG, LOLITA BARTE, HERMINIA BASCO, ADELAIDA GAMILLA, LUZ GAPULTOS, ERLINDA
MARGARITA BOTARDO, RUFINO BUGNOT, LOLITA GARCIA, HELEN GARCIA, ERLINDA GAUDIA,
BUSTILLO, ISABEL BALAKIT, ROSARIO BARRERO, FRANCISCA GUILING, MINTA HERRERA, ASUNCION
TESSIE BALBOS, NORMA BENISANO, GUILLERMA HONOA, JUAN HERNANDEZ, LUCERIA ANNA MAE
BRUGES, BERNADETTE BARTOLOME, SHIRLEY HERNANDEZ, JULIANA HERNANDEZ, EDITHA
BELMONTE, MERONA BELZA, AZUCENA BERNALES, IGNACIO, ANITA INOCENCIO, EULALIA INSORIO,
JOSE BASCO, NIMPHA BANTOG, BENILDA BUBAN, ESTELITA IRLANDA, MILAGROS IGNACIO, LINDA
REGINA BUBAN, SALOME BARRAMEDA, IRENE JABONILLO, ADELIMA JAEL, ROWENA JARABJO,
BISCO, FELICITAS BAUTISTA, VIOLETA BURA, LINA ROBERT JAVILINAR, CLARITA JOSE, CARMENCITA
BINUYA, BIBIANA BAARDE, ELSA BAES, ANASTACIA JUNDEZ, SOFIA LALUCIS, GLORIA LABITORIA,
BELONZO, SONIA BENOYO, ELIZABETH BACUNGAN, ANGELITA LODES, ERLINDA LATOGA, EVELYN
PATRICIA BARRAMEDA, ERLINDA BARCELONA, LEGASPI, ROMEO LIMCHOCO, JESUS LARA,
EMMA BANICO, APOLONIA BUNAO, LUCITA BOLEA, ESTRELLA DE LUNA, LORETA LAREZA, JOSEPHINE
PACIFICA BARCELONA, EDITHA BASIJAN, RENITA ALSCO, MERCY DE LEON, CONSOLACION LIBAO,
BADAMA, ELENA BALADAD, CRESENCIA BAJO, MARILYN LIWAG, TERESITA LIZAZO, LILIA
BERNADITA BASILID, MELINDA BEATO, YOLANDA MACAPAGAL, SALVACION MACAREZA, AMALIA
BATANES, EDITHA BORILLA, ANITA BAS, ELSA MADO, TERESITA MADRIAGA, JOVITA MAGNAYE,
CALIPUNDAN, MARIA CAMERINO, VIRGINIA JEAN MALABAD, FRANCISCA MENDOZA, NELCITA
CAMPOSANO, MILAGROS CAPILI, CARINA CARINO, MANGANTANG, TERESITA NELLA, GENEROZA
EUFEMIA CASIHAN, NENITA CASTRO, FLORENCIA MERCADO, CRISTETA MOJANA, BERNARDA
CASUBUAN, GIRLIE CENTENO, MARIANITA MONGADO, LYDIA MIRANDA, ELISA MADRILEJOS,
CHIQUITO, IMELDA DELA CRUZ, TEODOSIA CONG, LOIDA MAGSINO, AMELIA MALTO, JULITA MAHIBA,
TEOFILA CARACOL, TERESITA CANTA, IRENEA MYRNA MAYORES, LUISA MARAIG, FLORENCIA
CUNANAN, JULITA CANDILOSAS, VIOLETA CIERES, MARAIG, EMMA MONZON, IMELDA MAGDANGAN,
MILAGROS DELA CRUZ, FLOREPES CAPULONG, VICTORIA MARTIN, NOEMI MANGUILLO, BASILIZA
CARMENCITA CAMPO, MARILYN CARILLO, RUTH MEDINA, VICTORIO MERCADO, ESTELA MAYPA,
DELA CRUZ, RITA CIJAS, LYDIA CASTOR, VIRGIE EMILIA MENDOZA, LINA MAGPANTAY, FELICIANA
MANLOLO, ELENA MANACOP, WILMA MORENO, TERESITA TIBAR, LACHICA LEONORA, JULITA YBUT,
JUANA MENDOZA, EVELYN DEL MUNDO, ROSIE JOSEFINA ZABALA, WINNIE ZALDARIAGA, BENHUR
MATUTINA, MATILDE MANALO, TERESITA MENDEZ, ANTENERO, MARCELINA ANTENERO, ANTONINA
FELIPINA MAGONCIA, MARIA MANZANO, LIGAYA ALAPAN, EDITHA ANTOZO, ROWENA ARABIT, ANDRA
MANALO, LETICIA MARCHA, MARINA MANDIGMA, AQUINO, TERESITA ANGULO, MARIA ANGLO, MYRNA
LETICIA MANDASOC, PRESCILLA MARTINEZ, JULIA ALBOS, ELENITA AUSTRIA, ANNA ABRIGUE, VIRGINIA
MENDOZA, PACITA MAGALLANES, ANGELINA ADOBAS, VICTORIA ANTIPUESTO, REMEDIOS
MARJES, SHIRLEY MELIGRITO, IRENE MERCADO, BOLECHE, MACARIA BARRIOS, THELMA BELEN,
ELISA MAATUBANG, MARCELINA NICOLAS, ESTELLA BARRETTO, JOCELYN CHAVEZ, VIRGINIA
AGUSTINA NICOLAS, ROSA NOLASCO, WILMA CAPISTRANO, BENEDICTA CINCO, YOLLY CATPANG,
NILAYE, VIOLETA ORACION, ANGELA OSTAYA, REINA CUEVAS, VICTORIA CALANZA, FE CASERO,
JUANITA OSAYOS, MAGDALENA OCAMPO, ROBERTA CATALBAS, LOURDES CAPANANG,
MARDIANA OCTA, ROSELA OPAO, LIBRADA CLEMENCIA CRUZ, JOCELYN COSTO, MERCEDITA
OCAMPO, YOLANDA OLIVER, MARCIA ORLANDA, CASTILLO, EDITHA DEE, LUCITA DONATO, NORMA
PAGDUNAN, RITA PABILONA, MYRA PALACA, ESPIRIDION, LORETA FERNANDEZ, AURORA
BETHLEHEM PALINES, GINA PALIGAR, NORMA FRANCISCO, VILMA FAJARDO, MODESTA
PALIGAR, DELMA PEREZ, CLAUDIA PRADO, JULIE GABRENTINA, TERESITA GABRIEL, SALVACION
PUTONG, LUDIVINA PAGSALINGAN, MERLYN GAMBOA, JOSEPHINE IGNACIO, SUSAN IBARRA,
PANALIGAN, VIOLETA PANAMBITAN, NOREN PAR, ESPERANZA JABSON, OSCAR JAMBARO, ROSANNA
ERLINDA PARAGAS, MILA PARINO, REBECCA JARDIN, CORAZON JALOCON, ZENAIDA LEGASPI,
PENAFLOR, IMELDA PENAMORA, JERMICILLIN DELLA LAGRAMADA, ROSITA LIBRANDO, LIGAYA
PERALTA, REBECCA PIAPES, EDITHA PILAR, LUMAYOT, DELIA LUMBIS, LEONORA LANCHICA,
MAROBETH PILLADO, DIOSCORO PIMENTEL, RELAGIA LACSI, JOSEFINA LUMBO, VIOLETA DE
AURORA LAS PINAS, EVANGELINA PINON, MA. NITA LUNA, EVELYN MADRID, TERESITA MORILLA, GEMMA
PONDOC, MA. MERCEDES PODPOD, ANGELITO MAGPANTAY, EMILY MENDOZA, IRENEA MEDINA,
PANDEZ, LIGAYA PIGTAIN, LEONILA QUIAMBAO, NARCISA MABEZA, ROSANNA MEDINA, DELIA
ELENA QUINO, MARITESS QUIJANO, CHOLITA MARTINEZ, ROSARIO MAG-ISA, EDITHA MENDOZA,
REBUENO, LOLITA REYES, JOCELYN RAMOS, ROSITA EDILBERTA MENDOZA, FIDELA PANGANIBAN,
RAMIREZ, ELINORA RAMOS, ISABEL RAMOS, OFELIA PANGANIBAN, AZUCENA POSTGO, LOURDES
ANNABELLE RESURRECCION, EMMA REYES, ALILY PACHECO, LILIA PADILLA, MARISSA PEREZ,
ROXAS, MARY GRACE DELOS REYES, JOCELYN DEL FLORDELIZA PUMARES, LUZ REYES, NORMA
ROSARIO, JOSEFINA RABUSA, ANGELITA ROTAIRO, RACELIS, LEONOR RIZALDO, JOSIE SUMASAR,
SAMCETA ROSETA, EDERLINA RUIZ, ZENAIDA NANCY SAMALA, EMERLITA SOLAYAO, MERCEDITA
ROSARIO, BENITA REBOLA, ROSITA REVILLA, SAMANIEGO, BLANDINA SIMBULAN, JOCELYN
ROSITA SANTOS, ROWENA SALAZAR, EMILYN SENDING, LUISITA TABERRERO, TERESITA TIBAR,
SARMIENTO, ANA SENIS, ELOISA SANTOS, NARCISA ESTERLINA VALDEZ, GLORIA VEJERANO, ILUMINADA
SONGLIAD, ELMA SONGALIA, AMPARA SABIO, VALENCIA, MERLITA DELA VEGA, VIRGIE LAITAN,
JESSIE SANCHEZ, VIVIAN SAMILO, GLORIA JULIET VILLARAMA, LUISISTA OCAMPO, NARIO
SUMALINOG, ROSALINA DELOS SANTOS, MARIETA ANDRES, ANSELMA TULFO, GLORIA MATEO, FLANIA
SOMBRERO, HELEN SERRETARIO, TEODORO SULIT, MENDOZA, CONNIE CANGO, EDITHA SALAZAR,
BELLA SONGUINES, LINDA SARANTAN, ESTELLA MYRNA SANTOS, TERESITA SERGIO, CHARITO GILLA,
SALABAR, MILAGROS SISON, GLORIA TALIDAGA, FLORENTINA HERNAEZ, BERNARDINO VIRGINIA,
CECILIA TEODORO, ROMILLA TUAZON, AMELITA AMPO ANACORITA, SYLVIA POSADAS, ESTRELLA
TABULAO, MACARIA TORRES, LUTGARDA TUSI, ESPIRITU, CONCORDIA LUZURIAGA, MARINA
ESTELLA TORREJOS, VICTORIA TAN, MERLITA DELA CERBITO, EMMA REYES, NOEMI PENISALES,
VEGA, WEVINA ORENCIA, REMEDIOS BALECHA, CLARITA POLICARPIO, BELEN BANGUIO, HERMINIA
 ADVINCULA, LILIA MORTA, REGINA LAPIDARIO, positions. Should reinstatement be not feasible, respondent
LORNA LARGA, TERESITA VINLUAN, MARITA company shall pay separation pay of one month salary for
TENOSO, NILDS SAYAT, THELMA SARONG, DELMA every year of service. Since petitioners were terminated
REGALIS, SUSAN RAFAULO, ELENA RONDINA, without the requisite written notice at least 30 days prior to
MYRNA PIENDA, VIOLETA DUMELINA, FLORENCIA their termination, following the recent ruling in the case of
ADALID, FILMA MELAYA, ERLINDA DE BAUTISTA, Ruben Serrano vs. National Labor Relations Commission
MATILDE DE BLAS, DOLORES FACUNDO, REBECCA and Isetann Department Store, the respondent company is
LEDAMA, MA. FE MACATANGAY, EMELITA MINON, hereby ordered to pay full backwages to petitioner-
NORMA PAGUIO, ELIZA VASQUEZ, GLORIA employees while the Federation is also ordered to pay full
VILLARINO, MA. JESUS FRANCISCO, TERESITA backwages to petitioner-union officers who were dismissed
GURPIDO, LIGAYA MANALO, FE PINEDA, MIRIAM upon its instigation. Since the dismissal of petitioners was
OCMAR, LUISA SEGOVIA, TEODY ATIENZA, SOLEDA without cause, backwages shall be computed from the time
AZCURE, CARMEN DELA CRUZ, DEMETRIA the herein petitioner employees and union officers were
ESTONELO, MA. FLORIDA LOAZNO, IMELDA MAHIYA, dismissed until their actual reinstatement. Should
EDILBERTA MENDOZA, SYLVIA POSADAS, SUSANA reinstatement be not feasible, their backwages shall be
ORTEGA, JOSEPHINE D. TALIMORO, TERESITA computed from the time petitioners were terminated until the
LORECA, ARSENIA TISOY, LIGAYA MANALO, finality of this decision. Costs against the respondent
TERESITA GURPIO, FE PINEDA, and MARIA company.
SO ORDERED."
JESUS FRANCISCO, petitioners, vs. HON. CRESENCIO Petitioners allege that this Court committed patent and palpable error
J. RAMOS, NATIONAL LABOR RELATIONS in holding that "the respondent company officials cannot be held personally
COMMISSION, M. GREENFIELD (B), INC., SAUL TAWIL, liable for damages on account of employees' dismissal because the employer
CARLOS T. JAVELOSA, RENATO C. PUANGCO, corporation has a personality separate and distinct from its officers who merely
WINCEL LIGOT, MARCIANO HALOG, GODOFREDO acted as its agents" whereas the records clearly established that respondent
PACENO, SR., GERVACIO CASILLANO, LORENZO company officers Saul Tawil, Carlos T. Javelosa and Renato C. Puangco have
ITAOC, ATTY. GODOFREDO PACENO, JR., caused the hasty, arbitrary and unlawful dismissal of petitioners from work;
MARGARITO CABRERA, GAUDENCIO RACHO, that as top officials of the respondent company who handed down the decision
SANTIAGO IBANEZ, AND RODRIGO dismissing the petitioners, they are responsible for acts of unfair labor practice;
AGUILING, respondents. that these respondent corporate officers should not be considered as mere
agents of the company but the wrongdoers. Petitioners further contend that
while the case was pending before the public respondents, the respondent
company, in the early part of February 1990, began removing its machineries
RESOLUTION
and equipment from its plant located at Merville Park, Parañaque and began
diverting jobs intended for the regular employees to its sub-contractor/satellite
branches; 3 that the respondent company officials are also the officers and
GONZAGA-REYES, J p: incorporators of these satellite companies as shown in their articles of
incorporation and the general information sheet. They added that during their
Before us is petitioners' motion for partial reconsideration of our ocular inspection of the plant site of the respondent company, they found that
decision dated February 28, 2000, 1 the dispositive portion of which reads: 2 the same is being used by other unnamed business entities also engaged in
the manufacture of garments. Petitioners further claim that the respondent
"WHEREFORE, the petition is GRANTED; the company no longer operates its plant site as M. Greenfield thus it will be very
decision of the National Labor Relations Commission in difficult for them to fully enforce and implement the court's decision. In their
Case No. NCR-00-09-04199-89 is REVERSED and SET subsequent motion filed on the same day, petitioners also pray for the (A)
ASIDE; and the respondent company is hereby ordered to inclusion of the names of employees listed in Annex "D" of the petition which
immediately reinstate the petitioners to their respective they inadvertently omitted in the caption of the case, to wit: (1) Amores, Imelda
(2) Andres, Josefina (3) Aragon, Felicidad (4) Arias, Genevive (5) Arroyo, evidence not presented during the trial; that the supposed proof of satellite
Salvacion (6) Arceo, Elizabeth (7) Añonuevo, Monica (8) Abellada, Josefina companies hardly constitute newly discovered evidence. Respondent officials
(9) Advincula, Harmelina (10) Ajayo, Rosario (11) Alilay, Marilyn (12) Almario, interpose no objection to the inclusion of employees inadvertently excluded in
Anliza (13) Almario, Angelita (14) Almazan, Marilou (15) Almonte, Rosalina the caption of the case but object to the inclusion of employees who were
(16) Alvaran, Marites (17) Alvarez, Edna (18) Ampo, Anacorita (19) Aquino, allegedly similarly situated for the reason that these employees had not been
Leonisa (20) Bactat, Celia (21) Carpio, Azucena G. (22) Cruz, Amelia (23) parties to the case, hence should not be granted any relief from the court.
Glifonia, Eugenia (24) Escurel, Evelyn F. (25) Hilario, Bonifacio G. (26) Respondent company failed to file its comment. 11
Payuan, Adoracion (27) Perez, Mercedita (28) Rempis, Zenaida (29) Rosario,
Margie del (30) Salvador, Norma (31) Sambayanan, Olivia (32) Tiaga, Aida Petitioners' contention that respondent company officials should be
(33) Torbela, Maria (34) Trono, Nenevina (35) Varona, Asuncion (36) made personally liable for damages on account of petitioners' dismissal is not
Vasquez, Elisa M. (37) Villanueva, Milagros (38) Villapondo, Eva C. (39) Villon, impressed with merit. A corporation is a juridical entity with legal personality
Adeliza T.; (B) correction of their own typographical errors of the names of separate and distinct from those acting for and in its behalf and, in general
employees appearing in the caption, which should be as follows: Manuela from the people comprising it. 12 The rule is that obligations incurred by the
Avelin, Belen Barquio, Lita Buquid, Violeta C. Ciervo, Marilou Dejocos, corporation, acting through its directors, officers and employees, are its sole
Maximina Faustino, Primitiva Gomez, Myrna Palaca, Mercedita Perez, liabilities. 13 True, solidary liabilities may at times be incurred but only when
Rebecca Poceran, Amorlita Rotairo, Emma Saludario, Tita Senis, Salvacion exceptional circumstances warrant such as, generally, in the following
Wilson, 4 Anita Ahillon, Gregoria Arguelles, Tessie Balbis, Betty Borja, cases: 14
Rodrigo Buella, Celsa Doropan, Maria Enicame, Josephine Lasco, Julita 1. When directors and trustees or, in appropriate cases, the
Maniba, Juanita Osuyos, Juana Overencio, Azucena Postigo, Cristina officers of a corporation — aTIAES
Rapinan, Roselyn Rivero, Edeltrudes Romero, Rodelia Royandoyon, Fausta
Segundo, Teodora Sulit, Elena Tebis, Paulina Valdez, 5 Susan Abogona, (a) Vote for or assent to patently unlawful acts of
Diana Adovas, Carmen Rosimo Basco, Macaria Barrion, Maria Fe Berezo, the corporation;
Matilde de Blas, Rufina Bugnot, Aurora Bravo, Jovita Cera, Precila Carta,
Amalia Eugenio, Milagros Fonseca, Jose Irlanda, Rowena Jarabejo, Regina (b) act in bad faith or with gross negligence in
Lapidario, Josie Marcos, Shirley Melegrito, Noemi Menguillo, Teresita Nierves, directing the corporate affairs;
Ricardo Paloga, Florenia Ragos, Leonila Rodil, Emma Saludario, Narcisa (c) are guilty of conflict of interest to the prejudice of
Songuad, Josie Sumarsar, Evangeline Tayco; 6 (C) inclusion of other the corporation, its stockholders or
employees similarly situated whose names were not included in Annex "D" or members, and other persons. 15
in the caption of the case, to wit: (1) Dionisa Aban, (2) Alicia Aragon, (3) Vicky
Francia, (4) Nelita F. Gelongos, (5) Erlinda San Juan, (6) Erlinda Baby (2) When a director or officer has consented to the issuance
Patungan Manalo, (7) Jenette Patungan, 7 (8) Blandina Simbahan, 8 (9) of watered stocks or who, having knowledge
Asuncion Varona, 9 (10) Josefina Andres, (11) Teresita Arales, (12) Alice thereof, did not forthwith file with the corporate
Artikulo, (13) Esther Cometa, (14) Eliza Cabiting, (15) Erlinda Dalut, (16) Edna secretary his written objection thereto. 16
Fernandez, (17) Emily Inocencio, (18) Esperanza Jalocon, (19) Imelda Jarabe,
(3) When a director, trustee or officer has contractually
(20) Mercedes Pabadora, (21) Venerado Pastoral, (22) Cristina Perlas, (23)
agreed or stipulated to hold himself personally and
Margie del Rosario. 10
solidarily liable with the Corporation. 17
In their Comment, the Solicitor General interposes no objection to
(4) When a director, trustee or officer is made, by specific
petitioners' prayer for the inclusion of omitted and similarly situated employees
provision of law, personally liable for his corporate
and the correction of employees' names in the caption of the case.
action. 18
On the other hand, private respondent company officials Carlos
In labor cases, particularly, the Court has held corporate directors and
Javelosa and Remedios Caoleng, in their Comment, state that considering that
officers solidarily liable with the corporation for the termination of employment
petitioners admitted having knowledge of the fact that private respondent
officers are also holding key positions in the alleged satellite companies, they of corporate employees done with malice or in bad faith. 19 Bad faith or
should have presented the pertinent evidence with the public respondents; negligence is a question of fact and is evidentiary. 20 It has been held that bad
thus it is too late for petitioners to require this Court to admit and evaluate faith does not connote bad judgment or negligence; it imports a dishonest
purpose or some moral obliquity and conscious doing of wrong; it means
breach of a known duty thru some motive or interest or ill will; it partakes of the between respondent company and these satellite companies does not
nature of fraud. 21 necessarily imply fraud. 24 In such a case, respondent company's corporate
personality remains inviolable. 25
In the instant case, there is nothing substantial on record to show that
respondent officers acted in patent bad faith or were guilty of gross negligence Although there were earlier decisions of this Court in labor cases
in terminating the services of petitioners so as to warrant personal liability. As where corporate officers were held to be personally liable for the payment of
held in Sunio vs. NLRC, 22 wages and other money claims to its employees, we find those rulings
inapplicable to this case. In La Campana Coffee Factory, Inc. vs. Kaisahan ng
"We now come to the personal liability of petitioner, Manggagawa sa La Campana (KKM), 26 La Campana Coffee Factory, Inc.
Sunio, who was made jointly and severally responsible with and La Campana Gaugau Packing were substantially owned by the same
petitioner company and CIPI for the payment of the person. They had one office, one management, and a single payroll for both
backwages of private respondents. This is reversible error. businesses. The laborers of the gaugau factory and the coffee factory were
The Assistant Regional Director's Decision failed to disclose also interchangeable, i.e., the workers in one factory worked also in the other
the reason why he was made personally liable. factory.
Respondents, however, alleged as grounds thereof, his
being the owner of one half (1/2) interest of said corporation, In Claparols vs. Court of Industrial Relations, 27 the Claparol Steel
and his alleged arbitrary dismissal of private respondents. and Nail Plant which was ordered to pay its workers backwages, ceased
operations on June 30, 1957 and was succeeded on the next day, July 1, 1957
Petitioner Sunio was impleaded in the Complaint in by the Claparols Steel Corporation. Both corporations were substantially
his capacity as General Manager of petitioner corporation. owned and controlled by the same person and there was no break or cessation
There appears to be no evidence on record that he acted in operations. Moreover, all the assets of the steel and nail pant were
maliciously or in bad faith in terminating the services of transferred to the new corporation.
private respondents. His act, therefore, was within the
scope of his authority and was a corporate act. Notably, in the above-mentioned cases, a new corporation was
created, owned by the same family, engaged in the same business and
It is basic that a corporation is invested by law with operating in the same compound, a situation which is not obtaining in the
a personality separate and distinct from those of the instant case.
persons composing it as well as from that of any other legal
entity to which it may be related. Mere ownership by a single In AC Ransom Labor Union-CCLU vs. NLRC, 28 the Court ruled that
stockholder or by another corporation of all or nearly all of under the Minimum Wage Law, the responsible officer of an employer
the capital stock of a corporation is not of itself sufficient corporation can be held personally liable for non-payment of backwages for "if
ground for disregarding the separate corporate personality. the policy of the law were otherwise, the corporation employer would have
Petitioner Sunio, therefore, should nor have been made devious ways for evading of back wages." This Court said:
personally answerable for the payment of private
respondents' back salaries." "In the instant case, it would appear that RANSOM,
in 1969, foreseeing the possibility or probability of payment
Petitioners' claim that the jobs intended for the respondent company's of backwages to the 22 strikers, organized ROSARIO to
regular employees were diverted to its satellite companies where the replace RANSOM, with the latter to be eventually phased
respondent company officers are holding key positions is not substantiated out if the 22 strikers win their case. RANSOM actually
and was raised for the first time in consideration. Even assuming that the ceased operations on May 1, 1973, after the December 19,
respondent company officials are also officers and incorporators of the satellite 1972 Decision of the Court of Industrial Relations was
companies, such circumstance does not in itself amount to fraud. The promulgated against RANSOM."
documents attached to petitioners' motion for reconsideration show that these
satellite companies 23 were established prior to the filing of petitioners' Clearly, the situation in AC Ransom does not obtain in this case,
complaint against private respondents with the Department of Labor and where the alleged satellite companies were established even prior to the filing
Employment on September 6, 1989 and that these corporations have different of petitioners' complaint with the Department of Labor.
sets of incorporators aside from the respondent officers and are holding their Petitioners' prayer for the inclusion of employees listed in Annex "D"
principal offices at different locations. Substantial identity of incorporators whose names were admittedly inadvertently excluded in the caption of the
case and for the correction of typographical errors of the employees' names Vitug and Panganiban, J., reiterate their separate opinion in Serrano
appearing in the caption, is well taken and is hereby granted. However, v. NLRC, GR 117040, January, 2000.
petitioners' prayer for the inclusion of other employees allegedly similarly
situated but whose names were not included either in Annex "D" or in the ||| (Malayang Samahan ng mga Manggawa sa M. Greenfield v. Ramos, G.R.
caption of the case must be denied. A judgment cannot bind persons who are No. 113907 (Resolution), [April 20, 2001], 409 PHIL 61-88)
not parties to the action. 29 It is elementary that strangers to a case are not
bound by the judgment rendered by the court and such judgment is not
available as an adjudication either against or in favor of such other SECOND DIVISION
person. 30 Petitioners failed to explain why these employees allegedly
similarly situated were not included in the submitted list filed before us. Such
inclusion would be tantamount to a substantial amendment which cannot be [G.R. No. 68555. March 19, 1993.]
allowed at this late stage of the proceedings as it will definitely work to the
prejudice and disadvantage of the private respondents. 31 PRIME WHITE CEMENT
CORPORATION, petitioner, vs. HONORABLE
WHEREFORE, petitioners' motion for reconsideration is partially
INTERMEDIATE APPELLATE COURT and ALEJANDRO
granted so as to include the names of employees listed in Annex "D" which
TE, respondents.
petitioners inadvertently omitted in the caption of this case, to wit: (1) Amores,
Imelda (2) Andres, Josefina (3)Aragon, Felicidad (4) Arias, Genevive (5)
Arroyo, Salvacion (6) Arceo, Elizabeth (7) Añonuevo, Monica (8) Abellada,
SYLLABUS
Josefina (9) Advincula, Harmelina (10) Ajayo, Rosario (11) Alilay, Marilyn (12)
Almario, Anliza (13) Almario, Angelita (14) Almazan, Marilou (15) Almonte,
Rosalina (16) Alvaran, Marites (17) Alvarez, Edna (18) Ampo, Anacorita (19) 1. COMMERCIAL LAW; CORPORATIONS; GENERALLY CORPORATE
Aquino, Leonisa (20) Bactat, Celia (21) Carpio, Azucena G. (22) Cruz, Amelia POWERS SHALL BE EXERCISED BY THE BOARD OF DIRECTORS;
(23) Glifonia, Eugenia (24) Escurel, Evelyn F. (25) Hilario, Bonifacio G. (26) EXCEPTIONS. — Under the Corporation Law, which was then in force at the
Payuan, Adoracion (27) Perez, Mercedita (28) Rempis, Zenaida (29) Rosario, time this case arose, as well as under the present Corporation Code,all
Margie deL (30) Salvador, Norma (31) Sambayanan, Olivia (32) Tiaga, Aida corporate powers shall be exercised by the Board of Directors, except as
(33) Torbela, Maria (34) Trono, Nenevina (35) Varona, Asuncion (36) otherwise provided by law. Although it cannot completely abdicate its power
Vasquez, Elisa M. (37) Villanueva, Milagros (38) Villapondo, Eva C. (39) Villon, and responsibility to act for the juridical entity, the Board may expressly
Adeliza T.; and to correct the typographical errors of the names of employees delegate specific powers to its President or any of its officers. In the absence
appearing in the caption, as follows: Manuela Avelin, Belen Barquio, Lita of such express delegation, a contract entered into by its President, on behalf
Buquid, Violeta C. Ciervo, Marilou Dejocos, Maximina Faustino, Primitiva of the corporation, may still bind the corporation if the board should ratify the
Gomez, Myrna Palacaz Mercedita Perez, Rebecca Poceran, Amorlita Rotairo, same expressly or impliedly. Implied ratification may take various forms - like
Emma Saludario, Tita Senis, Salvacion Wilson, Anita Ahillon. Gregoria silence or acquiescence; by acts showing approval or adoption of the contract;
Arguelles, Tessie Balbis, Betty Borja, Rodrigo Buella, Celsa Doropan, Maria or by acceptance and retention of benefits flowing therefrom. Furthermore,
Enicame, Josephine Lasco, Julita Maniba, Juanita Osuyos, Juana Overencio, even in the absence of express or implied authority by ratification, the
Azucena Postigo, Cristina Rapinan, Roselyn Rivero, Edeltrudes Romero, President as such may, as a general rule, bind the corporation by a contract
Rodelia Royandoyon, Fausta Segundo, Teodora Sulit, Elena Tebis, Paulina in the ordinary course of business, provided the same is reasonable under the
Valdez, Susan Abogona, Diana Adovas, Carmen Rosimo Basco, Macaria circumstances. These rules are basic, but are all general and thus quite
Barrion, Maria Fe Berezo, Matilde de Blas, Rufina Bugnot, Aurora Bravo, flexible. They apply where the President or other officer, purportedly acting for
Jovita Cera, Precila Carta, Amalia Eugenio, Milagros Fonseca, Jose Irlanda, the corporation, is dealing with a third person, i.e., person outside the
Rowena Jarabejo, Regina Lapidario, Josie Marcos, Shirley Melegrito, Noemi corporation.
Menguillo, Teresita Nierves, Ricardo Paloga, Florenia Ragos, Leonila Rodil,
Emma Saludario, Narcisa Songuad, Josie Sumarsar, Evangeline Tayco. 2. ID.; ID.; BOARD OF DIRECTORS; RULE IN CASE OF CONFLICT OF
INTEREST. — A director of a corporation holds a position of trust and as such,
SO ORDERED. he owes a duty of loyalty to his corporation. In case his interests conflict with
those of the corporation, he cannot sacrifice the latter to his own advantage
Melo and Sandoval-Gutierrez, JJ., concur. and benefit. As corporate managers, directors are committed to seek the
maximum amount of profits for the corporation. This trust relationship "is not a products in the entire Mindanao area for a term of five (5)
matter of statutory or technical law. It springs from the fact that directors have years and proving (sic) among others that:
the control and guidance of corporate affairs and property and hence of the
property interests of the stockholders." In the case of Gokongwei v. Securities "a. The corporation shall, commencing
and Exchange Commission, this Court quoted with favor from Pepper v. September, 1970, sell to and supply the plaintiff, as
Litton, (89 scra 336) thus: ". . . He cannot by the intervention of a corporate dealer with 20,000 bags (94 lbs/bag) of white
entity violate the ancient precept against serving two masters . . . He cannot cement per month;
utilize his inside information and his strategic position for his own preferment. "b. The plaintiff shall pay the defendant
He cannot violate rules of fair play by doing indirectly through the corporation corporation P9.70, Philippine Currency, per bag of
what he could not do directly. He cannot use his power for his personal white cement, FOB Davao and Cagayan de Oro
advantage and to the detriment of the stockholders and creditors no matter ports;
how absolute in terms that power may be and no matter how meticulous he is
to satisfy technical requirements. For that power is at all times subject to the "c. The plaintiff shall every time the
equitable limitation that it may not be exercised for the aggrandizement, defendant corporation is ready to deliver the good,
preference, or advantage of the fiduciary to the exclusion or detriment of open with any bank or banking institution a
the cestuis . . ." confirmed, unconditional, and irrevocable letter of
credit in favor of the corporation and that upon
3. ID.; ID.; DEALINGS OF DIRECTORS, TRUSTEES OR OFFICERS WITH certification by the boat captain on the bill of lading
THE CORPORATION; RULE. — A director's contract with his corporation is that the goods have been loaded on board the
not in all instances void or voidable. If the contract is fair and reasonable under vessel bound for Davao the said bank or banking
the circumstances, it may be ratified by the stockholders provided a full institution shall release the corresponding amount
disclosure of his adverse interest is made as provided in Section 32 of the as payment of the goods so shipped."
Corporation Code.
Right after the plaintiff entered into the aforesaid dealership
agreement, he placed an advertisement in a national,
circulating newspaper the fact of his being the exclusive
DECISION dealer of the defendant corporation's white cement products
in Mindanao area, more particularly, in the Manila Chronicle
dated August 16, 1969 (Exhibits R and R-1) and was even
congratulated by his business associates, so much so, he
CAMPOS, JR., J p: was asked by some of his businessmen friends and close
associates if they can be his sub-dealer in the Mindanao
Before Us is a Petition for Review on Certiorari filed by petitioner Prime White area.
Cement Corporation seeking the reversal of the decision * of the then
Intermediate Appellate Court, the dispositive portion of which reads as follows: Relying heavily on the dealership agreement, plaintiff
sometime in the months of September, October, and
"WHEREFORE, in view of the foregoing, the judgment December, 1969, entered into a written agreement with
appealed from is hereby affirmed in toto." 1 several hardware stores dealing in buying and selling white
The facts, as found by the trial court and as adopted by the respondent Court cement in the Cities of Davao and Cagayan de Oro which
are hereby quoted, to wit: would thus enable him to sell his allocation of 20,000 bags
regular supply of the said commodity, by September, 1970
"On or about the 16th day of July, 1969, plaintiff and (Exhibits O, 0-1, 0-2, P, P-1, P-2, Q, Q-1 and Q-2). After the
defendant corporation thru its President, Mr. Zosimo Falcon plaintiff was assured by his supposed buyer that his
and Justo C. Trazo, as Chairman of the Board, entered into allocation of 20,000 bags of white cement can be disposed
a dealership agreement (Exhibit A) whereby said plaintiff of, he informed the defendant corporation in his letter dated
was obligated to act as the exclusive dealer and/or August 18, 1970 that he is making the necessary
distributor of the said defendant corporation of its cement preparation for the opening of the requisite letter of credit to
cover the price of the due initial delivery for the month of thereof, entered into an exclusive dealership agreement
September, 1970 (Exhibit B), looking forward to the with a certain Napoleon Co for the marketing of white
defendant corporation's duty to comply with the dealership cement in Mindanao (Exhibit T) hence, this suit." (Plaintiff's
agreement. In reply to the aforesaid letter of the plaintiff, the Record on Appeal, pp. 86-90)." 2
defendant corporation thru its corporate secretary, replied
that the board of directors of the said defendant decided to After trial, the trial court adjudged the corporation liable to Alejandro Te in the
impose the following conditions: amount of P3,302,400.00 as actual damages, P100,000.00 as moral
damages, and P10,000 00 as and for attorney's fees and costs. The appellate
"a. Delivery of white cement shall court affirmed the said decision mainly on the following basis, and We quote:
commence at the end of November, 1970;
"There is no dispute that when Zosimo R. Falcon and Justo
"b. Only 8,000 bags of white cement per B. Trazo signed the dealership agreement Exhibit "A", they
month for only a period of three (3) months will be were the President and Chairman of the Board,
delivered; respectively, of defendant-appellant corporation. Neither is
the genuineness of the said agreement contested. As a
"c. The price of white cement was priced at matter of fact, it appears on the face of the contract itself
P13.30 per bag; that both officers were duly authorized to enter into the said
"d. The price of white cement is subject to agreement and signed the same for and in behalf of the
readjustment unilaterally on the part of the corporation. When they, therefore, entered into the said
defendant; transaction they created the impression that they were duly
clothed with the authority to do so. It cannot now be said
"e. The place of delivery of white cement that the disputed agreement which possesses all the
shall be Austurias (sic); essential requisites of a valid contract was never intended
to bind the corporation as this avoidance is barred by the
"f. The letter of credit may be opened only principle of estoppel." 3
with the Prudential Bank, Makati Branch;
In this petition for review, petitioner Prime White Cement Corporation made
"g. Payment of white cement shall be made the following assignment of errors: 4
in advance and which payment shall be used by the
defendant as guaranty in the opening of a foreign I
letter of credit to cover costs and expenses in the
procurement of materials in the manufacture of "THE DECISION AND RESOLUTION OF THE
white cement. (Exhibit C)." INTERMEDIATE APPELLATE COURT ARE
UNPRECEDENTED DEPARTURES FROM THE
xxx xxx xxx CODIFIED PRINCIPLE THAT CORPORATE OFFICERS
COULD ENTER INTO CONTRACTS IN BEHALF OF THE
Several demands to comply with the dealership agreement CORPORATION ONLY WITH PRIOR APPROVAL OF THE
(Exhibits D, E, G, I, R, L, and N) were made by the plaintiff BOARD OF DIRECTORS.
to the defendant, however, defendant refused to comply
with the same, and plaintiff by force of circumstances was
constrained to cancel his agreement for the supply of white
cement with third parties, which were concluded in II
anticipation of, and pursuant to the said dealership THE DECISION AND RESOLUTION OF THE
agreement. INTERMEDIATE APPELLATE COURT ARE CONTRARY
Notwithstanding that the dealership agreement between the TO THE ESTABLISHED JURISPRUDENCE, PRINCIPLE
plaintiff and defendant was in force and subsisting, the AND RULE ON FIDUCIARY DUTY OF DIRECTORS AND
defendant corporation, in violation of, and with evident OFFICERS OF THE CORPORATION.
intention not to be bound by the terms and conditions III
 THE DECISION AND RESOLUTION OF THE corporation as well. He was what is often referred to as a "self-dealing"
INTERMEDIATE APPELLATE COURT DISREGARDED director.
THE PRINCIPLE AND JURISPRUDENCE, PRINCIPLE
AND RULE ON UNENFORCEABLE CONTRACTS AS A director of a corporation holds a position of trust and as such, he owes a
PROVIDED IN ARTICLE 1317 OF THE NEW CIVIL CODE. duty of loyalty to his corporation. 9 In case his interests conflict with those of
the corporation, he cannot sacrifice the latter to his own advantage and benefit.
IV As corporate managers, directors are committed to seek the maximum amount
of profits for the corporation. This trust relationship "is not a matter of statutory
THE DECISION AND RESOLUTION OF THE or technical law. It springs from the fact that directors have the control and
INTERMEDIATE APPELLATE COURT DISREGARDED guidance of corporate affairs and property and hence of the property interests
THE PRINCIPLE AND JURISPRUDENCE AS TO WHEN of the stockholders." 10 In the case of Gokongwei v. Securities and Exchange
AWARD OF ACTUAL AND MORAL DAMAGES IS Commission, this Court quoted with favor from Pepper v. Litton, 11 thus:
PROPER.
". . . He cannot by the intervention of a corporate entity
V violate the ancient precept against serving two masters . . .
IN NOT AWARDING PETITIONER'S CAUSE OF ACTION He cannot utilize his inside information and his strategic
AS STATED IN ITS ANSWER WITH SPECIAL AND position for his own preferment. He cannot violate rules of
AFFIRMATIVE DEFENSES WITH COUNTERCLAIM THE fair play by doing indirectly through the corporation what he
INTERMEDIATE APPELLATE COURT HAS CLEARLY could not do directly. He cannot use his power for his
DEPARTED FROM THE ACCEPTED USUAL COURSE OF personal advantage and to the detriment of the stockholders
JUDICIAL PROCEEDINGS." and creditors no matter how absolute in terms that power
may be and no matter how meticulous he is to satisfy
There is only one legal issue to be resolved by this Court: whether or not the technical requirements. For that power is at all times subject
"dealership agreement" referred by the President and Chairman of the Board to the equitable limitation that it may not be exercised for the
of petitioner corporation is a valid and enforceable contract. We do not agree aggrandizement, preference, or advantage of the fiduciary
with the conclusion of the respondent Court that it is. to the exclusion or detriment of the cestuis . . ."
Under the Corporation Law, which was then in force at the time this case On the other hand, a director's contract with his corporation is not in all
arose, 5 as well as under the present Corporation Code,all corporate powers instances void or voidable. If the contract is fair and reasonable under the
shall be exercised by the Board of Directors, except as otherwise provided by circumstances, it may be ratified by the stockholders provided a full disclosure
law. 6 Although it cannot completely abdicate its power and responsibility to of his adverse interest is made. Section 32 of the Corporation Code provides,
act for the juridical entity, the Board may expressly delegate specific powers thus:
to its President or any of its officers. In the absence of such express delegation,
a contract entered into by its President, on behalf of the corporation, may still "SEC. 32. Dealings of directors, trustees or officers with the
bind the corporation if the board should ratify the same expressly or impliedly. corporation. — A contract of the corporation with one or
Implied ratification may take various forms — like silence or acquiescence; by more of its directors or trustees or officers is voidable, at the
acts showing approval or adoption of the contract; or by acceptance and option of such corporation, unless all the following
retention of benefits flowing therefrom. 7 Furthermore, even in the absence of conditions are present:
express or implied authority by ratification, the President as such may, as a 1. That the presence of such director or trustee in the board
general rule, bind the corporation by a contract in the ordinary course of meeting in which the contract was approved was not
business, provided the same is reasonable under the circumstances. 8 These necessary to constitute a quorum for such meeting;
rules are basic, but are all generaland thus quite flexible. They apply where
the President or other officer, purportedly acting for the corporations, is dealing 2. That the vote of such director or trustee was not
with a third person, i.e., a person outsidethe corporation. Cdpr necessary for the approval of the contract;
The situation is quite different where a director or officer is dealing with his own 3. That the contract is fair and reasonable under the
corporation. In the instant case respondent Te was not an ordinary circumstances; and
stockholder; he was a member of the Board of Directors and Auditor of the
 4. That in the case of an officer, the contract with the officer "The price of white cement shall be mutually determined by
has been previously authorized by the Board of Directors. us but in no case shall the same be less than P14.00 per
bag (94 lbs)."
Where any of the first two conditions set forth in the
preceding paragraph is absent, in the case of a contract with The contract with Henry Wee was on September 15, 1969, and that with
a director or trustee, such contract may be ratified by the Gaudencio Galang, on October 13, 1967. A similar contract with
vote of the stockholders representing at least two-thirds Prudencio Lim was made on December 29, 1969. 15 All of these
(2/3) of the outstanding capital stock or of two-thirds (2/3) of contracts were entered into soon after his "dealership agreement" with
the members in a meeting called for the purpose: Provided, petitioner corporation, and in each one of them he protected himself from
That full disclosure of the adverse interest of the directors any increase in the market price of white cement. Yet, except for the
or trustees involved is made at such meeting: Provided, contract with Henry Wee, the contracts were for only two years from
however, That the contract is fair and reasonable under the October, 1970. Why did he not protect the corporation in the same
circumstances." manner when he entered into the "dealership agreement"? For that
matter, why did the President and the Chairman of the Board not do so
Although the old Corporation Law which governs the instant case did not either? As director, specially since he was the other party in interest,
contain a similar provision, yet the cited provision substantially incorporates respondent Te's bounden duty was to act in such manner as not to
well-settled principles in corporate law. 12 unduly prejudice the corporation. In the light of the circumstances of this
Granting arguendo that the "dealership agreement" involved here would be case, it is to Us quite clear that he was guilty of disloyalty to the
valid and enforceable if entered into with a person other than a director or corporation; he was attempting in effect, to enrich himself at the expense
officer of the corporation, the fact that the other party to the contract was a of the corporation. There is no showing that the stockholders ratified the
Director and Auditor of the petitioner corporation changes the whole situation. "dealership agreement" or that they were fully aware of its provisions.
First of all, We believe that the contract was neither fair nor reasonable. The The contract was therefore not valid and this Court cannot allow him to
"dealership agreement" entered into in July, 1969, was to sell and supply to reap the fruits of his disloyalty.
respondent Te 20,000 bags of white cement per month, for five years starting As a result of this action which has been proven to be without legal basis,
September, 1970, at the fixed price of P9.70 per bag. Respondent Te is a petitioner corporation's reputation and goodwill have been prejudiced.
businessman himself and must have known, or at least must be presumed to However, there can be no award for moral damages under Article 2217 and
know, that at that time, prices of commodities in general, and white cement in succeeding articles on Section 1 of Chapter 3 of Title XVIII of the Civil Code in
particular, were not stable and were expected to rise. At the time of the favor of a corporation.
contract, petitioner corporation had not even commenced the manufacture of
white cement, the reason why delivery was not to begin until 14 months later. In view of the foregoing, the Decision and Resolution of the Intermediate
He must have known that within that period of six years, there would be a Appellate Court dated March 30, 1984 and August 6, 1984, respectively, are
considerable rise in the price of white cement. In fact, respondent Te's own hereby SET ASIDE. Private respondent Alejandro Te is hereby ordered to pay
Memorandum shows that in September, 1970, the price per bag was P14.50, petitioner corporation the sum of P20,000.00 for attorney's fees, plus the cost
and by the middle of 1975, it was already P37.50 per bag. Despite this, no of suit and expenses of litigation.
provision was made in the "dealership agreement" to allow for an increase in
price mutually acceptable to the parties. Instead, the price was pegged at
P9.70 per bag for the whole five years of the contract. Fairness on his part as SO ORDERED.
a director of the corporation from whom he was to buy the cement, would
require such a provision. In fact, this unfairness in the contract is also a basis Narvasa, C . J ., Padilla, Regalado and Nocon, JJ., concur.
which renders a contract entered into by the President, without authority from ||| (Prime White Cement Corp. v. Intermediate Appellate Court, G.R. No.
the Board of Directors, void or voidable, although it may have been in the
68555, [March 19, 1993])
ordinary course of business. We believe that the fixed price of P9.70 per bag
for a period of five years was not fair and reasonable. Respondent Te, himself,
when he subsequently entered into contracts to resell the cement to his "new
dealers" Henry Wee13 and Gaudencio Galang 14 stipulated as follows: