A. Pamplona Plantation, Co. vs. Acosta G.R No.

153193, December 6, 2006

Facts:

This stems from a case before the Labor Arbiter for underpayment, overtime pay, premium pay for rest
day and holiday, service incentive leave pay, damages, attorney’s fees, and 13th month pay. The
complainants claimed that they were regular rank and file employees of petitioner Pamplona Plantation
Co., Inc. with different hiring periods, work designations, and salary rates.

Petitioner, however, denied this, alleging that some of the complainants are seasonal employees, some
are contractors, others were hired under the pakyaw system, while the rest were hired by the Pamplona
Plantation Leisure Corporation, which has a separate and distinct entity from it.

The Labor Arbiter (LA) held petitioner and Pamplona Plantation’s manager, Jose Luis Bondoc, liable for
underpayment as complainants were regular employees of petitioner. They were also held guilty of
illegal dismissal with regard to two complainants.

The NLRC reversed the LA’s decision, dismissing all the complaints, finding that the complaint should
have been directed against the Pamplona Plantation Leisure Corporation since complainants’ individual
affidavits contained the allegations that their tasks pertained to their work “in the golf course.”

The Court of Appeals (CA) set aside the NLRC’s dismissal and reinstated the LA’s Decision with
modification.

Issues:

1) Whether or not Pamplona Plantation is liable for the wage differentials of the worker-
respondents who themselves admitted in their affidavits that their employer was another entity –
Pamplona Plantation Leisure Corporation?

2) ) Whether or not Pamplona Plantation’s manager is personally liable for the money claims
awarded to the workers?
Ruling:

Petition PARTIALLY GRANTED.

For the purpose of resolving the workers’ claims, Pamplona Plantation and Pamplona Leisure are hereby
deemed one and the same entity. The CA is MODIFIED in that the manager of Pamplona Plantation is
absolved of any personal liability as regards the money claims awarded to respondents.

In all other respects, the Decision is AFFIRMED.

Petitioner is estopped from denying that respondents worked for it. It never raised this defense in the
proceedings before the Labor Arbiter. Notably, the defense it raised pertained to the nature of
respondents’ employment, i.e., whether they are seasonal employees, contractors, or worked under the
pakyaw system. Thus, in its Position Paper, petitioner alleged that some of the respondents are coconut
filers and copra hookers or sakadors; some are seasonal employees who worked as scoopers or
lugiteros; some are contractors; and some worked under the pakyaw system. In support of these
allegations, petitioner even presented the company’s payroll.

By setting forth these defenses, petitioner, in effect, admitted that respondents worked for it, albeit in
different capacities. Such allegations are negative pregnants – denials pregnant with the admission of
the substantial facts in the pleading responded to which are not squarely denied, and amounts to an
acknowledgement that respondents were indeed employed by petitioner.

Reiterating Pamplona Plantation Company, Inc. v. Tinghil, the Court holds that by piercing the veil of
corporate fiction, the two corporations – the Pamplona Plantation Corporation, Inc. and the Pamplona
Plantation Leisure Corporation – are one and the same. An examination of the facts reveals that, for
both the coconut plantation and the golf course, there is only one management which the laborers deal
with regarding their work. A portion of the plantation (also called Hacienda Pamplona) had actually been
converted into a golf course and other recreational facilities. The weekly payrolls issued by petitioner-
company bore the name “Pamplona Plantation Co., Inc.”

It is also a fact that respondents all received their pay from the same person, Bondoc -- the managing
director of the company. True, Pamplona Plantation Co., Inc., and the Pamplona Plantation Leisure
Corporation appear to be separate corporate entities. But it is settled that this fiction of law cannot be
invoked to further an end subversive of justice. The corporations have basically the same incorporators
and directors and are headed by the same official. Both use only one office and one payroll and are
under one management. The attempt to make the two corporations appear as two separate entities,
insofar as the workers are concerned, should be viewed as a devious but obvious means to defeat the
ends of the law. Such a ploy should not be permitted to cloud the truth and perpetrate an injustice. Also,
just because they worked at the golf course did not necessarily mean that they were not employed to do
other tasks, especially since the golf course was merely a portion of the coconut plantation. Thus,
petitioner cannot now deny that respondents are its employees.

As to the issue on the dismissal of one particular worker, Joselito Tinghil, it is well-settled that the
employer has the burden of proving that the dismissal was for a valid and just cause. Failure to discharge
this burden of proof substantially means that the dismissal was not justified and therefore, illegal. Given
petitioner’s failure to discharge this burden, the Court sustains the finding of illegal dismissal vis-à-vis
respondent Joselito Tinghil.

Lastly, petitioner believes that its manager, Jose Luis Bondoc, should not have been held solidarily liable
with the company for the wage differentials awarded to respondents. Petitioner argues that Bondoc is
merely an employee of the company and not a corporate director or officer who can be held personally
liable therefor.

The rule is that officers of a corporation are not personally liable for their official acts unless it is shown
that they have exceeded their authority. However, the legal fiction that a corporation has a personality
separate and distinct from stockholders and members may be disregarded if it is used as a means to
perpetuate fraud or an illegal act or as a vehicle for the evasion of an existing obligation, the
circumvention of statutes, or to confuse legitimate issues. Moreover, assuming Bondoc is a corporate
officer, a corporate officer is not personally liable for the money claims of discharged corporate
employees unless he acted with evident malice and bad faith in terminating their employment.

B. PNB vs. CA, GR No. L-27155, May 18, 1978

Facts:

Plaintiff, Philam gen as surety, issued a bond in favor of Tapnio, to secure the latter’s obligation to PNB
2371.79 plus 12% interest. Philamgen paid the said amount to PNB and seek indemnity from Tapnio.
Tapnio refused to pay alleging that he was notliable to the bank because due to the negligence of the
latter the contract of lease w/Tuazon was rescind which amounts to 2800.Tapnio mortgage his standing
crops and sugar quota to PNB. Tapnio agreed to leased thesugar quota, in excess of his need to Tuazon
which was approved by the branch and vice president of the PNB in the amount of P2.80 per picul.
However, the bank’s board of directors disapproved the lease, stating that the amount should be P3.00
per picul, its market value. Tuazon ask for reconsideration to the board which was not acted by the
board, so the lease was not consummated resulting to the loss of P2,800, which could have been earned
by Tapnio.

The Trial court and CA ruled that the bank was liable to Tapnio. Thus this petition

Issue :
WON PNB is liable to tapnio.

Ruling:

Yes PNB is liable to Tapnio. PNB argue that it has a right both under its own Charter and under the
Corporation Law, to approve or disapprove the said lease of sugar quotaand in the exercise of that
authority. The SC said that time is of the essence in the approval of the lease of sugar quota allotments,
since the same must be utilized during the milling season. There was no proof that there was any other
person at that time willing to lease the sugar quota allotment of private respondents for a price higher
than P2.80 per picul. Also, Considering that all the accounts of Rita Gueco Tapnio with the Bank were
secured by chattel mortgage on standing crops, assignment of leasehold rights and interests on her
properties, and surety bonds and that she had apparently "the means to pay her obligation to the Bank,
there was NO REASONABLE BASIS for the Board of Directors of petitioner to have rejected the lease
agreement. While petitioner had the ultimate authority of approving or disapproving the proposed lease
since the quota was mortgaged to the Bank, the latter certainly cannot escape its responsibility of
observing, for the protection of the interest of private respondents.

The law makes it imperative that every person "must in the exercise of his rights and in the performance
of his duties, act with justice, give everyone his due, and observe honesty and good faith. Certainly, it
knew that the agricultural year was about to expire, that by its disapproval of the lease private
respondents would be unable to utilize the sugar quota in question. Under Article 21 of the New Civil
Code, "any person who willfully causes loss or injury to another in a manner that is contrary to morals,
good customs or public policy shall compensate the latter for the damage." This grants adequate legal
remedy for the untold number of moral wrongs which is impossible for human foresight to specifically
provide in the statutes.

C. ABS-CBN vs. CA, GR No. 128690, Jan. 21, 1999

Facts:

1) In 1990, ABSCBN and Viva executed a Film Exhibition Agreement whereby Viva gave ABSCBN an
exclusive right to exhibit some Viva films.

2) One of the provisions of the agreement states that ABSCBN shall have the right of first refusal to
the next twenty-four Viva films for TV telecast provided, however, that such right shall be exercised by
ABSCBN from the actual offer in writing.

3) Viva, through defendant Del Rosario, offered ABSCBN, through its vice-president Charo Santos
Concio, a list of 3 film packages (36 title) from which ABSCBN may exercise its right of first refusal under
the aforesaid agreement.

4) ABSCBN, however through Mrs. Concio, "can tick off only ten (10) titles" (from the list) "we can
purchase" and therefore did not accept said list.
5) On February 27, 1992, defendant Del Rosario approached ABSCBN's Ms. Concio, with a list
consisting of 52 original movie titles (i.e. not yet aired on television) including the 14 titles subject of the
present case, as well as 104 reruns (previously aired on television) from which ABSCBN may choose
another 52 titles.

6) On April 2, 1992, defendant Del Rosario and ABSCBN general manager, Eugenio Lopez III, met at
the Tamarind Grill Restaurant in Quezon City to discuss the package proposal of Viva.

7) What transpired in that lunch meeting is the subject of conflicting versions.

8) Mr. Lopez testified that he and Mr. Del Rosario allegedly agreed that ABSCRN was granted
exclusive film rights to 14 films for a total consideration of P36 million; that he allegedly put this
agreement as to the price and number of films in a "napkin'' and signed it and gave it to Mr. Del Rosario.

9) On the other hand, Del Rosario denied having made any agreement with Lopez regarding the 14
Viva films; Denied the existence of a napkin in which Lopez wrote something; and insisted that what he
and Lopez discussed at the lunch meeting was Viva's film package offer of 104 films for a total price of
P60 million. Mr. Lopez promising to make a counter proposal which came in the form of a proposal
contract.

10) On April 06, 1992, Del Rosario and Mr. Graciano Gozon of RBS Senior vice-president for Finance
discussed the terms and conditions of Viva's offer to sell the 104 films, after the rejection of the same
package by ABSCBN.

11) On April 07, 1992, defendant Del Rosario received through his secretary, a handwritten note
from Ms. Concio – a draft of the counter proposal.

12) The said counter proposal was however rejected by Viva's Board of Directors in the evening of
the same day.

13) On April 29, 1992, after the rejection of ABSCBN and following several negotiations and
meetings defendant Del Rosario and Viva's President Teresita Cruz, in consideration of P60 million,
signed a letter of agreement dated April 24, 1992. granting RBS the exclusive right to air 104 Viv
produced and/or acquired films including the 14 films subject of the present case.

14) RTC rendered a decision favoring respondents.

15) According to the RTC, there was no meeting of minds on the price and terms of the offer.

16) The alleged agreement between Lopez III and Del Rosario was subject to the approval of the
VIVA Board of Directors, and said agreement was disapproved during the meeting of the.

17) Hence, there was no basis for ABSCBN's demand that VIVA signed the 1992 Film Exhibition
Agreement.

18) Furthermore, the right of first refusal under the 1990 Film Exhibition Agreement had previously
been exercised per Ms. Concio's letter to Del Rosario ticking off ten titles acceptable to them, which
would have made the 1992 agreement an entirely new contract.
Issue:

Whether or not there is a perfected contract between ABSCBN and VIVA films.

Ruling:

A contract is a meeting of minds between two persons whereby one binds himself to give
something or to render some service to another for a consideration. There is no contract unless the
following requisites concur: (1) consent of the contracting parties; (2) object certain which is the subject
of the contract; and (3) cause of the obligation, which is established.

Once there is concurrence between the offer and the acceptance upon the subject matter,
consideration, and terms of payment a contract is produced. The offer must be certain. To convert the
offer into a contract, the acceptance must be absolute and must not qualify the terms of the offer; it
must be plain, unequivocal, unconditional, and without variance of any sort from the proposal. A
qualified acceptance, or one that involves a new proposal, constitutes a counteroffer and is a rejection
of the original offer.

ABSCBN, sent, through Ms. Concio, a counterproposal in the form of a draft contract proposing
exhibition of 53 films for a consideration of P35 million. This counterproposal could be nothing less than
the counteroffer of Mr. Lopez during his conference with Del Rosario at Tamarind Grill Restaurant.
Clearly, there was no acceptance of VIVA's offer, for it was met by a counteroffer which substantially
varied the terms of the offer.

In the case at bar, ABSCBN made no unqualified acceptance of VIVA's offer. Hence, they
underwent a period of bargaining. ABSCBN then formalized its counterproposals or counteroffer in a
draft contract, VIVA through its Board of Directors, rejected such counteroffer, Even if it be conceded
arguendo that Del Rosario had accepted the counteroffer, the acceptance did not bind VIVA, as there
was no proof whatsoever that Del Rosario had the specific authority to do so.

Under Corporation Code, unless otherwise provided by said Code, corporate powers, such as the power;
to enter into contracts; are exercised by the Board of Directors. However, the Board may delegate such
powers to either an executive committee or officials or contracted managers. The delegation, except for
the executive committee, must be for specific purposes.

Del Rosario did not have the authority to accept ABSCBN's counteroffer was best evidenced by his
submission of the draft contract to VIVA's Board of Directors for the latter's approval. In any event, there
was between Del Rosario and Lopez III no meeting of minds.

GUIDE QUESTIONS (Law on Private Corporations)

A. What is a Corporation?
- A corporation is an organization—usually a group of people or a company—authorized by the
state to act as a single entity and recognized as such in law for certain purposes. Early incorporated
entities were established by charter. Most jurisdictions now allow the creation of new corporations
through registration.

B. What are the attributes of a Corporation?

1) It is an artificial being;

2) It is created by operation of law;

3) It has the right of succession; and4)It has only the power, attributes, and the properties
expressly authorized by law or incident to its existence.

C. What are the classifications of corporations under the Corporation Code?

Answer: Stock and Non Stock Corporation

D. What is a Stock Corporation?

- A stock corporation is a type of for-profit company. Each of its shareholders receives part
ownership of the corporation through their shares of stock.

E. What is a Non-Stock Corporation?

- A Non-Stock Corporation is basically a corporation that does not issue shares of stock. It can be
formed as either a for-profit or non-profit corporation. Since the Non-Stock Corporation has no
shareholders, it is owned by its members – meaning a member-owned corporation that does not issue
shares of stock. The qualifications for membership and members are defined in the corporation by-laws.
There can be different classes of members such as voting and non-voting members.

F. Enumerate the salient provision of RA 11232 also known as the Revised Corporation Code of the
Philippines.

Some of the salient amendments to the Corporation Code include:

1) Incorporators (Sec. 10) – The RCC removed the absolute requirement of having a minimum of
five (5) individuals in the formation of corporations.
2) One-Person Corporation (Sections 115, 116, 130, 131) – The law now allows the establishment
of a One-Person Corporation (OPC) composed of a single shareholder, who may be a natural person, a
trust or an estate. A shareholder may acquire all the stocks of an ordinary stock corporation and apply
for the conversion thereof into an OPC. In terms of liability, the single shareholder claiming limited
liability has the burden of affirmatively showing that the corporation was adequately financed.

3) Corporate Term (Sec. 11) – The corporate term limit of fifty (50) years has been removed such
that a corporation can now enjoy perpetual existence unless expressly limited by its articles of
incorporation. Such perpetual corporate term shall also apply to corporations incorporated prior to the
RCC, unless said corporations elect to retain a specific corporate term.

4) Revival of Corporate Existence (Sec. 11) – The new law also states that a corporation whose
term has expired can apply with the Securities and Exchange Commission (SEC) for the revival of its
corporate existence, with all the rights and privileges under its certificate of incorporation and subject to
all of its duties, debts and liabilities existing prior to its revival. Upon the SEC’s approval, the corporation
shall be deemed revived and a certificate of revival of corporate existence shall be issued giving it
perpetual existence, unless its application for revival provides otherwise.

5) Filing of Electronic Documents with the SEC (Sec. 13) – The Articles of Incorporation and
applications for amendments thereto may be filed with the SEC in the form of electronic documents, in
accordance with the rules on electronic filing that the SEC will promulgate.

6) Capital Stock (Sec. 12) – Stock corporations are no longer required to have a minimum capital
stock, unless specifically provided by special law. Moreover, the RCC removed the requirement that 25%
of the authorized capital stock be subscribed and that 25% of the subscribed capital stock be paid for
purposes of incorporation as previously mandated under Section 13 of the Corporation Code, which was
deleted in its entirely.

7) Non-Use of Corporate Charter and Continuous In operation (Sec. 21) – The RCC extended the
allowable period for non-use of corporate charter from two (2) years to five (5) years from the date of
incorporation. The certificate of incorporation shall be deemed revoked as of the day following the end
of the 5-year period. Meanwhile, a corporation which has commenced its business but subsequently
becomes inoperative for a period of at least five (5) years may be deemed a delinquent corporation and
shall have a period of two (2) years to resume operations. Failure to resume operations within the
period given by the SEC shall cause the revocation of its certificate of incorporation.

8) Election of Directors or Trustees (Sec. 23) – The new law allows stockholders or members, when
authorized by the by-laws or by a majority of the board of directors, to vote through remote
communication methods or in absentia. A stockholder or member who participates through remote
communication or in absentia will still be considered present for purposes of determining the existence
of a quorum.

9) Corporate Officers (Sec. 24) – The RCC mandates a corporation vested with public interest to
appoint a Compliance Officer, in addition to the mandatory positions of President, Treasurer and
Corporate Secretary. The law now also expressly requires that the Treasurer should be a resident of the
Philippines.
10) Removal of Directors or Trustees (Sec. 27) – The RCC empowers the SEC, unilaterally or upon a
verified complaint, and after due notice and hearing, to remove members of the Board of Directors or
Trustees who are determined to be disqualified to be elected to or to hold such position.

11) Corporate Powers (Sec. 35) – The RCC removes the prohibition on domestic corporations to
donate to a political party or candidate or for purposes of partisan political activity.

12) Meetings of Stockholders; Notices; Manner of Voting Thereat (Sec. 49 and 57) – The RCC now
provides that if the date of the regular meeting of the stockholders or members is not fixed in the By-
Laws, the same shall be held on any date after April 15 of every year as determined by the Board of
Directors or Trustees. Written notices of regular meetings may now be sent to stockholders and
members through electronic mail and such other means as may be allowed by the SEC. The right of
stockholders or members to vote may now also be exercised through remote communication or in
absentia, under rules and regulations to be issued by the SEC governing participation and voting through
remote communication or in absentia, taking into account the company’s scale, number of shareholders
or members, structure, and other factors consistent with the protection and promotion of shareholders’
or members’ meetings.

13) Remedy if a Corporation Refuses a Demand for Inspection (Sec. 73) – If the corporation denies
or does not act on a demand for inspection and/or reproduction of corporate records, the aggrieved
stockholder or member may report such denial or inaction to the SEC, which shall, within five (5) days
from receipt of such report, conduct a summary investigation and issue an order directing the inspection
or reproduction of there quested records.

14) Financial Statements (Sec. 74) – The new law provides that if the paid-up capital of the
corporation is less than Six Hundred Thousand Pesos (P600,000.00) or such other amount as may be
determined appropriate by the Department of Finance, the financial statements may be certified under
oath by the President and the Treasurer, and need not be certified by an independent certified public
accountant.

15) Requirement for Branch Offices of Foreign Corporations to Deposit Securities (Sec. 143) – The
new law provides that within sixty (60) days from issuance by the SEC of a license to transact business to
a branch office of a foreign corporation, said branch must deposit acceptable securities to the SEC with
an actual market value of at least Five Hundred Thousand Pesos (P500,000.00) for the benefit of present
and future creditors of the licensee. In addition, within six (6) months after the fiscal year of the
licensee, the SEC may require the licensee to deposit additional securities or financial instruments
equivalent in market value to two percent (2%) of the amount by which the licensee’s gross income
exceeds Ten Million Pesos (P10,000,000.00).

16) Jurisdiction Over Party-List Organizations (Sec. 182) – The RCC provides for the transfer of
jurisdiction over party-list organizations from the SEC to the Commission on Elections (COMELEC),
subject to the implementing rules to be jointly promulgated by the SEC and the COMELEC.

17) Violations and Penalties – The RCC now enumerates various specific offenses and their
corresponding penalties, with special emphasis on fraud and graft and corrupt practices
a. Unauthorized Use of Corporate Name (Sec. 159);

b. Violation of Disqualification Provision (Sec. 160);

c. Violation of Duty to Maintain Records, to Allow Inspection or Reproduction (Sec. 161);

d. Willful Certification of Incomplete, Inaccurate, False or Misleading Statements or Reports (Sec.

162);

e. Independent Auditor Collusion (Sec. 163);

f. Obtaining Corporate Registration Through Fraud (Sec. 164);

g. Fraudulent Conduct of Business (Sec. 165);

h. Acting as Intermediaries for Graft and Corrupt Practices (Sec. 166);

i. Engaging Intermediaries for Graft and Corrupt Practices (Sec. 167);

j. Tolerating Graft and Corrupt Practices (Sec. 168);

k. Retaliation Against Whistleblowers (Sec. 169); and

l. Other Violations of the Code (Sec. 170).

18) Arbitration Agreement (Sec. 181) – The law now allows an arbitration agreement to be included
in the Articles of Incorporation or By-Laws of a corporation