This action might not be possible to undo. Are you sure you want to continue?
L-27155 May 18, 1978 PHILIPPINE NATIONAL BANK, petitioner, vs. THE COURT OF APPEALS, RITA GUECO TAPNIO, CECILIO GUECO and THE PHILIPPINE AMERICAN GENERAL INSURANCE COMPANY, INC., respondents. Medina, Locsin, Coruña, & Sumbillo for petitioner. Manuel Lim & Associates for private respondents. ANTONIO, J.: Certiorari to review the decision of the Court of Appeals which affirmed the judgment of the Court of First Instance of Manila in Civil Case No. 34185, ordering petitioner, as third-party defendant, to pay respondent Rita Gueco Tapnio, as third-party plaintiff, the sum of P2,379.71, plus 12% interest per annum from September 19, 1957 until the same is fully paid, P200.00 attorney's fees and costs, the same amounts which Rita Gueco Tapnio was ordered to pay the Philippine American General Insurance Co., Inc., to be paid directly to the Philippine American General Insurance Co., Inc. in full satisfaction of the judgment rendered against Rita Gueco Tapnio in favor of the former; plus P500.00 attorney's fees for Rita Gueco Tapnio and costs. The basic action is the complaint filed by Philamgen (Philippine American General Insurance Co., Inc.) as surety against Rita Gueco Tapnio and Cecilio Gueco, for the recovery of the sum of P2,379.71 paid by Philamgen to the Philippine National Bank on behalf of respondents Tapnio and Gueco, pursuant to an indemnity agreement. Petitioner Bank was made thirdparty defendant by Tapnio and Gueco on the theory that their failure to pay the debt was due to the fault or negligence of petitioner. The facts as found by the respondent Court of Appeals, in affirming the decision of the Court of First Instance of Manila, are quoted hereunder: Plaintiff executed its Bond, Exh. A, with defendant Rita Gueco Tapnio as principal, in favor of the Philippine National Bank Branch at San Fernando, Pampanga, to guarantee the payment of defendant Rita Gueco Tapnio's account with said Bank. In turn, to guarantee the payment of whatever amount the bonding company would pay to the Philippine National Bank, both defendants executed the indemnity agreement, Exh. B. Under the terms and conditions of this indemnity agreement, whatever amount the plaintiff would pay would earn interest at the rate of 12% per annum, plus attorney's fees in the amount of 15 % of the whole amount due in case of court litigation. The original amount of the bond was for P4,000.00; but the amount was later reduced to P2,000.00. It is not disputed that defendant Rita Gueco Tapnio was indebted to the bank in the sum of P2,000.00, plus accumulated interests unpaid, which she failed to pay despite demands. The Bank wrote a letter of demand to plaintiff, as per Exh. C; whereupon, plaintiff paid the bank on September 18, 1957, the full amount due and owing in the sum of P2,379.91, for and on account of defendant Rita Gueco's obligation (Exhs. D and D-1). Plaintiff, in turn, made several demands, both verbal and written, upon defendants (Exhs. E and F), but to no avail. Defendant Rita Gueco Tapnio admitted all the foregoing facts. She claims, however, when demand was made upon her by plaintiff for her to pay her debt to the Bank, that she told the Plaintiff that she did not consider herself to be indebted to the Bank at all because she had an agreement with one JacoboNazon whereby she had leased to the latter her unused export sugar quota for the 1956-1957 agricultural year, consisting of 1,000 piculs at the rate of P2.80 per picul, or for a total of P2,800.00, which was already in excess of her obligation guaranteed by plaintiff's bond, Exh. A. This lease agreement, according to her, was with the knowledge of the bank. But the Bank has placed obstacles to the consummation of the lease, and the delay caused by said obstacles forced 'Nazon to rescind the lease contract. Thus, Rita Gueco Tapnio filed her third-party complaint against the Bank to recover from the latter any and all sums of money which may be adjudged against her and in favor of the plaitiff plus moral damages, attorney's fees and costs. Insofar as the contentions of the parties herein are concerned, we quote with approval the following findings of the lower court based on the evidence presented at the trial of the case: It has been established during the trial that Mrs. Tapnio had an export sugar quota of 1,000 piculs for the agricultural year 1956-1957 which she did not need. She agreed to allow Mr. Jacobo C. Tuazon to use said quota for the consideration of P2,500.00 (Exh. "4"-Gueco). This agreement was called a contract of lease of sugar allotment. At the time of the agreement, Mrs. Tapnio was indebted to the Philippine National Bank at San Fernando, Pampanga. Her indebtedness was known as a crop loan and was secured by a mortgage on her standing crop including her sugar quota allocation for the agricultural
year corresponding to said standing crop. This arrangement was necessary in order that when Mrs. Tapnio harvests, the P.N.B., having a lien on the crop, may effectively enforce collection against her. Her sugar cannot be exported without sugar quota allotment Sometimes, however, a planter harvest less sugar than her quota, so her excess quota is utilized by another who pays her for its use. This is the arrangement entered into between Mrs. Tapnio and Mr. Tuazon regarding the former's excess quota for 1956-1957 (Exh. "4"-Gueco). Since the quota was mortgaged to the P.N.B., the contract of lease had to be approved by said Bank, The same was submitted to the branch manager at San Fernando, Pampanga. The latter required the parties to raise the consideration of P2.80 per picul or a total of P2,800.00 (Exh. "2-Gueco") informing them that "the minimum lease rental acceptable to the Bank, is P2.80 per picul." In a letter addressed to the branch manager on August 10, 1956, Mr. Tuazon informed the manager that he was agreeable to raising the consideration to P2.80 per picul. He further informed the manager that he was ready to pay said amount as the funds were in his folder which was kept in the bank. Explaining the meaning of Tuazon's statement as to the funds, it was stated by him that he had an approved loan from the bank but he had not yet utilized it as he was intending to use it to pay for the quota. Hence, when he said the amount needed to pay Mrs. Tapnio was in his folder which was in the bank, he meant and the manager understood and knew he had an approved loan available to be used in payment of the quota. In said Exh. "6-Gueco", Tuazon also informed the manager that he would want for a notice from the manager as to the time when the bank needed the money so that Tuazon could sign the corresponding promissory note. Further Consideration of the evidence discloses that when the branch manager of the Philippine National Bank at San Fernando recommended the approval of the contract of lease at the price of P2.80 per picul (Exh. 1 1-Bank), whose recommendation was concurred in by the Vice-president of said Bank, J. V. Buenaventura, the board of directors required that the amount be raised to 13.00 per picul. This act of the board of directors was communicated to Tuazon, who in turn asked for a reconsideration thereof. On November 19, 1956, the branch manager submitted Tuazon's request for reconsideration to the board of directors with another recommendation for the approval of the lease at P2.80 per picul, but the board returned the recommendation unacted upon, considering that the current price prevailing at the time was P3.00 per picul (Exh. 9-Bank). The parties were notified of the refusal on the part of the board of directors of the Bank to grant the motion for reconsideration. The matter stood as it was until February 22, 1957, when Tuazon wrote a letter (Exh. 10-Bank informing the Bank that he was no longer interested to continue the deal, referring to the lease of sugar quota allotment in favor of defendant Rita Gueco Tapnio. The result is that the latter lost the sum of P2,800.00 which she should have received from Tuazon and which she could have paid the Bank to cancel off her indebtedness, The court below held, and in this holding we concur that failure of the negotiation for the lease of the sugar quota allocation of Rita Gueco Tapnio to Tuazon was due to the fault of the directors of the Philippine National Bank, The refusal on the part of the bank to approve the lease at the rate of P2.80 per picul which, as stated above, would have enabled Rita Gueco Tapnio to realize the amount of P2,800.00 which was more than sufficient to pay off her indebtedness to the Bank, and its insistence on the rental price of P3.00 per picul thus unnecessarily increasing the value by only a difference of P200.00. inevitably brought about the rescission of the lease contract to the damage and prejudice of Rita Gueco Tapnio in the aforesaid sum of P2,800.00. The unreasonableness of the position adopted by the board of directors of the Philippine National Bank in refusing to approve the lease at the rate of P2.80 per picul and insisting on the rate of P3.00 per picul, if only to increase the retail value by only P200.00 is shown by the fact 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, aside from the fact that from Exh. 8-Bank, it appears that she was offering to execute a real estate mortgage in favor of the Bank to replace the surety bond This statement is further bolstered by the fact that Rita Gueco Tapnio apparently had the means to pay her obligation fact that she has been granted several value of almost P80,000.00 for the agricultural years from 1952 to 56. 1 Its motion for the reconsideration of the decision of the Court of Appeals having been denied, petitioner filed the present petition. The petitioner contends that the Court of Appeals erred: (1) In finding that the rescission of the lease contract of the 1,000 piculs of sugar quota allocation of respondent Rita Gueco Tapnio by Jacobo C. Tuazon was due to the unjustified refusal of petitioner to approve said lease contract, and its unreasonable insistence on the rental price of P3.00 instead of P2.80 per picul; and
(2) In not holding that based on the statistics of sugar price and prices of sugar quota in the possession of the petitioner, the latter's Board of Directors correctly fixed the rental of price per picul of 1,000 piculs of sugar quota leased by respondent Rita Gueco Tapnio to Jacobo C. Tuazon at P3.00 per picul. Petitioner argued that as an assignee of the sugar quota of Tapnio, it has the right, both under its own Charter and under the Corporation Law, to safeguard and protect its rights and interests under the deed of assignment, which include the right to approve or disapprove the said lease of sugar quota and in the exercise of that authority, its Board of Directors necessarily had authority to determine and fix the rental price per picul of the sugar quota subject of the lease between private respondents and Jacobo C. Tuazon. It argued further that both under its Charter and the Corporation Law, petitioner, acting thru its Board of Directors, has the perfect right to adopt a policy with respect to fixing of rental prices of export sugar quota allocations, and in fixing the rentals at P3.00 per picul, it did not act arbitrarily since the said Board was guided by statistics of sugar price and prices of sugar quotas prevailing at the time. Since the fixing of the rental of the sugar quota is a function lodged with petitioner's Board of Directors and is a matter of policy, the respondent Court of Appeals could not substitute its own judgment for that of said Board of Directors, which acted in good faith, making as its basis therefore the prevailing market price as shown by statistics which were then in their possession. Finally, petitioner emphasized that under the appealed judgment, it shall suffer a great injustice because as a creditor, it shall be deprived of a just claim against its debtor (respondent Rita Gueco Tapnio) as it would be required to return to respondent Philamgen the sum of P2,379.71, plus interest, which amount had been previously paid to petitioner by said insurance company in behalf of the principal debtor, herein respondent Rita Gueco Tapnio, and without recourse against respondent Rita Gueco Tapnio. We must advert to the rule that this Court's appellate jurisdiction in proceedings of this nature is limited to reviewing only errors of law, accepting as conclusive the factual fin dings of the Court of Appeals upon its own assessment of the evidence. 2 The contract of lease of sugar quota allotment at P2.50 per picul between Rita Gueco Tapnio and Jacobo C. Tuazon was executed on April 17, 1956. This contract was submitted to the Branch Manager of the Philippine National Bank at San Fernando, Pampanga. This arrangement was necessary because Tapnio's indebtedness to petitioner was secured by a mortgage on her standing crop including her sugar quota allocation for the agricultural year corresponding to said standing crop. The latter required the parties to raise the consideration to P2.80 per picul, the minimum lease rental acceptable to the Bank, or a total of P2,800.00. Tuazon informed the Branch Manager, thru a letter dated August 10, 1956, that he was agreeable to raising the consideration to P2.80 per picul. He further informed the manager that he was ready to pay the said sum of P2,800.00 as the funds were in his folder which was kept in the said Bank. This referred to the approved loan of Tuazon from the Bank which he intended to use in paying for the use of the sugar quota. The Branch Manager submitted the contract of lease of sugar quota allocation to the Head Office on September 7, 1956, with a recommendation for approval, which recommendation was concurred in by the VicePresident of the Bank, Mr. J. V. Buenaventura. This notwithstanding, the Board of Directors of petitioner required that the consideration be raised to P3.00 per picul. Tuazon, after being informed of the action of the Board of Directors, asked for a reconsideration thereof. On November 19, 1956, the Branch Manager submitted the request for reconsideration and again recommended the approval of the lease at P2.80 per picul, but the Board returned the recommendation unacted, stating that the current price prevailing at that time was P3.00 per picul. On February 22, 1957, Tuazon wrote a letter, informing the Bank that he was no longer interested in continuing the lease of sugar quota allotment. The crop year 1956-1957 ended and Mrs. Tapnio failed to utilize her sugar quota, resulting in her loss in the sum of P2,800.00 which she should have received had the lease in favor of Tuazon been implemented. It has been clearly shown that when the Branch Manager of petitioner required the parties to raise the consideration of the lease from P2.50 to P2.80 per picul, or a total of P2,800-00, they readily agreed. Hence, in his letter to the Branch Manager of the Bank on August 10, 1956, Tuazon informed him that the minimum lease rental of P2.80 per picul was acceptable to him and that he even offered to use the loan secured by him from petitioner to pay in full the sum of P2,800.00 which was the total consideration of the lease. This arrangement was not only satisfactory to the Branch Manager but it was also approves by Vice-President J. V. Buenaventura of the PNB. Under that arrangement, Rita Gueco Tapnio could have realized the amount of P2,800.00, which was more than enough to pay the balance of her indebtedness to the Bank which was secured by the bond of Philamgen. There is no question that Tapnio's failure to utilize her sugar quota for the crop year 1956-1957 was due to the disapproval of the lease by the Board of Directors of petitioner. The issue, therefore, is whether or not petitioner is liable for the damage caused.
"does not necessarily mean that there are always ready takers of said price. 4 This petitioner failed to do. or. whenever a tortious act is committed by an officer or agent under express direction or authority from the stockholders or members acting as a body. good customs or public policy shall compensate the latter for the damage. The law makes it imperative that every person "must in the exercise of his rights and in the performance of his duties. there was no reasonable basis for the Board of Directors of petitioner to have rejected the lease agreement because of a measly sum of P200. according to the trial court. and Santos. concur.As observed by the trial court. from the directors as the governing body. . and surety bonds and that she had apparently "the means to pay her obligation to the Bank.00 per picul demanded by the Board amounted only to a total sum of P200. Concepcion.00. generally. JJ. because any allotment which is not filled during such milling season may be reallocated by the Sugar Quota Administration to other holders of allotments. petitioner is consequently liable for the damages caused on private respondents. All of the authorities agree that a principal or master is liable for every tort which he expressly directs or authorizes. and whether the servant or agent be a natural or artificial person.80 per picul.80 per picul offered by Tuazon and the P3. for the protection of the interest of private respondents. act with justice. Certainly." 6 WHEREFORE.. it knew that the agricultural year was about to expire. Fernando. Considering that all the accounts of Rita Gueco Tapnio with the Bank were secured by chattel mortgage on standing crops. Aquino. While petitioner had the ultimate authority of approving or disapproving the proposed lease since the quota was mortgaged to the Bank. as shown by the fact that she has been granted several sugar crop loans of the total value of almost P80. Jr. give everyone his due. 5 A corporation is civilly liable in the same manner as natural persons for torts. assignment of leasehold rights and interests on her properties. since the same must be utilized during the milling season.000. the decision of the Court of Appeals is hereby AFFIRMED. the rules governing the liability of a principal or master for a tort committed by an agent or servant are the same whether the principal or master be a natural person or a corporation.. A corporation is liable. In failing to observe the reasonable degree of care and vigilance which the surrounding circumstances reasonably impose. and observe honesty and good faith. 3 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. " The unreasonableness of the position adopted by the petitioner's Board of Directors is shown by the fact that the difference between the amount of P2." The afore-cited provisions on human relations were intended to expand the concept of torts in this jurisdiction by granting adequate legal remedy for the untold number of moral wrongs which is impossible for human foresight to specifically provide in the statutes. because "generally speaking.00 a picul". that degree of care. that by its disapproval of the lease private respondents would be unable to utilize the sugar quota in question. and this is just as true of a corporation as of a natural person. therefore. time is of the essence in the approval of the lease of sugar quota allotments. Under Article 21 of the New Civil Code. precaution and vigilance which the circumstances justly demand in approving or disapproving the lease of said sugar quota. in view of the foregoing.00. the latter certainly cannot escape its responsibility of observing. "The fact that there were isolated transactions wherein the consideration for the lease was P3. "any person who wilfully causes loss or injury to another in a manner that is contrary to morals.00 for the agricultural years from 1952 to 1956".
Asia Banking Corp." It also ruled against the petitioners' argument that because they had already filed a notice of appeal. Jr. in securing the loans. RUSTE AND EVELYN SAW. petitioners. Rule 12 of the Revised Rules of Court is proper only when one's right is actual. CRUZ.R. LINA S. SIGUA. HON. FREEMAN MANAGEMENT AND DEVELOPMENT CORPORATION. 1991 RUBEN SAW. DIONISIO SAW. Inc. Equitable secured a writ of execution. alleging that (1) the loan transactions between Saw Chiao Lian and Equitable Banking Corp. Pineda. and Equitable Banking Corp. holding that "the compromise agreement between Freeman. the trial judge had lost jurisdiction over the case and could no longer issue the writ of execution. Equitable demurs. PARDO. were not approved by the stockholders representing at least 2/3 of corporate capital. . And intervention under Sec. 88-44404 because their rights as stockholders of Freeman are merely inchoate and not actual. . but that the action must be brought by the Board of Directors. it is obvious that a demand upon the Board of Directors to institute action and prosecute the same effectively would have been useless. 90580 April 8. and the law does not require litigants to perform useless acts. Inc. . (If the corporation [were] under the complete control of the principal defendants. material. and Saw Chiao Lian. William R. will not necessarily prejudice petitioners whose rights to corporate assets are at most inchoate. as an action against defendants in their personal . . J. were levied upon and sold at public auction to Freeman Management and Development Corp. . Ching. The Honorable Court of Appeals erred in holding that the appeal of the petitioners in said Civil Case No. contending that the collection suit against Freeman. LUCILA S. Inc. (2) Saw Chiao Lian had no authority to contract such loans. direct and immediate prior to the dissolution of the corporation. for petitioners. Inc. The motion to intervene was denied. respondents. vs. Vetor for Equitable Banking Corp. its President and General Manager. contending that: 1. has its exceptions. Inc. 2. through its President. EQUITABLE BANKING CORPORATION. The Court of Appeals 1 sustained the denial of the petitioners' motion for intervention. Uy & Janolo for Freeman. (Regional Trial Court of Manila). HON. The petitioners are now before this Court.. . 2 where it was held: The well-known rule that shareholders cannot ordinarily sue in equity to redress wrongs done to the corporation. material. THE REGISTER OF DEEDS OF CALOOCAN CITY. CHUA. 2. Presiding Judge of Branch 43. Inc.:p A collection suit with preliminary attachment was filed by Equitable Banking Corporation against Freeman. COURT OF APPEALS. The petitioners base their right to intervene for the protection of their interests as stockholders on Everett v. FREEMAN INCORPORATED. and two lots owned by Freeman. Equitable and Saw Chiao Lian entered into a compromise agreement which they submitted to and was approved by the lower court. No. 88-44404 was confined only to the order denying their motion to intervene and did not divest the trial court of its jurisdiction over the whole case. direct and immediate and not simply contingent or expectant. and DEPUTY SHERIFF ROSALIO G. Meanwhile. . and Equitable Banking Corp. But because it was not complied with. BERNARDO P. and Saw Chiao Lian is essentially in personam and. Inc. and (3) there was collusion between the officials of Freeman. and Saw Chiao. prior to the dissolution of Freeman. Benito O. SAW CHIAO LIAN. The petitioners moved to intervene. . The Honorable Court of Appeals erred in holding that the petitioners cannot intervene in Civil Case No.G. and the petitioners appealed to the Court of Appeals. .
03577 entitled "Dissolution. While a share of stock represents a proportionate or aliquot interest in the property of the corporation. Accounting. and the petitioners SEC Case No. After examining the issues and arguments of the parties. it was Freeman. their interest is purely inchoate. will not prejudice the petitioners as stockholders of the corporation. Inc. 902-A. his interest in the corporate property being . or in sheer expectancy of a right in the management of the corporation and to share in the profits thereof and in the properties and assets thereof on dissolution. Equitable maintains that the petitioners' appeal could only apply to the denial of their motion for intervention and not to the main case because their personality as party litigants had not been recognized by the trial court. Otherwise. proceedings will become unnecessarily complicated. expensive and interminable. it does not vest the owner thereof with any legal right or title to any of the property. The words "an interest in the subject" mean a direct interest in the cause of action as pleaded. without the establishment of which plaintiff could not recover. In the case of Batama Farmers' Cooperative Marketing Association. Court of Appeals. if it exists at all. or whether the intervenor's rights may be protected in a separate proceeding or not. On the second assignment of error. Inc. Rule 12 of the Revised Rules of Court. or he must be so situated as to be adversely affected by a distribution or other disposition of the property in the custody of the court or an officer thereof. there was pending between Freeman. And this is not the policy of the law. Rosal. 3 we ruled as follows: Viewed in the light of Section 2. In the case at bar.capacities. contingent. No." It also avers in its Comment that the intervention of the petitioners could have only caused delay and prejudice to the principal parties. In fact. v. Equitable also argues that the subject matter of the intervention falls properly within the original and exclusive jurisdiction of the Securities and Exchange Commission under P. conjectural. the party must have a legal interest in the matter in litigation." To allow intervention. that was being sued by the creditor bank. and [b] consideration must be given as to whether the adjudication of the rights of the original parties may be delayed or prejudiced. At the very least. In the case of Magsaysay-Labrador v. of petitioners-movants is indirect. or in the success of either of the parties or an interest against both. Inc. the Court finds that the respondent court committed no reversible error in sustaining the denial by the trial court of the petitioners' motion for intervention. this Court affirms the respondent court's holding that petitioners herein have no legal interest in the subject matter in litigation so as to entitle them to intervene in the proceedings below. the interest. Cancellation of Certificate of Registration with Restraining Order or Preliminary Injunction and Appointment of Receiver. The Everett case is not applicable because it involved an action filed by the minority stockholders where the board of directors refused to bring an action in behalf of the corporation. The interest which entitles a person to intervene in a suit between other parties must be in the matter in litigation and of such direct and immediate character that the intervenor will either gain or lose by the direct legal operation and effect of the judgment. Here. consequential and collateral. [a] it must be shown that the movant has legal interest in the matter in litigation.D. remote. or otherwise qualified. Both requirements must concur as the first is not more important than the second. to be permitted to intervene in a pending action. if persons not parties of the action could be allowed to intervene. at the time the motion for intervention was filed. and which would put the intervenor in a legal position to litigate a fact alleged in the complaint. after payment of the corporate debts and obligations. we held: "As clearly stated in Section 2 of Rule 12 of the Rules of Court.
It is so ordered. In the case of Clareza v. Rules of Court. Consequently. The Court observes that even with the denial of the petitioners' motion to intervene. there is nothing to aid or fight for. Inc. On the second assignment of error. the petition is DENIED. There is therefore no more principal proceeding in which the petitioners may intervene. Intervention is "an act or proceeding by which a third person is permitted to become a party to an action or proceeding between other persons. Resales. 1989. in the nature of things. 721). 2 SCRA 455. the complaint in intervention can no longer be acted upon. it was stated that: That right of the intervenor should merely be in aid of the right of the original party. with costs against the petitioners. As this right of the plaintiffs had ceased to exist. it will be illogical and of no useful purpose to grant or even consider further herein petitioner's prayer for the issuance of a writ of mandamus to compel the lower court to allow and admit the petitioner's complaint in intervention. but an ancillary and supplemental one which. as merely "collateral or accessory or ancillary to the principal action and not an independent proceedings. 457-458. p. for the purpose of hearing and determining at the same time all conflicting claims which may be made to the subject matter in litigation. nothing is really lost to them. . the respondent court correctly noted that the notice of appeal was filed by the petitioners on October 24. The decision of the lower court had already become final and in fact had already been enforced. With the final dismissal of the original action." They could only appeal the denial of their motion for intervention as they were never recognized by the trial court as party litigants in the main case. 4 It is not an independent proceeding. upon the denial of their motion to intervene. Elbinias: 7 An intervention has been regarded. and which results merely in the addition of a new party or parties to an original action. 1. So the right of intervention has ceased to exist. must be in subordination to the main proceeding. The dismissal of the expropriation case has no less the inherent effect of also dismissing the motion for intervention which is but the unavoidable consequence. The petitioners' appeal could not have concerned the "whole" case (referring to the decision) because the petitioners "did not appeal the decision as indeed they cannot because they are not parties to the case despite their being stockholders of respondent Freeman. unless otherwise provided for by the statute or Rules of Court. As we held in the case of Barangay Matictic v. the case between the original parties. and the writ of execution was issued by the lower court on January 30. The denial did not necessarily prejudice them as their rights are being litigated in the case now before the Securities and Exchange Commission and may be fully asserted and protected in that separate proceeding. like the plaintiffs in this case." (Fransisco. there is no more principal action to be resolved as a writ of execution had already been issued by the lower court and the claim of Equitable had already been satisfied. 6 In the case at bar. 1988. Vol. which is owned by the corporation as a distinct legal person. and interlocutory proceeding dependent on and subsidiary to. WHEREFORE.equitable or beneficial in nature. Shareholders are in no legal sense the owners of corporate property. 5 It may be laid down as a general rule that an intervenor is limited to the field of litigation open to the original parties.
SIGUA. COURT OF APPEALS. Equitable secured a writ of execution.. Inc. Equitable and Saw Chiao Lian entered into a compromise agreement which they submitted to and was approved by the lower court. Inc. FREEMAN MANAGEMENT AND DEVELOPMENT CORPORATION. alleging that (1) the loan transactions between Saw Chiao Lian and Equitable Banking Corp. (Regional Trial Court of Manila). 2. Inc. CRUZ. The Court of Appeals 1 sustained the denial of the petitioners' motion for intervention. PARDO. and Saw Chiao Lian. LUCILA S. (2) Saw Chiao Lian had no authority to contract such loans. RUSTE AND EVELYN SAW. Inc. The motion to intervene was denied. Inc. DIONISIO SAW. Benito O. . HON. were levied upon and sold at public auction to Freeman Management and Development Corp. 90580 April 8.G. the trial judge had lost jurisdiction over the case and could no longer issue the writ of execution. . holding that "the compromise agreement between Freeman. J. Uy & Janolo for Freeman. Meanwhile. Ching.R. SAW CHIAO LIAN. BERNARDO P. in securing the loans. for petitioners. and Equitable Banking Corp. The petitioners moved to intervene. material. respondents. and Saw Chiao. through its President. Inc. and DEPUTY SHERIFF ROSALIO G. and two lots owned by Freeman. THE REGISTER OF DEEDS OF CALOOCAN CITY. HON.:p A collection suit with preliminary attachment was filed by Equitable Banking Corporation against Freeman. Rule 12 of the Revised Rules of Court is proper only when one's right is actual. and Equitable Banking Corp. No. and (3) there was collusion between the officials of Freeman. petitioners. Presiding Judge of Branch 43. prior to the dissolution of Freeman. and the petitioners appealed to the Court of Appeals. EQUITABLE BANKING CORPORATION. Jr. . 1991 RUBEN SAW." It also ruled against the petitioners' argument that because they had already filed a notice of appeal. FREEMAN INCORPORATED. Pineda. Vetor for Equitable Banking Corp. were not approved by the stockholders representing at least 2/3 of corporate capital. its President and General Manager. will not necessarily prejudice petitioners whose rights to corporate assets are at most inchoate. LINA S. But because it was not complied with. vs. CHUA. direct and immediate and not simply contingent or expectant. William R. . And intervention under Sec.
2 where it was held: The well-known rule that shareholders cannot ordinarily sue in equity to redress wrongs done to the corporation. The petitioners base their right to intervene for the protection of their interests as stockholders on Everett v. direct and immediate prior to the dissolution of the corporation. . The Everett case is not applicable because it involved an action filed by the minority stockholders where the board of directors refused to bring an action in behalf of the corporation. there was pending between Freeman. material. 902-A. as an action against defendants in their personal capacities. Inc. . On the second assignment of error. 3 we ruled as follows: . Equitable maintains that the petitioners' appeal could only apply to the denial of their motion for intervention and not to the main case because their personality as party litigants had not been recognized by the trial court." It also avers in its Comment that the intervention of the petitioners could have only caused delay and prejudice to the principal parties. 03577 entitled "Dissolution. 2. contending that: 1. Equitable also argues that the subject matter of the intervention falls properly within the original and exclusive jurisdiction of the Securities and Exchange Commission under P. The Honorable Court of Appeals erred in holding that the appeal of the petitioners in said Civil Case No. Cancellation of Certificate of Registration with Restraining Order or Preliminary Injunction and Appointment of Receiver.D. Asia Banking Corp. No. . 88-44404 was confined only to the order denying their motion to intervene and did not divest the trial court of its jurisdiction over the whole case. In the case of Magsaysay-Labrador v. Accounting. . In fact. at the time the motion for intervention was filed.The petitioners are now before this Court. will not prejudice the petitioners as stockholders of the corporation. In the case at bar. After examining the issues and arguments of the parties. and the law does not require litigants to perform useless acts. it is obvious that a demand upon the Board of Directors to institute action and prosecute the same effectively would have been useless. that was being sued by the creditor bank. has its exceptions. but that the action must be brought by the Board of Directors. contending that the collection suit against Freeman. and the petitioners SEC Case No. 88-44404 because their rights as stockholders of Freeman are merely inchoate and not actual. . Court of Appeals. Equitable demurs. Inc. it was Freeman. (If the corporation [were] under the complete control of the principal defendants. and Saw Chiao Lian is essentially in personam and. The Honorable Court of Appeals erred in holding that the petitioners cannot intervene in Civil Case No. Inc. the Court finds that the respondent court committed no reversible error in sustaining the denial by the trial court of the petitioners' motion for intervention. .
contingent. upon the denial of their motion to intervene. Inc. The interest which entitles a person to intervene in a suit between other parties must be in the matter in litigation and of such direct and immediate character that the intervenor will either gain or lose by the direct legal operation and effect of the judgment. it does not vest the owner thereof with any legal right or title to any of the property. this Court affirms the respondent court's holding that petitioners herein have no legal interest in the subject matter in litigation so as to entitle them to intervene in the proceedings below. Rosal." To allow intervention.Viewed in the light of Section 2. or whether the intervenor's rights may be protected in a separate proceeding or not." They could only appeal the denial of their . remote. While a share of stock represents a proportionate or aliquot interest in the property of the corporation. Both requirements must concur as the first is not more important than the second. proceedings will become unnecessarily complicated. the respondent court correctly noted that the notice of appeal was filed by the petitioners on October 24. v. The words "an interest in the subject" mean a direct interest in the cause of action as pleaded. expensive and interminable. In the case of Batama Farmers' Cooperative Marketing Association. And this is not the policy of the law. without the establishment of which plaintiff could not recover. or he must be so situated as to be adversely affected by a distribution or other disposition of the property in the custody of the court or an officer thereof. On the second assignment of error. Otherwise. consequential and collateral. The petitioners' appeal could not have concerned the "whole" case (referring to the decision) because the petitioners "did not appeal the decision as indeed they cannot because they are not parties to the case despite their being stockholders of respondent Freeman. or in sheer expectancy of a right in the management of the corporation and to share in the profits thereof and in the properties and assets thereof on dissolution. if it exists at all. Inc. and [b] consideration must be given as to whether the adjudication of the rights of the original parties may be delayed or prejudiced. Here. At the very least. after payment of the corporate debts and obligations. we held: "As clearly stated in Section 2 of Rule 12 of the Rules of Court. or otherwise qualified. to be permitted to intervene in a pending action. 1989. Rule 12 of the Revised Rules of Court. the party must have a legal interest in the matter in litigation. which is owned by the corporation as a distinct legal person. their interest is purely inchoate. the interest. or in the success of either of the parties or an interest against both. [a] it must be shown that the movant has legal interest in the matter in litigation. and which would put the intervenor in a legal position to litigate a fact alleged in the complaint. his interest in the corporate property being equitable or beneficial in nature. of petitioners-movants is indirect. conjectural. if persons not parties of the action could be allowed to intervene. Shareholders are in no legal sense the owners of corporate property. and the writ of execution was issued by the lower court on January 30. 1988.
Vol. like the plaintiffs in this case. p. 6 In the case at bar. Intervention is "an act or proceeding by which a third person is permitted to become a party to an action or proceeding between other persons. the petition is DENIED. Resales. The denial did not necessarily prejudice them as their rights are being litigated in the case now before the Securities and Exchange Commission and may be fully asserted and protected in that separate proceeding. 4 It is not an independent proceeding. It is so ordered. unless otherwise provided for by the statute or Rules of Court. it was stated that: That right of the intervenor should merely be in aid of the right of the original party. As we held in the case of Barangay Matictic v. and interlocutory proceeding dependent on and subsidiary to.motion for intervention as they were never recognized by the trial court as party litigants in the main case. as merely "collateral or accessory or ancillary to the principal action and not an independent proceedings. there is no more principal action to be resolved as a writ of execution had already been issued by the lower court and the claim of Equitable had already been satisfied. there is nothing to aid or fight for. it will be illogical and of no useful purpose to grant or even consider further herein petitioner's prayer for the issuance of a writ of mandamus to compel the lower court to allow and admit the petitioner's complaint in intervention. 1. As this right of the plaintiffs had ceased to exist. nothing is really lost to them. 2 SCRA 455. the case between the original parties. . The decision of the lower court had already become final and in fact had already been enforced. So the right of intervention has ceased to exist. the complaint in intervention can no longer be acted upon. Rules of Court. in the nature of things. for the purpose of hearing and determining at the same time all conflicting claims which may be made to the subject matter in litigation. With the final dismissal of the original action. 5 It may be laid down as a general rule that an intervenor is limited to the field of litigation open to the original parties. 457-458. and which results merely in the addition of a new party or parties to an original action. WHEREFORE. must be in subordination to the main proceeding. There is therefore no more principal proceeding in which the petitioners may intervene. with costs against the petitioners." (Fransisco. 721). In the case of Clareza v. The Court observes that even with the denial of the petitioners' motion to intervene. The dismissal of the expropriation case has no less the inherent effect of also dismissing the motion for intervention which is but the unavoidable consequence. but an ancillary and supplemental one which. Consequently. Elbinias: 7 An intervention has been regarded.
005024-93 entitled "Bonifacio Red. SUSAN DE LA CRUZ.00 to bring some girls from the province to work as attendants at the respondent's massage clinic.April 15. with a salary of P50. Chua. Respondents.".All were paid on commission basis at the rate of twenty (20%) percent of the service fee paid by the customers. Complainant Nancy Cenita and Susan Calwit alleges [sic] that they were hired as waitresses on May 20.00 and P110.117473.TULABING. 1990 up to November 6. NLRC.CENITA and BENEDICTO A. vs. 1990 in the same establishment with a salary of P26. and that he works a minimum of twelve (12) hours a day without being paid overtime. which put a sing-along coffee shop and massage clinic.Soledad Domingo. Complainant Benedicto Tulabing alleges that he started on December 16. in circumvention of statutes. it suffered losses leading to its closure. et.00/day and was given living quarters inside the premises as he requested. increase in the rental cost and the failure of Meralco to reconnect the electrical services in the establishment. that he works thirteen (13) hours a day without payment of overtime pay. offered to sell her business to respondent Reah's Corporation. EDNA WAHINGON. MA.: Reahs Corporation v. Gudezand Pabalan. On the other hand. SONIA DELA CRUZ. respondents allege that sometime in 1986.. to justify solidary liability. Quezon City. holiday pay.. as culled by the labor arbiter from the position papers of both parties.00. as a vehicle for the evasion of existing obligations. separation pay and other benefits under the law. 1977 to November 6. are as follows: "Complainant Bonifacio Red alleges that he started working as a supervisor at the health and sauna parlor of respondents from September 5.” or a showing that the officers indiscriminately stopped its business to perpetuate an illegal act. that it was only on January 1. J. 1990. v. 1990 that complainant Red returned and was re-hired under the same terms and conditions of his previous employment with the understanding that he will have to refund the P1. 1990. the sole proprietress and operator of Rainbow Sauna located at 316 Araneta Avenue.25 per bottle of beer sold to or consumed by the customers and that they work ten (10) hours a day without being paid overtime. BONIFACIO RED. 1990.00 cash advance given to him. NANCY B. The facts. and was given an advance money of P1. This is a petition for certiorari under Rule 65 of the Rules of Court to annul and set aside the decision dated 29 April 1994 rendered by the National Labor Relations Commission (NLRC) in NLRC Case No.00 respectively. Petitioners.CALWIT. and to confuse legitimate issues. all the assets of Ms. 271 SCRA 247 (1997). a certain Ms. and that the closure of the health parlor was illegal as they were not notified. reviewed the A. Sonia dela Cruz and Victoria Padilla claims [sic] working as attendants and were hired on different dates until November 6. SEVERO CASTULO. P90.200. 1986 up to November 6. 13th month pay and separation pay. and that at the very least. DECISION PADILLA. that due to poor business. 283 of the Labor Code.200. that they render(ed) eleven (11) hours of work a day without being paid overtime. ROMEO PASCUA. [G.After the sale.al. complainant Red asked permission to go to Bicol for a period of ten (10) days. for ordinary and VIP service. and DANIEL VALENZUELA. without any notice and without paying his wages.No.R. It reiterated the main doctrine of separate personality of a corporation which should remain as the guiding rule in determining corporate liability to its employees.Domingo were turned over to respondent Reah's."1chanroblesvirtuallawlibrary . VICTORIA PADILLA.Reah's Corporation. 1990 and paid on commission basis at P0. Ransom doctrine of imposing solidarily liability on the highest officers of the corporation for judgment on labor claims rendered against the corporation pursuant to Art. Susan dela Cruz.00 a day.SUSAN R. that sometime in March 1989. that complainant Red started his employment on the first week of December 1988 as a roomboy atP50. et al. which was granted. that the said establishment was closed by respondents on November 6. NATIONAL LABOR RELATIONS COMMISSION. Complainants Edna Wahingon. and reviewed its application in subsequent cases of Maglutac. “there must be an allegation or showing that the officers of the corporation deliberately or maliciously designed to evade the financial obligation of the corporation to its employees.C. 1997] REAHS CORPORATION. which affirmed the decision of the Labor arbiter holding individual petitioners jointly and severally liable with petitioner Reah's Corporation to pay private respondents' claims for underpayment of wages.
However. these must be sufficiently proved by the employer. August 24. WHETHER OR NOT PETITIONERS-OFFICERS CAN BE HELD JOINTLY AND SEVERALLY LIABLE WITH THE CORPORATION IN THE PAYMENT OF SEPARATION PAY TO PRIVATE RESPONDENTS UNDER ARTICLE 283 OF THE LABOR CODE.No. only Bonifacio Red and Benedicto Tulabing were declared entitled to the claimed labor standard benefits as the rest were found to have been employed on commission basis.31 of the Corporation Code3 they cannot be held solidarily liable with the corporation. respondents failed to comply. Petitioners argue that since the charges of illegal dismissal and unfair labor practices were dismissed by the labor arbiter.The labor arbiter further awarded attorney's fees to private respondents Bonifacio Red and Benedicto Tulabing amounting to ten (10%) percent of their adjudged money claims.NLRC.They contend that even if they were the top corporate officers of Reah's corporation at the time they closed the business.No.We only have respondents' mere say-so on the matter.Petitioners further maintain that the corporation also cannot be held liable because Article 283 of the Labor Code "orders payment of separation pay only when the closure of the business is due to causes other than serious business losses or financial reverses".85286. The Supreme Court held in Basilio Balasbas vs.Neither did respondents present any evidence to prove that Reah's closure was really due to SERIOUS business losses or financial reverses. J. the corporation has a personality that is separate and distinct from its officers and stockholders. 178 SCRA 168).' Thus. they cannot be held solidarily liable with the corporation for the payment of separation pay and labor standard benefits to private respondents.On 6 May 1993. holiday pay and 13th month pay. cannot be held jointly and severally liable with Reah's "unless there is evidence to show that the cause of the closure of the business was due to the criminal negligence of the [respondent] officers. petitioners raise three (3) issues which.In the present petition. II. 3rd Division.80352.R. 1992. we cannot but agree that complainants are entitled to the payment of separation pay. G. underpayment of wages. III. the closure of a business establishment or reduction of personnel is a ground for the termination of the services of any employee unless the closing or retrenching is for the purpose of circumventing the provision of the law. WHETHER OR NOT THE OFFICERS OF REAH'S CORPORATION CAN BE HELD JOINTLY AND SEVERALLY LIABLE WITH THE CORPORATION IN PAYMENT OF THE MONETARY CLAIMS AWARDED PRIVATE RESPONDENTS IN THE ABSENCE OF ANY FINDING OF UNFAIR LABOR PRACTICES OR ILLEGAL DISMISSAL.) that 'Under Article 283 of the Labor Code.al. et. Petitioners appealed the labor arbiter's decision to the NLRC. WHETHER OR NOT THERE IS LEGAL BASIS FOR THE NLRC TO AFFIRM THE AWARD OF 10% ATTORNEY'S FEES TO PRIVATE RESPONDENTS. for brevity and clarity.x x x. while admittedly the acting chairman of the board.But while business reverses can be a just cause for terminating employees. when they used their business judgment to close the establishment because of serious business losses.R. September 29.' This. "exempts establishment(s) from payment of termination pay when the closure of business is due to serious business losses or financial reverses". Pascua and Valenzuela.NLRC. board member and accountant acting manager respectively of Reah's Corporation. contending mainly that Article 283 of the Labor Code.All eight (8) private respondents were awarded separation pay.Since there was no finding that they violated Sec. may be simplified as follows: I. Romero. (G. . the labor arbiter rendered judgment dismissing private respondents' complaints for unfair labor practice and illegal dismissal but upholding the claims for separation pay."2chanroblesvirtuallawlibrary Petitioners filed a motion for reconsideration but this was denied by the NLRC on 30 August 1994. Article 283 of the Labor Code provides that '[T]he employer may x x x terminate the employment of any employee due to x x x the closing or cessation of operation of the establishment or undertaking x x x by serving a written notice on the workers and the Ministry of Labor and Employment at least one (1) month before the intended date thereof.(Indino vs. that petitioners Castulo. 1989." The NLRC dismissed the appeal based on the following dispositions: "Anent the issue on separation pay.
Thus.Ransom Labor Union . is a statutory obligation on the part of the employer and a demandable right on the part of the employee.In the case at bar. duly proved. directly or indirectly. the separation pay shall be equivalent to one (1) month pay or at least () month pay for every year of service. the affected employee is entitled to separation pay. where the most ranking officer of Commart.NLRC. The rule. is found in Article 212(c) of the Labor Code which provides that "an employer includes any person acting in the interest of an employer.A fraction of at least six (6) months shall be considered as one (1) whole year. is that in all cases of business closure or cessation of operation or undertaking of the employer. however.In the absence of such proof of serious business losses or financial reverses. a judgment against a corporation (A. affording full protection to its rights as well as its welfare. Chua v. stockholders and members. when a corporation violates a provision declared to be penal in nature. it must have an officer who can be presumed to be the employer.C. the burden of proving that the termination was for a valid or authorized cause shall rest on the employer. except only where the closure or cessation of operations was due to serious business losses or financial reverses and there is sufficient proof of this fact or condition.Under the Labor Code.4 If the business closure is due to serious losses or financial reverses." It is not the function of the law nor its intent to supplant the prerogative of management in running its business.In that case. and to confuse legitimate issues".7chanroblesvirtuallawlibrary The Solicitor General.CCLU v. such as. the employer must present sufficient proof of its actual or imminent losses.5chanroblesvirtuallawlibrary The grant of separation pay. was held solidarily liable with the corporation which thereafter became insolvent and suspended operations.This is consistent with the state policy of treating labor as a primary social economic force. therefore. We now proceed to rule on the corollary issue of whether or not individual petitioners Castulo. in which case.The corporation only in the technical sense is the employer. as what actually happened when it ceased operations a few months after the labor arbiter ruled in favor of Ransom's employees. officers of a corporation are not personally liable for their official acts unless it is shown that they have exceeded their authority. the corporation has a personality separate and distinct from its officers.Ransom) to reinstate its dismissed employees with back wages was declared to be a continuing solidary liability of the company president and all who may have thereafter succeeded to said office after the records failed to identify the officer or agents directly responsible for failure to pay the back wages of its employees." "Since Ransom is an artificial person.NLRC8 should be applied to the case at bar. to compel the latter to operate at a continuing loss. x x x.Petitioners have obviously resorted to a misreading of the last sentence of Article 283 which provides that " x x x In case of retrenchment to prevent losses and in cases of closures or cessation of operations of establishment or undertaking not due to serious business losses or financial reverses. an illegal act.However.C. the employer closing his business is obligated to pay his employees and workers their separation pay. said the Court. As a general rule established by legal fiction. for instance. it must show proof that the cessation of or withdrawal from business operations was bona fide in character. the corporation's alleged serious business losses and financial reverses were not amply shown or proved. the penalty shall be imposed upon the guilty officer or officers of the corporation. argues that the doctrine laid down in the case of A. the right of affected employees to separation pay is lost for obvious reasons.NLRC9 an illegal dismissal case. The basis. Pascua and Valenzuela should be held liable in solidum with the corporation (REAH's) in the payment to private respondents of separation pay and labor standard benefits.This fictional veil. as a vehicle for the evasion of an existing obligation. petitioner therein.10 also an illegal dismissal case. as an incidence of termination of employment under Article 283." This ruling was eventually applied by the Court in the following cases: Maglutac v. in behalf of private respondents.Hence.The Court noted Ransom's subterfuge in organizing another family corporation while the case was on litigation with the intent to phase out the existing corporation in case of an adverse decision.6 The exception is when the closure of business or cessation of operations is due to serious business losses or financial reverses. where the vice-president of a corporation was held solidarily . whichever is higher. Article 283 provides as an authorized cause in the termination of employment the "closing or cessation of operation of the establishment or undertaking". can be pierced by the very same law which created it when "the notion of the legal entity is used as a means to perpetrate fraud.
None of these situations exists in the case at bar. should be construed still as exceptions to the doctrine of separate personality of a corporation which should remain as the guiding rule in determining corporate liability to its employees. as a vehicle for the evasion of existing obligations.Neither did they offer separation pay to the employees as they conveniently resorted to a lame excuse that they suffered serious business losses. (disconnection of) light and discontinuance of the leased premises [sic] for failure to pay the increased monthly rentals from P8. and to confuse legitimate issues.Since petitioners themselves have admitted that they have dissolved the corporation de facto. petitioners aver. as if the entity were an automaton designed to perform functions at the push of a button. as what we held in Pabalan v.We only have respondents mere say-so on the matter. knowing fully well that they had no substantial proof in their hands to prove such losses. Pascua and Valenzuela solidarily liable with Reah's Corporation because the law presumes that they have acted in the latter's interest when they obstinately refused to grant the labor standard benefits and separation pay due private respondent-employees. "there must be an allegation or showing that the officers of the corporation deliberately or maliciously designed to evade the financial obligation of the corporation to its employees".The issue.11 where the president and treasurer were held solidarily liable with the corporation which had ceased operations but failed to pay the wage and money claims of its employees. more or less.000 to P20.liable with the corporation for the payment of the unpaid salaries of its president. petitioners have opted to abstain from presenting sufficient evidence to establish the serious and adverse financial condition of the company. coffee shop.NLRC. among others.12 to justify solidary liability. in circumvention of statutes.000. These cases. the thrust of petitioners' arguments was aimed at confining liability solely to the corporation.Neither would it be oppressive to capital to hold petitioners Castulo. and Valenzuela jointly and severally liable with Reah's Corporation to pay all private respondents separation pay and private respondents Red and Tulabing other monetary benefits but the award of ten percent (10%) attorneys fees is hereby DELETED for lack of factual and legal basis.Under Article 111 of the Labor Code. The findings of the NLRC did not indicate whether or not Reah's Corporation has continued its personality after it had stopped operations when it closed its sing-along. instead. is not limited to payment of separation pay under Article 283 but also payment of labor standard benefits such as underpayment of wages. petitioners are bound by the allegations contained in their pleading.But in its petition. WHEREFORE. however. In the case at bar."13chanroblesvirtuallawlibrary This uncaring attitude on the part of the officers of Reah's gives credence to the supposition that they simply ignored the side of the workers who. they abruptly closed business. however.While there is no sufficient evidence to conclude that petitioners have indiscriminately stopped the entity's business. at the same time.In fine. the decision of respondent National Labor Relations Commission is hereby AFFIRMED in so far as it holds petitioners Castulo. and in Gudez v.At the very least. and massage clinic in November 1990. 10% attorneys fees may be assessed only in cases where there is an unlawful withholding of wages. ."14 Under the Rules of Evidence. The last issue raised by petitioners is whether there is legal basis for the payment of 10% attorney's fees out of the total amount awarded to private respondents Red and Tulabing.NLRC. these officers were conscious that the corporation was violating labor standard provisions but they did not act to correct these violations. Pascua. we cannot allow labor to go home with an empty victory.Under these circumstances. the Court presumes that Reah's Corporation had become insolvent and therefore would be unable to satisfy the judgment in favor of its employees.15 or under Article 222 those arising from collective bargaining negotiations that may be charged against union funds in an amount to be agreed upon by the parties. or a showing that the officers indiscriminately stopped its business to perpetrate an illegal act. were only demanding what is due them in accordance with law. that the "company totally folded for lack of patrons.The Court finds this portion of the assailed decision to have been rendered with grave abuse of discretion as both the labor arbiter and the NLRC failed to make an express finding of fact and cite the applicable law to justify the grant of such award. holiday pay and 13th month pay to two of the private respondents. As the NLRC aptly stated: "Neither did respondents (petitioners) present any evidence to prove that Reah's closure was really due to SERIOUS business losses or financial reverses. SO ORDERED.
August 16. 2010 X -------------------------------------------------------------------------------------. and/or XU ZHI JIE. Inc. 2008 Decision and October 23.versus - LORETA T. 185122 Present: CARPIO.: This is a petition for review on certiorari under Rule 45 of the Rules of Court filed by an employer who was charged before the National Labor Relations Commission (NLRC) for dismissing an employee upon the advice of a Feng Shui master. In this action. JJ. Chairperson. Pobby Co (Xu) is its president. (Wensha) in Quezon City is in the business of sauna bath and massage services. NACHURA. Petitioners.R.WENSHA SPA CENTER. ABAD. Inc. Yung (Loreta) was its administrative manager at the time of her termination from employment. In her position paper. Xu Zhi Jie a. J.. and/or Xu Zhi Jie.X DECISION MENDOZA. 98855 entitled Loreta T. (Manmen) where Xu was a client. PERALTA. Respondent. INC. Xu was apparently . and MENDOZA. YUNG. Promulgated: . Ltd. G.a. Loreta stated that she used to be employed by Manmen Services Co. the petitioners assail the May 28. 2008 Resolution of the Court of Appeals (CA) in CA-G. THE FACTS: Wensha Spa Center.R.  respondent Loreta T. SP No.k. J.. National Labor Relations Commission. Wensha Spa Center. Yung v. No.
2004 as Xu’s personal assistant and interpreter at a monthly salary of P12. The complainant herself alleged in her position paper that she has done several improvements in respondents’ . 2004. Loreta went to the NLRC and filed a case for illegal dismissal against Xu and Wensha. 2004. this office has found it dubious and hard to believe the contentions made by the complainant that she was dismissed by the respondents on the sole ground that she is a “mismatch” in respondents' business as advised by an alleged Feng Shui Master. they terminated Loreta’s employment on August 31. He found it more probable that Loreta was dismissed from her employment due to Wensha’s loss of trust and confidence in her. They claimed that two months after Loreta was hired. Wensha and Xu denied illegally terminating Loreta’s employment. they advised her to take a leave of absence for one month while they conducted an investigation on the matter. Later that day. Loreta resigned from Manmen and transferred to Wensha. After he established Wensha. Enticed. The LA’s decision partly reads: However. 2004 for loss of trust and confidence. 2004. according to the Feng Shui master. She did so and returned on September 10. Loreta refused but was informed that she could no longer continue working at Wensha. The Labor Arbiter (LA) Francisco Robles dismissed Loreta’s complaint for lack of merit. her aura did not match that of Xu. That same afternoon.impressed by Loreta’s performance. She started working on April 21. But Xu was persistent and offered her a higher pay. Loreta introduced positive changes to Wensha which resulted in increased business. she was promoted to the position of Administrative Manager. they received various complaints against her from the employees so that on August 10. Loreta recounted that on August 10. Based on the results of the investigation. Xu and his wife asked her to resign from Wensha because. Upon her return. This pleased Xu so that on May 18.000. she was asked to leave her office because Xu and a Feng Shui master were exploring the premises. Xu asked Loreta to go on leave with pay for one month. Loreta was initially reluctant to accept Xu’s offer because her job at Manmen was stable and she had been with Manmen for seven years.00. 2004. he convinced Loreta to transfer and work at Wensha.
Absent any proof submitted by the complainant. The CA reversedthe ruling of the NLRC on the ground that it gravely abused its discretion in appreciating the factual bases that led to Loreta’s dismissal. It would be against human experience and contrary to business acumen to let go of someone. Loreta moved for a reconsideration of the NLRC’s ruling but her motion was denied. Loreta then went to the CA on a petition for certiorari. The CA noted that there were irregularities and inconsistencies in Wensha’s position. This ruling was affirmed by the NLRC in its December 29. and that respondent Co was very much pleased with the improvements made by the complainant that she was offered twice a promotion but she nevertheless declined. The CA stated the following: We. It was held that [T]he purpose of the rule in requiring the production of the best evidence is the prevention of fraud. 2004 letter to Loreta asking her to come back to personally clarify some matters. because if a party is in possession of such evidence and withholds it. the affidavits cannot be assigned any weighty probative value and are mere scraps of paper the contents of which are . The rule is that an affiant must sign the document in the presence of and take his oath before a notary public as evidence that the affidavit was properly made. and seeks to substitute inferior evidence in its place. the affidavits were not executed under oath. thus. The NLRC added that this finding was bolstered by Wensha’s September 10. Guided by these principles. this office finds it more probable that the complainant was dismissed due to loss of trust and confidence. the presumption naturally arise[s] that the better evidence is withheld for fraudulent purposes which its production would expose and defeat. peruse the affidavits and documentary evidence of the Private Respondents and find the following: First. 2006 Resolution. it must be noted that the same were mere photocopies. but she declined because she had already filed a case. citing its observation that Wensha was still considering the proper action to take on the day Loreta left Wensha and filed her complaint. Moreover. on the affidavits of their witnesses. who was an asset and has done so much for the company merely on the ground that she is a “mismatch” to the business.business such as uplifting the morale and efficiency of its employees and increasing respondents’ clientele.
however. who attested to the truth of the contents therein. Inc. the daily time records (DTRs) of Yung. which allegedly prove that Yung had been charging her food and drinks to Wensha. after the Private Respondents filed their position paper. Thus. the instant petition is GRANTED. thus suspect. however. Second. 2004. the said pieces of evidence do not. much later than its date of filing. which supposedly prove her habitual tardiness. [Emphasis supplied] Hence. 2004. Third. she did not. if not violative of the best evidence rule and. It is also puzzling that their position paper was dated November 25. may have been duly executed under oath. In fact. delos Reyes only made general statements on the alleged complaints against Yung that were not even substantiated by any other piece of evidence. delos Reyes. the fallo of the CA decision reads: WHEREFORE. they subsequently moved for the admission of their rejoinder. earlier than the date when their position paper was filed. however. on the sales report and order slips. and Xu Zhi Jie are ORDERED . If at all. 2004.hearsay. Finally. the Private Respondents’ admission of Yung’s termination on August 31. or impute. They cannot use the mistake of their counsel as an excuse considering that the position paper was verified by their Operations Manager. therefore. Nevertheless. except that of Wensha. Hence. which was on November 3. the said rejoinder was dated October 4. they alleged mistake on the part of their former counsel in stating that Yung was dismissed on August 31. Wensha Spa Center. Finally. The irregularities are simply too glaring to be ignored. incompetent evidence. specify the alleged infractions that Yung committed. it does not state anyone’s name. Princess delos Reyes (delos Reyes). 2004. it would simply be capricious to pinpoint. Notably. on Yung as the author in charging such expenses to Wensha on the basis of hearsay evidence. bear Yung’s name thereon or even her signature. 2004 cannot be retracted. were mere photocopies that are not even signed by Wensha’s authorized representative. while the affidavit of Wensha’s Operations Manager. x x x [Emphases appear in the original] x x x x.
GROUNDS FOR THE PETITION THE ALLOWANCE OF 5. 5. Yung her full backwages. SO ORDERED. other privileges. Wensha and Xu now assail this ruling of the CA in this petition presenting the following: V.000. which justify the appeal by certiorari under Rule 45 of the 1997 Revised Rules of Civil Procedure.000.00) as exemplary damages.1 The following are the reasons and arguments. to this Honorable SUPREME COURT of the assailed Decision and Resolution.1. jointly and severally. twenty five thousand pesos (Php25. as amended. or their monetary equivalent. and benefits.1 The Honorable COURT OF APPEALS gravely erred in reversing that factual findings of the Honorable Labor Arbiter and the Honorable NLRC (Third Division) notwithstanding recognized and established rule in our jurisdiction that findings of facts of quasijudicial agencies who have gained expertise on their respective subject matters are given respect and finality. pay Loreta T.1.to. which are purely questions of law and some questions of facts.000.00) as attorney’s fees.00) as moral damages. 2004 up to the finality of this decision. to wit: 5. and damages in the amounts of fifty thousand pesos (Php50.2 The Honorable COURT OF APPEALS committed grave abuse of discretion and serious errors when it ruled that findings of facts of the Honorable Labor Arbiter and the Honorable NLRC are not supported by substantial evidence despite the fact that the records clearly show that petitioner therein was not dismissed but is . No costs. and twenty thousand pesos (Php20. corresponding to the period of her dismissal from September 1.
Article II that the State shall protect the rights of workers and promote their welfare. Under the security of tenure guarantee. The 1987 Philippine Constitution provides in Section 18.under investigation. and full backwages. Section 3. and before the employee can be dismissed. the employer bears the burden of proving that the dismissal of an . assuming that respondent was illegally dismissed.1. and would pose dangerous precedent. Article XIII also provides that all workers shall be entitled to security of tenure. in lieu of reinstatement. 5.1.4 The Honorable COURT OF APPEALS committed grave abuse of discretion and serious errors when it held that petitioner XU ZHI JIE to be solidarily liable with WENSHA. For a valid termination by the employer: (1) the dismissal must be for a valid cause as provided in Article 282. A just and valid cause for an employee’s dismissal must be supported by substantial evidence.2 The same need to be corrected as they would work injustice to the herein petitioner. as well as damages and attorney’s fees. grave and irreparable damage will be done to him. THE COURT’S RULING: Loreta’s security of tenure is guaranteed by the Constitution and the Labor Code. 5. In the process. and that she is guilty of serious infractions that warranted her termination. and (2) the employee must be afforded an opportunity to be heard and to defend himself. Article 3 of the Labor Code mandates that the State shall assure the rights of workers to security of tenure. 5. he must be given notice and an adequate opportunity to be heard. a worker can only be terminated from his employment for cause and after due process. Along that line. or for any of the authorized causes under Articles 283 and 284 of the Labor Code.3 The Honorable COURT OF APPEALS grave[ly] erred when it ordered herein petitioner to pay herein respondent her separation pay.
this office finds it more probable that the complainant was dismissed due to loss of trust and confidence. According to Wensha in its position paper. 2004. This case. The onus of proving a valid dismissal rests on the employer. not on the employee. however. declined because she had already filed her complaint. It claimed that she caused the resignation of an employee because of gossips initiated by her. Loss of trust and confidence to be a valid ground for dismissal must have basis and must be founded on clearly established facts. It is the employer who bears the burden of proving that its dismissal of the employee is for a valid or authorized cause supported by substantial evidence. It even sent her a notice requesting her to report back to work. Wensha asserted that her dismissal was a valid exercise of an employer’s right to terminate a managerial employee for loss of trust and confidence. As a rule. and abuse of authority. it dismissed Loreta on August 31. “[a]bsent any proof submitted by the complainant.” to be utterly erroneous as it is contrary to the applicable rules and pertinent jurisprudence. Its failure to discharge this burden renders the dismissal unjustified and. the factual findings of the court below are conclusive on Us in a petition for review on certiorari where We review only errors of law. She was also accused of dishonesty.employee was for a valid cause. serious breach of trust reposed in her.  . The Court finds the LA ruling that states. 2004 after investigating the complaints against her. It was the reason she was asked to take a leave of absence with pay for one month starting August 10. however. As correctly found by the CA. She. Wensha also alleged that Loreta was “sowing intrigues in the company” which was inimical to Wensha. Wensha changed its position claiming that it did not terminate Loreta’s employment on August 31. tardiness. is an exception because the CA’s factual findings are not congruent with those of the NLRC and the LA. therefore. In its Rejoinder. the cause of Loreta’s dismissal is questionable. illegal. 2004.
complainant reported to the office of respondents. a certain Oliva Gonzalo (Gonzalo) resigned from Wensha. She returned to work on September 10. 2004. 2005. she punched-in her time card and signed in the logbook of the security . After several hours of waiting. Loreta was advised to take a paid leave of absence for one month while Wensha conducted an investigation. She was ordered not to seek employment elsewhere and was told to come back on the 10th of September 2004. As usual. the reason for her termination was her aura did not match that of Xu and the work environment at Wensha. Loreta narrated: On August 10. 2004 however. Because of the incident. This is how Loreta recounted the events of that day: On September 10. however. The affidavits of employees attached to Delos Reyes’ affidavit were all dated November 19. respondent Xu then told complainant that according to the Feng Shui master her Chinese Zodiac sign is a “mismatch” with that of the respondents.According to the NLRC. “[p]erusal of the entire records show that complainant left the respondents’ premises when she was confronted with the infractions imputed against her. not in Wensha’s earlier position paper or pleadings submitted to the LA.” This information was taken from the affidavit of Princess Delos Reyes (Delos Reyes) which was dated March 21. “reportedly got angry with complainant and of the management telling her friends at respondent company that she would retaliate thus creating fear among those concerned. 2004. complainant was called by respondent Xu and told her to wait at the lounge area while the latter and a Feng Shui Master were doing some analysis of the office.” As a result. whose father was a policeman. in the morning. Although she was a little confused. According to Loreta. that complainant should not enter the administrative office for a month while an altar was to be placed on the left side where complainant has her table to allegedly correct the “mismatch” and that it is necessary that offerings and prayers have to be made and said for about a month to correct the alleged “jinx.” Respondent Xu instructed complainant not to report to the office for a month with assurance of continued and regular salary. It is also noteworthy that Wensha’s position paper related that because of the gossips perpetrated by Loreta. 2004 indicating that they were not yet executed when the complaints against Loreta were supposedly being investigated in August 2004. Gonzalo. Loreta did as she was instructed and did not report for work for a month.
the former frankly told complainant that she has to resign allegedly she is a mismatch to respondent Xu according to the Feng Shui master and therefore she does not fit to work (sic) with the respondents. xxx Loreta also alleged that in the afternoon of that day.a Annie Co. FORMER ADMINISTRATIVE OFFICER . After waiting for about two (2) hours.k. Jiang Xue Qin insisted for the complainant's resignation. Instead of a termination letter issued.guard. 2004. Instead. Hearing this from no lees than respondent Xu. Jian Xue Qin shouted invectives at her and told to leave the office immediately. the Chinese spiritual art of placement. September 10. Respondent Xu did not show up but talked to the complainant over the mobile phone and convinced her likewise to resign from the company since there is no way to retain her because her aura unbalanced the area of employment according to the Feng Shui. a notice was posted on the Wensha bulletin board that reads: TO ALL EMPLOYEES OF WENSHA SPA CENTER WE WOULD LIKE TO INFORM YOU THAT MS. xxx Complainant waited for respondent Xu in the dining area. who arrived and after a short conversation between them. When she entered the administrative office. some of its employees immediately contacted respondent Xu. Respondent Xu then contacted complainant thru her mobile phone and told her to leave the administrative office immediately and instead to wait for him in the dining area. respondent Xu was nowhere. LORIE TSE YUNG. complainant demanded of Jiang Xue Qin to issue a letter of termination if it were the reason therefor. But when complainant stood her ground. 2004. Surprised and shocked. it was Jiang Xue Qin a. the Chinese wife of respondent Xu. complainant left the office and went straight to this Office and filed the present case on September 10.
The CA decision is supported by evidence and logically flows from a review of the records. the affidavits of the employees only pertain to petty matters that. are not sufficient to support Wensha’s alleged loss of trust and confidence.) THE MANAGEMENT [Italics were in red letters. More importantly. There is consistency in her pleadings and evidence. to the Court’s mind. the records are bereft of evidence that Loreta was duly informed of the charges against her and that she was given the opportunity to respond to those charges prior to her dismissal. In contrast. would no . under the circumstances. 2004. Reinstatement. then it should have informed her of those charges and required her to explain her side. Loreta did not receive any of those required notices. Wensha’s pleadings and evidence. suffer from inconsistency. ANY TRANSACTION MADE BY HER IS NO LONGER A LIABILITY OF THE COMPANY.OF WENSHA SPA CENTER IS NO LONGERCONNECTED TO THIS COMPANY STARTING TODAY SEPTEMBER 10. taken as a whole. Loreta’s narration of the events surrounding her termination from employment was simple and straightforward. If there were indeed charges against Loreta that Wensha had to investigate.] The Court finds Loreta’s complaint credible. This is a requirement of due process and clearly. Moreover. the act or acts constituting breach of trust must have been done intentionally. knowingly. To be a valid cause for termination of employment. she is being terminated from her employment. and purposely. (SGD. Wensha should also have kept records of the investigation conducted while Loreta was on leave. and the second notice is the notice to the employee that upon due consideration of all the circumstances. and they must be founded on clearly established facts. The law requires that two notices be given to an employee prior to a valid termination: the first notice is to inform the employee of the charges against her with a warning that she may be terminated from her employment and giving her reasonable opportunity within which to explain her side. Her claims are more credible than the affidavits which were clearly prepared as an afterthought. We are in accord with the pronouncement of the CA that the reinstatement of Loreta to her former position is no longer feasible in the light of the strained relations between the parties.
an illegally dismissed employee is entitled to two reliefs backwages and reinstatement. the payment of separation pay has been considered an acceptable alternative to reinstatement when the latter option is no longer desirable or viable. the CA. The CA. We wrote: Under the doctrine of strained relations. If reinstatement would only exacerbate the tension and further ruin the relations of the employer and the employee. it would be prudent to order payment of separation pay instead of reinstatement. Under the law and jurisprudence. or if their relationship has been unduly strained due to irreconcilable differences. it imports a dishonest purpose or some moral obliquity and . The respondent has not contested the finding. Bad faith does not connote bad judgment or negligence. the payment releases the employer from the grossly unpalatable obligation of maintaining in its employ a worker it could no longer trust. Nevertheless. “Mere ownership by a single stockholder or by another corporation of all or nearly all of the capital stock of a corporation is not of itself sufficient ground for disregarding the separate corporate personality. the Court finds merit in the argument of petitioner Xu that the CA erred in ruling that he is solidarily liable with Wensha. On the one hand. corporate directors and officers may be held solidarily liable with the corporation for the termination of employment only if done with malice or in bad faith. Talde. Elementary is the rule that a corporation is invested by law with a personality separate and distinct from those of the persons composing it and from that of any other legal entity to which it may be related. such payment liberates the employee from what could be a highly oppressive work environment. As she is not insisting on being reinstated.longer be practical as it would not be in the interest of both parties. In the case at bench. On the other. which are separate and distinct. failed to decree such award in the dispositive portion.” In labor cases. In the case of Golden Ace Builders v. particularly where the illegally dismissed employee held a managerial or key position in the company. upon its own assessment. pronounced that the relations between petitioners and the respondent have become strained because of her dismissal anchored on dubious charges. she should be paid separation pay equivalent to one (1) month salary for every year of service. however. This should be rectified.
and Twenty Thousand (P20.00) Pesos. is hereby ordered to pay Loreta T. it partakes of the nature of fraud. SO ORDERED. and separation pay reckoned from the date of her dismissal. 2004.000. other privileges. The decretal portion of the May 28. 2008 Decision of the Court of Appeals.000. in CA-G. No costs. the petition is GRANTED. In the subject decision. therefore.R. There is. Wensha Spa Center. We have read the decision in its entirety but simply failed to come across any finding of bad faith or malice on the part of Xu. 98855. September 1. as moral damages. To sustain such a finding. Inc.00) Pesos as exemplary damages. the petition is PARTIALLY GRANTED. SP No.conscious doing of wrong. the CA concluded that petitioner Xu and Wensha are jointly and severally liable to Loreta. there should be an evidence on record that an officer or director acted maliciously or in bad faith in terminating the services of an employee. . Twenty Five Thousand (P25. WHEREFORE. Yung her full backwages. it means breach of a known duty through some motive or interest or ill will. is hereby MODIFIED to read as follows: WHEREFORE. as attorney’s fees. and benefits. up to the finality of this decision. no justification for such a ruling.00) Pesos. plus damages in the amounts of Fifty Thousand (P50. or their monetary equivalent. the finding or indication that the dismissal was effected with malice or bad faith should be stated in the decision itself.  Moreover.000.
Logronio. (Phil. the Judge was informed that the depositions had already been taken. 1 filed a separate concurring opinion to which 1 concurs. he could be charged for perjury. that preliminary prohibitory and mandatory writs of injunction be issued. he instructed his Deputy Clerk of Court to take the depositions of De Leon and Logronio. and Frederick E. the Judge asked Logronio to take the oath and warned him that if his deposition was found to be false and without legal basis. dissolved or recalled. The Judge signed de Leon's application for search warrant and Logronio's deposition. wrote a letter addressed to Judge Vivencio M. (Phil. vs. Ruiz [GR L-32409.). At that time the Judge was hearing a certain case. and a search warrant already accomplished but still unsigned by Judge. The agents nevertheless proceeded with their search which yielded 6 boxes of documents. so. De Leon and his witness. 72. an affidavit of Logronio subscribed before De Leon. Arturo Logronio. The stenographer. Villamor (J): 7 concur. by means of a note. Commissioner of Internal Revenue. Vera. 3 days later (a Saturday). a deposition in printed form of Logronio already accomplished and signed by him but not yet subscribed. an application for search warrant already filled up but still unsigned by De Leon. 73.) Inc. On 3 March 1970. In the afternoon of the following day. 1 concurs in result Facts: On 24 February 1970. Seggerman for violation of Section 46(a) of the National Internal Revenue Code (NIRC). Inc. the BIR agents served the search warrant to the corporation and Seggerman at the offices of the corporation on Ayala Avenue. Misael P. in relation to all other pertinent provisions thereof. 208 and 209. After the session had adjourned. went to the Court of First Instance (CFI) of Rizal. The corporation's lawyers protested the search on the ground that no formal complaint or transcript of testimony was attached to the warrant. and thereafter.Bache & Co. that the search warrant be declared null and void. Ruiz requesting the issuance of a search warrant against Bache & Co. Makati. and authorizing Revenue Examiner Rodolfo de Leon to make and file the application for search warrant which was attached to the letter. 27 February 1971] En Banc. upon request of the Judge. They brought with them the following papers: Vera's letter-request. the corporation and Seggerman filed a petition with the Court of First Instance (CFI) of Rizal praying that the search warrant be quashed. particularly Sections 53. read to him her stenographic notes. and that Vera. Search Warrant 2-M-70 was then signed by Judge and accordingly issued. de . Rizal.
is itself a petitioner. only the officers of the various corporations in whose offices documents. the search warrant was void inasmuch as First. The Judge did . prohibition. herein. while in the latter. vs.97. In Stonehill. the offices they hold therein may be. et al.594. regardless of the amount of shares of stock or the interest of each of them in said corporations. and whose rights have thereby been impaired. (GR L-19550. Diokno. Issue: Whether the corporation has the right to contest the legality of the seizure of documents from its office Revenue Examiner Rodolfo de Leon to make and file the application for search warrant which was attached to the letter Held: The legality of a seizure can be contested only by the party whose rights have been impaired thereby. since the right to object to the admission of said papers in evidence belongs exclusively to the corporations.. and may not be invoked by the corporate officers in proceedings against them in their individual capacity. Moreover. based on the documents thus seized. if not entirely. be ordered to pay the corporation and Seggerman. On that score. there was no personal examination conducted by the Judge of the complainant (De Leon) and his witness (Logronio). partly. et al.729. papers and effects were searched and seized were the petitioners. the Bureau of Internal Revenue made tax assessments on the corporation in the total sum of P2. and mandamus. and that the objection to an unlawful search and seizure is purely personal and cannot be availed of by third parties. separate and distinct from the personality of the corporate officers. the corporation herein stands on a different footing from the corporations in Stonehill. the court issued an order dismissing the petition for dissolution of the search warrant. papers and things seized from the offices and premises of the corporations. damages and attorney's fees. 20 SCRA 383) the Supreme Court impliedly recognized the right of a corporation to object against unreasonable searches and seizures. jointly and severally. the corporation to whom the seized documents belong. or on 16 April 1970. After hearing and on 29 July 1970. to whom the seized effects belong. In the meantime.Leon. 19 June 1967. and that the corporate officers therefore may not validly object to the use in evidence against them of the documents. whatever. The distinction between the Stonehill case and the present case is that: in the former case. al. et. The corporation and Seggerman filed an action for certiorari. holding that the corporations have their respective personalities.
could possibly render its business inoperative. The third is the violation of Section 208 (unlawful pursuit of business or occupation). the search warrant was issued for more than one specific offense. if seized. 2-M-70 tends to defeat the major objective of the Bill of Rights. Search Warrant 2-M-70 is null and void. This cannot be consider a personal examination. and Seggerman. while Sections 208 and 209 are under Title V (Privilege Tax on Business and Occupation). the search warrant does not particularly describe the things to be seized. Even in their classification the 6 provisions are embraced in 2 different titles: Sections 46(a). i. The search warrant was issued for at least 4 distinct offenses under the Tax Code. Lastly. Section 72 and Section 73 (the filing of income tax returns). to a few words of warning against the commission of perjury. The first is the violation of Section 46(a). Search Warrant No. The second is the violation of Section 53 (withholding of income taxes at source). business or gross value of output actually removed or to pay the tax due thereon). the elimination of general warrants. Second.. The participation of the Judge in the proceedings which led to the issuance of Search Warrant 2-M-70 was thus limited to listening to the stenographer's readings of her notes. which. sales. which are interrelated. 72 and 73 are under Title II (Income Tax). and to administering the oath to the complainant and his witness. . for the language used therein is so all-embracing as to include all conceivable records of the corporation. 53.not ask either of the two any question the answer to which could possibly be the basis for determining whether or not there was probable cause against Bache & Co.e. and the fourth is the violation of Section 209 (failure to make a return of receipts. Thus.