SANTOS V.

NLRC 287 SCRA 117 (1998)

BY THE WAY
By: Dean Antonio H. Abad, Jr.

In the case of Santos vs. NLRC (287 SCRA 117 [1998]), Mr. Santos, a married man, was employed by the school
as a teacher. Likewise a teacher for the school was Mrs. Martin, also married. In the course of their employment,
the couple fell in love. Thereafter, rumors regarding the couple’s relationship spread, especially among the faculty
members and school officials.

The crux of the controversy is whether the illicit relationship between Mr. Santos and Mrs. Martin could be
considered immoral as to constitute just cause to terminate an employee under Article 282 of the Labor Code.

Under 282 of the Labor Code, as amended, the following are deemed just causes to terminate an employee:

a Serious misconduct or willful disobedience by the employee of the lawful orders of his employer or
representative in connection with his work;
b Gross and habitual neglect by the employee of his duties;
c Fraud or willful breach by the employee of the trust reposed in him by his employer or duly authorized
representative;
d Commission of a crime or offense by the employee against the person of his employer or any immediate
member of his family or his duly authorized representatives; and
e Other causes analogous to the foregoing.

Moreover, it is provided inter alia under Section 94 of the Manual of Regulations for Private Schools:
“Section 94. Causes of terminating Employment. – In addition to the just cases enumerated in the labor Code, the
employment of school personnels, including faculty, may be terminated for any of the following causes:
xxx xxx xxx

E Disgraceful or immoral conduct.”

On the outset, the Supreme Court stressed that to constitute immorality, the circumstances of each particular case
must be holistically considered and evaluated in light of the prevailing norms of conduct and applicable
laws. American jurisprudence has defined immorality as a course of conduct which offends the morals of the
community and is a bad example to the youth whose ideals a teacher is supposed to foster and to elevate, the same
including sexual misconduct. Thus, in Mr. Santos’ case, the gravity and seriousness of the charges against him
stem from his being a married man and at the same time a teacher.
The Supreme Court said that it cannot overemphasize that having an extra-marital affair is an affront to the sanctity
of marriage, which is a basic institution of society. Even our Family Code provides that husband and wife must
live together, observe mutual love, respect and fidelity. This is rooted in the fact that both our Constitution and
our laws cherish the validity of marriage and unity of the family. Our laws, in implementing this constitutional
edict on marriage and the family underscore their permanence, inviolability and solidarity.
As a teacher, Mr. Santos serves as an example to his pupils, especially during their formative years and stands in
loco parentis to them. To stress their importance in our society, teachers are given substitute and special parental
authority under our laws.
Consequently, it is but stating the obvious to assert that teachers must adhere to the exacting standards of morality
and decency. There is no dichotomy of morality. A teacher, both in his official and personal conduct, must
display exemplary behavior. He must freely and willingly accept restrictions on his conduct that might be viewed
irksome by ordinary citizrns. In other words, the personal behavior of teachers, in and outside the classroom,
must be beyond reproach.
Accordingly, teachers must abide by a standard of personal conduct which not only proscribes the commission of
immoral acts, but also prohibits behavior creating a suspicion of immorality because of the harmful impression it
might have on the students. Likewise, they must observe a high standard of integrity and honesty.
From the foregoing, it seems obvious that when a teacher engages in extra-marital relationship, especially when
the parties are both married, such behavior amount to immorality, justifying termination from employment.

Corporate Law Case Digest: Stockholders Of F. Guanzon And Sons, Inc V. Register Of Deeds Of Manila

(1962)
G.R. No. L-18216 October 30, 1962
Lessons Applicable: Strong Juridical Personality (Corporate Law)

FACTS:
 Sept 19, 1960: 5 stockholders of the F. Guanzon and Sons, Inc. executed a certificate of liquidation of the
assets of the corporation, dissolution and distribution among themselves in proportion to their
shareholdings, as liquidating dividends, corporate assets, including real properties

 Register of Deeds of Manila denied the registration of the certificate of liquidation:

1. The number of parcels not certified to in the acknowledgment;

2. P430.50 Reg. fees need be paid;

3. P940.45 documentary stamps need be attached to the document;

4. The judgment of the Court approving the dissolution and directing the disposition of the assets of the
corporation need be presented

 Commissioner of Land Registration overruled ground No. 7 and sustained requirements Nos. 3, 5 and 6.

 Stockholders appealed

 contend that the certificate of liquidation is not a conveyance or transfer but merely a distribution of the
assets of the corporation which has ceased to exist for having been dissolved

ISSUE: W/N certificate merely involves a distribution of the corporation's assets (or should be considered a
transfer or conveyance)

HELD: NO. affirm the resolution appealed from

 Corporation - juridical person distinct from the members composing it.

 Properties registered in the name of the corporation are owned by it as an entity separate and distinct from
its members.

 While shares of stock constitute personal property they do not represent property of the corporation.

 A share of stock only typifies an aliquot part of the corporation's property, or the right to share in its
proceeds to that extent when distributed according to law and equity but its holder is NOT the owner of any
part of the capital of the corporation nor entitled to possession

 The stockholder is not a co-owner or tenant in common of the corporate property

Manila Gas vs. Collector

FACTS: This is an action brought by the Manila Gas Corporation against the Collector of Internal Revenue for
the recoveryof P56,757.37, which the plaintiff was required by the defendant to deduct and withhold from the
various sums paid it toforeign corporations as dividends and interest on bonds and other indebtedness and which
the plaintiff paid under protest.

ISSUES: Won the Collector of Internal Revenue was justified in withholding income taxes on interest on bonds
and otherindebtedness paid to nonresident corporations

RULING: YES. The approved doctrine is that no state may tax anything not within its jurisdiction without
violating the dueprocess clause of the constitution. The taxing power of a state does not extend beyond its
territorial limits, but within such itmay tax persons, property, income, or business. If an interest in property is
taxed, the situs of either the property or interestmust be found within the state. If an income is taxed, the
recipient thereof must have a domicile within the state or theproperty or business out of which the income issues
must be situated within the state so that the income may be said tohave a situs therein. Personal property may be
separated from its owner, and he may be taxed on its account at the placewhere the property is although it is not
the place of his own domicile and even though he is not a citizen or resident of thestate which imposes the tax.
But debts owing by corporations are obligations of the debtors, and only possess value in thehands of the
creditors.The Manila Gas Corporation operates its business entirely within the Philippines. Its earnings,
therefore come from localsources. The place of material delivery of the interest to the foreign corporations paid
out of the revenue of the domesticcorporation is of no particular moment. The place of payment even if
conceded to be outside of the country cannot alter thefact that the income was derived from the Philippines. The
word "source" conveys only one idea, that of origin, and theorigin of the income was the Philippines.Taxation
Law Case Digest

Magsaysay-Labrador, et. al. vs. Court of Appeals

[GR 58168, 19 December 1989]

Facts: On 9 February 1979, Adelaida Rodriguez-Magsaysay, widow and special administratix of the estate of the
late Senator Genaro Magsaysay, brought before the then Court of First Instance of Olongapo an action against
Artemio Panganiban, Subic Land Corporation (SUBIC), Filipinas Manufacturer's Bank (FILMANBANK) and
the Register of Deeds of Zambales, for the annulment of the Deed of Assignment executed by the late Senator in
favor of SUBIC (as a result of which TCT 3258 was cancelled and TCT 22431 issued in the name of SUBIC), for
the annulment of the Deed of Mortgage executed by SUBIC in favor of FILMANBANK (dated 28 April 1977 in
the amount of P 2,700,000.00), and cancellation of TCT 22431 by the Register of Deeds, and for the latter to issue
a new title in her favor. On 7 March 1979, Concepcion Magsaysay-Labrador, Soledad Magsaysay-Cabrera, Luisa
Magsaysay-Corpuz, Felicidad Magsaysay, and Mercedes Magsaysay-Diaz, sisters of the late senator, filed a
motion for intervention on the ground that on 20 June 1978, their brother conveyed to them 1/2 of his
shareholdings in SUBIC or a total of 416,566.6 shares and as assignees of around 41 % of the total outstanding
shares of such stocks of SUBIC, they have a substantial and legal interest in the subject matter of litigation and
that they have a legal interest in the success of the suit with respect to SUBIC. On 26 July 1979, the trial court
denied the motion for intervention, and ruled that petitioners have no legal interest whatsoever in the matter in
litigation and their being alleged assignees or transferees of certain shares in SUBIC cannot legally entitle them
to intervene because SUBIC has a personality separate and distinct from its stockholders.

On appeal, the Court of Appeals found no factual or legal justification to disturb the findings of the lower court.
The appellate court further stated that whatever claims the Magsaysay sisters have against the late Senator or
against SUBIC for that matter can be ventilated in a separate proceeding. The motion for reconsideration of the
Magsaysay sisters was denied. Hence, the petition for review on certiorari.

Issue: Whether the Magsaysay sister, allegedly stockholders of SUBIC, are interested parties in a case where
corporate properties are in dispute.
Held: Viewed in the light of Section 2, Rule 12 of the Revised Rules of Court, the Magsaysay sisters have no
legal interest in the subject matter in litigation so as to entitle them to intervene in the proceedings. To be permitted
to intervene in a pending action, the party must have a legal interest in the matter in litigation, or in the success of
either of the parties or an interest against both, 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 . Here, the interest, if it exists
at all, of the Magsaysay sisters is indirect, contingent, remote, conjectural, consequential and collateral. At the
very least, their interest is purely inchoate, 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, after payment of the
corporate debts and obligations. While a share of stock represents a proportionate or aliquot interest in the property
of the corporation, it does not vest the owner thereof with any legal right or title to any of the property, his interest
in the corporate property being equitable or beneficial in nature. Shareholders are in no legal sense the owners of
corporate property, which is owned by the corporation as a distinct legal person.

GOOD EARTH EMPORIUM VS CA (194 SCRA 544)

Good Earth Emporium Inc. vs Court of Appeals

194 SCRA 544 [GR No. 82797 February 27, 1991]

Facts: A lease contract, dated October 16, 1981, was entered into by and between Roces-Reyes Realty Inc. as
lessor, and Good Earth Emporium Inc. (GEE) as lessee for a term of three years beginning November 1, 1981 and
ending October 31, 1984 at a monthly rental of Php65,000. The building which was the subject of the contract of
lease is a five story building located at the corner of Rizal Avenue and Bustos Street in Sta. Cruz, Manila. From
March 1983 up to the complaint was filed, the lessee had defaulted in the payment of rentals, as a consequence of
which, private respondent Roces-Reyes Realty Inc. filed on October 14, 1984 an ejectment case against herein
petitioners, Good Earth Emporium Inc. and Lim Ka Ring. After the latter had tendered their responsive pleading,
the lower court on motion of Roces rendered judgement on the pleadings dated April 17, 1984 to which petitioners
were ordered to vacate the premises and surrender the same to the plaintiffs. On May 16, 1984, Roces filed a
motion for execution which was opposed by petitioners on May 28, 1984 simultaneous with the latter’s filing of
a notice of appeal. However, on August 15, 1984, GEE thru counsel filed a motion to withdraw said appeal citing
as reason that they are satisfied with the decision of the lower court.

Issue: Whether or not the payment made by GEE to the Roces brothers constitute payment to private respondent
corporation which would result to the extinguishment of the obligation.

Held: No. Under article 1240 of the civil code of the Philippines – Payment shall be made to the person in whose
favor the obligation has been constituted, on his successor in interest or any person authorized to receive it.

In the case at bar, the supposed payments were not made to Roces-Reyes Realty Inc. or to its successors in interest
nor is there positive evidence that payment was made to a person authorized to receive it. No such proof was
submitted but merely inferred by the RTC from Marcos Roces having signed the lease contract as President which
was witnessed by Jesus Marcos Roces. The later, however, was no longer President or even an officer of the
Roces-Realty Inc at the time he received the money and signed the sale with pacto de retro. He, in fact denied
being in possession of authority to receive payment for the respondent corporation nor does the receipt show that
he signed in the same capacity as he did in the lease contract at a time when he was President for respondent
corporation.

A corporation has a personality distinct and separate from its individual stockholders or members. Being an officer
or stockholder of a corporation does not make one’s property also of the corporation, and vice-versa, for they are
separate entities. Share owners are in no legal sense the owners corporate property which is owned by the
corporation as a distinct legal person. As a consequence of the separate juridical personality of a corporation, the
corporate debt or credit is not the debt or credit of the stockholder, nor is the stockholder’s debt or credit that of
the corporation.