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Ongkingko v.

G.R. No. 119877, March 31, 1997

Galeria de Magallanes Condominium Association, Inc. (Galeria for brevity) is a
non-stock, non-profit corporation formed in accordance with R.A. No. 4726,
otherwise known as the Condominium Act. "Its primary purpose is to hold title to the
common areas of the Galeria de Magallanes Condominium Project and to manage
and administer the same for the use and convenience of the residents and/or
owners." Petitioner Bienvenido Ongkingco was the president of Galeria at the time
private respondent filed his complaint.
Guilas was appointed as an Administrator/Superentendent by the Board of
Directors (BOD) of Galeria.In 1992, Guilas, through a board resolution was not re-
appointed as Administrator. He then instituted a complaint for illegal dismissal and
non-payment of salaries. Petitioner filed a motion to dimiss alleging that he SEC,
and not the Labor Arbiter (LA), which has jurisdiction over the subject matter of the
case. It was granted by the LA stating that: 1.) the position of administrator is a
corporate position; and 2.) under the Article of Incorporation of the corporation, the
appointment and removal of the administrator is prerogative of the BOD, and
thereby involves the exercise of deliberate choice and faculty of discriminative
selection. It was reversed by the NLRC stating that the case is within the jurisdiction
of the NLRC. This is so, because while it may be true that the termination of the
complainant was effected allegedly by a resolution of the Board of Directors of the
respondent association, this did not make the dispute intracorporate in nature.
Moreover, the complainant is neither a member of the association nor an officer
thereof. Hence, he is an employee of the respondent association occupying the
position of administrator.
Whether the case is within the jurisdiction of the NLRC.
No. Guilas is a corporate officer. It has been held that an "office" is created by
the charter of the corporation and the officer is elected by the directors or
stockholders. On the other hand, an "employee" usually occupies no office and
generally is employed not by action of the directors or stockholders but by the
managing officer of the corporation who also determines the compensation to be
paid to such employee.

In the case at bar, considering that herein petitioner, unlike an ordinary

employee, He was appointed directly by the Board of Directors not by any managing
officer of the corporation and his salary was, likewise, set by the same Board, he is
deemed an officer of the corporation. Perforce, Section 5(c) of Presidential Decree
No. 902-A, which provides that the SEC exercises exclusive jurisdiction over
controversies in the election or appointment of directors, trustees, officers or
managers of corporations, partnerships or associations, applies in the present
dispute. Accordingly, jurisdiction over the same is vested in the SEC, and not in the
Labor Arbiter or the NLRC.

Andres Lao v. CA
Gr. No. 47013, February 17, 2000

The Association Anglo-American Tobacco Corporation entered into a Contract
of Sales Agent with Lao. Under the contract, Lao agreed to sell cigarettes
manufactured and shipped by the Corporation to his business address in Tacloban
City. Lao would in turn remit the sales proceeds to the Corporation. For his services,
Lao would receive commission depending on the kind of cigarettes sold, fixed
monthly salary, and operational allowance. As a guarantee to Lao's compliance with
his contractual obligations, his brother Jose and his father Tomas executed a deed of
mortgage in favor of the Corporation in the amount of P200,000.
Lao had been regularly remitted the proceeds of his sales until February 1968
where he failed to accomplish his monthly sales report. His liability was accounted
and it amount to P525,053.47.
The Corporation discovered that Lao was engaging in the construction
business so much so that it suspected that Lao was diverting the proceeds of his
sales to finance his business. In the demand letter of April 15, 1979, counsel for the
Corporation sought payment of the obligations of Lao, warning him of the intention
of the Corporation to foreclose the mortgage.
Since Lao appeared to encounter difficulties in complying with his obligations
under the contract of agency, the Corporation sent Ngo Kheng to supervise Lao's
sales operations in Leyte and Samar. Ngo Kheng discovered that, contrary to Lao's
allegation that he still had huge collectibles from his customers, nothing was due
the Corporation from Lao's clients. From then on, Lao no longer received shipments
from the Corporation which transferred its vehicles to another compound controlled
by Ngo Kheng. Shipments of cigarettes and the corresponding invoices were also
placed in the name of Ngo Kheng.

On May 21, 1970, Andres, Jose and Tomas Lao brought a complaint for
accounting and damages with writ of preliminary injunction against the Corporation.

The court ordered both to undergo a court supervised accounting but also
ordered the Corporation to pay the Laos actual loss of earnings, moral damages,
exemplary damages, atty. fees and cost of suit. Later the court gave a supplemental
decision dismissing Laos claim of overpayment. The Corp. and the Laos appealed.
The CA found the corporation liable for actual damages of loss of earnings, moral
damages and exemplary damages. It also ordered the Corp. to pay the claim of
overpayment by Lao. The corporation file a motion for reconsideration and during its
pendency, Esteban Co, the new VP of the Corp. filed a complaint with the fiscal
alleging Lao failed to remit an amount which he allegedly misappropriated and
converted to his own personal use. Pending the criminal case, Lao filed against the
Corp. and Esteban Co a complaint for malicious prosecution. The fiscal found that
Lao did not commit estafa and that his liability was civil. The trial court found the
Corp and Esteban Co guilty of malicious prosecution. They appealed. Co asserts that
he cannot be held jointly and severally liable with the Corp. as he was acting as
executive vice president and his action was within the scope of his authority as such
corporate officer

Issue: Whether Esteban Co will be solidary liable with the

Yes. A perusal of his affidavit reveals that at the time he filed the complaint
on June 1974, Co was vice president of the corporation. As a corporate officer, his
power to bind the corporation as its agent must be sought from statute, charter, by-
laws, a delegation of authority to a corporate officer, or from the acts of the board
of directions, expressed or implied from custom of doing business.
In this case, no such sources of Cos authority from which to deduce whether
or not he was acting beyond the scope of his responsibilities are mentioned, or
proven. It is logical to conclude that the board or by-laws of the corporation vested
Co with certain executive duties, one of which is the case for the corporation. That
Co was authorized to institute the estafa case is buttressed by the fact the
corporation failed to make an issue out of his authority to file the case. The defence
should have been specially pleaded by the corporation. Its failure to interpose such
defence could only mean that the filing of Co was with consent and authority of the
Corp. Thus, Co may not be held personally liable for acts performed by him in
pursuance of an authority.
De Tavera v. Philippine Tuberculosis Society
Gr. No. L-48928 February 25, 1982

De Tavera is a doctor of Medicine by profession and a recognized specialist in
the treatment of tuberculosis. She is a member of the Board of Directors of the
defendant Society, in representation of the PCSO. She was duly appointed as
Executive Secretary of the Society. On May 29, 1974, the past Board of Directors
removed her summarily from her position, the lawful cause of which she was not
informed, through the simple expedient of declaring her position vacant. Defendant
Romulo was appointed to the position and defendants Pardo, Nubla, Garcia and Adil,
not being members of defendant Society were elevated as members of the Board of
Directors. Not being qualified, petitioner alleged said acts to be null and void. The
court a quo rendered a decision holding that the present suit being one for quo
warranto it should be filed within one year from plaintiff's ouster from office; that
nevertheless, plaintiff was not illegally removed from her position as Executive
Secretary in The Society since plaintiff was holding an appointment at the pleasure
of the appointing power and hence temporary.
Whether petitioner was illegally removed from her position in
violation of Code of By-Laws of the society.
No. It appears from the records, specifically the minutes of the special
meeting of the Society on August 3, 1972, that petitioner was designated as Acting
Executive Secretary with an honorarium of P200.00 monthly in view of the
application of Dr. Jose Y. Buktaw for leave effective September 1, 1972 for 300
working days. This designation was formalized in Special Order No. 110, s. 1972
wherein it was indicated that: "This designation shall take effect on September 1,
1972 and shall remain until further advice."
Although the minutes of the organizational meeting show that the Chairman
mentioned the need of appointing a "permanent" Executive Secretary, such
statement alone cannot characterize the appointment of petitioner without a
contract of employment definitely fixing her term because of the specific provision
of Section 7.02 of the Code of By-Laws that: "The Executive Secretary, the Auditor,
and all other officers and employees of the Society shall hold office at the pleasure
of the Board of Directors, unless their term of employment shall have been fixed in
their contract of employment." Besides the word permanent" could have been used
to distinguish the appointment from acting capacity".

The absence of a fixed term in the letter addressed to petitioner informing

her of her appointment as Executive Secretary is very significant. This could have
no other implication than that petitioner held an appointment at the pleasure of the
appointing power.

An appointment held at the pleasure of the appointing power is in essence

temporary in nature. It is co-extensive with the desire of the Board of Directors.
Hence, when the Board opts to replace the incumbent, technically there is no
removal but only an expiration of term and in an expiration of term, there is no need
of prior notice, due hearing or sufficient grounds before the incumbent can be
separated from office. The protection afforded by Section 7.04 of the Code of By-
Laws on Removal of Officers and Employees, therefore, cannot be claimed by

The act of the Board in declaring her position as vacant is not only in
accordance with the Code of By-Laws of the Society but also meets the exacting
standards of honesty and good faith. The meeting of May 29, 1974, at which
petitioner ,petitioner's position was declared vacant, was caged specifically to take
up the unfinished business of the Reorganizational Meeting of the Board of April 30,
1974. Hence, and act cannot be said to impart a dishonest purpose or some moral
obliquity and conscious doing to wrong but rather emanates from the desire of the
Board to reorganize itself.