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Case Digest on Andres Lao vs. CA, Associated Anglo-American Tabacco Corp. and Esteban Co.

July 27, 2010

Andres Lao vs. CA, the Associated Anglo-Amedican Tabacco Corp. and Esteban Co.
February 17, 2000
Corporate Officers not personally liable for Authorized Corporate Acts
Facts: In 1965 a Contract of Sales Agent was entered by the Association of Anglo-American Tobacco Corporation with Andres Lao.  Lao was to sell cigarettes manufactured and shipped by the Corporation to his address in Tacloban, and he would remit the sales proceeds.  Lao would receive commission for those sold, with a monthly salary and operational allowance.  In 1968 Lao’s attention was called to his enormous accounts and the difficulty in obtaining a tally despite his avowal of regular remittance of collections.  In 1969 it was established that his liability amounted to P525,053.  Also, the Corp. discovered that Lao was engaged in a construction business and suspecting that he diverted the sale proceeds to such business, it gave a demand letter for payment of his obligations.  It also found that contrary to his allegations, he did not have a huge collectible from customers and nothing was due to the Corporation.  From then on, the Corp. no longer sent him shipments.  In 1970, Andres, Jose and Tomas Lao brought a complaint for accounting and damages against the Corp..  The court ordered both to undergo a court supervised accounting but also ordered the Corporation to pay the Lao’s actual loss of earnings, moral damages, exemplary damages, atty. fees and cost of suit.  Later the court gave a supplemental decision dismissing Lao’s claim of overpayment.  The Corp. and the Lao’s appealed.  The CA found the Corp. 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 Corp. 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 or not Co should be held solidarily liable with the Corp.

Held:    A perusal of his affidavit reveals that at the time he filed the complaint on June 1974, Co was vice president of the Corp.  As a corporate officer, his power to bind the Corp 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 Co’s 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 Corp. vested Co with certain executive duties, one of which is the case for the Corp.  That Co was authorized to institute the estafa case is buttressed by the fact the Corp failed to make an issue out of his authority to file the case.  The defense should have been specially pleaded by the Corp.  Its failure to interpose such defense 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.

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