DETECTIVE & PROTECTIVE BUREAU, INC.

, petitioner,
vs.
THE HONORABLE GAUDENCIO CLORIBEL, in his capacity as Presiding Judge of Branch VI, Court of First
Instance of Manila, and FAUSTINO S. ALBERTO, respondents.

Crispin D. Biazas and Associates and Jose S. Sarte for petitioner.

Gaudencio T. Bocobo for respondents.

ZALDIVAR, J.:

The complaint, in Civil Case No. 56949 of the Court of First Instance of Manila, dated May 4, 1964, filed by
Detective and Protective Bureau, Inc., therein plaintiff (petitioner herein) against Fausto S. Alberto, therein
defendant (respondent herein), for accounting with preliminary injunction and receivership, alleged that plaintiff was
a corporation duly organized and existing under the laws of the Philippines; that defendant was managing director
of plaintiff corporation from 1952 until January 14, 1964; that in June, 1963, defendant illegally seized and took
control of all the assets as well as the books, records, vouchers and receipts of the corporation from the
accountant-cashier, concealed them illegally and refused to allow any member of the corporation to see and
examine the same; that on January 14, 1964, the stockholders, in a meeting, removed defendant as managing
director and elected Jose de la Rosa in his stead; that defendant not only had refused to vacate his office and to
deliver the assets and books to Jose de la Rosa, but also continued to perform unauthorized acts for and in behalf
of plaintiff corporation; that defendant had been required to submit a financial statement and to render an
accounting of his administration from 1952 but defendant has failed to do so; that defendant, contrary to a
resolution adopted by the Board of Directors on November 24, 1963, had been illegally disposing of corporate
funds; that defendant, unless immediately restrained ex-parte, would continue discharging the functions of
managing director; and that it was necessary to appoint a receiver to take charge of the assets and receive the
income of the corporation. Plaintiff prayed that a preliminary injunction ex-parte be issued restraining defendant
from exercising the functions of managing director and from disbursing and disposing of its funds; that Jose M.
Barredo be appointed receiver; that, after judgment, the injunction be made permanent and defendant be ordered
to render an accounting.

Herein respondent Judge, the Honorable Gaudencio Cloribel, set for hearing plaintiff's prayer for ancillary relief and
required the parties to submit their respective memoranda. On June 18, 1964, respondent Judge granted the writ of
preliminary injunction prayed for, conditioned upon plaintiff's filing a bond of P5,000.00. Plaintiff filed the bond, but
while the same was pending approval defendant Fausto S. Alberto filed, on July 1, 1964, a motion to admit a
counter-bond for the purpose of lifting the order granting the writ of preliminary injunction. Inspite of the opposition
filed by plaintiff, respondent Judge issued, on August 5, 1964, an order admitting the counterbond and setting aside
the writ of preliminary injunction.

On the belief that the order approving the counter-bond and lifting the writ of preliminary injunction was contrary to
law and the act of respondent Judge constituted a grave abuse of discretion, and that there was no plain, speedy
and adequate remedy available to it, plaintiff filed with this Court the instant petition for certiorari, praying that a writ
of preliminary injunction enjoining defendant Fausto S. Albert from exercising the functions of managing director be
issued, and that the order dated August 5, 1964 of respondent Judge approving the counter-bond and lifting the writ
of preliminary injunction he had previously issued be set aside and declared null and void. The Court gave due
course to the petition but did not issue a preliminary injunction.

In his answer, now respondent Fausto S. Alberto traversed the material allegations of the petition, justified the order
complained of, and prayed for the dismissal of the petition.

From the pleadings, it appears that the only issue to be resolved is whether the order of respondent Judge dated
August 5, 1964, admitting and approving the counter-bond of P5,000 and setting aside the writ of preliminary
injunction granted in his order dated June 18, 164, was issued contrary to law and with grave abuse of discretion.

Now petitioner contends that the setting aside of the order granting the writ was contrary to law and was done with
a grave abuse of discretion, because: (1) the motion to admit defendant's counter-bond was not supported by
affidavits showing why the counter-bond should be admitted, as required by Section 6 of Rule 58; (2) the
preliminary injunction was not issued ex-parte but after hearing, and the admission of the counter-bond rendered
said writ ineffective; (3) the writ was granted in accordance with Rule 58 of the Rules of Court and established
precedents' (4) public interest required that the writ be not set aside because respondent had arrogated unto
himself all the powers of petitioning corporation, to the irreparable damage of the corporation; and that (5) the
counter-bond could not compensate petitioner's damage.

1. The first reason given by petitioner in support of its contention that the dissolution of the writ of preliminary
injunction was contrary to law is that the motion to admit respondent's counter-bond for the dissolution of the writ
was not supported by affidavits as required by section 6 of Rule 58 of the Rules of Court. The controverted motion,
however, does not appear in the record. However, the record shows that respondent Alberto had filed a verified
answer to the complaint and a verified opposition to the issuance of the writ of preliminary injunction.

Regarding the necessity of verification of the motion for dissolution of a writ of preliminary injunction, this Court has
ruled that the requirement of verification is not absolute but is dependent on the circumstances obtaining in a
particular case. In the case of Sy Sam Bio, et al. vs. Barrios and Buyson Lampa, 1 the only question raised was
whether the respondent Judge exceeded his jurisdiction and abused his discretion in setting aside an order
directing the issuance of a writ of preliminary injunction. In maintaining the affirmative, petitioners in that case
alleged that the questioned order was issued in violation of the provisions of Section 169 of Act 190(which is one of
the sources of Sec. 6 of Rule 58 of the revised Rules of Court)inasmuch as the Judge set aside said order and
directed the dissolution of the preliminary injunction without any formal petition of the parties and without having
followed the procedure prescribed by the statute. There was, however, a verbal application for the dissolution of the
writ, based upon the ground of the in suficiency of the complaint which was the basis of the application for the
issuance of said writ of preliminary injunction. This Court said:

Section 169 of Act 1909 does not prescribe the manner of filing the application to annul or modify a writ of
preliminary injunction. It simply states that if a temporary injunction be granted without notice, the defendant, at any
time before trial, may apply, upon reasonable notice to the adverse party, to the judge who granted the injunction, or
to the judge of the court of which the action was brought, to dissolve or modify the same.

On the strength of the decision in the above-cited case, this Court in Caluya, et al. vs. Ramos, et al.,2 said;

Petitioners' criticism that the motion to dissolve filed by the defendants in Civil Case No. 4634 was not verified, is
also groundless inasmuch as even an indirect verbal application for the dissolution of an ex parte order of
preliminary injunction has been held to be a sufficient compliance with the provisions of Section 6 of Rule 60
(Moran, Comments on the Rules of Court, Second Edition, Vol. II, p. 65, citing the case of Sy Yam Bio v. Barrios,
etc., 63 Phil. 206), the obvious reason being that said rule does not prescribe the form by which an application for
the dissolution or modification of an order of preliminary injunction should be presented.

If according to the above rulings, Section 6 of Rule 60 (now sec. 6, Rule 58) of the Rules of Court did not require
any form for the application for the dissolution of the writ of preliminary injunction, then respondent Fausto Alberto's
motion to lift the preliminary injunction in the court below need not be verified, and much less must the motion be
supported by affidavits, as urged by petitioner.

However, in Canlas, et al. vs. Aquino, et al.,3 this Court ruled that a motion for the dissolution of a writ of preliminary
injunction should be verified. In that case, respondent Tayag filed an unverified motion for the dissolution of a writ of
preliminary injunction, alleging that the same "would work great damage to the defendant who had already spend a
considerable sum of money" and that petitioners "can be fully compensated for any damages that they may suffer."
The court granted the motion and dissolved the preliminary injunction. In an original action for a writ of certiorari
filed with this Court to annual said order, this Court remarked in part:

Petitioners herein are entitled to the writ prayed for. The motion of respondent Tayag for the dissolution of the writ of
preliminary injunction issued on October 22, 1959, was unverified....

From the precedents quoted above, as well as from the terminology of Section 6 of Rule 58 of the new Rules of
Court, it is evident that whether the application for the dissolution of the writ of preliminary injunction must be
verified or not depends upon the ground upon which such application is based. If the application is based on the
insufficiency of the complaint, the motion need not be verified. If the motion is based on the ground that the
injunction would cause great damage to defendant while the plaintiff can be fully compensated for such damages
as he may suffer, the motion should be verified.

In the instant case, it is alleged by petitioner that the motion for the dissolution of the writ of preliminary injunction
was not verified. This allegation was not denied in the answer. But because said motion does not appear in the
record of the case now before this Court, We cannot determine what are the grounds for the dissolution that are
alleged therein, and so We cannot rule on whether the motion should have been verified or not. This Court,
therefore, has to rely on the order of respondent Judge, dated August 5, 1964, which states that "the filing of the
counter-bond is in accordance with law." Consequently, the first ground alleged by petitioner must be brushed
aside.

2. The second and third reasons alleged by petitioner in its petition for certiorari assume that a preliminary
injunction issued after hearing and in accordance with Rule 58 cannot be set aside. This contention is untenable.
The provision of Section 6 of Rule 58 that "the injunction may be refused, or, if granted ex parte, may be dissolved"
can not be construed as putting beyond the reach of the court the dissolution of an injunction which was granted
after hearing. The reason is because a writ of preliminary injunction is an interlocutory order, and as such it is
always under the control of the court before final judgment. Thus, in Caluya, et al. vs. Ramos, et al.,4 this Court
said:

The first contention of the petitioners is that, as said injunction was issued after a hearing, the same cannot be
dissolved, specially on the strength of an unverified motion for dissolution and in the absence to support it. Reliance
is placed on Section 6 of Rule 60 of the Rules of Court which provides that "the injunction may be reduced, or, if
granted ex parte, maybe dissolved," thereby arguing that if an injunction is not issued ex parte the same cannot be
dissolved. The contention is clearly erroneous. Although said section prescribes the grounds for objecting to, or for
moving the dissolution of, a preliminary injunction prior to its issuance or after its granting ex parte, it does not
thereby outlaw a dissolution if the injunction has been issued after a hearing. This is to be so, because a writ of
preliminary injunction is an interlocutory order which is always under the control of the court before final judgment.
(Manila Electric Company vs. Artiaga and Green, 50 Phil. 144, 147).

This Court has also ruled that the dissolution of a writ of preliminary injunction issued after hearing, even if the
dissolution is ordered without giving the other party an opportunity to be heard, does not constitute an abuse of
discretion and may be cured not by certiorari but by appeal. In Clarke vs. Philippine Ready Mix Concrete Co., Inc.,
et al.,5 one of the issues presented was whether a writ of preliminary injunction granted the plaintiff by a trial court
after hearing, might be dissolved upon an ex parte application by the defendant, and this Court ruled that:

The action of a trial court in dissolving a writ of preliminary injunction already issued after hearing, without giving
petitioner an opportunity to be heard, does not constitute lack or excess of jurisdiction or an abuse of discretion,
and any irregularity committed by the trial court on this score may be cured not by certiorari but by appeal.

3. The fourth reason alleged by petitioner in support of its stand is that public interest demanded that the writ
enjoining respondent Fausto Alberto from exercising the functions of managing director be maintained. Petitioner
contended that respondent Alberto had arrogated to himself the power of the Board of Directors of the corporation
because he refused to vacate the office and surrender the same to Jose de la Rosa who had been elected
managing director by the Board to succeed him. This assertion, however, was disputed by respondent Alberto who
stated that Jose de la Rosa could not be elected managing director because he did not own any stock in the
corporation.

There is in the record no showing that Jose de la Rosa owned a share of stock in the corporation. If he did not own
any share of stock, certainly he could not be a director pursuant to the mandatory provision of Section 30 of the
Corporation Law, which in part provides:

There is in the record no showing that Jose de la Rosa owned a share of stock in the corporation. If he did not own
any share of stock, certainly he could not be a director pursuant to the mandatory provision of Section 30 of the
Corporation Law, which in part provides:
Sec. 30. Every director must own in his own right at least one share of the capital stock of the stock corporation of
which he is a director, which stock shall stand in his name on the books of the corporations....

If he could not be a director, he could also not be a managing director of the corporation, pursuant to Article V,
Section 3 of the By-Laws of the Corporation which provides that:

The manager shall be elected by the Board of Directors from among its members.... (Record, p. 48)

If the managing director-elect was not qualified to become managing director, respondent Fausto Alberto could not
be compelled to vacate his office and cede the same to the managing director-elect because the by-laws of the
corporation provides in Article IV, Section 1 that "Directors shall serve until the election and qualification of their duly
qualified successor."

4. The fifth reason alleged by herein petitioner in support of its contention that respondent Judge gravely abused his
discretion when he lifted the preliminary injunction upon the filing of the counter-bond was that said counter-bond
could not compensate for the irreparable damage that the corporation would suffer by reason of the continuance of
respondent Fausto Alberto as managing director of the corporation. Respondent Alberto, on the contrary, contended
that he really was the owner of the controlling interest in the business carried on the name of the petitioner, having
invested therein a total of P57,727.29 as against the sum of P4,000 only invested by one other director, Jose M.
Barredo. We find that there was a question as to who own the controlling interest in the corporation. Where
ownership is in dispute, the party in control or possession of the disputed interest is presumed to have the better
right until the contrary is adjudged, and hence that party should not be deprived of the control or possession until
the court is prepared to adjudicate the controverted right in favor of the other party.6

Should it be the truth that respondent Alberto is the controlling stockholder, then the damages said respondent
would suffer would be the same, if not more, as the damages that the corporation would suffer if the injunction were
maintained. If the bond of P5,000 filed by petitioner for the injunction would be sufficient to answer for the damages
that would be suffered by respondent Alberto by reason of the injunction, there seems to be no reason why the
same amount would not be sufficient to answer for the damages that might be suffered by the petitioning
corporation by reason of the lifting of the injunction. The following ruling of this Court has a persuasive application in
this case:

The rule that a court should not, by means of a preliminary injunction, transfer property in litigation from the
possession of one party to another is more particularly applicable where the legal title is in dispute and the party
having possession asserts ownership in himself.7

Let it be stated, in relation to all the reason given by petitioner, that it is a settled rule that the issuance of the writ of
preliminary injunction as an ancillary or preventive remedy to secure the rights of a party in a pending case is
entirely within the discretion of the court taking cognizance of the case the only limitation being that this
discretion should be exercised based upon the grounds and in the manner provided by law, 8 and it is equally well
settled that a wide latitude is given under Section 7 of Rule 58 of the Rules of Court to the trial court to modify or
dissolve the injunction as justice may require. The court which is to exercise that discretion is the trial court, not the
appellate court.9 The exercise of sound judicial discretion by the lower court in injunctive matters should not be
interfered with except in cases of manifest abuse. 10 In the instant case, We find that petitioner failed to show
manifest abuse of discretion by respondent Judge in setting aside the writ of preliminary injunction.

There is, however, one vital reason why the instant petition for certiorari should be denied. And it is, that from the
order dissolving the writ of preliminary injunction, the petitioner has gone directly to this Court without giving the
respondent Judge (or trial court) a chance or opportunity to correct his error, if any, in an appropriate motion for
reconsideration. An omission to comply with this procedural requirement justifies a denial of the writ applied for. 11

The instant case is not one of the exceptions in the application of this rule, which are: where the questions of
jurisdiction has been squarely raised, argued before, submitted to, and met and decided by the respondent court;
where the questioned order is a patent nullity; and where there is a deprivation of the petitioner's fundamental right
to due process.12
It being our considered view that respondent Judge had not committed grave abuse of discretion in issuing the
order dated August 5, 1964 lifting the writ of preliminary injunction which had previously been granted in the order
dated June 18, 1964, and the herein petition for certiorari having been filed without previously complying with a well
settled procedural requirement, there is no alternative for this Court but to order its dismissal.

WHEREFORE, the instant petition for certiorari with preliminary injunction is dismissed, with costs againsts the
petitioner. It is so ordered.

GRACE CHRISTIAN HIGH SCHOOL, represented by its Principal, DR. JAMES TAN, Petitioner,
vs.
FILIPINAS A. LAVANDERA, Respondent.

DECISION

PERLAS-BERNABE, J.:

Assailed in this petition for review on certiorari 1 is the Decision2 dated April 30, 2007 of the Court of Appeals (CA) in
CA-G.R. SP. No. 75958 which affirmed with modification the Decision 3 dated August 30, 2002 of the National Labor
Relations Commission (NLRC) in NLRC CA No. 031739-02, applying the 22.5-day multiplier in computing
respondent Filipinas A. Lavandera' s (Filipinas) retirement benefits differential, with legal interest reckoned from the
filing date of the latter's illegal dismissal complaint.

The Facts

Filipinas was employed by petitioner Grace Christian High School (GCHS) as high school teacher since June1977,
with a monthly salary of 18,662.00 as of May 31, 2001. 4

On August 30, 2001,5 Filipinas filed a complaint for illegal (constructive) dismissal, non-payment of service incentive
leave (SIL) pay, separation pay, service allowance, damages, and attorneys fees against GCHS 6 and/or its
principal,7 Dr. James Tan. She alleged that on May 11, 2001, she was informed that her serviceswere to be
terminated effective May 31, 2001, pursuant to GCHS retirement plan which gives the school the option to retire a
teacher who has rendered at least 20 years of service, regardless of age, with a retirement pay of one-half ()
month for every year of service. At that time, Filipinas was only 58 years old and still physically fit to work. She
pleaded with GCHS toallow her to continue teaching but her services were terminated, 8 contrary to the provisions of
Republic Act No. (RA) 7641,9 otherwise known as the "Retirement Pay Law."

For their part, GCHS denied that they illegally dismissed Filipinas. They asserted that the latter was considered
retired on May 31, 1997 after having rendered 20 years of service pursuant to GCHS retirement plan and that she
was duly advised that her retirement benefits in the amount of 136,210.00 based on her salary atthe time of
retirement, i.e., 13,621.00, had been deposited to the trustee-bank in her name. Nonetheless, her services were
retained on a yearly basis until May 11, 2001 when she was informed that her year-to-year contract would no longer
be renewed.10

The LA Ruling

In a Decision11 dated March 26, 2002, the Labor Arbiter (LA) dismissed the illegal dismissal complaint for lack of
merit.

The LA found that GCHS has a retirement plan for its faculty and non-faculty members which pertinently provides:

ARTICLE X
RETIREMENT DATES12

Section 1. Normal Retirement Date For qualified members of the Plans, the normal retirement date shall be the
last day of the month during which he attains age sixty (60) regardless of length of service or upon completion of 20
years of service unless extended at the option of the School. Such extension is subject tothe approval of the School
on a case to case and year to year basis. The School reserves the right to require an employee before it
approveshis application for an extension of service beyond the normal retirement date, to have a licensed physician
appointed by the School, certify that the employee concerned has no physical and/or mental impediments which
will prevent the employee from performing the duties in the School. 13 (Emphasis supplied)

Consequently, the LA ruled that Filipinas was not terminated from employment but was considered retired 14 as of
May 31, 1997 after rendering 20 years of service 15 and was only allowed by GCHS to continue teaching on a year-
to-year basis (until May 31, 2001)in the exercise of its option to do so under the aforementioned retirement plan
until she was informed that her contract would not be renewed. 16

Nonetheless, the LA found the retirement benefits payable under GCHS retirement plan to be deficient vis--vis
those provided under RA 7641, 17 and, accordingly, awarded Filipinas retirement pay differentials based on her latest
salaryas follows:

P18,662.00/30 =
P622.06/day

P622.06 x 22.5 =
P13,996.35 x 20 =
P279,927.00
- P136,210.00

P143,717.00
18

The LA, however, denied Filipinasclaims for service allowance, salary increase, and damages for lack of sufficient
bases, but awarded her attorneys fees equivalent to five percent (5%) of the total award, or the amount of
P7,185.85.19

Dissatisfied, GCHS filed an appeal before the NLRC.

The NLRC Ruling

In a Decision20 dated August 30, 2002 (August 30, 2002 Decision), the NLRC set aside the LAs award, and ruled
that Filipinas retirement pay should be computed based on her monthly salary at the time of her retirementon May
31, 1997, i.e., 13,621.00. Moreover, it held that under Article 287 of the Labor Code, as amended by RA 7641, the
retirement package consists of 15 days salary, plus 13th month pay and SIL pay pro-rated to their one-twelfth (1/12)
equivalent.21

In view of the foregoing, the NLRC awarded Filipinas retirement pay differentials in the amount of
27,057.20consisting of one-twelfth (1/12) of the 13th month pay and SIL pay based on her salary at the time of her
retirement on May 31, 1997, or 13,621.00 multiplied by 20 years. It, however, deleted the award of attorneys fees
for failure of Filipinas to show that GCHS had unreasonably and in bad faith refused to pay her retirement
benefits.22

Aggrieved, Filipinas filed a petition for certioraribefore the CA.

The CA Ruling

In a Decision23 dated April 30, 2007, the CA affirmed with modification the NLRCs Decision. It held that the Court, in
the case of Capitol Wireless, Inc.v. Sec. Confesor,24 has simplified the computation of "one-half month salary" by
equating it to"22.5 days" which is "arrived at after adding 15 days plus 2.5 days representing one-twelfth of the 13th
month pay, plus 5 days of [SIL]."25 Accordingly, it computed Filipinas retirement benefits differential as follows:
1wphi1
Monthly salary
P13,624.00
26

30 days
30 days

Daily rate
P454.13
27

x 22.5 days
x 22.5 days
1/2 month salary28

P10,218.00
x 20 years
x 20 years

Total amount of retirement benefits

P204,360.00
- Amount deposited in trust
P136,210.00

Retirement benefits differential

P68,150.00
29

The CA further imposed legal interestat the rate of six percent (6%) per annum on the award reckoned from the
date of the filing of the illegal dismissal complaint until actual payment 30 pursuant to the Courts Decision in Manuel
L. Quezon University v. NLRC(MLQU v. NLRC).31 Unperturbed, GCHS filed the instant petition.

The Issue before the Court

The essential issue in this case is whether or not the CA committed reversible error in using the multiplier "22.5
days" in computing the retirement pay differentials of Filipinas.

The Courts Ruling

The petition is bereft of merit.

RA 7641, which was enacted on December 9, 1992, amended Article 287 of the Labor Code, providing for the rules
on retirement pay to qualified private sector employees in the absence of any retirement plan in the establishment.
The said law32 states that "an employees retirement benefits under any collective bargaining [agreement (CBA)]
and other agreements shall not be less than those provided" under the same that is, at least onehalf (1/2) month
salary for every year of service, a fraction of at least six (6) months being considered as one whole year and that
"[u]nless the parties provide for broader inclusions, the term one-half (1/2) month salary shall mean fifteen (15)
days plus one-twelfth (1/12) of the 13th month pay and the cash equivalent of not more than five (5) days of service
incentive leaves."

The foregoing provision is applicable where (a) there is no CBA or other applicable agreement providing for
retirement benefits to employees, or (b) there is a CBA or other applicableagreement providing for retirement
benefits but it is below the requirement set by law. 33 Verily, the determining factor in choosing which retirement
scheme to apply is still superiority in terms of benefits provided. 34
In the present case, GCHS has a retirement plan for its faculty and non-faculty members, which gives it the option
to retire a teacher who has rendered at least 20 years of service, regardless of age, with a retirement pay of one-
half (1/2) month for every year ofservice. Considering, however, that GCHS computed Filipinas retirement pay
without including one-twelfth (1/12) of her 13th month pay and the cash equivalent of her five (5) days SIL, both the
NLRC and the CA correctly ruled that Filipinas retirement benefits should be computed in accordance withArticle
287 of the Labor Code, as amended by RA 7641, being the more beneficent retirement scheme. They differ,
however, in the resulting benefit differentials due to divergent interpretations of the term "one-half (1/2) month
salary" as used under the law.

The Court, in the case of Elegir v. Philippine Airlines,Inc., 35 has recently affirmed that "one-half (1/2) month salary
means 22.5 days: 15 days plus 2.5 days representingone-twelfth (1/12) of the 13th month pay and the remaining 5
days for [SIL]."36 The Court sees no reason to depart from this interpretation. GCHS argument 37 therefore that the 5
days SIL should be likewise pro-rated to their 1/12 equivalent must fail.1wphi1

Section 5.2, Rule II38 of the Implementing Rules of Book VI of the Labor Code, as amended, promulgated to
implement RA 7641, further clarifies what comprises the " month salary" due a retiring employee, to wit:

RULE II
Retirement Benefits

xxxx

SEC. 5. Retirement Benefits.

xxxx

5.2 Components of One-half (1/2) Month Salary. For the purpose of determining the minimum retirement pay due
an employee under this Rule, the term "one-half month salary" shall include all the following:

(a) Fifteen (15) days salary of the employee based on his latest salary rate. As used herein, the term "salary"
includes all remunerations paid by an employer to his employees for services rendered during normal working days
and hours, whether such payments are fixed or ascertained on a time, task, piece or commission basis, or other
method of calculating the same, and includes the fair and reasonable value, as determined by the Secretary of
Labor and Employment, of food, lodging or other facilities customarily furnished by the employer to his employees.
The term does not include cost of living allowance,profit-sharing payments and other monetary benefits which are
not considered as part of or integrated into the regular salary of the employees.

(b) The cash equivalent of not more than five (5) days of service incentive leave;

(c) One-twelfth of the 13th month paydue the employee.

(d) All other benefits that the employer and employee may agree upon that should be included in the computation of
the employees retirement pay.

x x x x (Emphases supplied)

The foregoing rules are, thus, clear that the whole 5 days of SIL are included in the computation of a retiring
employees pay,39 as correctly ruled by the CA.1wphi1

Nonetheless, the Court finds that the award of legal interest at the rate of 6% per annum on the amount of
P68,150.00 representing the retirement pay differentials due Filipinas should be reckoned from the rendition of the
LA's Decision on March 26, 2002 and not from the filing of the illegal dismissal complaint as ordered by the CA, 40 in
accordance with the ruling in Eastern Shipping Lines, Inc. v. CA 41 (Eastern Shipping). Unlike in MLQU v. NLRC,
where the retired teachers sued for the payment of the deficiency in their retirement benefits, Filipinas' complaint
was for illegal (constructive) dismissal, and the obligation to provide retirement pay was only determined upon the
rendition of the LA's Decision, which also found the same to be deficient vis-a-vis those provided under RA 7641.
As such, it is only from the date of the LA's Decision that GCHS' obligation to pay Filipinas her retirement pay
differentials may be deemed to have been reasonably ascertained and its payment legally adjudged to be due,
although the actual base for the computation of legal interest shall be on the amount finally adjudged. As held in the
Eastern Shipping case:42

When an obligation, not constituting a loan or forbearance of money, is breached, an interest on the amount of
damages awarded may be imposed at the discretion of the court at the rate of 6% per annum. No interest, however,
shall be adjudged on unliquidated claims or damages except when or until the demand can be established with
reasonable certainty. Accordingly, where the demand is established with reasonable certainty, the interest shall
begin to run from the time the claim is made judicially or extrajudicially (Art. 1169, Civil Code) but when such
certainty cannot be so reasonably established at the time the demand is made, the interest shall begin to run only
from the date the judgment of the court is made (at which time the quantification of damages may be deemed to
have been reasonably ascertained). The actual base for the computation of legal interest shall, in any case, be on
the amount finally adjudged. (Emphases supplied)

WHEREFORE, the petition is DENIED. The Decision dated April 30, 2007 of the Court of Appeals in CA-G.R. SP.
No. 75958 is hereby AFFIRMED with MODIFICATION that the legal interest at the rate of six percent (6%) per
annum on the amount of P68,150.00 representing the retirement pay differentials payable by petitioner Grace
Christian High School to respondent Filipinas A. Lavandera shall be reckoned from the promulgation of the Labor
Arbiter's Decision on March 26, 2002 until full payment.

GRACE CHRISTIAN HIGH SCHOOL, represented by its Principal, DR. JAMES TAN, Petitioner,
vs.
FILIPINAS A. LAVANDERA, Respondent.

DECISION

PERLAS-BERNABE, J.:

Assailed in this petition for review on certiorari 1 is the Decision2 dated April 30, 2007 of the Court of Appeals (CA) in
CA-G.R. SP. No. 75958 which affirmed with modification the Decision 3 dated August 30, 2002 of the National Labor
Relations Commission (NLRC) in NLRC CA No. 031739-02, applying the 22.5-day multiplier in computing
respondent Filipinas A. Lavandera' s (Filipinas) retirement benefits differential, with legal interest reckoned from the
filing date of the latter's illegal dismissal complaint.

The Facts

Filipinas was employed by petitioner Grace Christian High School (GCHS) as high school teacher since June1977,
with a monthly salary of 18,662.00 as of May 31, 2001. 4

On August 30, 2001,5 Filipinas filed a complaint for illegal (constructive) dismissal, non-payment of service incentive
leave (SIL) pay, separation pay, service allowance, damages, and attorneys fees against GCHS 6 and/or its
principal,7 Dr. James Tan. She alleged that on May 11, 2001, she was informed that her serviceswere to be
terminated effective May 31, 2001, pursuant to GCHS retirement plan which gives the school the option to retire a
teacher who has rendered at least 20 years of service, regardless of age, with a retirement pay of one-half ()
month for every year of service. At that time, Filipinas was only 58 years old and still physically fit to work. She
pleaded with GCHS toallow her to continue teaching but her services were terminated, 8 contrary to the provisions of
Republic Act No. (RA) 7641,9 otherwise known as the "Retirement Pay Law."

For their part, GCHS denied that they illegally dismissed Filipinas. They asserted that the latter was considered
retired on May 31, 1997 after having rendered 20 years of service pursuant to GCHS retirement plan and that she
was duly advised that her retirement benefits in the amount of 136,210.00 based on her salary atthe time of
retirement, i.e., 13,621.00, had been deposited to the trustee-bank in her name. Nonetheless, her services were
retained on a yearly basis until May 11, 2001 when she was informed that her year-to-year contract would no longer
be renewed.10
The LA Ruling

In a Decision11 dated March 26, 2002, the Labor Arbiter (LA) dismissed the illegal dismissal complaint for lack of
merit.

The LA found that GCHS has a retirement plan for its faculty and non-faculty members which pertinently provides:

ARTICLE X
RETIREMENT DATES12

Section 1. Normal Retirement Date For qualified members of the Plans, the normal retirement date shall be the
last day of the month during which he attains age sixty (60) regardless of length of service or upon completion of 20
years of service unless extended at the option of the School. Such extension is subject tothe approval of the School
on a case to case and year to year basis. The School reserves the right to require an employee before it
approveshis application for an extension of service beyond the normal retirement date, to have a licensed physician
appointed by the School, certify that the employee concerned has no physical and/or mental impediments which
will prevent the employee from performing the duties in the School. 13 (Emphasis supplied)

Consequently, the LA ruled that Filipinas was not terminated from employment but was considered retired 14 as of
May 31, 1997 after rendering 20 years of service 15 and was only allowed by GCHS to continue teaching on a year-
to-year basis (until May 31, 2001)in the exercise of its option to do so under the aforementioned retirement plan
until she was informed that her contract would not be renewed. 16

Nonetheless, the LA found the retirement benefits payable under GCHS retirement plan to be deficient vis--vis
those provided under RA 7641, 17 and, accordingly, awarded Filipinas retirement pay differentials based on her latest
salaryas follows:

P18,662.00/30 =
P622.06/day

P622.06 x 22.5 =
P13,996.35 x 20 =
P279,927.00
- P136,210.00

P143,717.00
18

The LA, however, denied Filipinasclaims for service allowance, salary increase, and damages for lack of sufficient
bases, but awarded her attorneys fees equivalent to five percent (5%) of the total award, or the amount of
P7,185.85.19

Dissatisfied, GCHS filed an appeal before the NLRC.

The NLRC Ruling

In a Decision20 dated August 30, 2002 (August 30, 2002 Decision), the NLRC set aside the LAs award, and ruled
that Filipinas retirement pay should be computed based on her monthly salary at the time of her retirementon May
31, 1997, i.e., 13,621.00. Moreover, it held that under Article 287 of the Labor Code, as amended by RA 7641, the
retirement package consists of 15 days salary, plus 13th month pay and SIL pay pro-rated to their one-twelfth (1/12)
equivalent.21

In view of the foregoing, the NLRC awarded Filipinas retirement pay differentials in the amount of
27,057.20consisting of one-twelfth (1/12) of the 13th month pay and SIL pay based on her salary at the time of her
retirement on May 31, 1997, or 13,621.00 multiplied by 20 years. It, however, deleted the award of attorneys fees
for failure of Filipinas to show that GCHS had unreasonably and in bad faith refused to pay her retirement
benefits.22

Aggrieved, Filipinas filed a petition for certioraribefore the CA.

The CA Ruling

In a Decision23 dated April 30, 2007, the CA affirmed with modification the NLRCs Decision. It held that the Court, in
the case of Capitol Wireless, Inc.v. Sec. Confesor,24 has simplified the computation of "one-half month salary" by
equating it to"22.5 days" which is "arrived at after adding 15 days plus 2.5 days representing one-twelfth of the 13th
month pay, plus 5 days of [SIL]."25 Accordingly, it computed Filipinas retirement benefits differential as follows:

1wphi1
Monthly salary
P13,624.00
26

30 days
30 days

Daily rate
P454.13
27

x 22.5 days
x 22.5 days
1/2 month salary28

P10,218.00
x 20 years
x 20 years

Total amount of retirement benefits

P204,360.00
- Amount deposited in trust
P136,210.00

Retirement benefits differential

P68,150.00
29

The CA further imposed legal interestat the rate of six percent (6%) per annum on the award reckoned from the
date of the filing of the illegal dismissal complaint until actual payment 30 pursuant to the Courts Decision in Manuel
L. Quezon University v. NLRC(MLQU v. NLRC).31 Unperturbed, GCHS filed the instant petition.

The Issue before the Court

The essential issue in this case is whether or not the CA committed reversible error in using the multiplier "22.5
days" in computing the retirement pay differentials of Filipinas.

The Courts Ruling

The petition is bereft of merit.

RA 7641, which was enacted on December 9, 1992, amended Article 287 of the Labor Code, providing for the rules
on retirement pay to qualified private sector employees in the absence of any retirement plan in the establishment.
The said law32 states that "an employees retirement benefits under any collective bargaining [agreement (CBA)]
and other agreements shall not be less than those provided" under the same that is, at least onehalf (1/2) month
salary for every year of service, a fraction of at least six (6) months being considered as one whole year and that
"[u]nless the parties provide for broader inclusions, the term one-half (1/2) month salary shall mean fifteen (15)
days plus one-twelfth (1/12) of the 13th month pay and the cash equivalent of not more than five (5) days of service
incentive leaves."

The foregoing provision is applicable where (a) there is no CBA or other applicable agreement providing for
retirement benefits to employees, or (b) there is a CBA or other applicableagreement providing for retirement
benefits but it is below the requirement set by law. 33 Verily, the determining factor in choosing which retirement
scheme to apply is still superiority in terms of benefits provided. 34

In the present case, GCHS has a retirement plan for its faculty and non-faculty members, which gives it the option
to retire a teacher who has rendered at least 20 years of service, regardless of age, with a retirement pay of one-
half (1/2) month for every year ofservice. Considering, however, that GCHS computed Filipinas retirement pay
without including one-twelfth (1/12) of her 13th month pay and the cash equivalent of her five (5) days SIL, both the
NLRC and the CA correctly ruled that Filipinas retirement benefits should be computed in accordance withArticle
287 of the Labor Code, as amended by RA 7641, being the more beneficent retirement scheme. They differ,
however, in the resulting benefit differentials due to divergent interpretations of the term "one-half (1/2) month
salary" as used under the law.

The Court, in the case of Elegir v. Philippine Airlines,Inc., 35 has recently affirmed that "one-half (1/2) month salary
means 22.5 days: 15 days plus 2.5 days representingone-twelfth (1/12) of the 13th month pay and the remaining 5
days for [SIL]."36 The Court sees no reason to depart from this interpretation. GCHS argument 37 therefore that the 5
days SIL should be likewise pro-rated to their 1/12 equivalent must fail.1wphi1

Section 5.2, Rule II38 of the Implementing Rules of Book VI of the Labor Code, as amended, promulgated to
implement RA 7641, further clarifies what comprises the " month salary" due a retiring employee, to wit:

RULE II
Retirement Benefits

xxxx

SEC. 5. Retirement Benefits.

xxxx

5.2 Components of One-half (1/2) Month Salary. For the purpose of determining the minimum retirement pay due
an employee under this Rule, the term "one-half month salary" shall include all the following:

(a) Fifteen (15) days salary of the employee based on his latest salary rate. As used herein, the term "salary"
includes all remunerations paid by an employer to his employees for services rendered during normal working days
and hours, whether such payments are fixed or ascertained on a time, task, piece or commission basis, or other
method of calculating the same, and includes the fair and reasonable value, as determined by the Secretary of
Labor and Employment, of food, lodging or other facilities customarily furnished by the employer to his employees.
The term does not include cost of living allowance,profit-sharing payments and other monetary benefits which are
not considered as part of or integrated into the regular salary of the employees.

(b) The cash equivalent of not more than five (5) days of service incentive leave;

(c) One-twelfth of the 13th month paydue the employee.

(d) All other benefits that the employer and employee may agree upon that should be included in the computation of
the employees retirement pay.
x x x x (Emphases supplied)

The foregoing rules are, thus, clear that the whole 5 days of SIL are included in the computation of a retiring
employees pay,39 as correctly ruled by the CA.1wphi1

Nonetheless, the Court finds that the award of legal interest at the rate of 6% per annum on the amount of
P68,150.00 representing the retirement pay differentials due Filipinas should be reckoned from the rendition of the
LA's Decision on March 26, 2002 and not from the filing of the illegal dismissal complaint as ordered by the CA, 40 in
accordance with the ruling in Eastern Shipping Lines, Inc. v. CA 41 (Eastern Shipping). Unlike in MLQU v. NLRC,
where the retired teachers sued for the payment of the deficiency in their retirement benefits, Filipinas' complaint
was for illegal (constructive) dismissal, and the obligation to provide retirement pay was only determined upon the
rendition of the LA's Decision, which also found the same to be deficient vis-a-vis those provided under RA 7641.
As such, it is only from the date of the LA's Decision that GCHS' obligation to pay Filipinas her retirement pay
differentials may be deemed to have been reasonably ascertained and its payment legally adjudged to be due,
although the actual base for the computation of legal interest shall be on the amount finally adjudged. As held in the
Eastern Shipping case:42

When an obligation, not constituting a loan or forbearance of money, is breached, an interest on the amount of
damages awarded may be imposed at the discretion of the court at the rate of 6% per annum. No interest, however,
shall be adjudged on unliquidated claims or damages except when or until the demand can be established with
reasonable certainty. Accordingly, where the demand is established with reasonable certainty, the interest shall
begin to run from the time the claim is made judicially or extrajudicially (Art. 1169, Civil Code) but when such
certainty cannot be so reasonably established at the time the demand is made, the interest shall begin to run only
from the date the judgment of the court is made (at which time the quantification of damages may be deemed to
have been reasonably ascertained). The actual base for the computation of legal interest shall, in any case, be on
the amount finally adjudged. (Emphases supplied)

WHEREFORE, the petition is DENIED. The Decision dated April 30, 2007 of the Court of Appeals in CA-G.R. SP.
No. 75958 is hereby AFFIRMED with MODIFICATION that the legal interest at the rate of six percent (6%) per
annum on the amount of P68,150.00 representing the retirement pay differentials payable by petitioner Grace
Christian High School to respondent Filipinas A. Lavandera shall be reckoned from the promulgation of the Labor
Arbiter's Decision on March 26, 2002 until full payment.

DOMINGO PONCE AND BUHAY L. PONCE, petitioners,

vs.
DEMETRIO B. ENCARNACION, Judge of the Court of First Instance of Manila, Branch I, and POTENCIANO
GAPOL, respondents.

Marcelino Lontok for petitioners.

Zavalla, Bautista and Nuevas for respondents.

PADILLA, J.:

This is a petition for a writ of certiorari to annul an order of the respondent court granting Potenciano Gapol
authority, pursuant to section 26, Act No. 1459, otherwise known as the Corporation Law, to call a meeting of the
stockholders of the Dagunoy Enterprises, Inc. and to preside at such meeting by giving proper notice to the
stockholders, as required by law or by laws of the corporation, until after the majority of the stockholders present
and qualified to vote shall have chosen one of them to act as presiding officer of the meeting; another order denying
a motion of the petitioners to have the previous order set aside; and a third order denying a motion to the same
effect as the one previously filed.

The petitioners aver that the Daguhoy Enterprises, Inc., was duly registered as such on 24 June 1948; that on 16
April 1951 at a meeting duly called, the voluntary dissolution of the corporation and the appointment of Potenciano
Gapol as receiver were agreed upon and to that end a petitioner Domingo Ponce; that instead of filing the petition
for voluntary dissolution of the of the corporation as agreed upon, the respondent Potenciano Gapol, who is the
largest stockholder, charged his mind and filed a complaint in the Court of First Instance of Manila (civil No. 13753)
to compel the petitioners to render an accounting of the funds and assets of the corporation, to reimburse it, jointly
and severally, in the sum of P4,500, the purchase price of a parcel of land acquired by the corporation; P6,190
loaned to the wife of petitioner Domingo Ponce; and P8,000 spent by the latter in his trip to the United States, or a
total sum of P18,690, plus interest, or such sum as may be found after the accounting shall have been rendered to
have been misspent, misapplied, missappropriated and converted by the petitioner Domingo Ponce to his own use
and benefit; that on 18 May 1951 the plaintiff in that case, the respondent Potenciano Gapol in this case, filed a
motion praying that the petitioners be removed as members of the board of directors which was denied by the
court; that on 3 January 1952 respondent Potenciano Gapol filed a petition (civil No. 15445, Exhibit L), praying for
an order directing him to a call a meeting of the stockholders of the corporation and to preside at such meeting in
accordance with section 26 of the Corporation law; that two days later, without notice to the petitioners and to the
other members of the board of directors and in violation of the Rules of Court which require that the adverse parties
be notified of the hearing of the motion three days in advance, the respondent court issued the order as prayed for
(Exhibit M); that the petitioners learned only of this order of the court on 27 February, when the Bank of America
refused to recognize the new board of directors elected at such meeting and returned the checks drawn upon it by
the said board of directors; that the election of Juanito R. Tianzon as member of the board of directors of the
corporation he must be a member of the Legionarios del Trabajo, as required and provided for in article 7 of the by-
laws of the corporation; that on 5 March the petitioners filed a petition in the respondent court to have the order of 5
January set aside but on April, the date set for the hearing of the petition, as the respondent judge was on leave
vacation judge directed its transfer to the branch of the respondent judge; that without having set the motion for
hearing, the respondent court denied the motion of 5 March in its order of 7 May; that on 14 May the petitioners
filed another motion inviting the attention of the respondent court to the irregularity and illegality of its procedure
and setting the motion for hearing on 21 May, but the court denied the motion by its order of 13 June.

The only question to determine in this case is whether under and pursuant to section 26 of Act No. 1459, known as
the Corporation law, the respondent court may issue the order complained of. Said section provides:

Whenever, from any cause, there is no person authorized to call a meeting, or when the officer authorized to do so
refuses, fails or neglects to call a meeting, any judge of a Court of First Instance on the showing of good cause
therefor, may issue an order to any stockholder or member of a corporation, directing him to call a meeting of the
corporation by giving the proper notice required by this Act or by-laws; and if there be no person legally authorized
to preside at such meeting, the judge of the Court of First Instance may direct the person calling the meeting to
preside at the same until a majority of the members or stockholders representing a majority of the stock members
or stockholders presenting a majority of the stock present and permitted by law to be voted have chosen one of
their number to act as presiding officer for the purposes of the meeting.

On the showing of good cause therefor, the court may authorize a stockholder to call a meeting and to preside
threat until the majority stockholders representing a majority strockholders representing a majority of the stock
present and permitted to be voted shall have chosen one among them to preside it. And this showing of good cause
therefor exists when the court is apprised of the fact that the by-laws of the corporation require the calling of a
general meeting of the stockholders to elect the board of directors but call for such meeting has not been done.

Article 9 of the by-laws of the Daguhoy Enterprises, Inc., provides:

The Board of Directors shall compose of five (5) members who shall be elected by the stockholders in a general
meeting called for that purpose which shall be held every even year during the month of January.

Article 20 of the by-laws in part provides:

. . . Regular general meetings are those which shall be called for every even year, . . . .

The requirement that "on the showing of good cause therefor," the court may grant to a stockholder the authority to
call such meeting and to preside thereat does not mean that the petition must be set for hearing with notice served
upon the board of directors. The respondent court was satisfied that there was a showing of good cause for
authorizing the respondent Potenciano Gapol to call a meeting of the stockholders for the purpose of electing the
board of directors as required and provided for in the by-laws, because the chairman of the board of directors called
upon to do so had failed, neglected, or refused to perform his duty. It may be likened to a writ of preliminary
injunction or of attachment which may be issued ex-parte upon compliance with the requirements of the rules and
upon the court being satisfied that the same should be issue. Such provisional reliefs have not been deemed and
held as violative of the due process of law clause of the Constitution.

In several state of the Union 1 the remedy which may be availed of our resorted to in a situation such as the one
brought about in this case is mandamus to compel the officer or incumbent board of directors to perform a duties
specifically enjoined by law or by-laws, to wit: to call a meeting of the stockholders. Dela ware is the estate that has
a law similar to ours and there the chancellor of a chancery court may summarily issue or enter an order
authorizing a stockholder to call a meeting of the stockholders of the corporation and preside thereat. 2 It means that
the chancellor may issue such order without notice and hearing.

That the relief granted by the respondent court lies within its jurisdiction is not disputed. Having the authority to
grant the relief, the respondent court did not exceed its jurisdiction; nor did it abuse its discretion in granting it.

With persistency petitioners claim that they have been deprived of their right without due process of law. They had
no right to continue as directors of the corporation unless reflected by the stockholders in a meeting called for that
purpose every even year. They had no right to a hold-over brought about by the failure to perform the duty
incumbent upon one of them. If they felt that they were sure to be reelected, why did they fail, neglect, or refuse to
call the meeting to elect the members of the board? Or, why did they not seek their reelection at the meeting called
to elect the directors pursuant to the order of the respondent court.

The alleged illegality of the election of one member of the board of directors at the meeting called by the
respondent Potenciano Gapol as authorized by the court being subsequent to the order complained of cannot affect
the validity and legality of the order. If it be true that one of the directors elected at the meting called by the
respondent Potenciano Gapol, as authorized by the order of the court complained of, was not qualified in
accordance with the provisions of the by-laws, the remedy of an aggrieved party would be quo a warranto. Also, the
alleged previous agreement to dissolve the corporation does not affect or render illegal the order issued by the
respondent court.

BALDOMERO ROXAS, ENRIQUE ECHAUS and ROMAN J. LACSON, petitioners,

vs.
Honorable MARIANO DE LA ROSA, Auxiliary Judge of First Instance of Occidental Negros, AGUSTIN
CORUNA, MAURO LEDESMA and BINALBAGAN ESTATE, INC., respondents.

Roman J. Lacson, for petitioners.

The respondent judge in his own behalf.
The respondent corporation in its own behalf.
R. Nolan and Feria and La O for the respondents Coruna and Ledesma.

STREET, J.:

This is an original petition for the writ of certiorari whereby the petitioners, Baldomeo Roxas, Enrique Echaus, and
Roman J. Lacson, seek to procure the abrogation of an order of the respondent judge granting a preliminary
injunction in an action in the Court of First Instance of Occidental Negros, instituted by Agustin Coruna and Mauro
Ledesma against the petitioners and the Binalbagan Estate, Inc. The cause is now before us upon the issues made
by the answers filed by the respondents.

It appears that the Binalbagan Estate, Inc., is a corporation having its principal plant in Occidental Negros where it
is engaged in the manufacture of raw sugar from canes grown upon farms accessible to its central. In July, 1924,
the possessors of a majority of the shares of the Binalbagan Estate, Inc., formed a voting trust composed of three
members, namely, Salvador Laguna, Segunda Monteblanco, and Arthur F. Fisher, as trustee. By the document
constituting this voting trust the trustees were authorized to represent and vote the shares pertaining to their
constituents, and to this end the shareholders undertook to assign their shares to the trustees on the books of the
company. The total number of outstanding shares of the corporation is somewhat over 5,500, while the number of
shares controlled by the voting trust is less than 3,000.

On February 1, 1926, the general annual meeting of the shareholders of the Binalbagan Estate, Inc., took place, at
which Mr. J. P. Heilbronn appeared as representative of the voting trust, his authority being recognized by the
holders of all the other shares present at this meeting. Upon said occasion Heilbronn, by virtue of controlling the
majority of the shares, was able to nominate and elect a board of directors to his own liking, without opposition from
the minority. After the board of directors had been thus elected and had qualified, they chose a set of officers
constituting of Jose M. Yusay, president, Timoteo Unson, vice-president, Jose G. Montalvo, secretary-treasurer, and
H. W. Corp and Agustin Coruna, as members. Said officials immediately entered upon the discharged of their duties
and have continued in possession of their respective offices until the present time.

Since the creation of the voting trust there have been a number of vacancies caused by resignation or the absence
of members from the Philippine Islands, with the result that various substitutions have been made in the personnel
of the voting trust. At the present time the petitioners Roxas, Echaus, and Lacson presumably constitute its
membership. We say presumably, because in the present proceedings an issue of fact is made by the respondents
upon the point whether the three individuals named have been regularly substituted for their several predecessors.
In the view we take of the case it is not necessary to determine this issue; and we shall assume provisionally that
the three petitioners are the lawful components of the voting trust.

Although the present officers of the Binalbagan Estate, Inc., were elected by the representative of the voting trust,
the present trustee are apparently desirous of ousting said officers, without awaiting the termination of their official
terms at the expiration of one year from the date of their election. In other to effect this purpose the petitioners in
their character as members of the voting trust, on August 2, 1926, caused the secretary of the Binalbagan Estate,
Inc., to issue to the shareholders a notice calling for a special general meeting of shareholders to be held at 10 a.
m., on August 16, 1926, "for the election of the board of directors, for the amendment of the By-Laws, and for any
other business that can be dealt with in said meeting."

Within a few days after said notice was issued Agustin Corua, as member of the existing board, and Mauro
Ledesma, as a simple shareholder of the corporation, instituted a civil action (No. 3840) in the Court of First
Instance of Occidental Negros against the trustees and the Binalbagan Estate, Inc., for the purpose of enjoining the
meeting completed in the notice above-mentioned.

In response to a proper for a preliminary injunction, in connection with said action, the respondent judge issued the
restraining order, or preliminary injunction, which gave rise to the present petition for the writ of certiorari. In the
dispositive part of said order the Binalbagan Estate, Inc., its lawyers, agents, representatives, and all others who
may be assisting or corroborating with them, are restrained from holding the general shareholders' meeting called
for the date mentioned and from electing new directors for the company in substitution of the present incumbents,
said injunction to be effective until further order of the court. it is now asserted here by the petitioners that the
making of this order was beyond the legitimate powers of the respondent judge, and it is accordingly prayed that
said order be set aside.

We are of the opinion that this contention is untenable and that the respondent judge acted within his legitimate
powers in making the order against which relief is sought. In order to expose the true inwardness of the situation
before us it is necessary to take not of the fact that under the law the directors of a corporation can only be
removed from office by a vote of the stockholders representing at least two-thirds of the subscribed capital stock
entitled to vote (Act No. 1459, sec. 34); while vacancies in the board, when they exist, can be filled by mere majority
vote, (Act No. 1459, sec. 25). Moreover, the law requires that when action is to be taken at a special meeting to
remove the directors, such purpose shall be indicated in the call (Act No. 1459, sec. 34).

Now, upon examining into the number of shares controlled by the voting trust, it will be seen that, while the trust
controls a majority of the stock, it does not have a clear two-thirds majority. It was therefore impolitic for the
petitioners, in forcing the call for the meeting of August 16, to come out frankly and say in the notice that one of the
purpose of the meeting was to removed the directors of the corporation from office. Instead, the call was limited to
the election of the board of directors, it being the evident intention of the voting trust to elect a new board as if the
directorate had been then vacant.
But the complaint in civil No. 3840 directly asserts that the members of the present directorate were regularly
elected at the general annual meeting held in February, 1926; and if that assertion be true, the proposal to elect,
another directorate, as per the call of August 2, if carried into effect, would result in the election of a rival set of
directors, who would probably need the assistance of judgment of court in an independent action of quo warranto to
get them installed into office, even supposing that their title to the office could be maintained. That the trial judge
had jurisdiction to forestall that step and enjoin the contemplated election is a matter about which there cannot be
the slightest doubt. The law contemplates and intends that there will be one of directors at a time and that new
directors shall be elected only as vacancies occur in the directorate by death, resignation, removal, or otherwise.
lawphil.net

It is instituted that there was some irregularity or another in the election of the present directorate. We see nothing
upon which this suggestion can be safely planted; And at any rate the present board of directors are de facto
incumbents of the office whose acts will be valid until they shall be lawfully removed from the office or cease from
the discharge of their functions. In this case it is not necessary for us to agitate ourselves over the question whether
the respondent judge properly exercised his judicial discretion in granting the order complained of. If suffices to
know that in making the order he was acting within the limits of his judicial powers.

It will be noted that the order in question enjoins the defendants from holding the meeting called for August 16; and
said order must not be understood as constituting any obstacle for the holding of the regular meeting at the time
appointed in the by-laws of the corporation.

EXPERTRAVEL & TOURS, INC., petitioner,

vs.
THE HON. COURT OF APPEALS and RICARDO LO, respondents.

VITUG, J.:

Petitioner, Expertravel and Tours, Inc., seeks in the instant petition for review on certiorari a modification of the
decision, dated 20 March 1997, of the Court of Appeals affirming in toto the 07th November 1994 judgment of the
Regional Trial Court (Branch 5) of Manila, the dispositive portion of which reads:

WHEREFORE, in view of all the foregoing, judgment is rendered declaring the instant suit DISMISSED, and hereby
orders the plaintiff to pay defendant Ricardo Lo moral damages in the amount of P30,000.00; attorney's fees in the
amount of P10,000.00, and to pay the costs of the suit.

1
No pronouncement as to other damages for lack of evidence to warrant the same.

The factual and case settings of the controversy are culled from the pleadings on record and the assailed decision
of the appellate court and that of the court a quo.

On 07 October 1987, Expertravel & Tours, Inc., ("Expertravel"), a domestic corporation engaged in the travel
agency business, issued to private respondent Ricardo Lo four round-trip plane tickets for Hongkong, together with
hotel accommodations and transfers, for a total cost of P39,677.20. Alleging that Lo had failed to pay the amount
due, Expertravel caused several demands to be made. Since the demands were ignored by Lo, Expertravel filed a
court complaint for recovery of the amount claimed plus damages.

Respondent Lo explained, in his answer, that his account with Expertravel had already been fully paid. The
outstanding account was remitted to Expertravel through its then Chairperson, Ms. Ma. Rocio de Vega, who was
theretofore authorized to deal with the clients of Expertravel. The payment was evidenced by a Monte de Piedad
Check No. 291559, dated 06 October 1987, for P42,175.20 for which Ms. de Vega, in turn, issued City Trust Check
No. 417920 in favor of Expertravel for the amount of P50,000.00, with the notation "placement advance for Ricardo
Lo, etc." Per its own invoice, Expertravel received the sum on 10 October 1987.
The trial court, affirmed by the appellate court, held that the payment made by Lo was valid and bidding on
petitioner Expertravel. Even on the assumption that Ms. de Vera had not been specifically authorized by
Expertravel, both courts said, the fact that the amount "delivered to the latter remain(ed) in its possession up to the
present, mean(t) that the amount redounded to the benefit of petitioner Expertravel, in view of the second
paragraph of Article 1241 of the Civil Code to the effect that payment made to a third person shall also be valid in
so far as it has rebounded to the benefit of the creditor."

In this recourse, petitioner confines itself to the following related legal issues; viz.:

I. Can moral damages be recovered in a clearly unfounded suit?

II. Can moral damages be awarded for negligence or quasi-delict that did not result to physical injury to the
offended party? 2

There is merit in the petition.

Although the institution of a clearly unfounded civil suit can at times be a legal justification for an award of attorney's
fees, 10 such filing, however, has almost invariably been held not to be a ground for an award of moral
damages. 11 The rationale for the rule is that the law could not have meant to impose a penalty on the right to
litigate. The anguish suffered by a person for having been made a defendant in a civil suit would be no different
from the usual worry and anxiety suffered by anyone who is haled to court, a situation that cannot by itself be a
cogent reason for the award of moral damages. 12 If the rule were otherwise, then moral damages must every time
be awarded in favor of the prevailing defendant against an unsuccessful plaintiff. 13

The Court confirms, once again, the foregoing rules.

WHEREFORE, the petition is GRANTED and the award of moral damages to respondent Ricardo Lo under the
assailed decision is DELETED. In its other aspects, the appealed decision shall remain undisturbed. No
costs.1wphi1.nt

Moral damages are not punitive in nature but are designed to

compensate 3 and alleviate in some way the physical suffering, mental anguish, fright, serious anxiety, besmirched
reputation, wounded feelings, moral shock, social humiliation, and similar injury unjustly caused to a person.
Although incapable of pecuniary computation, moral damages, nevertheless, must somehow be proportional to and
in approximation of the suffering inflicted. 4 Such damages, to be recoverable, must be the proximate result of a
wrongful act or omission the factual basis for which is satisfactorily established by the aggrieved party. 5 An award of
moral damages would require certain conditions to be met; to wit: (1) First, there must be an injury, whether
physical, mental or psychological, clearly sustained by the claimant; (2) second, there must be a culpable act or
omission factually established; (3) third, the wrongful act or omission of the defendant is the proximate cause of the
injury sustained by the claimant; and (4) fourth, the award of damages is predicated on any of the cases stated in
Article 2219. 6 Under the provisions of this law, in culpa contractual or breach of contract, moral damages may be
recovered when the defendant acted in bad faith or was guilty of gross negligence (amounting to bad faith) or in
wanton disregard of his contractual obligation and, exceptionally, when the act of breach of contract itself is
constitutive of tort resulting in physical injuries. 7 By special rule in Article 1764, in relation to Article 2206, of the Civil
Code, moral damages may also be awarded in case the death of a passenger results from a breach of carriage. In
culpa aquiliana, or quasi-delict, (a) when an act or omission causes physical injuries, or (b) where the defendant is
guilty of intentional tort, 8 moral damages may aptly be recovered. This rule also applies, as aforestated, to
contracts when breached by tort. In culpa criminal, moral damages could be lawfully due when the accused is
found guilty of physical injuries, lascivious acts, adultery or concubinage, illegal or arbitrary detention, illegal arrest,
illegal search, or defamation. Malicious prosecution can also give rise to a claim for moral damages. The term
"analogous cases," referred to in Article 2219, following the ejusdem generis rule, must be held similar to those
expressly enumerated by the law. 9

WESTERN INSTITUTE OF TECHNOLOGY, INC., HOMERO L. VILLASIS, DIMAS ENRIQUEZ, PRESTON F.

VILLASIS & REGINALD F. VILLASIS, petitioner,
vs.
RICARDO T. SALAS, SALVADOR T. SALAS, SOLEDAD SALAS-TUBILLEJA, ANTONIO S. SALAS, RICHARD
S. SALAS & HON. JUDGE PORFIRIO PARIAN, respondents.

HERMOSISIMA, JR., J.:

Up for review on certiorari are: (1) the Decision dated September 6, 1993 and (2) the Order dated November 23,
1993 of Branch 33 of the Regional Trial Court of Iloilo City in Criminal Cases Nos. 37097 and 37098 for estafa and
falsification of a public document, respectively. The judgment acquitted the private respondents of both charges, but
petitioners seek to hold them civilly liable.

Private respondents Ricardo T. Salas, Salvador T. Salas, Soledad Salas-Tubilleja, Antonio S. Salas, and Richard S.
Salas, belonging to the same family, are the majority and controlling members of the Board of Trustees of Western
Institute of Technology, Inc. (WIT, for short), a stock corporation engaged in the operation, among others, of an
educational institution. According to petitioners, the minority stockholders of WIT, sometime on June 1, 1986 in the
principal office of WIT at La Paz, Iloilo City, a Special Board Meeting was held. In attendance were other members
of the Board including one of the petitioners Reginald Villasis. Prior to aforesaid Special Board Meeting, copies of
notice thereof, dated May 24, 1986, were distributed to all Board Members. The notice allegedly indicated that the
meeting to be held on June 1, 1986 included Item No. 6 which states:

Possible implementation of Art. III, Sec. 6 of the Amended By-Laws of Western Institute of Technology, Inc. on
compensation of all officers of the corporation. 1

In said meeting, the Board of Trustees passed Resolution No. 48, s. 1986, granting monthly compensation to the
private respondents as corporate officers retroactive June 1, 1985, viz.:

Resolution No. 48 s. 1986

On the motion of Mr. Richard Salas (accused), duly seconded by Mrs. Soledad Tubilleja (accused), it was
unanimously resolved that:

The Officers of the Corporation be granted monthly compensation for services rendered as follows: Chairman
P9,000.00/month, Vice Chairman P3,500.00/month, Corporate Treasurer P3,500.00/month and Corporate
Secretary P3,500.00/month, retroactive June 1, 1985 and the ten per centum of the net profits shall be
distributed equally among the ten members of the Board of Trustees. This shall amend and superceed (sic) any
previous resolution.

There were no other business.

The Chairman declared the meeting adjourned at 5:11 P.M.

This is to certify that the foregoing minutes of the regular meeting of the Board of Trustees of Western Institute of
Technology, Inc. held on March 30, 1986 is true and correct to the best of my knowledge and belief.

(Sgd) ANTONIO S. SALAS

Corporate Secretary 2

A few years later, that is, on March 13, 1991, petitioners Homero Villasis, Prestod Villasis, Reginald Villasis and
Dimas Enriquez filed an affidavit-complaint against private respondents before the Office of the City Prosecutor of
Iloilo, as a result of which two (2) separate criminal informations, one for falsification of a public document under
Article 171 of the Revised Penal Code and the other for estafa under Article 315, par. 1(b) of the RPC, were filed
before Branch 33 of the Regional Trial Court of Iloilo City. The charge for falsification of public document was
anchored on the private respondents' submission of WIT's income statement for the fiscal year 1985-1986 with the
Securities and Exchange Commission (SEC) reflecting therein the disbursement of corporate funds for the
compensation of private respondents based on Resolution No. 4, series of 1986, making it appear that the same
was passed by the board on March 30, 1986, when in truth, the same was actually passed on June 1, 1986, a date
not covered by the corporation's fiscal year 1985-1986 (beginning May 1, 1985 and ending April 30, 1986). The
Information for falsification of a public document states:

The undersigned City Prosecutor accuses RICARDO T. SALAS, SALVADOR T. SALAS, SOLEDAD SALAS-
TUBILLEJA, ANTONIO S. SALAS and RICHARD S. SALAS (whose dates and places of birth cannot be
ascertained) of the crime of FALSIFICATION OF A PUBLIC DOCUMENT, Art. 171 of the Revised Penal Code,
committed as follows:

That on or about the 10th day of June, 1986, in the City of Iloilo, Philippines and within the jurisdiction of this
Honorable Court, the above-named accused, being then the Chairman, Vice-Chairman, Treasurer, Secretary, and
Trustee (who later became Secretary), respectively, of the board of trustees of the Western Institute of Technology,
Inc., a corporation duly organized and existing under the laws of the Republic of the Philippines, conspiring and
confederating together and mutually helping one another, to better realized (sic) their purpose, did then and there
wilfully, unlawfully and criminally prepare and execute and subsequently cause to be submitted to the Securities
and Exchange Commission an income statement of the corporation for the fiscal year 1985-1986, the same being
required to be submitted every end of the corporation fiscal year by the aforesaid Commission, and therefore, a
public document, including therein the disbursement of the retroactive compensation of accused corporate officers
in the amount of P186,470.70, by then and there making it appear that the basis thereof Resolution No. 4, Series of
1986 was passed by the board of trustees on March 30, 1986, a date covered by the corporation's fiscal year 1985-
1986 (i.e., from May 1, 1985 to April 30, 1986), when in truth and in fact, as said accused well knew, no such
Resolution No. 48, Series of 1986 was passed on March 30, 1986.

CONTRARY TO LAW.

Iloilo City, Philippines, November 22, 1991. 3 [Emphasis ours].

The Information, on the other hand, for estafa reads:

The undersigned City Prosecutor accuses RICARDO SALAS, SALVADOR T. SALAS, SOLEDAD SALAS-
TUBILLEJA, ANTONIO S. SALAS, RICHARD S. SALAS (whose dates and places of birth cannot be ascertained) of
the crime of ESTAFA, Art. 315, par. 1 (b) of the Revised Penal Code, committed as follows:

That on or about the 1st day of June, 1986, in the City of Iloilo, Philippines, and within the jurisdiction of this
Honorable Court, the above-named accused, being then the Chairman, Vice-Chairman, Treasurer, Secretary, and
Trustee (who later became Secretary), respectively; of the Board of Trustees of Western Institute of Technology,
Inc., a corporation duly organized and existing under the laws of the Republic of the Philippines, conspiring and
confederating together and mutually helping one another to better realize their purpose, did then and there wilfully,
unlawfully and feloniously defraud the said corporation (and its stockholders) in the following manner, to wit: herein
accused, knowing fully well that they have no sufficient, lawful authority to disburse let alone violation of
applicable laws and jurisprudence, disbursed the funds of the corporation by effecting payment of their retroactive
salaries in the amount of P186,470.00 and subsequently paying themselves every 15th and 30th of the month
starting June 15, 1986 until the present, in the amount of P19,500.00 per month, as if the same were their own, and
when herein accused were informed of the illegality of these disbursements by the minority stockholders by way of
objections made in an annual stockholders' meeting held on June 14, 1986 and every year thereafter, they refused,
and still refuse, to rectify the same to the damage and prejudice of the corporation (and its stockholders) in the total
sum of P1,453,970.79 as of November 15, 1991.

CONTRARY TO LAW.

Iloilo City, Philippines, November 22, 1991. 4 [Emphasis ours]

Thereafter, trial for the two criminal cases, docketed as Criminal Cases Nos. 37097 and 37098, was consolidated.
After a full-blown hearing, Judge Porfirio Parian handed down a verdict of acquittal on both counts 5 dated
September 6, 1993 without imposing any civil liability against the accused therein.
Petitioners filed a Motion for Reconsideration 6 of the civil aspect of the RTC Decision which was, however, denied
in an Order dated November 23, 1993. 7

Hence, the instant petition.

Significantly on December 8, 1994, a Motion for Intervention, dated December 2, 1994, was filed before this Court
by Western Institute of Technology, Inc., supposedly one of the petitioners herein, disowning its inclusion in the
petition and submitting that Atty. Tranquilino R. Gale, counsel for the other petitioners, had no authority whatsoever
to represent the corporation in filing the petition. Intervenor likewise prayed for the dismissal of the petition for being
utterly without merit. The Motion for Intervention was granted on January 16, 1995. 8

Petitioners would like us to hold private respondents civilly liable despite their acquittal in Criminal Cases Nos.
37097 and 37098. They base their claim on the alleged illegal issuance by private respondents of Resolution No.
48, series of 1986 ordering the disbursement of corporate funds in the amount of P186,470.70 representing
retroactive compensation as of June 1, 1985 in favor of private respondents, board members of WIT, plus
P1,453,970.79 for the subsequent collective salaries of private respondents every 15th and 30th of the month until
the filing of the criminal complaints against them on March 1991. Petitioners maintain that this grant of
compensation to private respondents is proscribed under Section 30 of the Corporation Code. Thus, private
respondents are obliged to return these amounts to the corporation with interest.

We cannot sustain the petitioners. The pertinent section of the Corporation Code provides:

Sec. 30. Compensation of directors In the absence of any provision in the by-laws fixing their compensation, the
directors shall not receive any compensation, as such directors, except for reasonable per diems: Provided,
however, That any such compensation (other than per diems) may be granted to directors by the vote of the
stockholders representing at least a majority of the outstanding capital stock at a regular or special stockholders'
meeting. In no case shall the total yearly compensation of directors, as such directors, exceed ten (10%) percent of
the net income before income tax of the corporation during the preceding year. [Emphasis ours]

There is no argument that directors or trustees, as the case may be, are not entitled to salary or other
compensation when they perform nothing more than the usual and ordinary duties of their office. This rule is
founded upon a presumption that directors/trustees render service gratuitously, and that the return upon their
shares adequately furnishes the motives for service, without compensation. 9 Under the foregoing section, there are
only two (2) ways by which members of the board can be granted compensation apart from reasonable per diems:
(1) when there is a provision in the by-laws fixing their compensation; and (2) when the stockholders representing a
majority of the outstanding capital stock at a regular or special stockholders' meeting agree to give it to them.

This proscription, however, against granting compensation to directors/trustees of a corporation is not a sweeping
rule. Worthy of note is the clear phraseology of Section 30 which states: ". . . [T]he directors shall not receive any
compensation, as such directors, . . . ." The phrase as such directors is not without significance for it delimits the
scope of the prohibition to compensation given to them for services performed purely in their capacity as directors
or trustees. The unambiguous implication is that members of the board may receive compensation, in addition to
reasonable per diems, when they render services to the corporation in a capacity other than as directors/trustees.
10
In the case at bench, Resolution No. 48, s. 1986 granted monthly compensation to private respondents not in their
capacity as members of the board, but rather as officers of the corporation, more particularly as Chairman, Vice-
Chairman, Treasurer and Secretary of Western Institute of Technology. We quote once more Resolution No. 48, s.
1986 for easy reference, viz.:

Resolution No. 48 s. 1986

On the motion of Mr. Richard Salas (accused), duly seconded by Mrs. Soledad Tubilleja (accused), it was
unanimously resolved that:

The Officers of the Corporation be granted monthly compensation for services rendered as follows: Chairman
P9,000.00/month, Vice Chairman P3,500.00/month, Corporate Treasurer P3,500.00/month and Corporate
Secretary P3,500.00/month, retroactive June 1, 1985 and the ten per centum of the net profits shall be
distributed equally among the ten members of the Board of Trustees. This shall amend and superceed (sic) any
previous resolution.

There were no other business.

The Chairman declared the meeting adjourned at 5:11 P.M.

This is to certify that the foregoing minutes of the regular meeting of the Board of Trustees of Western Institute of
Technology, Inc. held on March 30, 1986 is true and correct to the best of my knowledge and belief.

(Sgd) ANTONIO S. SALAS

Corporate Secretary 11 [Emphasis ours]

Clearly, therefore, the prohibition with respect to granting compensation to corporate directors/trustees as such
under Section 30 is not violated in this particular case. Consequently, the last sentence of Section 30 which
provides:

. . . . . . . In no case shall the total yearly compensation of directors, as such directors, exceed ten (10%) percent of
the net income before income tax of the corporation during the preceding year. (Emphasis ours]

does not likewise find application in this case since the compensation is being given to private respondents in their
capacity as officers of WIT and not as board members.

Petitioners assert that the instant case is a derivative suit brought by them as minority shareholders of WIT for and
on behalf of the corporation to annul Resolution No. 48, s. 1986 which is prejudicial to the corporation.

We are unpersuaded. A derivative suit is an action brought by minority shareholders in the name of the corporation
to redress wrongs committed against it, for which the directors refuse to sue. 12 It is a remedy designed by equity
and has been the principal defense of the minority shareholders against abuses by the majority. 13 Here, however,
the case is not a derivative suit but is merely an appeal on the civil aspect of Criminal Cases Nos. 37097 and 37098
filed with the RTC of Iloilo for estafa and falsification of public document. Among the basic requirements for a
derivative suit to prosper is that the minority shareholder who is suing for and on behalf of the corporation must
allege in his complaint before the proper forum that he is suing on a derivative cause of action on behalf of the
corporation and all other shareholders similarly situated who wish to join. 14 This is necessary to vest jurisdiction
upon the tribunal in line with the rule that it is the allegations in the complaint that vests jurisdiction upon the court or
quasi-judicial body concerned over the subject matter and nature of the action. 15 This was not complied with by the
petitioners either in their complaint before the court a quo nor in the instant petition which, in part, merely states that
"this is a petition for review on certiorari on pure questions of law to set aside a portion of the RTC decision in
Criminal Cases Nos. 37097 and 37098" 16 since the trial court's judgment of acquittal failed to impose any civil
liability against the private respondents. By no amount of equity considerations, if at all deserved, can a mere
appeal on the civil aspect of a criminal case be treated as a derivative suit.

Granting, for purposes of discussion, that this is a derivative suit as insisted by petitioners, which it is not, the same
is outrightly dismissible for having been wrongfully filed in the regular court devoid of any jurisdiction to entertain the
complaint. The ease should have been filed with the Securities and Exchange Commission (SEC) which exercises
original and exclusive jurisdiction over derivative suits, they being intra-corporate disputes, per Section 5 (b) of P.D.
No. 902-A:

In addition to the regulatory and adjudicative functions of the Securities and Exchange Commission over
corporations, partnerships and other forms of associations registered with it as expressly granted under existing
laws and decrees, it shall have original and exclusive jurisdiction to hear and decide cases involving:

xxx xxx xxx

b) Controversies arising out of intra-corporate or partnership relations, between and among stockholders,
members, or associates; between any or all of them and the corporation, partnership or association of which they
are stockholders, members or associates, respectively; and between such corporation, partnership or association
and the State insofar as it concerns their individual franchise or right to exist as such entity;

xxx xxx xxx

[Emphasis ours]

Once the case is decided by the SEC, the losing party may file a petition for review before the Court of Appeals
raising questions of fact, of law, or mixed questions of fact and law. 17 It is only after the case has ran this course,
and not earlier, can it be brought to us via a petition for review on certiorari under Rule 45 raising only pure
questions of law. 18Petitioners, in pleading that we treat the instant petition as a derivative suit, are trying to short-
circuit the entire process which we cannot here sanction.

As an appeal on the civil aspect of Criminal Cases Nos. 37097 and 37098 for falsification of public document and
estafa, which this petition truly is, we have to deny the petition just the same. It will be well to quote the respondent
court's ratiocinations acquitting the private respondents on both counts:

The prosecution wants this Court to believe and agree that there is falsification of public document because, as
claimed by the prosecution, Resolution No. 48, Series of 1986 (Exh. "1-E-1") was not taken up and passed during
the Regular Meeting of the Board of Trustees of the Western Institute of Technology (WIT), Inc. on March 30, 1986,
but on June 1, 1986 special meeting of the same board of trustees.

This Court is reluctant to accept this claim of falsification. The prosecution omitted to submit the complete minutes
of the regular meeting of the Board of Trustees on March 30, 1986. It only presented in evidence Exh. "C", which is
page 5 or the last page of the said minutes. Had the complete minutes (Exh. "1") consisting of five (5) pages, been
submitted, it can be readily seen and understood that Resolution No. 48, Series of 1986 (Exh. "1-E-1") giving
compensation to corporate officers, was indeed included in Other Business, No. 6 of the Agenda, and was taken up
and passed on March 30, 1986. The mere fact of existence of Exh. "C" also proves that it was passed on March 30,
1986 for Exh. "C" is part and parcel of the whole minutes of the Board of Trustees Regular Meeting on March 30,
1986. No better and more credible proof can be considered other than the Minutes (Exh. "1") itself of the Regular
Meeting of the Board of Trustees on March 30, 1986. The imputation that said Resolution No. 48 was neither taken
up nor passed on March 30, 1986 because the matter regarding compensation was not specifically stated or written
in the Agenda and that the words "possible implementation of said Resolution No. 48, was expressly written in the
Agenda for the Special Meeting of the Board on June 1, 1986, is simply an implication . This evidence by implication
to the mind of the court cannot prevail over the Minutes (Exh. "1") and cannot ripen into proof beyond reasonable
doubt which is demanded in all criminal prosecutions.

This Court finds that under the Eleventh Article (Exh. "3-D-1") of the Articles of Incorporation (Exh. "3-B") of the
Panay Educational Institution, Inc., now the Western Institute of Technology, Inc., the officers of the corporation
shall receive such compensation as the Board of Directors may provide. These Articles of Incorporation was
adopted on May 17, 1957 (Exh. "3-E"). The Officers of the corporation and their corresponding duties are
enumerated and stated in Sections 1, 2, 3 and 4 of Art. III of the Amended By-Laws of the Corporation (Exh. "4-A")
which was adopted on May 31, 1957. According to Sec. 6, Art. III of the same By-Laws, all officers shall receive
such compensation as may be fixed by the Board of Directors.

It is the perception of this Court that the grant of compensation or salary to the accused in their capacity as officers
of the corporation, through Resolution No. 48, enacted on March 30, 1986 by the Board of Trustees, is authorized
by both the Articles of Incorporation and the By-Laws of the corporation. To state otherwise is to depart from the
clear terms of the said articles and by-laws. In their defense the accused have properly and rightly asserted that the
grant of salary is not for directors, but for their being officers of the corporation who oversee the day to day activities
and operations of the school.

xxx xxx xxx

. . .[O]n the question of whether or not the accused can be held liable for estafa under Sec. 1 (b) of Art. 315 of the
Revised Penal Code, it is perceived by this Court that the receipt and the holding of the money by the accused as
salary on basis of the authority granted by the Articles and By-Laws of the corporation are not tainted with abuse of
confidence. The money they received belongs to them and cannot be said to have been converted and/or
misappropriated by them.

xxx xxx xxx 19

[Emphasis ours]

From the foregoing factual findings, which we find to be amply substantiated by the records, it is evident that there
is simply no basis to hold the accused, private respondents herein, civilly liable. Section 2(b) of Rule 111 on the
New Rules on Criminal Procedure provides:

Sec. 2. Institution of separate civil action.

xxx xxx xxx

(b) Extinction of the penal action does not carry with it extinction of the civil, unless the extinction proceeds from a
declaration in a final judgment that the fact from which the civil might arise did not exist. [Emphasis ours]

Likewise, the last paragraph of Section 2, Rule 120 reads:

Sec. 2. Form and contents of judgment.

xxx xxx xxx

In case of acquittal, unless there is a clear showing that the act from which the civil liability might arise did not exist ,
the judgment shall make a finding on the civil liability of the accused in favor of the offended party. [Emphasis ours]

The acquittal in Criminal Cases Nos. 37097 and 37098 is not merely based on reasonable doubt but rather on a
finding that the accused-private respondents did not commit the criminal acts complained of. Thus, pursuant to the
above rule and settled jurisprudence, any civil action ex delicto cannot prosper. Acquittal in a criminal action bars
the civil action arising therefrom where the judgment of acquittal holds that the accused did not commit the criminal
acts imputed to them. 20