United Paragon Mining Corporation vs. Court of Appeals

A corporation's power to sue and be sued is lodged with its board of directors, and no person, not even an officer of the corporation, can validly bind the corporation in litigation without authority from the board. A petition filed by a corporate officer without an enabling board resolution is fatally defective, including its verification and certification against non-forum shopping, and the rules of procedure will not be relaxed absent a showing of reasonable cause justifying the non-compliance.

United Paragon Mining Corporation (UPMC) is a corporation governed by the Corporation Code, which provides that a corporation exercises its powers through its board of directors and/or its duly authorized officers and agents. Cesario F. Ermita was a regular employee of UPMC working as a foreman, and his employment was governed by a Collective Bargaining Agreement between UPMC and the United Paragon Supervisors Union. The dispute arose within the framework of labor law's protective stance toward employees, as reflected in the Constitutional provision on labor, which mandates that doubts be resolved in favor of labor.

Cesario F. Ermita was a regular employee of United Paragon Mining Corporation (UPMC), working as a foreman. On January 18, 1996, Cesario received a termination letter dated January 16, 1996, signed by UPMC's Personnel Superintendent, Feliciano M. Daniel, informing him that his employment was terminated effective thirty days after receipt of the letter. The termination was on account of Cesario's alleged violation of company rules against infliction of bodily injuries on a co-employee, one Jerry Romero, and for unlawfully possessing a deadly weapon, a bolo, also in violation of company rules.

As a result of the termination, the matter was brought to the grievance machinery as mandated under the Collective Bargaining Agreement between UPMC and the United Paragon Supervisors Union. Having failed to reach a settlement, the parties agreed to submit the dispute to voluntary arbitration. The complaint for illegal dismissal was referred to Voluntary Arbitrator Atty. Murly P. Mendez of the National Conciliation and Mediation Board, Regional Branch No. V, Legaspi City, docketed as VA Case No. RB5-657-04-002-96.

On February 28, 1997, the Voluntary Arbitrator rendered a decision in Cesario's favor, stating that although the procedural requirements in the termination of an employee had been complied with, the termination was unjustified because it was arrived at through gross misapprehension of facts. The Voluntary Arbitrator found that the evidence consisted of the uncorroborated statement of Jerry Romero claiming he was assaulted by Cesario, which Cesario disputed. The Arbitrator noted that an amicable settlement was jointly signed by Cesario and Romero, in which Romero admitted "hindi naming sinasadya yon at itong ginawa naming sulat na ito ay siya ang magpapatunay na ayos kaming dalawa at walang problema sa isa't isa," establishing that whatever happened between them was not willful and voluntary. The Arbitrator also found that the bolo seen that night was used to chop wood for a bonfire, and that it was Cesario's son, not Cesario, who used the bolo. The Voluntary Arbitrator ordered Cesario's reinstatement without loss of seniority, payment of back wages and fringe benefits from the date of termination effective February 17, 1996 up to actual reinstatement, and attorney's fees equivalent to 10 percent of the monetary award.

UPMC moved for reconsideration insofar as the decision ordered reinstatement, offering separation pay instead, citing that Cesario's position had already been filled and that reinstatement was no longer appropriate due to supposed strained relations. The Voluntary Arbitrator denied the motion in an Order dated April 22, 1997, stressing that UPMC's management misapprehended the facts, which cannot support the claim of strained relations.

Unsatisfied, UPMC, through its Personnel Superintendent Feliciano M. Daniel, elevated the case to the Court of Appeals on a Petition for Certiorari with Prayer for Temporary Restraining Order and Injunction, docketed as CA-G.R. SP No. 44450, asserting that the Voluntary Arbitrator committed grave abuse of discretion, erroneous interpretation of the law, and denial of substantial justice. Throughout the proceedings before the Voluntary Arbitrator, from the filing of position papers up to the motion for reconsideration, UPMC was duly represented by its counsel, Atty. Archimedes O. Yanto. Cesario's complaint for illegal dismissal was filed against both the corporation and Daniel, but contained no allegation for specific claim or charge against Daniel in whatever capacity; Daniel was impleaded merely in his capacity as UPMC's Personnel Superintendent who signed the termination letter.

The Court of Appeals, in its Decision dated July 24, 2001, dismissed the petition without going into its merits on three grounds: (1) the petition for certiorari was not the proper remedy to seek review or nullify decisions or final orders issued by the Labor Arbiter; (2) the verification in the petition was ineffective and insufficient because it was merely signed by the company's Personnel Superintendent without alleging or showing that he was authorized for the purpose and that the verification was based on knowledge and information; and (3) the petitioner's grounds actually dwelt on the appreciation of facts, which cannot be entertained in a petition for certiorari. UPMC's motion for reconsideration was denied by the CA in its Resolution of November 7, 2001, prompting UPMC to file the present petition for review with the Supreme Court.

• No Need for Board Resolution: Petitioner argued that there was no necessity for a board resolution authorizing its Personnel Superintendent to file the certiorari petition in CA-G.R. SP No. 44450 because the petition arose out of the labor dispute filed against the corporation and its Personnel Superintendent, Feliciano M. Daniel, who was made a co-respondent in Cesario's complaint for illegal dismissal.
• Right to Appeal as Representative: Petitioner argued that Daniel had all the right to answer the complaint and to appeal an unfavorable judgment therein, which he actually did, in his capacity as the corporation's Personnel Superintendent and as its representative.
• Consequence of Insisting on Board Authority: Petitioner contended that were the CA to insist that Daniel could not represent the corporation, it would follow that the proceedings before the Voluntary Arbitrator could only be binding as against Daniel because the company then could not have been duly represented in said proceedings.
• Continuation of Proceedings: Petitioner repeated its basic submission that CA-G.R. SP No. 44450 was merely a continuation of the proceedings before the Voluntary Arbitrator and that its Personnel Superintendent was impleaded as one of the respondents in Cesario's complaint for illegal dismissal.

N/A — The decision does not recount the respondents' arguments in the Supreme Court proceedings.

• Propriety of Certiorari as Remedy: Whether the Court of Appeals erred in dismissing the petition after finding that the proper remedy should have been a petition for review on certiorari and not a petition for certiorari.
• Sufficiency of Verification: Whether the Court of Appeals erred in dismissing the petition after finding that the verification portion of the petition was ineffective and insufficient in the absence of allegation or showing that Feliciano Daniel, as Personnel Superintendent, was duly authorized to file the petition.
• Appreciation of Facts in Certiorari: Whether the Court of Appeals erred in dismissing the petition after finding that the petition lacks merit because it dwelt on the appreciation of facts which is not proper in a petition for certiorari.

• Propriety of Certiorari as Remedy: Not directly addressed. The Court deemed it unnecessary to address petitioner's other grievances in view of the fatal defect in the petition arising from Daniel's lack of authority to represent the corporation.
• Sufficiency of Verification: No. The petition was fatally defective, inclusive of the verification and the certification of non-forum shopping, because Daniel filed it in behalf of and in representation of UPMC without an enabling resolution of the latter's board of directors. A corporation's power to sue and be sued is lodged with its board of directors, and no person, not even an officer of the corporation, can validly bind the corporation without authority from the board.
• Appreciation of Facts in Certiorari: Not directly addressed. The Court deemed it unnecessary to address petitioner's other grievances in view of the fatal defect in the petition arising from Daniel's lack of authority to represent the corporation.

• Propriety of Certiorari as Remedy: The Court did not reach this issue, having found a more fundamental defect in the petition. The Court stated: "With the view we take of this case, we deem it unnecessary to address petitioner's other grievances." The dispositive defect was the lack of authority of the person who filed the petition on behalf of the corporation.

• Sufficiency of Verification: The Court began with the basic concept that a corporation, like petitioner UPMC, has no power except those expressly conferred on it by the Corporation Code and those that are implied or incidental to its existence. A corporation exercises said powers through its board of directors and/or its duly authorized officers and agents. The power of a corporation to sue and be sued in any court is lodged with its board of directors that exercises its corporate powers. Physical acts of the corporation, like the signing of documents, can be performed only by natural persons duly authorized for the purpose by the corporate by-laws or by a specific act of the board of directors. The Court found that throughout the proceedings before the Voluntary Arbitrator, UPMC was duly represented by its counsel, Atty. Archimedes O. Yanto. While Cesario's complaint was filed against both the corporation and Daniel, Daniel was merely a nominal party, impleaded in his capacity as UPMC's Personnel Superintendent who signed the termination letter. The complaint contained no allegation for specific claim or charge against Daniel in whatever capacity, and Daniel was not in any way affected by the outcome of the illegal dismissal case because only the corporation was made liable. Being not a real party-in-interest, Daniel had no right to file the petition in CA-G.R. SP No. 44450 in behalf of the corporation without any authority from its board of directors. The Court cited Premium Marble Resources, Inc. vs. Court of Appeals for the proposition that in the absence of an authority from the board of directors, no person, not even the officers of the corporation, can validly bind the latter. Given that the petition was filed by Daniel without an enabling resolution of the board, the petition was fatally defective, inclusive of the verification and the certification of non-forum shopping executed by Daniel himself. The Court acknowledged that ample jurisprudence exists to the effect that subsequent and substantial compliance may call for the relaxation of the rules of procedure in the interest of justice, but to merit the Court's liberal consideration, petitioner must show reasonable cause justifying non-compliance with the rules and must convince the Court that the outright dismissal of the petition would defeat the administration of justice. Here, petitioner did not adequately explain its failure to have the certification against forum shopping signed by its duly authorized officer; instead, it merely persisted in its thesis that it was not necessary to show proof that its Personnel Superintendent was duly authorized to file the petition and to sign the verification and the certification against forum shopping despite the absence of the necessary board authorization.

• Appreciation of Facts in Certiorari: The Court did not reach this issue, having found the petition fatally defective on the ground of lack of authority of the person who filed it on behalf of the corporation. The Court stated: "With the view we take of this case, we deem it unnecessary to address petitioner's other grievances."

• Corporate Power to Sue and Be Sued — A corporation has no power except those expressly conferred on it by the Corporation Code and those that are implied or incidental to its existence. The power of a corporation to sue and be sued in any court is lodged with its board of directors that exercises its corporate powers. Physical acts of the corporation, like the signing of documents, can be performed only by natural persons duly authorized for the purpose by the corporate by-laws or by a specific act of the board of directors. In this case, the Court applied this doctrine to hold that the Personnel Superintendent, who was merely a nominal party in the labor case, had no authority to file the certiorari petition on behalf of the corporation without an enabling board resolution.

• Separate Corporate Personality — A corporation has a legal personality entirely separate and distinct from that of its officers, and the latter cannot act for and on its behalf without being so authorized by its governing board. The Court applied this doctrine to reject the petitioner's argument that Daniel's status as co-respondent in the labor case gave him the right to represent the corporation in the appellate proceedings.

• Relaxation of Procedural Rules — Ample jurisprudence exists to the effect that subsequent and substantial compliance of a petitioner may call for the relaxation of the rules of procedure in the interest of justice. However, to merit the Court's liberal consideration, the petitioner must show reasonable cause justifying non-compliance with the rules and must convince the Court that the outright dismissal of the petition would defeat the administration of justice. The Court applied this doctrine to deny UPMC's petition because it failed to adequately explain its failure to have the certification against forum shopping signed by its duly authorized officer.

• "The power of the corporation to sue and be sued in any court is lodged with the board of directors that exercises its corporate powers. In turn, physical acts of the corporation, like the signing of documents, can be performed only by natural persons duly authorized for the purpose by the corporate by-laws or by a specific act of the board of directors." — This passage articulates the core doctrine on corporate representation in litigation, which formed the basis for the Court's finding that the petition was fatally defective.

• "Being not a real party-in-interest, Daniel has no right to file the petition in CA-G.R. SP No. 44450 in behalf of the corporation without any authority from its board of directors. It is basic in law that a corporation has a legal personality entirely separate and distinct from that of its officers and the latter cannot act for and on its behalf without being so authorized by its governing board." — This passage explains why the Personnel Superintendent, as a mere nominal party, could not validly represent the corporation in the appellate proceedings.

• "Given the reality that the petition in CA-G.R. SP No. 44450 was filed by Daniel in behalf of and in representation of petitioner UPMC without an enabling resolution of the latter's board of directors, that petition was fatally defective, inclusive of the verification and the certification of non-forum shopping executed by Daniel himself." — This passage states the operative conclusion that the lack of board authorization rendered the entire petition, including its verification and certification against forum shopping, fatally defective.

• "But to merit the Court's liberal consideration, petitioner must show reasonable cause justifying non-compliance with the rules and must convince the Court that the outright dismissal of the petition would defeat the administration of justice." — This passage sets out the standard for when the Court may relax procedural rules, which the petitioner failed to satisfy in this case.

• Premium Marble Resources, Inc. vs. Court of Appeals, G.R. No. 96551, November 4, 1996, 264 SCRA 11 — Controlling precedent cited for the proposition that in the absence of an authority from the board of directors, no person, not even the officers of the corporation, can validly bind the corporation. The Court quoted this case extensively to support its finding that the petition was fatally defective.

• Monfort Hermanos Agricultural Development Corporation vs. Monfort III, G.R. No. 152542, July 8, 2004, 434 SCRA 27 — Cited as authority for the basic concept that a corporation exercises its powers through its board of directors and/or its duly authorized officers and agents.

• Bank of the Philippine Islands vs. Court of Appeals, 450 Phil. 532 (2003) — Cited as authority for the proposition that ample jurisprudence exists to the effect that subsequent and substantial compliance of a petitioner may call for the relaxation of the rules of procedure in the interest of justice.

• Philippine Valve Mfg. Company vs. National Labor Relations Commission, G.R. No. 152304, November 12, 2004, 442 SCRA 383 — Cited as authority for the standard that to merit the Court's liberal consideration, a petitioner must show reasonable cause justifying non-compliance with the rules and must convince the Court that the outright dismissal of the petition would defeat the administration of justice.

• Section 13, Article VIII, 1987 Constitution — Cited in the Certification portion of the decision, confirming that the conclusions in the decision were reached in consultation before the case was assigned to the writer of the opinion of the Court.

• Rule 45, Rules of Court — The petition for review on certiorari was filed pursuant to this rule, which governs appeals to the Supreme Court from judgments or final orders of the Court of Appeals.

• Corporation Code — Referenced as the source of the principle that a corporation has no power except those expressly conferred on it and those that are implied or incidental to its existence, and that a corporation exercises said powers through its board of directors and/or its duly authorized officers and agents.

• Justice Reynato S. Puno (Chairperson)
• Justice Angelina Sandoval-Gutierrez
• Justice Renato C. Corona
• Justice Adolfo S. Azcuna

N/A — No dissenting opinions are noted in the provided case text.