[ G.R. No. L-10556, April 30, 1958 ]
RICARDO GUREBA, PLAINTIFF AND APPELLANT, VS. JOSE MANUEL LEZAMA, ET AL., DEFENDANTS AND APPELLEES.
BAUTISTA ANGELO, J.:
Plaintiff instituted this action in the Court of First Instance of Iloilo to have Resolution No. 65 of the Board of Directors of the La Paz Ice Plant and Cold Storage Co., Inc., removing him from his position of
manager of said corporation declared null and void and to recover damages incident thereto. The action is predicated on the ground that said resolution was adopted in contravention of the provisions of the by-laws of the corporation, of the
Corporation Law and of the understanding, intention and agreement reached among its stockholders.
Defendant answered the complaint setting up as defense that plaintiff had been removed by virtue of a valid resolution.
In connection with this complaint, plaintiff moved for the issuance of a writ of preliminary injunction to restrain defendant Jose Manuel Lezama from managing the corporation pending the determination of this case, but after hearing where parties presented testimonial and documentary evidence, the court denied the motion. Thereafter, by agreement of the parties and without any trial on the merits, the case was submitted for judgment on the sole legal question of whether plaintiff could be legally removed as manager of the corporation merely by resolution of the board of directors or whether the affirmative vote of 2/3 of the paid shares of stocks was necessary for that purpose. And passing upon this legal point, the trial court held that the removal of plaintiff was legal and dismissed the complaint without pronouncement as to costs. Plaintiff appealed to the Court of Appeals but finding that the question at issue is one of law, the latter certified the case to us for decision.
Section S3 of the Corporation Law provides: "Immediately after the election, the directors of a corporation must organize by the election of a president, who must be one of their number, a secretary or clerk who shall be a resident of the Philippines * * * and such other officers as may be provided for in the by-laws." The by-laws of the instant corporation in turn provide that in the board of directors there shall be a president, a vice-president, a secretary and a treasurer. These are the only ones mentioned therein as officers of the corporation. The manager is not included although the latter is mentioned as the person in whom the administration of the corporation is vested, and with the exception of the president, the by-laws provide that the officers of the corporation may be removed or suspended by the affirmative vote of 2/3 of the paid-up shares of the corporation (Exhibit A).
From the above the following conclusion is clear: that we can only regard as officers of a corporation those who are given that character either by the Corporation Law or by its by-laws, The rest can be considered merely as employees or subordinate officials. And considering that plaintiff has been appointed manager by the board of directors and as such does not have the character of an officer, the conclusion is inescapable that he can be suspended or removed by said board of directors under such terms as it may see fit and not as provided for in the by-laws. Evidently, the power to appoint carries with it the power to remove, and it would be incongruous to hold that having been appointed by the board of directors he could only be removed by the stockholders.
The above interpretation finds also support in the American authorities. Fletcher, in his treatise, states the rule in the following wise: "It is sometimes important to determine whether a person representing a corporation is to be classed as an officer of the company or merely as an agent or employee, especially in construing statutes relating only to 'officers' of corporations. Generally the officers of a corporation are enumerated in its charter or by-laws, and include a president, vice-president, secretary, treasurer and sometimes others. The statutes in most of the states expressly provide for the election of a president, secretary and treasurer, and then provide that there shall be such other officers, agents and factors as the corporation shall authorize for that purpose. If the charter expressly enumerates who shall be officers of the company, a person whose position is not enumerated is not an officer as to members of the corporation, since the charter is conclusive upon them" (Fletcher, Cyclopedia of the Law of Private Corporations, Vol. II, p. 19). It has been likewise held "that the offices pertaining to a private corporation are defined in its charter and by-laws, and that no other positions in the service of the corporation are offices" (Ann. 53 A.L.R., 599).
Indeed, there are authorities galore that hold that a . general manager is not an officer of a corporation, even if his powers and influence may be as great as those of any officer in said organization.
The dissenting opinion quotes from Thompson and Fletcher to support the theory that the general manager of a corporation may be considered as its principal officer even though not so mentioned in its charter or by-laws. We have examined the cases cited in support of that theory but we have found that they are not in point. Thus, we have found (1) that the parties involved are mostly outsiders who press their transactions against the corporation; (2) that the point raised is whether the acts of the manager bind the corporation; (3) that the tendency of the courts is to hold the corporation liable for the acts of the manager so long as they are within the powers granted, hence, the courts emphasized the importance of the position of manager; and (4) the position of manager was discussed from the point of view of an outsider and not from the internal organization of the corporation, or in accordance with its charter or by-laws.
In the present case, however, the parties are the manager and the corporation. And the solution of the problem hinges on the internal government of the corporation where the charter and the by-laws are necessarily involved in the determination of the rights of the parties. Indeed, it has been held: "But it is urged that a corporation may have officers not recognized by the charter and by-laws. It is possible this may be so as to matters arising between strangers and the corporation." [Com. vs. Christian, 9 Phila. (Pa.) 556; italics supplied].
The cases on all fours with the present are those of State ex rel Blackwood vs. Brast, et al., 127 S. E. 507 and Denton Milling Co. vs. Blewitt, 254 S. W. 236, 238, where the parties involved are the manager and the corporation. The issue raised is the relation of the manager towards the corporation. The position of the manager is discussed from the point of view of its internal government. And the holding of the court is that the manager is the creation of the board of directors and the agent through whom the corporate duties of the board are performed. Hence, the manager holds his position at the pleasure of the board. This stipulation is well expressed in the following words of Thompson:
The dissenting opinion quotes the provision of the by-laws relative to the administration of the affairs of the instant corporation. It is there provided that the affairs of the corporation shall be successively administered by (1) the stockholders; (2) the board of directors; and (3) the manager. From this it concludes that the manager should be considered an officer.
The above enumeration only emphasizes the different organs through which the affairs of the corporation should be administered and the order in which the powers should be exercised. The stockholders are the entity composing the whole corporation. The board of directors is the entity elected by the stockholders to manage the affairs of the corporation. And the manager is the individual appointed by the board of directors to carry out the powers delegated to him. In other words, the manager is the creation of the board of directors. He is an alter ego of the board. As our law provides that only those enumerated in the charter or in the by-laws are considered officers, the manager who has not been so enumerated therein, but only incidentally mentioned in the order of management, cannot be considered an officer of the corporation within their purview.
The mere fact that the directors are not mentioned in the by-laws as officers does not deprive them of their category as such for their character as officers is secured in the charter. The same is not true with the manager. Custom and corporate usages cannot prevail over the express provisions of the charter and the by-laws.
There is no comparison between an appointee of the President, especially one in the judiciary, and the appointee of the board of directors of a corporation. In the first case, removal is especially provided for by law and in the second, the appointee holds office at the pleasure of the board. And with regard to the powers of the board of directors to remove a manager of the corporation, Thompson has the following to say:
Paras, C. J, Montemayor, Concepcion, Reyes, J. S. L., and Endencia, JJ., concur.
1 Cited by Grange, Corporation Law for Officers and Directors, p. 432.
2 Georgia-Vanderman vs. Pcnn. Mut. Life Ins. Co., supra; New York-Studebaker Bros. Co. vs. R. M. Rose Co., supra; OklahomaBadger us. Oil Gas Co. Preston, 49 Okla. 270, 152 Pac. 383; Wisconsin-Wheeler & Wilson Mfsr. Co., vs. Lawson, 57 Wis. 400, 15 N. W. 898; Louisiana-Roberts vs. J. A. Masquere Co., 158 La. 642, 104 So. 484; Texas-Denton Milling Co. vs. Blewett, 264 S. W. 236; West Virginia-State vs. Brast, 98 W. Va. 127 S. E. 507; South Dakota-Magpie Gold Mining Co. vs. Sherman, 23 S. Dak. 232, 121 N. W. 770; South Carolina-Silverthorne vs. Barnwedd Lumber Co,, 96 S. Car. 32, 79 S. E. 619.
3 Kansas-Kansas City vs. Cuiinan, 65 Kansas 68, 68 Pac. 1099; Missouri-Robinson vs. Moark Nemo Consol, Min. Co., supra; North Carolina-Kelly vs. Newark Shoe Stores Co., 190 N. Car. 406. 130 S. E. 32; Colorado-Robert E. Lee S. Mining Co., vs. Omaha Grant, 16 Colorado 118, 122, 26 Pac. 326; New Mexico-Steams-Roger Mfg. Co. vs. Aztec Gold, 93 Puc. 706; Nebraska-Ritchie vs. Illinois Cent. E. Co., 12S N. W. 35.
D I S S E N T I N G :
BENGZON, J,
Disposition of this appeal depends on the question whether Manager Ricardo Gurrea is "an officer" of the corporation. If he is, he wins. The majority says he is not.
I disagree, because the authorities hold the manager to be the principal executive officer of the corporation, because our Legislature considers him as such, or at least as one of the principal officers, and because we have heretofore regarded him as an officer of the corporation. Moreover, judging from the history of this corporation's organization and operation I think the stockholders intended that the manager shall be removed only by a two-thirds vote.
I. Manager is principal executive officer. West Coast vs. Hurd, 27 Phil., 401, held that corporations may not be criminally prosecuted for violations of the law although their officials could be made liable therefor.
Thereafter several statutes have been enacted expressly making the "manager" criminally responsible for violations by the corporation of: the Usury Laws,[1] the Price Control Law,[2] the law on Employment of Women and Children[3] the Chemistry Law,[4] the Minimum Wage Law,[5] the Chemical Engineering Law,[6] the Labor on Sunday Law,[7] and other laws.[8] Only the Manager; not the president, nor the directors nor other officers. This obviously shows that in the opinion of the legislature, the manager is the principal executive officer of the corporation, through whom the latter acts and transacts business.
In this case however, this Court (the majority) declares that the manager is not even an officer. Did the Legislature err? Let the authorities speak.
II. Textbook vs. Treatises. The majority disregarded the extensive treatises of Thompson on Corporations (12 volumes) and Fletcher on Corporations (20 volumes), only to rely on the one-volume work of Attorney Grange, confessedly (in its preface) not written for "the corporation lawyer," being a "concise" statement of the basic principles of corporation law. In support of his statement, said attorney cites two cases only: Meton vs. Isham Wagon, 4 N. Y. Suppl. and State vs. Bergs, 195 Wis. 73, 217 N. W. 736.
The first was decided in illo tempore, long ago, in 1889; at that time corporate development was in its initial stages. And it was decided by the Supreme Court of New York, which everybody knows is only an appellate court, the highest court in that state being the Court of Appeals.
The second case expressly follows the Meton decision. On the other hand more than ten cases from eight states of the American Union support the Thompson and Fletcher excerpts above quoted. Clearly the choice of this Court's majority, reflects the minority view. Worse still, it ignores the Congressional viewpoint.
The majority decision draws the conclusion that the manager is not an officer, from these two propositions or premises: Generally, the officers in a corporation are mentioned in its charter as an officer in the by-laws of the La Paz Ice Plant and Cold Storage Co., Inc. Let me analyze these propositions in their order.
III. By-laws mention manager. As to the first, observe the word "generally." The quotations from Thompson and Fletcher do not rest on the charter or by-laws of the corporation. They consider the duties and powers of the position. And our own laws, the Usury Law, the Price Control Law, the Law on Employment of Women and Children, the Chemistry Law, the Minimum Wage Law, the Chemical Engineering Law, the Labor or Sunday Law, etc., postulate the manager's dominant official position in the corporate set-up regardless of whether he is mentioned in the by-laws. The first proposition of the majority decision could be applied to other less known officials, such as the cashier, the auditor, superintendent, branch manager, etc.
Nevertheless, for the sake of argument, I will admit the first proposition as an absolute rule, with no exceptions: officers of the corporation must be mentioned in its charter and/or by-laws. Is the manager mentioned in the by-laws of the La Paz Ice Plant? I say yes, definitely; and I quote the by-laws:
Defendant answered the complaint setting up as defense that plaintiff had been removed by virtue of a valid resolution.
In connection with this complaint, plaintiff moved for the issuance of a writ of preliminary injunction to restrain defendant Jose Manuel Lezama from managing the corporation pending the determination of this case, but after hearing where parties presented testimonial and documentary evidence, the court denied the motion. Thereafter, by agreement of the parties and without any trial on the merits, the case was submitted for judgment on the sole legal question of whether plaintiff could be legally removed as manager of the corporation merely by resolution of the board of directors or whether the affirmative vote of 2/3 of the paid shares of stocks was necessary for that purpose. And passing upon this legal point, the trial court held that the removal of plaintiff was legal and dismissed the complaint without pronouncement as to costs. Plaintiff appealed to the Court of Appeals but finding that the question at issue is one of law, the latter certified the case to us for decision.
Section S3 of the Corporation Law provides: "Immediately after the election, the directors of a corporation must organize by the election of a president, who must be one of their number, a secretary or clerk who shall be a resident of the Philippines * * * and such other officers as may be provided for in the by-laws." The by-laws of the instant corporation in turn provide that in the board of directors there shall be a president, a vice-president, a secretary and a treasurer. These are the only ones mentioned therein as officers of the corporation. The manager is not included although the latter is mentioned as the person in whom the administration of the corporation is vested, and with the exception of the president, the by-laws provide that the officers of the corporation may be removed or suspended by the affirmative vote of 2/3 of the paid-up shares of the corporation (Exhibit A).
From the above the following conclusion is clear: that we can only regard as officers of a corporation those who are given that character either by the Corporation Law or by its by-laws, The rest can be considered merely as employees or subordinate officials. And considering that plaintiff has been appointed manager by the board of directors and as such does not have the character of an officer, the conclusion is inescapable that he can be suspended or removed by said board of directors under such terms as it may see fit and not as provided for in the by-laws. Evidently, the power to appoint carries with it the power to remove, and it would be incongruous to hold that having been appointed by the board of directors he could only be removed by the stockholders.
The above interpretation finds also support in the American authorities. Fletcher, in his treatise, states the rule in the following wise: "It is sometimes important to determine whether a person representing a corporation is to be classed as an officer of the company or merely as an agent or employee, especially in construing statutes relating only to 'officers' of corporations. Generally the officers of a corporation are enumerated in its charter or by-laws, and include a president, vice-president, secretary, treasurer and sometimes others. The statutes in most of the states expressly provide for the election of a president, secretary and treasurer, and then provide that there shall be such other officers, agents and factors as the corporation shall authorize for that purpose. If the charter expressly enumerates who shall be officers of the company, a person whose position is not enumerated is not an officer as to members of the corporation, since the charter is conclusive upon them" (Fletcher, Cyclopedia of the Law of Private Corporations, Vol. II, p. 19). It has been likewise held "that the offices pertaining to a private corporation are defined in its charter and by-laws, and that no other positions in the service of the corporation are offices" (Ann. 53 A.L.R., 599).
Indeed, there are authorities galore that hold that a . general manager is not an officer of a corporation, even if his powers and influence may be as great as those of any officer in said organization.
"Officers Distinguished from Mere Employees. As already stated, both officers and employees are agents of the corporation and the difference between them is largely one of degree; the officers are the most important employees exercising greater authority or power in the management of the business. Ordinarily, too, the principal offices are designated by statute, charter or by-law provisions, and specific duties are imposed upon certain officers. Thus the state statute or a by-law may provide that stock certificates shall be signed by the president and countersigned by the secretary or treasurer. The general manager of a corporation is not ordinarily clashed as an officer, but his powers and influence may be quite as great as those of any person in the organization" (Grange, Corporation Law for Officers and Directors, p. 432; Italics supplied.)We therefore hold that plaintiff has been properly removed when the board of directors of the instant corporation approved its Resolution No. 65 on June 3, 1948. We will now clarify some of the points raised by the distinguished dissenter in his dissenting opinion. The fact that the "manager" of the corporation in the several statutes enacted by Congress is held criminally liable for violation of any of the penal provisions there-in prescribed does not make him an "officer" of the corporation. This liability flows from the nature of his duties which are delegated to him by the board of directors. He is paid for them. Hence, he has to answer for them should he use it in violation of law. In the case of Robinson vs. Moark-Nemo Consol Mining Co., et al., 163 S. W. 889, in connection with the liability of the manager, the court said:
"One distinction between officers and agents of a corporation lies in the manner of their creation. An officer in created by the charter of the corporation, and the officer is elected by the directors or the stockholders. An agency is usually created by the officers, or one or more of them, and the agent is appointed by the same authority. It is clear that the two terms officers and agents are by no means interchangeable. One, deriving its existence from the other, and being dependent upon that other for its continuation, is necessarily restricted in its powers and duties, and such powers and duties are not necessarily the same as those pertaining to the authority creating it. The officers, as such, are the corporation. An agent is an employee. 'A mere employment, however liberally compensated, does not rise to the dignity of an office.' 21 Am. & Eng, Enc. Law (2d Ed.) 836. In Wheeler & Wilson Mfg. Co. vs. Lawson, 57 Wis. 400, 15 N. W. 398, it was held that under a statute requiring an affidavit to be made by an officer of a corporation, the general agent or 'managing agent, within the state, of a foreign corporation is not an officer. In Farmers' Loan & Trust Co. vs. Warring, 20 Wis. 305, Service was made upon the 'principal agent' of a corporation holding in trust a railroad, when the statute required service upon a 'principal officer.' In answering the question whether or not the agent was a principal officer the court said: 'It is evident he was net, and must be regarded only as an agent, not as an officer of any kind, much less a principal officer.' A ruling that a 'general manager' of a corporation was not authorized to verify pleadings, under a statute requiring verification by 'an officer' was made in Meton vs. Isham Wagon Co. (Sup.) 4 N. Y. Supp. 215. In Raleigh, etc. U. Co. vs. Pullman Co., 122 Ga. 704, 50 S.E. 1008 (4), it was held that the term 'general manager.' as applied to one representing a corporation, arid especially a railroad corporation, imported an agent of a very extensive authority; but it was not ruled that even the term 'general manager" would import that the person holding that position was necessarily an officer of the company. One distinction between an officer and an agent suggested in Commonwealth vs. Christian, 9 Phila. (Pa.) 558, is that an officer of a corporation, if illegally excluded from his office, may by mandamus compel the corporation to reinstate him; while an agent may be dismissed without cause, and his only remedy would be compensation in damages. It would not be contended that the 'general agent of the defendant at Columbus,' in the event of his discharge, could be reinstated by mandamus. We do not think the general agent at Columbus was ail officer of the defendant company. Therefore his alleged waiver of a condition in the policy was not binding upon the company." (Vardeman vs. Penn. Mut. Life Ins. Co., 125 Ga. 117, 54 S.E. p. 66; Italics supplied.)
"The plaintiff predicates this action on said contract, and claims that the same being signed by the defendant through its 'general manager' if admitted in evidence, would show sufficient authority prima facie to do any act which the directors could authorize or ratify. The instrument in question being signed by James W. Codle, ''General Manager', and no evidence on the trial being produced showing the duties of said manager or what kind of an office he was general manager of, the words 'general manager' without proof as to the nature of services performed by the person called 'general manager' have no meaning in law, excepting that the person hearing the title is mi employee who has been designated with a title. ' It does not make him an officer of the company employing him." (Studebaker Bros. Co. vs. K. M. Rose Co., 119 N.Y.S. pp. 970, 97; Italics supplied.)
"Common justice and common sense demand that, where those in charge and control of tile management of a corporation direct it along paths of wrongdoing, they should be held accountable by law * * *. This doctrine will prevent many wrongs, and have a salutary influence in bringing about the lawful and orderly management of corporations."It is claimed that the cases of Meton vs. Isham Wagon, 4 N.Y.S., 215 and State vs. Bergs, 217 N. W., 736, supporting the theory that a manager is not necessarily an officer, are in illo tempore.[1] It is submitted that we do not adopt a rule just because it is new nor reject another just because it is old. We adopt a rule because it is a good and sound rule. The fact however is that they are not the only authorities supporting that theory. Additional cases are cited by Fletcher in support thereof, such as the cases of Vardeman vs. Penn. Mut. Life Ins. Co., supra; Studebaker Bros. Co. vs. E. M. Rose Co., supra.
The dissenting opinion quotes from Thompson and Fletcher to support the theory that the general manager of a corporation may be considered as its principal officer even though not so mentioned in its charter or by-laws. We have examined the cases cited in support of that theory but we have found that they are not in point. Thus, we have found (1) that the parties involved are mostly outsiders who press their transactions against the corporation; (2) that the point raised is whether the acts of the manager bind the corporation; (3) that the tendency of the courts is to hold the corporation liable for the acts of the manager so long as they are within the powers granted, hence, the courts emphasized the importance of the position of manager; and (4) the position of manager was discussed from the point of view of an outsider and not from the internal organization of the corporation, or in accordance with its charter or by-laws.
In the present case, however, the parties are the manager and the corporation. And the solution of the problem hinges on the internal government of the corporation where the charter and the by-laws are necessarily involved in the determination of the rights of the parties. Indeed, it has been held: "But it is urged that a corporation may have officers not recognized by the charter and by-laws. It is possible this may be so as to matters arising between strangers and the corporation." [Com. vs. Christian, 9 Phila. (Pa.) 556; italics supplied].
The cases on all fours with the present are those of State ex rel Blackwood vs. Brast, et al., 127 S. E. 507 and Denton Milling Co. vs. Blewitt, 254 S. W. 236, 238, where the parties involved are the manager and the corporation. The issue raised is the relation of the manager towards the corporation. The position of the manager is discussed from the point of view of its internal government. And the holding of the court is that the manager is the creation of the board of directors and the agent through whom the corporate duties of the board are performed. Hence, the manager holds his position at the pleasure of the board. This stipulation is well expressed in the following words of Thompson:
"The "word 'manager' implies agency, control, and presumptively sufficient authority to hind a corporation in a case in "which the corporation was an actual party. It has been said that such agent must have the same general supervision of the corporation as is associated with the office of cashier or secretary. By whatever name he may he called, such managing agent is a mere employee of the board of directors and holds hi? position subject to the particular contract of employment; and unless the contract of employment fixes hiss term of office, it may be terminated at the pleasure of the board. * * * The manager, like any other appointed agent, is subject to removal when his term expires and on the request of the proper officer he should turn over his business to the corporation and, where he refuses to comply, he may be restrained from the further performance of work for the corporation." (Thompson on Corporations, Vol. III, 3rd., pp. 209-210; Italics supplied.)It is not correct to hold that the theory that a manager is not classed as an officer of a corporation is only the minority view. If we consider the states that hold that managers are merely agents or employees as among those that hold the theory that managers are not necessarily officers, then our theory is supported by the majority view. Indeed, this view is upheld by nine states,[2] where as only six states adopt the view that managers are considered principal officers of the corporation.[3]
The dissenting opinion quotes the provision of the by-laws relative to the administration of the affairs of the instant corporation. It is there provided that the affairs of the corporation shall be successively administered by (1) the stockholders; (2) the board of directors; and (3) the manager. From this it concludes that the manager should be considered an officer.
The above enumeration only emphasizes the different organs through which the affairs of the corporation should be administered and the order in which the powers should be exercised. The stockholders are the entity composing the whole corporation. The board of directors is the entity elected by the stockholders to manage the affairs of the corporation. And the manager is the individual appointed by the board of directors to carry out the powers delegated to him. In other words, the manager is the creation of the board of directors. He is an alter ego of the board. As our law provides that only those enumerated in the charter or in the by-laws are considered officers, the manager who has not been so enumerated therein, but only incidentally mentioned in the order of management, cannot be considered an officer of the corporation within their purview.
The mere fact that the directors are not mentioned in the by-laws as officers does not deprive them of their category as such for their character as officers is secured in the charter. The same is not true with the manager. Custom and corporate usages cannot prevail over the express provisions of the charter and the by-laws.
There is no comparison between an appointee of the President, especially one in the judiciary, and the appointee of the board of directors of a corporation. In the first case, removal is especially provided for by law and in the second, the appointee holds office at the pleasure of the board. And with regard to the powers of the board of directors to remove a manager of the corporation, Thompson has the following to say:
* * * Below the grade of director and such other officers as are elected by the corporation at large, the general rule is that the officers of private corporations hold their offices during the will of the directors, and are hence removable by the directors without assigning any cause for the removal, except so far as their power may be restrained by contract with the particular officer, just as any other employer may discharge his employee. Speaking generally, it may be said that the power to appoint carries with it the power to remove. * * * the directors who appoint a ministerial officer may undoubtedly remove him at pleasure, and he has no remedy other than an action for damages against the corporation for a breach of contract. * * * The ordinary ministerial and other lesser officers, however, hold their offices during the pleasure of the directors and may be removed at will, without assigned cause. Of this doss of officers and agents are the secretary and treasurer of the corporation, the general manager, the assistant manager, the field manager, the attorney of the company, an assistant horticulturist, and the bookkeepers." (Thompson on Corporations, Vol. III, 521-523.)Wherefore, the decision appealed from is affirmed, with costs against appellant.
Paras, C. J, Montemayor, Concepcion, Reyes, J. S. L., and Endencia, JJ., concur.
1 Cited by Grange, Corporation Law for Officers and Directors, p. 432.
2 Georgia-Vanderman vs. Pcnn. Mut. Life Ins. Co., supra; New York-Studebaker Bros. Co. vs. R. M. Rose Co., supra; OklahomaBadger us. Oil Gas Co. Preston, 49 Okla. 270, 152 Pac. 383; Wisconsin-Wheeler & Wilson Mfsr. Co., vs. Lawson, 57 Wis. 400, 15 N. W. 898; Louisiana-Roberts vs. J. A. Masquere Co., 158 La. 642, 104 So. 484; Texas-Denton Milling Co. vs. Blewett, 264 S. W. 236; West Virginia-State vs. Brast, 98 W. Va. 127 S. E. 507; South Dakota-Magpie Gold Mining Co. vs. Sherman, 23 S. Dak. 232, 121 N. W. 770; South Carolina-Silverthorne vs. Barnwedd Lumber Co,, 96 S. Car. 32, 79 S. E. 619.
3 Kansas-Kansas City vs. Cuiinan, 65 Kansas 68, 68 Pac. 1099; Missouri-Robinson vs. Moark Nemo Consol, Min. Co., supra; North Carolina-Kelly vs. Newark Shoe Stores Co., 190 N. Car. 406. 130 S. E. 32; Colorado-Robert E. Lee S. Mining Co., vs. Omaha Grant, 16 Colorado 118, 122, 26 Pac. 326; New Mexico-Steams-Roger Mfg. Co. vs. Aztec Gold, 93 Puc. 706; Nebraska-Ritchie vs. Illinois Cent. E. Co., 12S N. W. 35.
BENGZON, J,
Disposition of this appeal depends on the question whether Manager Ricardo Gurrea is "an officer" of the corporation. If he is, he wins. The majority says he is not.
I disagree, because the authorities hold the manager to be the principal executive officer of the corporation, because our Legislature considers him as such, or at least as one of the principal officers, and because we have heretofore regarded him as an officer of the corporation. Moreover, judging from the history of this corporation's organization and operation I think the stockholders intended that the manager shall be removed only by a two-thirds vote.
I. Manager is principal executive officer. West Coast vs. Hurd, 27 Phil., 401, held that corporations may not be criminally prosecuted for violations of the law although their officials could be made liable therefor.
Thereafter several statutes have been enacted expressly making the "manager" criminally responsible for violations by the corporation of: the Usury Laws,[1] the Price Control Law,[2] the law on Employment of Women and Children[3] the Chemistry Law,[4] the Minimum Wage Law,[5] the Chemical Engineering Law,[6] the Labor on Sunday Law,[7] and other laws.[8] Only the Manager; not the president, nor the directors nor other officers. This obviously shows that in the opinion of the legislature, the manager is the principal executive officer of the corporation, through whom the latter acts and transacts business.
In this case however, this Court (the majority) declares that the manager is not even an officer. Did the Legislature err? Let the authorities speak.
"A general manager of a corporation has been defined to be a person who really has the most general control over the affairs of the corporation, and who has knowledge of all its business, and property, and can act in emergencies on his own responsibility; he may be considered the 'principal officer." (Thompson on Corporations, Vol. III p. 209, citing 14 Am. & Eng. Ency. of Law (2d od.) 1002; American Inv. Co. vs. Cable Co., 4 Ga. App. 106, 60 S.E. 1037; Kansas City vs. Cullinan, 65 Kans. 68, 68 Pac. 1099; Manross vs. Uncle Sam Oil Co., SS Kans. 2S7, Pac. 38BJ Ann. Cas. 1914, 827; Robmson vs. Moark-Nemo Cansol Min, Co., 178 Mo. App. 531, 103 S. W. 885. See also Kelly vs. Newark Shoe Stores Co., 190 N. Car. 406, 180 S. E. 32.)The Legislature was right. It punished the principal executive officer for wrongs committed for and by the corporate entity.
"A general manager, where his duties are fixed by by-laws or otherwise, has been denned as "the person who really has the most general control over the affairs of a corporation, and who has knowledge of all its business and property, and who can act in emergencies on his own responsibility; who may be considered the principal officer." (Fletcher, Cyclopedia of Corporations Vol. II p. 598 citing: Anderson's Law Dictionary (quoted in Robert E. Lee Silver Min. Co. vs. Omaha & Grant Smelting & Refining Co., 16 Colo. 118, 122, 26 Pac. 826; Kansas City vs. Culliman, 65 Kan. 68, 77, 68 Pac. 1099; Stearns-Roger Mfg. Co. vs. Aztec Gold Mining & Milling Co. 14 N. M. 300, 830, 93 Pac. 706); Marderoaian V. National Casualty Co.; Cal. App., 273 Pac. 1093; State ex rel. Blackwood vs. Brast, 98 W. Va. 596, 127 S. E. B07, See also Manross vs. Uncle Sam Oil Co., 88 Kan. 237, 128 Pac. 385, Ann. Gas. 1914 827; Robinson vs. Moark-Nemo Consul, Min. Co., 178 Mo. App. ESI, 163 S. W. 886; Eitchie vs. Illinois Cent. R. Co., Neb. 631, 635, 128 N. W. 85; Booker-Jones Oil Co. vs. National Refining Co. (Tex. Civ App ) 132 S. W. 816.
Thompson Op. Cit. Vol. Ill sec. 1690. In the Grange quotation, majority implicdly admits "manager" is the same as "general manager."
"Manager" and "General Manager" are interchangeable.x
II. Textbook vs. Treatises. The majority disregarded the extensive treatises of Thompson on Corporations (12 volumes) and Fletcher on Corporations (20 volumes), only to rely on the one-volume work of Attorney Grange, confessedly (in its preface) not written for "the corporation lawyer," being a "concise" statement of the basic principles of corporation law. In support of his statement, said attorney cites two cases only: Meton vs. Isham Wagon, 4 N. Y. Suppl. and State vs. Bergs, 195 Wis. 73, 217 N. W. 736.
The first was decided in illo tempore, long ago, in 1889; at that time corporate development was in its initial stages. And it was decided by the Supreme Court of New York, which everybody knows is only an appellate court, the highest court in that state being the Court of Appeals.
The second case expressly follows the Meton decision. On the other hand more than ten cases from eight states of the American Union support the Thompson and Fletcher excerpts above quoted. Clearly the choice of this Court's majority, reflects the minority view. Worse still, it ignores the Congressional viewpoint.
The majority decision draws the conclusion that the manager is not an officer, from these two propositions or premises: Generally, the officers in a corporation are mentioned in its charter as an officer in the by-laws of the La Paz Ice Plant and Cold Storage Co., Inc. Let me analyze these propositions in their order.
III. By-laws mention manager. As to the first, observe the word "generally." The quotations from Thompson and Fletcher do not rest on the charter or by-laws of the corporation. They consider the duties and powers of the position. And our own laws, the Usury Law, the Price Control Law, the Law on Employment of Women and Children, the Chemistry Law, the Minimum Wage Law, the Chemical Engineering Law, the Labor or Sunday Law, etc., postulate the manager's dominant official position in the corporate set-up regardless of whether he is mentioned in the by-laws. The first proposition of the majority decision could be applied to other less known officials, such as the cashier, the auditor, superintendent, branch manager, etc.
Nevertheless, for the sake of argument, I will admit the first proposition as an absolute rule, with no exceptions: officers of the corporation must be mentioned in its charter and/or by-laws. Is the manager mentioned in the by-laws of the La Paz Ice Plant? I say yes, definitely; and I quote the by-laws: