Laborte v. Pagsanjan Tourism Consumers’ Cooperative
REITERATIONFacts
The Antecedents: Petitioner Philippine Tourism Authority (PTA), a government-owned corporation, managed the Philippine Gorge Tourist Zone (PGTZ) Administration Complex. In 1989, PTA permitted respondent Pagsanjan Tourism Consumers’ Cooperative (PTCC), a cooperative, to operate a restaurant and boat ride services within the complex, in exchange for a percentage of earnings. PTCC comprised employees of the PTA, including restaurant staff and boatmen. In 1993, Rodolfo Laborte was appointed Area Manager with supervisory authority over the PTA Complex. Procedural History: On October 22, 1993, Laborte notified PTCC to cease operations due to a planned rehabilitation project. PTCC filed a complaint for prohibition, injunction, and damages with a Temporary Restraining Order (TRO) and Preliminary Injunction against Laborte. The trial court issued the TRO. PTCC later filed a contempt petition, alleging defiance of the TRO. Laborte denied the allegations, asserting his actions were based on PTA directives and that PTCC lacked a contract or franchise. Individual respondents, PTCC employees, intervened, seeking damages for lost livelihood. The trial court admitted the intervention and later issued a decision in favor of the respondents, ordering petitioners to pay substantial damages. Petitioners appealed to the Court of Appeals (CA), which affirmed the trial court's decision. The CA denied petitioners' motion for reconsideration. The Petition: This petition for review on certiorari under Rule 45 seeks to nullify the CA's decision and resolution. Petitioners argue that the CA erred in affirming the trial court's decision, particularly regarding the closure of PTCC's businesses, which they contend was a valid exercise of PTA's management prerogative. They assert that Laborte acted in good faith, merely complying with orders for the complex's renovation, and that PTCC had no vested right to continue operations as their authorization was merely tolerated. Petitioners also raise a procedural issue concerning the failure to formally offer evidence, arguing that the evidence presented was duly identified and recorded, and thus should have been considered. They contend that the damages awarded were baseless as PTCC lacked a contract and was adequately notified to vacate, and that Laborte should not be held personally liable.
Issue(s)
Whether the Court of Appeals gravely erred in not giving due course to the petitioners' appeal and in not setting aside and reversing the decision of the trial court. Whether the Court of Appeals gravely erred in finding that the closure of PTCC's restaurant and boat ride business was not a valid and lawful exercise of PTA's management prerogative. Whether the Court of Appeals gravely erred in finding petitioner Laborte liable both in his personal and official capacity.
Ruling
The petition is GRANTED. The Decision dated May 29, 2008, and the Resolution dated July 23, 2008, of the Court of Appeals are VACATED. The Amended Complaint and the Complaint-in-Intervention filed by the Respondents in the Regional Trial Court, Branch 28, Sta. Cruz, Laguna in Civil Case No. SC-3150 are DISMISSED.
Ratio Decidendi
On the issue of whether the Court of Appeals gravely erred in not giving due course to the petitioners' appeal and in not setting aside and reversing the decision of the trial court: The Supreme Court found merit in the petition, particularly concerning the procedural issue of the failure to formally offer evidence. While Section 34, Rule 132 of the Rules of Evidence generally requires formal offer of evidence, the Court has relaxed this rule in certain instances. The Court noted that the petitioners presented evidence duly identified by testimony and incorporated in the records, and the respondents had the opportunity to object. The Court cited cases like People v. Napat-a and Heirs of Romana Saves to support the relaxation of the rule when evidence is identified and recorded, and when the opposing party had the chance to object. The Court found that the requisites for relaxation were present, warranting the admission of the petitioners' evidence despite the lack of formal offer, thereby justifying a deviation from the general rule and a review of the CA's findings. On the issue of whether the Court of Appeals gravely erred in finding that the closure of PTCC's restaurant and boat ride business was not a valid and lawful exercise of PTA's management prerogative: The Supreme Court ruled in favor of the petitioners, holding that the closure was a valid exercise of management prerogative. The PTA, as a government-owned and controlled corporation mandated to administer tourism zones, had the obligation to rehabilitate its facilities, as evidenced by its comprehensive program and projects. The Court emphasized that the PTCC operated the restaurant and boat ride services merely by tolerance of the PTA, without any contract, concession, or franchise. Therefore, the PTA had the right to terminate these operations at any time, as upheld in cases like Phil. Ports Authority v. Pier 8 Arrastre & Stevedoring Services, Inc. concerning hold-over permits. The Court disagreed with the CA's finding of bad faith, stating that sufficient notice was given and the Sheriff's Report was premature given the TRO issued by the trial court. The engagement of a new operator was deemed temporary and contingency-based. On the issue of whether the Court of Appeals gravely erred in finding petitioner Laborte liable both in his personal and official capacity: The Supreme Court found no basis to hold petitioner Laborte liable. The Court reiterated the general rule that an officer cannot be held personally liable for acts done in behalf of the corporation, within the scope of authority, and in good faith. Laborte was found to be simply implementing the lawful order of the PTA Management. Furthermore, the Court noted that charges of grave coercion and violation of R.A. 6713 against Laborte and PTA had already been dismissed. Consequently, the award of damages to the respondents and intervenors was deemed without basis, as the act complained of was a lawful exercise of PTA's management prerogative, tempered with justice and good faith.
Main Doctrine
The exercise of management prerogative by a government-owned and controlled corporation to rehabilitate its facilities is a lawful act, and the termination of operations tolerated by the agency, absent any contract, concession, or franchise, is a valid exercise of such prerogative, not giving rise to claims for damages.