Facts:

This case involves a petition for review by Luis Ma. Araneta (the petitioner) against Antonio R. de Joya (the respondent), stemming from a decision made by the Court of Appeals in CA-G.R. No. 34277-R. The events leading to this review date back to November 1952 when de Joya, then the general manager of Ace Advertising Agency, Inc., proposed a plan to send employee Ricardo Taylor to the United States for specialized studies in television. Although the board of directors, including the petitioner, did not formally approve this proposal, de Joya proceeded to send Taylor abroad in September 1953, assuring the petitioner that another party would cover the costs. Throughout Taylor's stay in the U.S. from September 1, 1953, to March 15, 1954, he received his salary from corporate funds through checks prepared and signed by the petitioner and others. Subsequently, Ace Advertising filed a suit against de Joya for the recovery of expenses totaling P5,043.20 that the company allegedly

...

Facts:

Background and Initiation

• In November 1952, Antonio R. de Joya, then General Manager of Ace Advertising, proposed to the board of directors that employee Ricardo Taylor be sent to the United States for special studies in television.
• The board, composed of J. Antonio Araneta, Vicente Araneta, Gregorio Araneta II, Luis Ma. Araneta (the petitioner), and Antonio R. de Joya (the respondent), did not act on the proposal.

Unauthorized Action and Approval

• Despite the board’s inaction, in September 1953, the respondent unilaterally sent Taylor abroad.
• When J. Antonio Araneta inquired about Taylor’s trip, the respondent assured him that Taylor’s expenses would be defrayed by other parties—a claim later confirmed in a memorandum.

Salary Disbursements and Payroll Checks

• While abroad from September 1, 1953, to March 15, 1954, Taylor continued to receive his salaries, which were evidenced by payroll vouchers approved by the respondent.
• These payroll checks were prepared and signed by:
• The respondent or Vicente Araneta (the company treasurer) for most payments, including those covering part of Taylor’s related expenses.
• The petitioner, Luis Ma. Araneta, who signed three checks dated November 27, December 15, and December 29, 1953.

Disbursement of Corporate Funds

• Ace Advertising disbursed a total sum of P5,043.20 on account of Taylor’s travel and studies.
• The disbursements represented unauthorized expenditures from corporate funds, as the trip had neither been authorized by nor ratified with the knowledge of the company's board.

Legal Proceedings

• On August 23, 1954, Ace Advertising filed a recovery suit in the court of first instance in Manila against the respondent seeking to recover the disbursed sum.
• In response, the respondent denied the charges, alleging that:
• The trip was later ratified by the company’s board of directors.
• Under the by-laws, he had the discretion as general manager to authorize such expenses for the company’s benefit.
• Additionally, the respondent filed a third-party complaint against Vicente Araneta and the petitioner, asserting that both had participated in the disbursement of corporate funds.

Trial Court and Appellate Court Decisions

• On April 13, 1964, the trial court rendered judgment ordering the respondent to pay the Ace Advertising P5,043.20 with interest, while dismissing the third-party complaint.
• The respondent appealed, and on August 2, 1965, the Court of Appeals:
• Affirmed the trial court’s judgment in favor of Ace Advertising.
• Reversed the dismissal of the third-party complaint on the basis that both Vicente and Luis Ma. Araneta were involved.
• The appellate court detailed that both Aranetas were aware of and had approved Taylor’s travel and the associated disbursements:
• Evidence showed that Vicente Araneta had not only been informed but actively participated by signing checks related to the travel expenses.
• Luis Ma. Araneta’s signature on payroll checks after Taylor was already abroad further confirmed his awareness and approval.

Issue:

Central Legal Issue

• Whether the petitioner, Luis Ma. Araneta, is guilty of a quasi-delict for his passive role and approval—through his signature on payroll checks—in the unauthorized disbursement of corporate funds for Taylor’s travel and studies.

Specific Points of Contention

• Determining if the petitioner’s action of signing payroll checks in good faith could absolve him of liability, despite lacking evidence and testimony in support of his claim.
• The extent to which the petitioner’s status as both vice-president and director of Ace Advertising imposed a duty to exercise proper oversight in disbursing corporate funds.
• Whether his contractual relationship with the company precludes liability for actions constituting a tort (quasi-delict).

Ruling:

• (Subscriber-Only)

Ratio:

• (Subscriber-Only)

Doctrine:

• (Subscriber-Only)