G.R. No. L-22450 - Yu Chuck vs. Kong Li Po

Plaintiffs: Yu Chuck, Mack Yueng, and Ding Moon, printers employed by the defendant.
Defendant: "Kong Li Po," a domestic corporation engaged in the publication of a Chinese newspaper.
Plaintiffs sued to recover damages for their alleged wrongful discharge under a contract of employment supposedly executed by the defendant's general business manager.

Defendant has a board of directors and a president who signs contracts; no specific provision for a business or general manager.
C. C. Chen (also known as T. C. Chen) was appointed general business manager in 1919.
Chen entered into a contract with the plaintiffs in December 1919 for printing services at P580 per month.
The contract provided a term of three years starting January 1, 1920, and stipulated full pay for the remaining term if plaintiffs were discharged without just cause.

Plaintiffs worked from January 1, 1920, to January 31, 1921.
Plaintiffs were discharged by the new manager, Tan Tian Hong, who replaced Chen after Chen left for China.
The dismissal letter gave no specific reasons.
Plaintiffs filed suit claiming unjust discharge before contract expiration and claimed damages of P20,880.

Denied contract validity, claiming Chen lacked authority to bind the corporation.
Alleged plaintiffs caused deliberate delays in newspaper issuance, rendering damages of P300.
Plaintiffs failed to prepare extra pages needed for January 1, 1921 issue, causing additional costs of P110.
Plaintiffs neglected to correct advertisement errors causing loss of P160.50.
Plaintiffs refused to perform certain job printing causing P150 damage.

Exhibit A, the contract signed by plaintiffs and “C. C. Chen, manager of Kong Li Po,” was admitted.
The trial court found Chen’s signature authentic and found implied ratification by the defendant.
Judgment was rendered in favor of the plaintiffs for P13,340 with interest and costs.

Defendant challenged the sufficiency of plaintiff’s evidence on contract execution and authority.
Defendant’s counterclaims were raised in special defenses.

The complaint was accompanied by a translated copy of the contract which defendant did not deny under oath, raising the issue of admission by failure to deny (§ 103, Code of Civil Procedure).
The parties conducted the trial on the merits regarding Chen’s authority, waiving procedural objections to the lack of sworn denial.

Whether C. C. Chen, as general business manager, had the authority to bind the defendant corporation by the employment contract with plaintiffs.
Whether the contract for a three-year term, containing onerous conditions and contemplating bankruptcy, is reasonable and within the implied authority of Chen.
Whether the corporation impliedly ratified the contract by its conduct or knowledge of the contract.
Whether defendant's counterclaims alleging breaches and damages by plaintiffs are supported by evidence.
Procedural issue: Effect of defendant’s failure to deny under oath the genuineness and execution of the contract attached to the complaint.