Sabalvaro v. Erlanger & Galinger

DIAZ, J.:

Having lost at the trial in the Court of First Instance of Manila, the plaintiff appealed from the judgment rendered against him, alleging that the trial judge committed the five errors assigned by him in his brief. By means of said alleged errors he raises the following three questions, to wit: (1) Is the defendant corporation or its officer, who are the other defendants, under obligation or not to purchase from the plaintiff his ten shares of stock in the corporation, which had been assigned to him upon partial payments with the same dividends earned by said shares of stock and which are those stated in certificates of stock Nos. 30, 43 and, 48, for 1, 7, and 2 shares, respectively, according to Exhibits C, A and B, after the plaintiff separation from said defendant corporation? (2) Is the defendant corporation under obligation or not to pay to the plaintiff on amount equivalent to seven per cent of the value of his said ten share of stock, as interest during the year 1932, under the terms of Exhibit A?

(3) Is the defendant corporation under obligation or not to pay to the plaintiff the value of his alleged accrued leave of 12 months and 25 days, for his 12 years and 10 months of service rendered thereto, after his separation from the service? To understand the question raised it is necessary to know the pertinent facts of the case proven at the trial, which are as follows: The defendant corporation accepted the services of the plaintiff, as its employee, on April 16, 1920. A few months after the plaintiff had entered said defendant's service - the record is silent as to the said date - the defendant Feldstein, who was the vice-president thereof, offered to sell him the share which had originally been issued in the name of Serapio Estabaya and transferred by the latter to the corporation, for economic reasons.

In view of the fact that the plaintiff had no money available to pay for the value of the share offered to him, which was P500, he by agreement with Feldstein signed a promissory note for said amount, with the understanding that it would be paid piecemeal with bonus thereafter to be given him monthly as dividends by the corporation, which was so done although not completed. In January, 1923, the defendant corporation was kind enough to raise the salaries of its employees, but instead of giving the plaintiff a raise, the defendant Feldstein made him a present of said share formerly belonging to Serapio Estabaya, informing him in his letter of the 14th of said month and year that with said arrangement his promissory note would be cancelled and returned to him on the following Monday (Exhibit C). On January 1, 1924, the defendants Wm.

H. Anderson and S. Feldstein, who were the holders of the majority stock of the defendant corporation, on their own account, granted the plaintiff an option to acquire the 7 shares stated in certificate No. 43, which are the ones referred to in Exhibit A, expressly informing him in the latter document which, by the way, is also signed by the defendant corporation and by the plaintiff himself, among other things, as follows: 1. You are entitled to purchase seven shares of the capital stock at par, which is P500 a share. This privilege is nontransferable.

2. Until the shares are fully paid for by you, they shall remain in our name and we shall vote them. 3.

You will pay the purchase price of said shares out of the earnings of the stock. 4. You shall not sell the shares acquired by you except to the officers of the corporation unless the Board of Directors of the corporation approve the sale.

5.

After you have fully paid for the aforesaid shares, then and then only the purchase price paid by you shall draw interests at 7 per cent a year in addition to drawing such dividends as the Board of Directors may authorize. 6. Should you become separated from the Company's employment through any cause - except sickness or death - before fully paying for your shares, you forfeit all earnings on the stock and you forfeit all your rights to acquire the shares.

Should, however, your separation from the Company's employment be by reason of sickness or death, before fully paying for your shares, you or your estate will be entitled to receive only the earnings of such shares as shown by the last balance sheet prior to your separation but all your rights to acquire such shares shall be and stand forfeited. This clause is inserted as expressing the intention of the parties hereto that the offer to acquire shares is in the nature of a special bonus for long, faithful and continuous service. This agreement is also signed by Erlanger & Galinger, Inc. so as to be binding as to clauses 4 and 5 hereof.

The plaintiff succeeded in paying piecemeal the value of the 7 shares in question with the dividends earned by the same during the years 1924, 1925 and 1926 (Exhibit H). The defendant Feldstein again gave the plaintiff other 2 shares under the same conditions for payment as those granted him for the acquisition of their 7 shares stated in certificate No. 43, so as to permit him, as he stated in his letter of January 24, 1928 (Exhibit B), "to become permanently identified with this company", referring to the defendant corporation. Feldstein, however, imposed upon him the following condition.

These stock certificates must not be sold without the approval of the Board of Directors whose authority must first be obtained and they will automatically revert to me in case you lave the employ of the company. If for any reason whatsoever, you leave the employ of the company you will not be entitled to any earnings on this stock. Effective Jan.

1, 1928. As promised him in paragraph 5 of Exhibit A, the stipulated interest of 7 per cent per annum, from 1926 to the month of December, 1931, was paid to the plaintiff. In December, 1932, however, the officers of the defendant corporation, to wit: Wm.

H. Anderson, S. Feldstein, H. N. Salet, Wm. Wolf, F. C. Hagedorn, and W. H. Rennolds, together with the plaintiff and the other stockholders thereof, agreed to discontinue payment of said interest from January 1, 1932, executing to the effect the document marked in the record as Exhibit P, which literally reads as follows: This indenture, executed this . .

. day of December, 1932 by the parties undersigned, all of whom are of age and residing in the places set opposite their signature, WITNESSETH - THAT: For and in consideration of the sum of one peso (P1) and other valuable considerations, receipt whereof is hereby acknowledged, the parties undersigned, for themselves, their heirs, successors, executors, administrators and assigns, have waived, renounced and quit-claimed, freely and voluntarily, any and all rights in and to the credit or interest of seven per centum (7%) per annum heretofore paid, and now due, owing and/or payable or which may hereafter accrue, become due, owing and/or payable upon or account of the divers shares of stock to all and each of them appertaining, or by them owned and held, in the capital stock of "Erlanger & Galinger, Inc.", a corporation organized under and by virtue of the laws of the Philippine Islands, with main offices therein in the City of Manila; this waiver, renunciation and quit-claim to inure to the benefit of the said corporation "Erlanger & Galinger, Inc.", its successors and assigns, from and after December 15, 1932, including interest accrued during the year 1932.

In witness whereof, the Parties have executed these present, in Manila, P. I., the day and year written above. Names Shares Address Maj. Wm.

H.

Anderson ............................ 601 (Sgd.) Wm. H. ANDERSON Mr. S. Feldstein ........................................

378 Mr. Wm. H. Rennolds ............................. 1 Mr. H. N. Salet ..........................................

101 Mr. Wm. Wolff .......................................... 31 Mr. K. L. Morrison ...................................

25 Mr. B. W. Guysi ....................................... 20 Mr. J. Tremblay ....................................... 10 Mr. V. Sabalvaro ......................................

10 Mr. R. Muños ........................................... 8 Mr. F. C. Hagedon .................................. 5 Mr. N. Dominguez ...................................

5 Mr. R. Mascuñana .................................. 4 Mr. B. H. Silen ......................................... 1 Total .

. . .

. . .

. . .

. . .

. . .

. . .

.