Visayan v. National Labor Relations Commission
REITERATIONFacts
The Antecedents: The underlying dispute concerns the employment status of petitioners who were hired by Lourdes Jureidini and Milagros Tsuchiya, individuals who had taken control of Fujiyama Restaurant & Hotel, Inc. through a court-issued writ of preliminary mandatory injunction. Upon regaining management of the corporation, the original owners, Aquilino Rivera and Isamu Akasako, refused to recognize the employees hired by Jureidini and Tsuchiya, leading to the filing of illegal dismissal cases by these new employees. Procedural History: The case originated when Jureidini and Tsuchiya, allegedly pretending to be stockholders, obtained a writ of preliminary mandatory injunction that transferred possession and management of Fujiyama Hotel & Restaurant, Inc. to them. During their management, they replaced existing employees with the petitioners, extending them probationary appointments. Subsequently, the Supreme Court issued injunctions enjoining Jureidini and Tsuchiya from managing the corporation, leading to Rivera and Akasako regaining control. Upon regaining control, Rivera and his group refused to recognize the employees hired by Jureidini and Tsuchiya, prompting the latter to file illegal dismissal cases. A Labor Arbiter ruled in favor of the dismissed employees, ordering reinstatement and backwages. The private respondent appealed this decision. The National Labor Relations Commission (NLRC) initially denied the appeal but later set aside its resolution and the Labor Arbiter's decision, declaring Jureidini and Tsuchiya as the employers and absolving the corporation. The Petition: The petitioners are seeking a review of the NLRC's Resolution dated January 15, 1985, arguing that it was issued contrary to law, jurisprudence, and with grave abuse of discretion. They contend that an employer-employee relationship existed between them and Fujiyama Hotel & Restaurant, Inc. and that the NLRC erred in giving due course to the private respondent's appeal and in reversing the Labor Arbiter's decision. The petition questions whether privity of contract was established and whether the NLRC correctly reversed the prior ruling, asserting that the actions of Jureidini and Tsuchiya should bind the corporation.
Issue(s)
Whether there was an employer-employee relationship between petitioners and Fujiyama Hotel & Restaurant, Inc., considering the actions of Jureidini and Tsuchiya. Whether the NLRC erred in giving due course to private respondent's appeal and in reversing the Labor Arbiter's decision, despite the late filing of the memorandum of appeal.
Ruling
The petition is dismissed for lack of merit, and the assailed Resolution of the National Labor Relations Commission dated January 15, 1985, is affirmed in toto.
Ratio Decidendi
On the issue of employer-employee relationship and privity of contract: The Court held that a corporation can only act through its board of directors. Acts done by individuals, even officers, without authority from the board are not binding upon the corporation. In this case, Jureidini and Tsuchiya, who took over the management of Fujiyama Hotel & Restaurant, Inc. through a writ of preliminary mandatory injunction, were not officers of the corporation and acted without authority from the board of directors. Therefore, their acts, including the hiring and dismissal of employees, were not binding upon the corporation. Consequently, no employer-employee relationship existed between the petitioners and Fujiyama Hotel & Restaurant, Inc. The Court reiterated that the authority of corporate officers or agents must be derived from the board of directors, the charter, or the by-laws. Since Jureidini and Tsuchiya lacked such authority, they, and not the corporation, should be considered the employers of the petitioners. The appointments of the petitioners were also found to be probationary, further supporting the lack of a permanent employer-employee relationship with the corporation. On the issue of the NLRC giving due course to the appeal and reversing the Labor Arbiter's decision: The Court found that the NLRC did not commit grave abuse of discretion. While the memorandum of appeal was filed out of time, the Court emphasized that procedural rules are meant to serve substantial justice and should not override it. The NLRC has broad powers to correct errors and irregularities in proceedings. In this case, the Labor Arbiter's decision was based on an erroneous premise that Jureidini and Tsuchiya were authorized officers, which would cause manifest injustice to the respondent corporation. The Court noted that the private respondent seriously intended to appeal, as evidenced by its actions, and that the failure to file the memorandum on time was due to excusable mistake. Therefore, giving due course to the appeal was justified to prevent a gross injustice and to allow the substantive rights of the respondent corporation to be considered. The Court also pointed out that the NLRC's remand for further proceedings to determine the actual employer was a proper exercise of its powers under Article 218 and 221 of the Labor Code, which allow the NLRC to use all reasonable means to ascertain facts without regard to technicalities.
Main Doctrine
Acts done by individuals without authority from the board of directors are not binding upon the corporation, and consequently, no employer-employee relationship can arise from such unauthorized acts. Procedural rules should not override substantial justice, and appeals may be given due course to prevent manifest injustice.