Benguet Electric Cooperative, Inc. v. National Labor Relations Commission
REITERATIONFacts
The Antecedents: Peter Cosalan was the General Manager of Benguet Electric Cooperative, Inc. (Beneco). Following audit reports from the Commission on Audit (COA) highlighting financial irregularities and mismanagement, Cosalan initiated remedial measures. In response, the Beneco Board of Directors adopted resolutions that abolished Cosalan's housing allowance, reduced his salary and allowances, directed him to hold in abeyance personnel actions, and removed him as a principal signatory. Subsequently, the Board passed resolutions terminating Cosalan's services, suspending him indefinitely, and withholding his salary and allowances. Procedural History: Cosalan continued to work, believing only the National Electrification Administration (NEA) could suspend or remove him. He requested his compensation, which Beneco denied. Cosalan filed a complaint with the National Labor Relations Commission (NLRC) challenging the Board's resolutions and demanding payment. The Labor Arbiter granted Cosalan's motion for reinstatement and later rendered a decision confirming reinstatement, ordering Beneco and the Board members jointly and severally to pay backwages, allowances, moral damages, and attorney's fees. The Petition: The respondent Board members appealed to the NLRC. Beneco, with a new set of directors, did not appeal but moved for dismissal and execution. The NLRC modified the Labor Arbiter's decision, holding Beneco alone liable for backwages and allowances and dismissing the claims for moral damages and attorney's fees against the Board members. Beneco filed a Petition for Certiorari with the Supreme Court, arguing the NLRC gravely abused its discretion in accepting the Board members' out-of-time appeal and in holding Beneco solely liable while releasing the Board members.
Issue(s)
Whether the NLRC gravely abused its discretion in accepting the appeal filed by the respondent Board members out of time. Whether the NLRC gravely abused its discretion amounting to lack of jurisdiction in holding petitioner Beneco alone liable for backwages and allowances and releasing the respondent Board members from liability; and whether the indefinite suspension and termination of Cosalan's services by the respondent Board members were illegal. Whether the respondent Board members are liable for damages under Section 31 of the Corporation Code; and whether Beneco has a right to be reimbursed by the respondent Board members for any amounts it may be compelled to pay Cosalan.
Ruling
The Supreme Court granted the Petition for Certiorari, set aside the NLRC decision, and reinstated the Labor Arbiter's decision in toto. The Court ordered the respondent Board members to reimburse Beneco any amounts it may be compelled to pay Cosalan.
Ratio Decidendi
On the timeliness of the appeal: The Court found that the respondent Board members' appeal memorandum was filed out of time. The established rule is that transmission through a private carrier or letter-forwarder is not a recognized mode of filing pleadings, and the date of actual receipt by the court, not the date of delivery to the private carrier, is deemed the date of filing. Therefore, the NLRC should have dismissed the appeal memorandum as the ten-day reglementary period for perfection of an appeal is mandatory and jurisdictional. On the illegality of the suspension and termination and the liability of Beneco: The Court held that the indefinite suspension and termination of Cosalan's services by the respondent Board members were illegal for several reasons. Firstly, the suspension exceeded the lawful maximum period of thirty (30) days for preventive suspension. Secondly, Cosalan was deprived of procedural due process, as he was not informed of the charges nor given an opportunity to be heard. Thirdly, the Board members failed to adduce any lawful cause for the suspension and dismissal. Fourthly, they failed to obtain the prior approval of the NEA, which was required under the loan agreement. The Court held that while Beneco, as an artificial person, is liable for the acts of its directors acting within the scope of their official functions, the liability-generating acts of the respondent Board members in suspending and dismissing Cosalan were personal and individual acts done in bad faith and ultra vires. On the liability of the Board members and reimbursement to Beneco: The Court disagreed with the NLRC's conclusion that the Board members were not motivated by malice or bad faith and that Beneco alone should bear responsibility. The Court found strong indications that the Board members acted illegally and in reprisal against Cosalan for attempting to remedy financial irregularities. The NLRC's finding of no malice or bad faith flew in the face of the evidence. The Court applied Section 31 of the Corporation Code, which holds directors liable for willful and knowing assent to patently unlawful acts or for gross negligence or bad faith in directing the affairs of the corporation. The respondent Board members were found guilty of gross negligence or bad faith in enacting resolutions that indefinitely suspended and dismissed Cosalan without lawful cause and due process. Therefore, Beneco has a right to be reimbursed by the respondent Board members for any amounts it may be compelled to pay Cosalan, to prevent innocent members of Beneco from being penalized.
Main Doctrine
The filing of pleadings through a private carrier is not a recognized mode of filing, and the date of actual receipt by the court, not the date of delivery to the private carrier, is deemed the date of filing. Failure to file an appeal within the reglementary period renders the decision final and executory. Directors who act with gross negligence or bad faith in directing the affairs of the corporation, including illegal dismissal of an employee without due process, may be held jointly and severally liable for damages under Section 31 of the Corporation Code.