Pepsi-Cola Products Philippines, Inc. v. Court of Appeals
REITERATIONFacts
The Antecedents: The Pepsi-Cola Products Philippines, Inc. Employees and Workers Union (PCEWU) filed a complaint against Pepsi-Cola Distributors of the Philippines (PCDP) for overtime pay for services rendered by 53 employees on eight Muslim holidays in 1985. PCEWU alleged that these holidays were previously paid as overtime and submitted a certification of Muslim holidays and relevant provisions of P.D. No. 1083. PCDP argued that only five Muslim holidays were legal, that Cagayan de Oro and Dipolog were not included in areas observing them, and that only Muslims were entitled to the benefit. Procedural History: The Executive Labor Arbiter (ELA) ruled in favor of PCEWU, ordering PCDP to pay overtime claims for eight Muslim holidays for employees in Region 12 and five holidays for those in Dipolog City, plus attorney's fees. The National Labor Relations Commission (NLRC) modified the ELA's decision, affirming that PCDP was estopped from denying claims due to past practice but vacated the monetary award, directing further proceedings for recomputation. Subsequently, PCDP ceased to exist as a corporation and was acquired by Pepsi-Cola Products Philippines, Inc. (PCPPI). The NLRC dismissed the case, citing PCDP's dissolution as a supervening event rendering judgment incapable of execution. The NLRC later denied PCEWU's motion for reconsideration. PCPPI filed a petition for nullification of the NLRC's resolution. The Court of Appeals (CA) annulled the NLRC's resolution, finding grave abuse of discretion, and reinstated the ELA's decision, holding PCPPI liable as successor-in-interest. The CA denied PCPPI's motion for reconsideration. The Petition: PCPPI filed a petition for review on certiorari, assailing the CA's decision for allegedly failing to state the facts and law on which it was based, for reinstating the ELA's decision without resolving the merits of the NLRC's decision, and for ruling on the entitlement of non-Muslims to Muslim holiday pay and the coverage of Dipolog City under P.D. No. 1083, and the entitlement of managerial employees to overtime pay.
Issue(s)
Whether the Court of Appeals erred in reinstating the Executive Labor Arbiter's decision in full without stating the facts and law on which it was based. Whether the NLRC committed grave abuse of discretion in dismissing the complaint due to the dissolution of PCDP; and on the corporate dissolution and winding up of affairs. Whether non-Muslims working in private companies located in Muslim areas are entitled to Muslim holiday provisions under P.D. 1083; What is the spirit behind the declaration and celebration of Muslim holidays; and whether allowing non-Muslims to be entitled to Muslim holiday pay is too onerous and unfair to the employer, violating equal protection. Whether the Muslim holiday provisions of P.D. 1083 cover the City of Dipolog; and whether managerial employees are entitled to overtime pay. Whether there are five (5) or eight (8) Muslim holidays to be observed in the areas at issue.
Ruling
The petition is PARTIALLY GRANTED. The assailed Decision of the Court of Appeals, nullifying the February 11, 1992 Decision of the NLRC, is AFFIRMED WITH MODIFICATION. The NLRC is DIRECTED to resolve, with reasonable dispatch, the motions for reconsideration of the parties of its decision. No costs.
Ratio Decidendi
On the issue of the Court of Appeals' jurisdiction and the void judgment: The Supreme Court affirmed the CA's finding that the NLRC committed grave abuse of discretion in dismissing the case solely due to the dissolution of PCDP. However, the Court modified the CA's ruling by holding that the CA exceeded its jurisdiction. The CA's authority was limited to reviewing the NLRC's dismissal for grave abuse of discretion, not to rule on the merits of the case or reinstate the ELA's decision. By doing so, the CA rendered a void judgment, as it lacked statutory authority to make such a ruling. The proper course for the CA was to nullify the NLRC's resolution and order the NLRC to resolve the pending motions for reconsideration. On the NLRC's dismissal and corporate dissolution: The Court reiterated that under Section 122 of the Corporation Code, a dissolved corporation continues to exist for three years for the purpose of prosecuting and defending suits and settling its affairs. The acquisition of PCDP by PCPPI did not extinguish PCDP's corporate personality or its liabilities during this winding-up period. Therefore, the NLRC erred in dismissing the case based on the dissolution alone, as the complaint was filed while PCDP was still legally capable of being sued. On the entitlement of non-Muslims to Muslim holiday pay and related issues: The Court did not directly rule on the substantive merits of whether non-Muslims are entitled to Muslim holiday pay or the exact number of Muslim holidays applicable, as these issues were still pending before the NLRC. The Court emphasized that the CA should have remanded the case to the NLRC for the resolution of these pending motions for reconsideration, rather than pre-empting the NLRC's jurisdiction. The Court did not delve into the spirit behind Muslim holidays, as the case was remanded to the NLRC for resolution of the pending motions. The focus remained on the procedural correctness of the CA's actions and the NLRC's dismissal of the case. On the coverage of Dipolog City and managerial employees: The specific coverage of Dipolog City under P.D. No. 1083 and the entitlement of managerial employees to overtime pay were issues that remained unresolved by the NLRC. The CA's reinstatement of the ELA's decision, which had addressed these points, was deemed an overreach of its appellate authority in a petition for certiorari focused on grave abuse of discretion. On the number of Muslim holidays: The Court did not directly rule on the exact number of Muslim holidays applicable, as these issues were still pending before the NLRC. The Court emphasized that the CA should have remanded the case to the NLRC for the resolution of these pending motions for reconsideration, rather than pre-empting the NLRC's jurisdiction.
Main Doctrine
A corporation's dissolution does not extinguish its liabilities; it continues to exist for three years for the purpose of prosecuting and defending suits and settling its affairs. A court that exceeds its jurisdiction by ruling on the merits of a case when its authority was limited to reviewing for grave abuse of discretion renders a void judgment.