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PEPSI-COLA PRODUCTS PHILIPPINES v. CA

FACTS:

The case involves a complaint filed by the Pepsi-Cola Employees Union (PCEU) against Pepsi-Cola Distributors of the Philippines (PCDP) for non-payment of overtime pay during Muslim holidays and special holidays. PCEU claimed that PCDP had a company policy of granting overtime pay on Muslim holidays and presented supporting documents. The Labor Arbiter ruled in favor of the employees and awarded them overtime pay. PCDP appealed the decision to the NLRC, arguing that the Labor Arbiter erred in awarding overtime pay based on a mere allegation. PCDP also claimed that only Muslims were entitled to the benefits of Muslim holidays and that the city where the employees were based was not covered by the law. The NLRC modified the decision, ruling that PCDP is estopped from denying the employees' claims based on the company's past practice. The NLRC also held that only the five Muslim holidays provided under the law should be included in the computation of overtime pay and that managerial employees were not entitled to overtime pay. Before the motions for reconsideration were resolved, ownership of the Pepsi-Cola bottling plants was transferred to Pepsi-Cola Products Philippines, Inc. The NLRC then dismissed the complaint against PCDP, stating that it no longer had jurisdiction because PCDP had ceased to exist. PCEU filed a motion for reconsideration, but it was denied. PCEU filed a petition to nullify the NLRC's resolution.

ISSUES:

  1. Whether or not Pepsi-Cola Products Philippines, Inc. (PCPPI), as successor-in-interest of the dissolved Pepsi-Cola Distributors of the Philippines (PCDP), is liable for the unpaid obligations of the dissolved corporation towards its employees.

  2. Whether or not a dissolved corporation is exempt from the payment of its obligations.

  3. Whether or not the National Labor Relations Commission (NLRC) has jurisdiction over Pepsi-Cola Distributors of the Philippines.

  4. Whether or not the decision of the Court of Appeals (CA) is null and void for failing to express the facts and law on which it is based, in violation of Section 14, Article VIII of the Constitution.

  5. Whether or not the NLRC committed a grave abuse of discretion in dismissing the case and whether the CA has jurisdiction to decide on the correctness of the NLRC's decision.

RULING:

  1. The Court of Appeals (CA) held that the NLRC committed grave abuse of discretion when it dismissed the complaint against PCDP. The CA ruled that the PCDP was still in existence when the complaint was filed and that the supervening dissolution of the corporation did not warrant the dismissal of the complaint. The CA reinstated the decision of the Executive Labor Arbiter (ELA) ordering PCDP and its successor-in-interest, PCPPI, to pay the employees their claims for overtime services.

  2. The decision of the CA is null and void for lack of jurisdiction. The CA had no appellate jurisdiction over the issue of whether the decision of the NLRC is correct or not. The CA only had jurisdiction to determine whether the NLRC committed a grave abuse of its discretion in dismissing the complaint based on the acquisition of PCDP.

  3. The NLRC committed a grave abuse of discretion in dismissing the case. The NLRC erred in perceiving that the petitioner lost its corporate personality after acquiring PCDP. Under Section 122 of the Corporation Code, a corporation continues to exist for three years after its dissolution for the purpose of prosecuting and defending suits. The CA correctly resolved the issue with sufficient fullness, supported by statutory provisions and applicable case law.

PRINCIPLES:

  • A dissolved corporation is not exempt from the payment of its obligations.

  • The NLRC has jurisdiction over corporations, including dissolved corporations, for the resolution of labor disputes.

  • A dissolved corporation is given three years to wind up its affairs, and if litigation is filed by or against the corporation within the three-year period, the period may be prolonged until the final determination of the case.

  • A court decision must clearly and distinctly express the facts and law on which it is based in accordance with Section 14, Article VIII of the Constitution.

  • A corporation continues to exist for three years after dissolution for the purpose of prosecuting and defending suits.

  • The termination of a corporate entity does not cause the extinction or diminution of its rights and liabilities.

  • A void judgment has no legal and binding effect, force or efficacy for any purpose and is considered non-existent in contemplation of law.

  • If a court exercises jurisdiction in a case to which the applicable statute does not apply, the judgment rendered is void.

  • The Court of Appeals has jurisdiction over errors of jurisdiction and not errors of judgment.