PIGLAS vs. COA

A final and executory judgment against a party who was not impleaded in the case cannot bind that party, and a void judgment rendered by a tribunal without jurisdiction over a GOCC with an original charter can never attain finality as to that entity. The labor arbiter and the NLRC have no jurisdiction over illegal dismissal claims against LRTA, a GOCC with an original charter governed by civil service rules, and any judgment against it is a patent nullity that may be ignored and resisted in any proceeding.

The petitioners are former regular rank-and-file employees of Metro Transit Organization, Inc. (Metro), a wholly-owned subsidiary of the Light Rail Transit Authority (LRTA) that operated Light Rail Transit (LRT) Line 1. They are members of the Pinag-isang Lakas ng mga Manggagawa sa METRO – National Federation of Workers' Union – Kilusang Mayo Uno (PIGLAS/Union), the sole and exclusive bargaining agent of Metro's rank-and-file employees. On June 8, 1984, Metro and LRTA entered into an "Agreement for the Management and Operation of the Light Rail Transit System" (O & M Agreement) for a PHP 5 Million annual fee, with LRTA undertaking to defray and reimburse all of Metro's operating expenses. On June 9, 1989, the Manila Electric Company sold its 499,990 Metro shares to LRTA, making Metro a wholly owned subsidiary, though Metro maintained its distinct and separate corporate personality. LRTA was created by Executive Order No. 603, making it a GOCC with an original charter, and is principally tasked to administer LRT Line 1 operations under the Department of Transportation and Communication.

Sammy Malunes and numerous other individuals (collectively, Malunes et al.) were former regular rank-and-file employees of the Metro Transit Organization, Inc. (Metro), a wholly-owned subsidiary of the Light Rail Transit Authority (LRTA) that operated LRT Line 1. They were all members of the Pinag-isang Lakas ng mga Manggagawa sa METRO – National Federation of Workers' Union – Kilusang Mayo Uno (PIGLAS/Union), the sole and exclusive bargaining agent of Metro's rank-and-file employees. On June 8, 1984, Metro and LRTA entered into an "Agreement for the Management and Operation of the Light Rail Transit System" (O & M Agreement) for a PHP 5 Million annual fee, with LRTA undertaking to defray and reimburse all of Metro's operating expenses. On June 9, 1989, the Manila Electric Company sold its 499,990 Metro shares to LRTA, making Metro a wholly owned subsidiary, though Metro maintained its distinct and separate corporate personality. The O & M Agreement was renewed on a month-to-month basis upon its expiration on June 8, 1994.

On July 25, 2000, the Union staged a strike over a bargaining deadlock, paralyzing LRT Line 1 operations. The Secretary of the Department of Labor and Employment (DOLE) assumed jurisdiction over the labor dispute and issued a Return to Work Order (RTWO), directing all striking employees to return to work. However, LRTA did not renew the O & M Agreement when it expired on July 31, 2000, refused to admit back the employees who were willing to return to work, and hired replacement workers. Through a Resolution passed by the LRTA Board on July 28, 2000, LRTA authorized its take-over of operations and maintenance of Line 1, and Malunes et al. were dismissed from service. They claimed they were not notified of the non-renewal and that their dismissal was without just cause and due process, constituting unfair labor practice. They also alleged that Metro and LRTA were one and the same business entity. LRTA denied the existence of an employer-employee relationship with Malunes et al., contending that it has a personality separate and distinct from Metro, and that the employees were validly dismissed for staging an illegal strike and defying the RTWO.

No amicable settlement was reached, and the Union and Malunes et al. filed a complaint for illegal dismissal and unfair labor practice with claims for moral and exemplary damages and attorney's fees. The labor arbiter found Malunes et al. to have been illegally dismissed and ordered Metro and LRTA to jointly and severally pay separation pay and backwages totaling PHP 208,235,682.72 plus 10% attorney's fees. The labor arbiter held that it was not established that Malunes et al. were dismissed for a just or authorized cause or afforded due process, and disregarded the claim that they defied the RTWO for failure to establish notice thereof. The labor arbiter also refused to give credence to LRTA's defense of immunity from suit and disregarded Metro's and LRTA's separate identities, holding that Metro acted as a mere alter ego of LRTA.

Metro and LRTA filed separate appeals, which the NLRC dismissed on May 19, 2006 for non-perfection due to failure to post the required bond. The NLRC Resolution became final and executory on June 23, 2006. Metro and LRTA then separately sought review before the Court of Appeals. Metro's petition (CA-G.R. SP No. 95665) was dismissed for being fatally defective due to failure to file a motion for reconsideration. LRTA's petition (CA-G.R. SP No. 95578) was found meritorious, with the CA annulling the labor arbiter's and NLRC's rulings insofar as they held LRTA jointly and severally liable, ruling that the labor tribunals had no jurisdiction over LRTA as a GOCC with an original charter. Metro's subsequent petition to the Supreme Court (G.R. No. 175460) was denied by the Third Division on April 14, 2008, which affirmed the CA's dismissal of Metro's petition on procedural grounds. Meanwhile, the petition in G.R. No. 182928, which challenged the CA's decision in CA-G.R. SP No. 95578, was denied by the Second Division on July 8, 2009, which reiterated that LRTA cannot be held liable for employment-related obligations of Metro and that the labor tribunals lacked jurisdiction over LRTA.

Thereafter, the labor arbiter issued an Alias Writ of Execution on November 6, 2008, directing enforcement of the final and executory Decision dated September 13, 2004 against Metro and LRTA, but only in the event of Metro's failure or incapacity to satisfy the writ. As of November 18, 2013, only PHP 364,028.93 was paid, leaving a balance of PHP 228,695,222.06. The labor arbiter later issued an Order dated March 15, 2018 adopting the NLRC Computation Unit's computation and ordering the issuance of an Updated Alias Writ of Execution for PHP 461,554,636.77 against LRTA and MTOI. LRTA and Metro filed separate Motions to Quash, arguing that the enforcement of judgment against GOCCs requires prior approval of the COA. During a DOLE mediation conference on June 14, 2018, the parties agreed to submit the enforcement of the judgment award to the COA for approval through a Petition for Money Claims.

The COA denied the petition on December 17, 2020, finding that G.R. No. 175460 merely resolved technical issues and did not dispose of the merits of the case, and that the Court's dispositions in Venus and G.R. No. 182928, which held that LRTA and Metro are separate and distinct entities, are controlling. The COA also held that the Updated Alias Writ of Execution was unenforceable and void, and that it is Metro that is liable for the money claim, though Metro is now a defunct government agency with no funds. The COA denied the motion for reconsideration on January 28, 2022.

• Grave Abuse of Discretion by COA: Petitioners argued that the COA committed grave abuse of discretion for reversing and nullifying the final and executory Decision of the Supreme Court in G.R. No. 175460, which affirmed the CA Resolution and NLRC Resolution declaring as final and executory the labor arbiter's Decision dated September 13, 2004 due to non-perfection of appeals by LRTA and Metro.
• COA's Limited Jurisdiction: Citing Taisei Shimizu Joint Venture vs. Commission on Audit, petitioners argued that the COA's jurisdiction over money judgments rendered by courts pertains only to the execution stage, specifically to determine the source of funds, and that the COA went beyond its authority when it set aside the final and executory judgment in G.R. No. 175460.
• Substantive Disposition in G.R. No. 175460: Petitioners contended that the dismissal of Metro's petition in G.R. No. 175460 was not based purely on a technical ground but also disposed of the substantive issue of LRTA's failure to post the jurisdictional appeal bond, which is akin to a judgment on the merits.
• Abandonment of Prior Doctrine: Petitioners reiterated that the Court's Second Division abandoned its own rulings in G.R. No. 182928 and Venus when it promulgated Mendoza, Pili, and Alvarez, where it held that LRTA is solidarily liable to pay the money claims of Metro's former employees as their indirect employer under Articles 107 and 109 of the Labor Code.

• Non-Binding Effect of G.R. No. 175460: The COA averred that LRTA should not be bound by the ruling of the NLRC, as affirmed by the CA in CA-G.R. SP No. 95665 and upheld by the Court in G.R. No. 175460, since LRTA was not a party to the CA petition in CA-G.R. SP No. 95665.
• Controlling Effect of G.R. No. 182928: The COA argued that LRTA separately filed a petition for certiorari with the CA docketed as CA-G.R. SP No. 95578, where the appellate court favorably ruled for LRTA, holding that the labor arbiter and NLRC have no jurisdiction over LRTA, and this was affirmed by the Court's Second Division in G.R. No. 182928. Since LRTA was a party in G.R. No. 182928, the finding that LRTA is not solidarily liable with Metro should control.
• No Definitive Discussion of Solidary Liability: The COA argued that G.R. No. 175460 resolved only procedural issues and not the merits, whereas G.R. No. 182928 categorically held that LRTA is not solidarily liable with Metro, and declared that there is no conflict between the two cases.
• No Abandonment of Prior Doctrine: The COA maintained that G.R. No. 182928 was not overturned in Mendoza, Pili, and Alvarez insofar as the NLRC's lack of jurisdiction over LRTA is concerned, since the respondents in those cases did not claim they were employees of LRTA but merely sued LRTA because it contractually assumed certain obligations of Metro.

• Grave Abuse of Discretion in Denying Money Claims: Whether the COA committed grave abuse of discretion amounting to lack or excess of jurisdiction when it denied the money claims of Malunes et al. against LRTA.
• Grave Abuse of Discretion in Exercising Appellate Review: Whether the COA committed grave abuse of discretion amounting to lack or excess of jurisdiction when it exercised appellate review power on the May 19, 2006 Resolution of the NLRC Third Division and the final and executory Decision dated April 14, 2008 of the Supreme Court Third Division which held LRTA solidarily liable to pay the judgment award to petitioners.

• Grave Abuse of Discretion in Denying Money Claims: No. The COA did not commit grave abuse of discretion in denying the Petition for Money Claims against LRTA. The labor tribunals lacked jurisdiction over LRTA, a GOCC with an original charter, and their judgments against it are void and can never attain finality as to LRTA.
• Grave Abuse of Discretion in Exercising Appellate Review: No. The COA did not alter nor modify the Court's ruling in G.R. No. 175460. The Third Division's ruling in G.R. No. 175460 is not binding on LRTA because LRTA was not a party to that case, and the Second Division's determination in G.R. No. 182928, which ruled with finality LRTA's non-liability, is the binding ruling.

• Grave Abuse of Discretion in Denying Money Claims: The Court held that the issue of LRTA's solidary liability with Metro for Malunes et al.'s illegal dismissal and money claims had already been settled with finality by the Second Division's Resolution dated July 8, 2009 in G.R. No. 182928. The Second Division discussed at length the labor tribunals' lack of jurisdiction over LRTA, it being a GOCC with its own original charter as decreed in Venus. As a consequence, the labor arbiter's Decision dated September 13, 2004, holding LRTA solidarily liable, as upheld by the NLRC, is void and without legal effect. The Court quoted the NLRC's observation that LRTA was not a party to CA-G.R. SP No. 95665 and G.R. No. 175460, and therefore cannot be bound by those rulings, citing the principle that no man shall be affected by a proceeding in which he is a stranger. The Court also cited the hornbook doctrine that a void judgment has no legal and binding effect for any purpose, is nonexistent in contemplation of law, and can never attain finality. Thus, the reliance on G.R. No. 175460 to enforce the alleged solidary liability of LRTA is misplaced, and it is the Second Division's determination in G.R. No. 182928 that is binding on LRTA.

• Grave Abuse of Discretion in Exercising Appellate Review: The Court rejected the petitioners' assertion that the NLRC correctly dismissed LRTA's appeal for non-perfection, thereby rendering the labor arbiter's decision final and executory. The Court quoted the Second Division's ruling that the nullity of the labor arbiter's decision and the resulting nullity of all NLRC actions on the case for lack of jurisdiction over LRTA effectively rendered the appeal bond issue moot. The Court further held that the doctrine in Venus and G.R. No. 182928 was not abandoned in Mendoza, Pili, and Alvarez. The Court distinguished those cases: Venus and G.R. No. 182928 involved illegal dismissal claims where complainants claimed they were employees of LRTA, while Mendoza, Pili, and Alvarez involved purely monetary claims for severance pay arising from the CBA, where the respondents admitted they were employed by Metro. In Mendoza, Pili, and Alvarez, the NLRC acquired jurisdiction over LRTA not because of an employer-employee relationship but because LRTA expressly assumed the monetary obligations of Metro to its employees. The Court quoted Pili to emphasize that "as far as the claim of illegal dismissal is concerned, we find that NLRC cannot exercise jurisdiction over LRTA." Consequently, the labor arbiter's Decision holding Metro and LRTA liable for illegal dismissal is void insofar as LRTA is concerned, and the backwages and separation pay awarded as a consequence of the finding of illegal dismissal are not binding on LRTA. The Court concluded that the COA did not commit grave abuse of discretion in denying the Petition for Money Claims anchored on G.R. No. 175460.

• Jurisdiction over GOCCs with Original Charters — A government-owned and controlled corporation (GOCC) with an original charter, such as LRTA created under Executive Order No. 603, is governed by civil service rules and not by the Labor Code, and is beyond the reach of the DOLE. Consequently, the labor arbiter and the NLRC have no jurisdiction over illegal dismissal claims against such an entity. The Court applied this doctrine to hold that the labor arbiter's Decision and all NLRC actions against LRTA were void for lack of jurisdiction and never attained finality as to LRTA.

• Void Judgments Can Never Attain Finality — A void judgment or order has no legal and binding effect for any purpose; in contemplation of law, it is nonexistent and may be resisted in any action or proceeding whenever it is involved. It is not even necessary to take steps to vacate or avoid a void judgment; it may simply be ignored, and all acts performed pursuant to it and all claims emanating from it have no legal effect. The Court applied this doctrine to hold that the labor arbiter's Decision against LRTA, rendered without jurisdiction, is void and cannot be enforced against LRTA.

• Res Judicata — Identity of Parties — For the principle of res judicata to apply, there must be identity of parties, subject matter, and causes of action. A person who was not impleaded in a case cannot be bound by the decision rendered therein, for no man shall be affected by a proceeding in which he is a stranger. The Court applied this doctrine to hold that the Third Division's ruling in G.R. No. 175460 is not binding on LRTA because LRTA was not a party to that case, and that the Second Division's ruling in G.R. No. 182928, to which LRTA was a party, is the controlling determination of LRTA's non-liability.

• Distinction Between Illegal Dismissal Claims and Purely Monetary Claims — The jurisdiction of labor tribunals over LRTA in purely monetary claims, where LRTA expressly assumed the monetary obligations of Metro to its employees, does not extend to illegal dismissal claims, where the labor tribunals lack jurisdiction over LRTA as a GOCC with an original charter. The Court applied this distinction to hold that Mendoza, Pili, and Alvarez did not abandon the doctrine in Venus and G.R. No. 182928, since those cases involved different causes of action.

• "A person who was not impleaded in the complaint cannot be bound by the decision rendered therein, for no man shall be affected by a proceeding in which he is a stranger (Bulawan vs. Aquende, G.R. No. 182819, June 22, 2011)." — This quotation, adopted by the Court from the NLRC's Decision, articulates the fundamental due process principle that a judgment cannot bind a non-party, which was central to the Court's holding that G.R. No. 175460 does not bind LRTA.

• "It is a hornbook doctrine that '[a] void judgment or order has no legal and binding effect for any purpose. In contemplation of law, it is nonexistent and may be resisted in any action or proceeding whenever it is involved. It is not even necessary to take any steps to vacate or avoid a void judgment or final order; it may simply be ignored. All acts performed pursuant to it and all claims emanating from it have no legal effect. In this sense, a void order can never attain finality.'" — This passage states the controlling doctrine on void judgments, which the Court applied to hold that the labor arbiter's Decision against LRTA, rendered without jurisdiction, never attained finality and cannot be enforced.

• "However, as far as the claim of illegal dismissal is concerned, we find that NLRC cannot exercise jurisdiction over LRTA. The NLRC and Labor Arbiter erred when it took cognizance of such matter." — This quotation from Light Rail Transit Authority v. Pili was cited by the Court to reaffirm that the labor tribunals lack jurisdiction over illegal dismissal claims against LRTA, notwithstanding their jurisdiction over purely monetary claims where LRTA assumed obligations.

• "We put an end to the present case by reiterating that the CA correctly decided CA-G.R. SP. No. 95578 by invalidating the NLRC Resolution insofar as it finds the LRTA liable. No argument or submission in the petition or in the petitioners' subsequent submissions has changed this conclusion." — This quotation from G.R. No. 182928 was cited by the Court to emphasize that the issue of LRTA's non-liability for illegal dismissal had been settled with finality by the Second Division.

• Light Rail Transit Authority vs. Venus, 520 Phil. 233 (2006) — Controlling precedent establishing that employment in LRTA is governed by civil service rules, not the Labor Code, since LRTA is a GOCC with an original charter, hence beyond the ambit of the DOLE. The Court relied on this case to affirm the labor tribunals' lack of jurisdiction over LRTA.

• PIGLAS NFWU-KMU vs. Light Rail Transit Authority, G.R. No. 182928, July 8, 2009 — Controlling precedent where the Second Division ruled with finality that LRTA cannot be held liable for employment-related obligations of Metro to its employees, that the labor tribunals lacked jurisdiction over LRTA, and that G.R. No. 175460 does not operate as res judicata against LRTA due to lack of identity of parties. The Court relied heavily on this case as the binding determination of LRTA's non-liability.

• Metro Transit Organization, Inc. vs. PIGLAS-NFWU-KMU, G.R. No. 175460, April 14, 2008 — Distinguished by the Court as a ruling that resolved only procedural issues (failure to file a motion for reconsideration and failure to post an appeal bond) and did not dispose of the merits of the case, and which is not binding on LRTA since LRTA was not a party thereto.

• Light Rail Transit Authority vs. Mendoza, 767 Phil. 458 (2015) — Distinguished by the Court as involving purely monetary claims for severance pay, not illegal dismissal, and where the respondents did not claim to be employees of LRTA. The Court held that this case did not abandon the doctrine in Venus and G.R. No. 182928.

• Light Rail Transit Authority vs. Pili, 786 Phil. 624 (2016) — Distinguished by the Court as involving purely monetary claims, and cited for the proposition that the NLRC cannot exercise jurisdiction over LRTA as far as illegal dismissal claims are concerned. The Court quoted this case to reaffirm the continuing validity of the Venus doctrine.

• Light Rail Transit Authority vs. Alvarez, 801 Phil. 40 (2016) — Distinguished by the Court as involving purely monetary claims for severance pay, not illegal dismissal, and where the respondents did not claim to be employees of LRTA. The Court held that this case did not abandon the doctrine in Venus and G.R. No. 182928.

• Taisei Shimizu Joint Venture vs. Commission on Audit, 873 Phil. 323 (2020) — Cited by the petitioners to argue that the COA's jurisdiction over money judgments pertains only to the execution stage; the Court did not adopt this argument, instead affirming the COA's denial of the money claim on the ground that the judgment against LRTA was void.

• Nacar vs. Gallery Frames, 716 Phil. 267 (2013) — Cited in the procedural history for the doctrine on the running of legal interest on judgment awards from the date of finality of the decision sought to be enforced.

• Philippine National Bank vs. Daradar, G.R. No. 180203, June 28, 2021 — Cited by the Court as the source of the hornbook doctrine that a void judgment has no legal and binding effect for any purpose and can never attain finality.

• Power Sector Assets and Liabilities Management Corporation vs. Commission on Audit, G.R. No. 213425, April 27, 2021 — Cited by the Court for the definition of grave abuse of discretion as an evasion of a positive duty or a virtual refusal to perform a duty enjoined by law, or a judgment rendered not based on law and evidence but on caprice, whim, and despotism.

• Executive Order No. 603, Series of 1980 — The original charter of LRTA, which makes it a GOCC with an original charter. The Court applied this provision to hold that LRTA is governed by civil service rules, not the Labor Code, and that the labor tribunals have no jurisdiction over illegal dismissal claims against it.

• Article 107 and Article 109, Labor Code — Cited by the petitioners to argue that LRTA is solidarily liable as an indirect employer of Metro's employees. The Court implicitly rejected this argument in the context of illegal dismissal claims, holding that the labor tribunals lacked jurisdiction over LRTA.

• Rule VI, Section 6, Rules of Procedure of the NLRC, as amended by Resolution No. 01-02, series of 2002 — The provision requiring the posting of an appeal bond. The Court noted that Metro's and LRTA's appeals were dismissed for non-perfection due to failure to post the required bond, but held that the appeal bond issue was rendered moot as to LRTA due to the nullity of the labor tribunals' actions for lack of jurisdiction.

• Rule 64 and Rule 65, Rules of Court — The procedural bases for the petition for certiorari filed by the petitioners before the Supreme Court, assailing the COA's Decision and Resolution.

Gesmundo, C.J., Inting, Zalameda, M. Lopez, Gaerlan, Rosario, J. Lopez, Dimaampao, Marquez, Kho, Jr., and Singh, JJ., concurred. Caguioa, J., was on official business.

• Leonen, SAJ — Filed a dissenting opinion, the substance of which is not detailed in the provided text. Lazaro-Javier, J., joined the dissent of SAJ Marvic Leonen.