Salenga vs. Court of Appeals

An appeal from a labor arbiter's decision filed on behalf of a corporate employer by persons lacking a board resolution authorizing them to represent the corporation is not perfected and is a mere scrap of paper, rendering the labor arbiter's decision final and executory. Furthermore, a government-owned or -controlled corporation incorporated under the Corporation Code, without an original charter, is governed by the Labor Code and the SSS law—not the Civil Service Law or the GSIS Act—for purposes of computing retirement benefits, such that an employee's prior years of service with other government agencies are not creditable.

Petitioner Antonio Salenga was a long-time government employee who, at the time of his dismissal, held the position of Head Executive Assistant at respondent Clark Development Corporation (CDC), a government-owned and -controlled corporation (GOCC) created under Executive Order No. 80 and incorporated pursuant to the Corporation Code under the framework of R.A. No. 7227. CDC's legal representation in labor proceedings became a central issue, as the Office of the Government Corporate Counsel (OGCC) is the statutory counsel for GOCCs, but the corporation's board of directors had not authorized the specific individuals who filed the appeal on its behalf. The case also implicated the distinction between GOCCs with original charters (covered by the Civil Service Law) and those incorporated under the Corporation Code (covered by the Labor Code), a distinction critical to determining the proper retirement benefits regime applicable to Salenga.

On September 22, 1998, CDC President/CEO Rufo Colayco issued an Order informing Antonio Salenga that his position as Head Executive Assistant had been declared redundant pursuant to a board-approved reorganization scheme, and that his employment would be terminated thirty days from notice. Salenga received the Order that same day and immediately sought clarification from Colayco, who confirmed the termination was part of the reorganization. On September 17, 1999, Salenga filed a Complaint for illegal dismissal with the NLRC-RAB III in San Fernando, Pampanga, seeking reinstatement, back wages, benefits, and moral and exemplary damages against CDC and Colayco. In defense, CDC, represented by the OGCC, argued that the NLRC lacked jurisdiction because Salenga was a corporate officer and his dismissal was an intra-corporate matter cognizable by the SEC.

On February 29, 2000, Labor Arbiter Florentino Darlucio ruled in Salenga's favor, holding that he was a regular managerial employee—not a corporate officer—and that CDC had failed to establish redundancy as a valid cause. The LA also found that Salenga was denied due process, having been dismissed without proper notice or opportunity to be heard. The LA ordered reinstatement, back wages of ₱722,400, moral damages of ₱2,000,000, and exemplary damages of ₱500,000. At the time the Decision was rendered, CDC was under new leadership: President/CEO Sergio Naguiat, who upon receiving the Decision on March 10, 2000, instructed Atty. Monina Pineda not to appeal and to so inform the OGCC. Despite this instruction, two separate appeals were filed on March 20, 2000—one by the OGCC on behalf of CDC and Colayco, verified by Executive Vice President Hilana Timbol-Roman, and another by former CEO Colayco personally. Neither appeal was accompanied by a board resolution authorizing Timbol-Roman or OGCC lawyer Roy Christian Mallari to represent CDC. Naguiat later executed an affidavit stating that the appeal was filed without his knowledge, consent, or approval.

While the appeal was pending, CDC's leadership changed several times. On October 19, 2000, Board Chairperson and President/CEO Rogelio Singson ordered Salenga's reinstatement to his former position. In May 2001, President/CEO Emmanuel Angeles offered an early separation/redundancy program to managers, and in August 2001, a higher-benefit retirement plan was offered. On September 12, 2001, Salenga applied for the early retirement program, which Angeles approved on December 3, 2001. Meanwhile, the NLRC proceedings continued: on July 30, 2001, the NLRC First Division upheld the finding of illegal dismissal but deleted the moral and exemplary damages and dropped Colayco as a respondent. On December 5, 2002, the NLRC denied Salenga's Motion for Partial Reconsideration and dismissed the Complaint. On September 10, 2003, however, the NLRC partially granted Salenga's second Motion for Reconsideration, holding that the appeal had not been perfected absent a board resolution, and reinstated LA Darlucio's Decision with modifications, including an order for CDC to pay retirement benefits.

CDC thereafter filed a Petition for Certiorari with the Court of Appeals, which again lacked a board resolution authorizing its filing. A Secretary's Certificate attaching Board Resolution No. 86, Series of 2001—authorizing Angeles to represent CDC in lawsuits—was belatedly submitted on March 16, 2004. On September 13, 2005, the CA granted the petition, holding that Salenga was a corporate officer and that the case was an intra-corporate dispute within SEC jurisdiction, and ordering Salenga to restitute ₱3,222,400 plus interest. Salenga's Motion for Reconsideration was denied on August 17, 2006. Salenga then filed a Petition for Certiorari under Rule 65 with the Supreme Court, docketed as G.R. No. 174941.

• Lack of Jurisdiction over the Appeal: Petitioner maintained that the NLRC never acquired jurisdiction over the appeal, because neither Timbol-Roman nor Atty. Mallari was authorized by a board resolution to file the appeal on behalf of CDC, making the appeal a mere scrap of paper and rendering LA Darlucio's Decision final and executory.
• CA Grave Abuse of Discretion: Petitioner argued that the CA committed grave abuse of discretion by reviving and re-litigating factual issues already settled, by entertaining a petition filed without proper verification and certification against forum shopping, and by failing to dismiss despite the absence of a board resolution authorizing the petition's filing.
• Forum Shopping and Procedural Defects: Petitioner asserted that the CA should have dismissed the petition on grounds of forum shopping, failure to serve copies on the Office of the Solicitor General, and failure to attach certified true copies of the assailed NLRC resolutions and relevant pleadings.
• Retirement Benefits Computation: Petitioner contended that as a GOCC employee, his retirement benefits should be computed under R.A. No. 8291 (the GSIS Act), including all forty years of his government service, not merely his years of employment with CDC.

• Improper Remedy: Respondent insisted that a Petition for Certiorari under Rule 65 was an improper remedy to question the CA's Decision and that the case should be dismissed outright.
• Intra-Corporate Dispute: Respondent maintained that Salenga was a corporate officer whose employment depended on board action, making his dismissal an intra-corporate controversy cognizable by the SEC, not the NLRC.
• Authorization to Appeal: Respondent asserted that it had persistently sought reversal of LA Darlucio's Decision through letters to the OGCC and through Verification and Certificates against forum shopping signed during Angeles' tenure as President/CEO.
• Retirement Benefits Limited to CDC Service: Respondent argued that since CDC was created under the Corporation Code, Salenga was not covered by civil service laws, and his retirement benefits should be limited to the number of years employed by CDC, excluding his prior government service.

• Perfection of Appeal: Whether the appeal from LA Darlucio's Decision was validly perfected on behalf of CDC absent a board resolution authorizing Timbol-Roman and Atty. Mallari to file it.
• CA Jurisdiction: Whether the CA committed grave abuse of discretion in entertaining CDC's Petition for Certiorari despite the jurisdictional defect in the appeal and the procedural infirmities in the petition itself.
• Retirement Benefits Regime: Whether Salenga's retirement benefits should be computed under the GSIS Act (including all years of government service) or under the SSS law (limited to years of service with CDC), given CDC's status as a GOCC incorporated under the Corporation Code.

• Perfection of Appeal: No. The appeal was not perfected, because neither Timbol-Roman nor Atty. Mallari was authorized by a board resolution to represent CDC, making the appeal a mere scrap of paper and rendering LA Darlucio's Decision final and executory.
• CA Jurisdiction: Yes. The CA committed grave abuse of discretion in entertaining the petition and reviving factual issues already settled, given that the underlying appeal was void for lack of corporate authorization.
• Retirement Benefits Regime: No. Salenga is not entitled to have his prior government service credited; CDC, as a GOCC without an original charter, is governed by the Labor Code and the SSS law, not the Civil Service Law or the GSIS Act.

• Perfection of Appeal: Under Rule VI, Sections 4 to 6 of the NLRC Rules of Procedure, an appeal must be verified by the appellant—the employer itself—and accompanied by a certificate of non-forum shopping and a cash or surety bond. A corporation can only exercise its powers, including the power to sue and be sued, through its board of directors or through officers and agents authorized by a board resolution or its bylaws. The physical acts of a corporation, such as signing pleadings, can be performed only by natural persons duly authorized for that purpose. Neither Timbol-Roman nor Atty. Mallari presented any board resolution authorizing them to file the appeal on behalf of CDC. The OGCC's claim that it needed no such authorization as statutory counsel for GOCCs was rejected: applying the doctrine in Constantino-David vs. Pangandaman-Gania, it is necessary to determine whether the petitioning government body authorized the filing and espoused the same position, because government agencies may adopt positions different from their statutory counsel. The appeal was filed against the express instructions of then-President/CEO Naguiat, and Timbol-Roman was not an authorized representative. The OGCC was remiss in failing to advise CDC of the proper procedure and in failing to produce authorization despite repeated demands. The appeal was thus made in bad faith, and all subsequent proceedings flowing from it were null and void for lack of jurisdiction.

• CA Jurisdiction: Because the appeal from LA Darlucio's Decision was never perfected, that Decision became final and executory. The perfection of an appeal within the prescribed period is jurisdictional, and the lapse of that period deprives the courts of authority to alter the final judgment. The CA committed grave abuse of discretion in entertaining CDC's Petition for Certiorari after the NLRC had already dismissed the case for lack of jurisdiction over the defective appeal. The CA's Decision did not even address Salenga's persistent claim that the NLRC should never have taken cognizance of the appeal. Accordingly, LA Darlucio's Decision stands as to CDC's liability. However, as to Colayco, the NLRC's July 30, 2001 Decision correctly held that he could not be held solidarily liable, and Salenga did not question that ruling. All subsequent proceedings regarding the dismissal issue are null and void.

• Retirement Benefits Regime: CDC owes its existence to Executive Order No. 80 and was incorporated under the Corporation Code pursuant to Section 16 of R.A. No. 7227. Under Article IX-B, Section 2(1) of the 1987 Constitution, the civil service embraces only government-owned or -controlled corporations with original charters. Consistent with NASECO vs. NLRC and Gamogamo vs. PNOC Shipping and Transport Corp., a GOCC incorporated under the Corporation Code—not by special charter—is governed by the Labor Code, not the Civil Service Law. Retirement benefits for employees of such corporations are computed based only on years of service with that employer, not prior government service. Salenga is therefore entitled to retirement benefits computed under the Social Security Act of 1997 (R.A. No. 8282), limited to his years of employment with CDC, less amounts already paid.

• Perfection of Appeal as Jurisdictional — The perfection of an appeal within the period prescribed by law is jurisdictional; the lapse of the appeal period deprives the courts of jurisdiction to alter the final judgment. Applied here to hold that LA Darlucio's Decision became final and executory because the appeal was never perfected.

• Corporate Authorization Requirement for Pleadings — A corporation can only exercise its powers and transact business through its board of directors and through officers and agents authorized by a board resolution or its bylaws. The physical acts of a corporation, like signing documents, can be performed only by natural persons duly authorized for the purpose. Applied to hold that the appeal filed by Timbol-Roman and Atty. Mallari without a board resolution was a nullity.

• Statutory Counsel's Obligation to Secure Client Authorization — Even where a government office (such as the OSG or OGCC) is the statutory counsel for a government agency or GOCC, it must secure authorization from the client agency before filing pleadings, because the client agency may adopt a different position. Derived from Constantino-David vs. Pangandaman-Gania and applied to the OGCC's representation of CDC.

• GOCCs Without Original Charter Governed by Labor Code — Under Article IX-B, Section 2(1) of the 1987 Constitution, the civil service embraces only GOCCs with original charters. GOCCs incorporated under the Corporation Code are governed by the Labor Code, and their employees' retirement benefits are computed under the SSS law, not the GSIS Act. Prior government service with other agencies is not creditable.

• "A corporation can only exercise its powers and transact its business through its board of directors and through its officers and agents when authorized by a board resolution or its bylaws. The power of a corporation to sue and be sued is exercised by the board of directors. The physical acts of the corporation, like the signing of documents, can be performed only by natural persons duly authorized for the purpose by corporate bylaws or by a specific act of the board." — This passage articulates the ratio decidendi for why the appeal filed without board authorization was void.

• "The unauthorized and overzealous acts of officials of respondent CDC and the OGCC have led to a waste of the government's time and resources. More alarmingly, they have contributed to the injustice done to petitioner Salenga. By taking matters into their own hands, these officials let the case drag on for years, depriving him of the enjoyment of property rightfully his." — This passage underscores the Court's condemnation of the procedural misconduct that prolonged the litigation.

• "CDC, a government-owned or -controlled corporation without an original charter, was incorporated under the Corporation Code. Pursuant to Article IX-B, Sec. 2(1), the civil service embraces only those government-owned or -controlled corporations with original charter. As such, respondent CDC and its employees are covered by the Labor Code and not by the Civil Service Law." — This passage states the controlling rule on the retirement benefits regime applicable to GOCCs without original charters.

• Constantino-David vs. Pangandaman-Gania, 456 Phil. 273 (2003) — Controlling precedent applied by analogy to the OGCC. The Court held that even the OSG, as statutory counsel for government agencies, must secure client authorization before filing pleadings, because client agencies may adopt positions different from their counsel. The doctrine was extended to the OGCC's representation of CDC.

• NASECO vs. NLRC, 250 Phil. 129 (1988) — Controlling precedent establishing the distinction between GOCCs with original charters (covered by the Civil Service Law) and those incorporated under the Corporation Code (covered by the Labor Code). Applied to determine that CDC is governed by the Labor Code.

• Gamogamo vs. PNOC Shipping and Transport Corp., 431 Phil. 510 (2002) — Followed precedent holding that retirement benefits for employees of GOCCs without original charters are computed based only on years of service with that employer, and that prior government service with other agencies is not creditable.

• Galima vs. Court of Appeals, 166 Phil. 1231 (1977) — Cited for the doctrine that perfection of an appeal within the prescribed period is jurisdictional, and the lapse of that period deprives the courts of jurisdiction to alter a final judgment.

• Firme vs. Bukal Enterprises and Development Corp., 460 Phil. 321 (2003) — Cited for the principle that a corporation exercises its powers through its board of directors and duly authorized officers and agents.

• Rule VI, Sections 4 to 6, NLRC Rules of Procedure — Govern the requisites for perfection of appeal before the NLRC, including verification by the appellant, posting of a cash or surety bond, and certification against forum shopping. Applied to hold that the appeal was not perfected because the persons who filed it were not authorized by a board resolution to represent the corporate employer.

• Article IX-B, Section 2(1), 1987 Constitution — Provides that the civil service embraces all branches, subdivisions, instrumentalities, and agencies of the Government, including government-owned or controlled corporations with original charters. Applied to determine that CDC, incorporated under the Corporation Code without an original charter, is not covered by the Civil Service Law.

• Section 16, Republic Act No. 7227 — Authorizes the creation of CDC under Philippine corporation laws. Cited to establish that CDC was incorporated under the Corporation Code, not by special charter.

• Executive Order No. 80, Section 1 — Created CDC as the implementing and operating arm of the Bases Conversion and Development Authority for the Clark Special Economic Zone. Cited to confirm CDC's corporate origin.

• Republic Act No. 8282 (Social Security Act of 1997) — Governs retirement benefits for employees of private corporations, including GOCCs incorporated under the Corporation Code. Applied as the proper legal framework for computing Salenga's retirement benefits, limited to his years of service with CDC.

Carpio, A.T. (Chairperson), Brion, A.D., Perez, J.P., and Reyes, B.L. concurred.