Case Summary (G.R. No. 159333)
Background and Procedural Posture
The case involves a labor dispute wherein Arsenio T. Mendiola (petitioner) filed a complaint for separation pay, moral and exemplary damages, and attorney's fees against his employer Pacfor and its parent company Cellmark AB. The Labor Arbiter originally ruled in favor of Mendiola, ordering both Pacfor and Cellmark AB, jointly and severally, to pay separation pay, moral and exemplary damages, and attorney's fees. The NLRC and then the Court of Appeals affirmed the settlement in favor of respondents. Mendiola elevated the case to the Supreme Court, which reversed the CA's decision and reinstated the Labor Arbiter’s ruling, albeit with modification to exclude the unsubstantiated increase in salary as part of the award.
Jurisdictional Issue Regarding Cellmark AB
A key issue raised by Pacfor in its Motion for Reconsideration concerns the jurisdiction of local courts over Cellmark AB, which is an entirely foreign corporation organized under Swedish law with its principal office in Gothenburg, Sweden. The Supreme Court pointed out that Cellmark AB never received summons or voluntarily submitted itself to the jurisdiction of the Labor Arbiter or any quasi-judicial body in the Philippines. Hence, the courts did not acquire jurisdiction over Cellmark AB in the labor case.
Labor Arbiter’s Ruling and Supreme Court’s Modification
The Labor Arbiter had originally ordered both Pacfor and Cellmark AB to pay separation pay equivalent to one month for every year of service (five months in total), amounting to $32,000, plus P250,000 alleged to be a salary increment, P500,000 in moral and exemplary damages, and 10% attorney’s fees on the award. The Supreme Court ordered the deduction of the P250,000 increment from the separation pay for lack of evidence.
Supreme Court’s Final Resolution
The Supreme Court’s final ruling partially granted the Motion for Reconsideration filed by Pacfor. It affirmed the Labor Arbiter’s award against Pacfor but set aside the award as to Cellmark AB due to lack of jurisdiction over the latter. The earlier decisions of the Court of Appeals and NLRC affirming dismissal were annulled and set aside only insofar as they denied the award against Pacfor. The Court clarified that Cellmark AB’s liability was without effect due to procedural deficiencies regarding jurisdiction.
Conclusion and Legal Principles Est
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Case Background and Procedural History
- The case involves petitioner Arsenio T. Mendiola against respondents Pacific Forest Resources, Philippines, Inc. (Pacfor) and Cellmark AB.
- The dispute underwent several procedural stages, reaching the Supreme Court via a petition, with previous rulings coming from the National Labor Relations Commission (NLRC), the Court of Appeals, and the Labor Arbiter.
- The Labor Arbiter initially rendered a decision on July 30, 2001, ordering compensation and damages.
- The NLRC affirmed the Labor Arbiter’s decision on December 20, 2001.
- The Court of Appeals issued its Decision and Resolution on January 30 and July 30, 2003, respectively, affirming the NLRC rulings.
- The Supreme Court, in its July 31, 2006 decision, granted the petition and annulled and set aside the Court of Appeals’ Decision and Resolution, reinstating the Labor Arbiter’s July 30, 2001 Decision with a modification.
- Respondent Pacfor filed a Motion for Reconsideration dated September 23, 2006, contesting certain aspects of the Supreme Court’s Decision.
Dispositive Portion of the Labor Arbiter’s July 30, 2001 Decision
- The Labor Arbiter ruled that respondents Cellmark AB and Pacific Forest Resources, Inc., are jointly and severally liable to compensate Arsenio T. Mendiola.
- Compensation was ordered as separation pay equivalent to at least one month per year of service, or whichever is higher, amounting to five (5) months totaling $32,000.
- Additionally, an amount of P250,000 was awarded to address an alleged salary increase.
- Moral and exemplary damages amounting to P500,000 were awarded.
- Attorney’s fees were set at ten percent (10%) of the total amounts awarded.
- All other claims by the complainant were dismissed for lack of basis.
- The decision noted reinstatement was no longer feasible due to strained relations between the parties.