NESTLE PHILIPPINES, INC., PETITIONER, VS. NATIONAL LABOR RELATIONS COMMISSION, EUGENIA C. NUNEZ, LIZA T. VILLANUEVA, EMMANUEL S. VILLENA, RUDOLPH C. ARMAS, RODOLFO M. KUA AND RO…

Nestle Philippines versus National Labor Relations Commission

The Case

This is a petition for certiorari brought by Nestle Philippines, Incorporated against the National Labor Relations Commission and several of its former employees — the sales representatives and medical representatives who had availed of the company's car loan policy. The company asks the Supreme Court to annul two resolutions of the NLRC that enjoined it from cancelling the employees' car loans and from collecting the monthly amortizations while their illegal dismissal cases remained pending. The case matters because it draws the boundary between a labor dispute, where the NLRC may issue an injunction, and a civil obligation founded on contract, which must be enforced in the regular courts.

Procedural History

The private respondents filed complaints for illegal dismissal in the Arbitration Branch of the NLRC. The Labor Arbiter dismissed their complaints and upheld the legality of their dismissal. They appealed to the NLRC, and their appeals were still pending there. Meanwhile, the company filed a civil suit in the Regional Trial Court of Makati to recover possession of the cars, and that court issued an order directing the Deputy Sheriff to take the motor vehicles into his custody. The private respondents then sought a temporary restraining order from the NLRC to stop the company from cancelling their car loans and collecting their amortizations. The NLRC, sitting en banc, granted the injunction. The company's motion for reconsideration was denied for tardiness. The company then came to the Supreme Court on a petition for certiorari, alleging grave abuse of discretion amounting to lack of jurisdiction.

Facts

The private respondents were employed by Nestle either as sales representatives or as medical representatives. Because of the nature of their work, each was allowed to avail of the company's car loan policy. Under that policy, the company advances the purchase price of a car, to be paid back by the employee through monthly deductions from salary, and the company retains ownership of the motor vehicle until it shall have been fully paid for. All of the private respondents availed of this policy.

On September 14, 1987, four of the private respondents were dismissed for having participated in an illegal strike. On December 26, 1987, two more were dismissed for certain irregularities. All of them filed complaints for illegal dismissal. In the notices of dismissal, the company directed them to either settle the remaining balance of the cost of their respective cars or return the cars to the company for proper disposition. They failed and refused to avail of either option, so the company filed a civil suit in the Regional Trial Court of Makati to recover possession of the cars.

The private respondents then asked the NLRC to restrain the company from cancelling their car loans and collecting their monthly amortizations pending the final resolution of their appeals in the illegal dismissal case. The NLRC granted the injunction, resolving to hold in abeyance the cancellation of the car loans and the payment of the monthly amortizations pending resolution of the illegal dismissal cases. The company's motion for reconsideration was denied for tardiness, hence this petition.

Issues

• Whether or not the NLRC acted with grave abuse of discretion amounting to lack of jurisdiction in issuing a labor injunction to hold in abeyance the cancellation of the car loans and the payment of the monthly amortizations.
• Whether or not the demand for payment of the amortizations on the car loans, or in the alternative the return of the cars, is a labor dispute within the NLRC's power to enjoin.

Applicable Provisions

Article 218 of the Labor Code provides:

Article 218. Powers of the Commission. The Commission shall have the power and authority: (e) To enjoin or restrain any actual or threatened commission of any or all prohibited or unlawful acts or to require the performance of a particular act in any labor dispute which, if not restrained or performed forthwith, may cause grave or irreparable damage to any party or render ineffectual any decision in favor of such party.

This is the source of the NLRC's injunctive power, and the Court holds that it can be exercised only in a labor dispute.

Paragraph (1) of Article 212 of the Labor Code provides:

Labor dispute includes any controversy or matters concerning terms or conditions of employment or the association or representation of persons in negotiating, fixing, maintaining, changing or arranging the terms and conditions of employment, regardless of whether the disputants stand in the proximate relation of employer and employee.

This definition fixes the outer limit of the NLRC's jurisdiction, and the Court uses it to test whether the car loan demand falls within a labor dispute.

Ruling

On the first issue, the Court granted the petition, holding that the NLRC gravely abused its discretion and exceeded its jurisdiction by issuing the writ of injunction to stop the company from enforcing the civil obligation of the private respondents under the car loan agreements and from protecting its interest in the cars, which by the terms of those agreements belong to the company until their purchase price shall have been fully paid.

On the second issue, the Court held that the demand for payment of the amortizations, or in the alternative the return of the cars, is not a labor but a civil dispute. It involves debtor-creditor relations rather than employee-employer relations. The Court quoted the company's submission that the twin directives to settle the remaining balance or return the cars, and to pay all outstanding accountabilities, are matters related to the enforcement of a civil obligation founded on contract, not dependent on or related to any labor aspect under which a labor injunction can be issued. Whether or not the private respondents remain employees, there is no escape from their obligation to pay their outstanding accountabilities, and if they cannot afford it, to return the cars. The terms of the car loan agreements are not in issue in the labor case, and the rights and obligations under those contracts may be enforced by a separate civil action in the regular courts, not in the NLRC.

Doctrine

The NLRC's power to issue a writ of injunction under Article 218 of the Labor Code may be exercised only in a labor dispute. A labor dispute, as defined in Article 212, covers controversies concerning terms or conditions of employment or the association or representation of persons in negotiating, fixing, maintaining, changing or arranging the terms and conditions of employment. A demand for payment of car loan amortizations, or for the return of the cars, is a civil dispute involving debtor-creditor relations, not employee-employer relations, and it is not converted into a labor dispute by the fact that the parties are employer and employee or that an illegal dismissal case is pending. The enforcement of such a civil obligation belongs to the regular courts, and an injunction issued by the NLRC to restrain it is void for lack of jurisdiction.

Disposition

The petition for certiorari was granted, and the resolution of the NLRC in the injunction case was annulled and set aside, with costs against the private respondents.

Remember This

The single line to memorize: the NLRC may enjoin only in a labor dispute, and a car loan obligation is a civil, debtor-creditor matter for the regular courts. Examiners use this case to test the limits of the NLRC's injunctive power under Article 218 and the definition of labor dispute under Article 212.