Benguet Electric Cooperative vs.

NLRC (1992)
Summary Cases:

Benguet Electric Cooperative vs. National Labor Relations Commission (NLRC)

Subject: The date of actual receipt by the court, and not the date of delivery to the private carrier, is
deemed the date of filing of the pleading; 10-day reglementary period to perfect an appeal is mandatory
and jurisdictional in nature; Suspension and termination of services imposed by the Board members
upon Cosalan was illegal; Corporate officers and directors are not personally liable for consequences of
their corporate acts unless they act with malice and bad faith; Section 31 of the Corporation Code is
applicable to cooperatives; Board members solidarily liable with Beneco for the monetary award; Beneco
has right to be reimbursed by the Board members for any amount it is compelled to pay
Facts:
Peter Cosalan was the General Manager of Benguet Electric Cooperative, Inc. (Beneco), having been
elected as such by the Board of Directors of Beneco, effective October 16, 1982.
Cosalan received two Audit Memorandums (No. 1 and 2) issued by the Commission on Audit (COA).
These Memorandums noted that the audit and treatment of cash advances, per diems and allowances
received by officers and employees of Beneco were not in compliance with the guidelines of the National
Electrification Administration (NEA). The Audit Memorandums directed the taking of immediate remedial
action in conformity with existing NEA regulations.
Cosalan initiated implementation of the remedial measures recommended by the COA. The members of
the Board of Beneco reacted by adopting a series of resolutions during the period from 23 June to 24
July 1984. These Board Resolutions abolished the housing and other allowances of Cosalan, reduced
his salary and struck his name out as a principal signatory to transactions of Beneco.
The Beneco Board adopted another series of resolutions which resulted in the ouster of Cosalan as
General Manager as well as the withholding of his salary and allowances.
Cosalan nevertheless continued to work as General Manager of Beneco, in the belief that he could be
suspended or removed only by duly authorized officials of NEA, in accordance with provisions of P.D. No.
269, as amended by P.D. No. 1645 (NEA Charter). Accordingly, on 5 October and 10 November 1984,
Cosalan requested Beneco to release the compensation due him. Beneco, acting through its Board
members, denied the written request of Cosalan.
Cosalan then filed a complaint with the National Labor Relations Commissions (NLRC) against members
of the Beneco Board, challenging the legality of the Board resolutions which ordered his suspension and
termination from the service and demanding payment of his salaries and allowances.
In the course of the proceedings before the Labor Arbiter, Cosalan filed a motion for reinstatement which
was granted. Beneco complied with the Labor Arbiter's order through Resolution No. 10-90.
The Labor Arbiter rendered a decision (a) confirming Cosalan's reinstatement; (b) ordering payment to
Cosalan of his backwages and allowances by Beneco and the Board members, jointly and severally, for
a period of three (3) years without deduction, and (3) ordering the individual Board members to pay,
jointly and severally, to Cosalan moral damages of P50,000 plus attorney's fees of ten percent (10%) of
the award.
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The Board members appealed to the NLRC. However, petitioner Beneco did not appeal, but moved to
dismiss the appeal filed by the Board members and for execution of judgment. By this time, petitioner
Beneco had a new set of directors.
The NLRC modified the award rendered by the Labor Arbiter by declaring that petitioner Beneco alone,
and not the Board members, was liable for Cosalan's backwages and allowances, and by ruling that
there was no legal basis for the award of moral damages and attorney's fees made by the Labor Arbiter.
In the present Petition for Certiorari, Beneco (through its new set of directors), allege that the NLRC had
acted with grave abuse of discretion amounting to lack of jurisdiction when (a) it gave due course to the
Board members' appeal although such appeal had been filed out of time, and (b) it held Beneco alone
liable for payment of the backwages and allowances due to Cosalan and releasing the Board members
from liability therefor.
Held:
The date of actual receipt by the court, and not the date of delivery to the private carrier, is
deemed the date of filing of the pleading
1. Beneco Board members received the decision of the Labor Arbiter on 21 April 1988. Accordingly, and
because 1 May 1988 was a legal holiday, they had only up to 2 May 1988 within which to perfect their
appeal by filing their memorandum on appeal. The Board members' memorandum on appeal was posted
by registered mail on 3 May 1988 and received by the NLRC the following day. Clearly, the
memorandum on appeal was filed out of time.
2. The Board members insist that their Memorandum on Appeal was filed on time because it was
delivered for mailing on May 1, 1988 to the Garcia Communications Company, a licensed private letter
carrier. The Board members in effect contend that the date of delivery to Garcia Communications was
the date of filing of their appeal memorandum.
3. The established rule is that transmission through a private carrier or letter-forwarded - instead of the
Philippine Post Office - is not a recognized mode of filing pleadings. The established rule is that the date
of delivery of pleadings to a private letter-forwarding agency is not to be considered as the date of filing
thereof in court, and that in such cases, the date of actual receipt by the court, and not the date of
delivery to the private carrier, is deemed the date of filing of the pleading.
10-day reglementary period to perfect an appeal is mandatory and jurisdictional in nature
4. There was no reason grounded upon substantial justice and the prevention of serious miscarriage of
justice that might have justified the NLRC in disregarding the ten-day reglementary period for perfection
of an appeal by the Board members. Accordingly, the applicable rule was that the ten-day reglementary
period to perfect an appeal is mandatory and jurisdictional in nature, that failure to file an appeal within
the reglementary period renders the assailed decision final and executory and no longer subject to
review. The Board members had thus lost their right to appeal from the decision of the Labor Arbiter and
the NLRC should have forthwith dismissed their appeal memorandum.
Suspension and termination of services imposed by the Board members upon Cosalan was
illegal
5. The appeal was likewise quite bereft of merit. Both the Labor Arbiter and the NLRC had found that the
indefinite suspension and termination of services imposed by the Board members upon Cosalan was
illegal.
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6. First, the suspension of Cosalan was continued long after expiration of the period of thirty (30) days,
which is the maximum period of preventive suspension that could be lawfully imposed under Section 4,
Rule XIV of the Omnibus Rules Implementing the Labor Code.
7. Second, Cosalan had been deprived of procedural due process by the Board members. He was never
informed of the charges raised against him and was given no opportunity to meet those charges and
present his side of whatever dispute existed; he was kept totally in the dark as to the reason or reasons
why he had been suspended and effectively dismissed from the service of Beneco.
8. Third, the Board members failed to adduce any cause which could reasonably be regarded as lawful
cause for the suspension and dismissal of Cosalan from his position as General Manager of Beneco.
Cosalan was, in other words, denied due process both procedural and substantive.
9. Fourth, the Board members failed to obtain the prior approval of the NEA of their suspension and
dismissal of Cosalan, which prior approval was required under the subsisting loan agreement between
the NEA and Beneco. The requisite NEA approval was subsequently sought by the Board members but
no NEA approval was granted.
Corporate officers and directors are not personally liable for consequences of their corporate
acts unless they act with malice and bad faith
10. The Board members and officers of a corporation who purport to act for and in behalf of the
corporation, who keep within the lawful scope of their authority in so acting, and act in good faith, do not
become liable, whether civilly or otherwise, for the consequences of their acts. Those acts, when they
are such a nature and are done under such circumstances, are properly attributed to the corporation
alone and no personal liability is incurred by such officers and Board members.
11. The NLRC clearly overlooked or disregarded the circumstances under which the Board members
had in fact acted in the instant case. The record showed strong indications that the Board members had
illegally suspended and dismissed Cosalan precisely because he was trying to remedy the financial
irregularities and violations of NEA regulations which the COA had brought to the attention of Beneco.
The conclusion reached by the NLRC that "the records do not disclose that the individual Board
members were motivated by malice or bad faith" flew in the face of the evidence of record. At the very
least, a strong presumption had arisen, which it was incumbent upon the Board members to disprove,
that they had acted in reprisal against respondent Cosalan and in an effort to suppress knowledge about
and remedial measures against the financial irregularities the COA Audits had unearthed. That burden
the Board members did not discharge.
Section 31 of the Corporation Code is applicable to cooperatives
12. Section 31 of the Corporation Code is applicable in respect of Beneco and other electric
cooperatives similarly situated:
Sec. 31. Liability of directors, trustees or officers. Directors or trustees who willfully and knowingly
vote for or assent to patently unlawful acts of the corporation or who are guilty of gross negligence
or bad faith in directing the affairs of the corporation or acquire any personal or pecuniary interest
in conflict with their duty as such directors or trustees shall be jointly liable and severally for all
damages resulting therefrom suffered by the corporation, its stockholders or members and other
persons . . ..
13. Section 4 of the Corporation Code renders the provisions of that Code applicable in a supplementary
manner to all corporations, including those with special or individual charters so long as those provisions
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are not inconsistent with such charters. We find no provision in P.D. No. 269, as amended, that would
exclude expressly or by necessary implication the applicability of Section 31 of the Corporation Code in
respect of members of the boards of directors of electric cooperatives. Indeed, P.D. No. 269 expressly
describes these cooperatives as "corporations"
Board members solidarily liable with Beneco for the monetary award
14. The Board members were guilty of "gross negligence or bad faith in directing the affairs of the
corporation" in enacting the series of resolutions noted earlier indefinitely suspending and dismissing
Cosalan from the position of General Manager of Beneco. The Board members, in doing so, acted
beyond the scope of their authority as such Board members. The dismissal of an officer or employee in
bad faith, without lawful cause and without procedural due process, is an act that is contra legem. It
cannot be supposed that members of boards of directors derive any authority to violate the express
mandates of law or the clear legal rights of their officers and employees by simply purporting to act for
the corporation they control.
Beneco has right to be reimbursed by the Board members for any amount it is compelled to pay
15. Not only are Beneco and the Board members properly held solidarily liable for the awards made by
the Labor Arbiter, but also that Beneco which was controlled by and which could act only through the
Board members, has a right to be reimbursed for any amounts that Beneco may be compelled to pay to
respondent Cosalan. Such right of reimbursement is essential of the innocent members of Beneco are
not to be penalized for the acts of respondent Board members which were both done in bad faith and
ultra vires. The liability -generating acts here are the personal and individual acts of respondent Board
members, and are not properly attributed to Beneco itself.

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