Madrigal & Company v. Zamora (G.R. No. L-48237)

Facts:

Respondent Madrigal Central Office Employees Union sought for the renewal of their CBA with petitioner as well as an increase in their wage, allowance and other benefits. Petitioner however requested deferment in the negotiations and later on reduced its authorized capitalization on two occasions. Respondent Union commenced a complaint for unfair labor practice and illegal lockout against petitioner. Petitioner alleges it sustained operational losses and further, that whatever profits it earned is in the nature of dividends which cannot be disposed to meet employees’ economic demands. Petitioner motions for reconsideration and appeal proved futile.

Issue:

Whether or not the dividends earned by petitioners can be used to satisfy the employees’ claims.

Ruling: YES.

We agree with the National Labor Relations Commission that “[t]he dividends received by the company are corporate earnings arising from corporate investment.” Indeed, as found by the Commission, the petitioner had entered such earnings in its financial statements as profits, which it would not have done if they were not in fact profits.

Moreover, it is incorrect to say that such profits — in the form of dividends — are beyond the reach of the petitioner’s creditors since the petitioner had received them as compensation for its management services in favor of the companies it managed as a shareholder thereof. As such shareholder, the dividends paid to it were its own money, which may then be available for wage increments. It is not a case of a corporation distributing dividends in favor of its stockholders, in which case, such dividends would be the absolute property of the stockholders and hence, out of reach by creditors of the corporation. Here, the petitioner was acting as stockholder itself, and in that case, the right to a share in such dividends, by way of salary increases, may not be denied its employees.

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