When a court has already made a final decision in a case, any appeals about earlier steps in the case become irrelevant. This means that if a lower court makes a temporary decision, and that decision is questioned, but the main case is then resolved and finalized, the questioning of the temporary decision is no longer important. Furthermore, disagreements within a cooperative, specifically between its officers and the board of directors, are typically handled by regular courts, not labor arbitrators.

Dismissal Disputes: Are Cooperative Officers More Than Just Employees?

This case, Celso F. Pascual, Sr. and Serafin Terencio v. Caniogan Credit and Development Cooperative, revolves around a dispute within a cooperative, questioning whether the removal of officers by the Board of Directors constitutes a labor issue or an internal cooperative matter. Petitioners Celso F. Pascual, Sr. and Serafin Terencio, former General Manager and Collection Manager respectively, were terminated by the Caniogan Credit and Development Cooperative (CCDC). This termination led to a legal battle primarily focused on whether the Regional Trial Court (RTC) or the Labor Arbiter had jurisdiction over the dispute.

The central issue was whether the case was an illegal dismissal claim, which would fall under the jurisdiction of the Labor Arbiter, or an intra-cooperative dispute, placing it under the jurisdiction of the regular courts. The Court of Appeals initially dismissed the petitioners’ appeal due to prematurity, citing their failure to file a motion for reconsideration and the lack of prior resort to settlement mechanisms required by cooperative laws. The Supreme Court, while ultimately denying the petition, clarified aspects of the appellate court’s decision and affirmed the RTC’s jurisdiction.

At the heart of the matter is the nature of the relationship between cooperative officers and the cooperative itself. The Supreme Court addressed the necessity of filing a motion for reconsideration before seeking a special civil action for certiorari. Generally, a motion for reconsideration is required to give the lower court an opportunity to correct any errors. However, the Court acknowledged exceptions to this rule, such as when the order is a patent nullity or when there is an urgent necessity for resolution. In this case, the Court found no exceptional circumstances to excuse the petitioners’ failure to file a motion for reconsideration, emphasizing that the trial court’s resolution of their motions within a reasonable timeframe did not constitute undue delay.

The Court also clarified that while the Court of Appeals was correct in dismissing the petition for certiorari, its observation regarding prior recourse to settlement modes under Republic Act No. 6938 and Republic Act No. 6939 was inaccurate. The records showed that the dispute had indeed been referred to the Cooperative Development Authority for mediation and arbitration, but no settlement was reached, leading to the issuance of a certificate of non-resolution. This underscored the importance of exhausting administrative remedies, when applicable, but also recognized the validity of proceeding to judicial action when such remedies prove unsuccessful.

The most critical aspect of the case is the determination of jurisdiction. The petitioners argued that their termination was an illegal dismissal, thus falling under the purview of labor laws and the jurisdiction of the Labor Arbiter. However, the Supreme Court sided with the Court of Appeals in ruling that the case involved an intra-cooperative dispute, which is properly adjudicated by the regular courts. The distinction lies in the nature of the positions held by Pascual and Terencio. The Supreme Court referenced Tabang v. NLRC, stating that:

[A]n “office” is created by the charter of the corporation and the officer is elected by the directors or stockholders. On the other hand, an “employee” usually occupies no office and generally is employed not by action of the directors or stockholders but by the managing officer of the corporation who also determines the compensation to be paid to such employee.

Applying this principle, the Court found that Pascual and Terencio were officers of CCDC, appointed directly by the Board of Directors, with their salaries set by the Board as well. This determination is crucial because, as the Court emphasized, the termination or removal of a corporate officer is considered an intra-cooperative matter. Such matters involve disputes within the cooperative between officers and the Board of Directors, thus falling outside the jurisdiction of labor tribunals.

The petitioners attempted to distinguish their case by arguing that they were not contesting the Board’s power to remove them, but rather the manner, cause, and legality of their removal. However, the Court was not persuaded, asserting that an officer’s dismissal is inherently connected to the management of the cooperative’s affairs and constitutes an intra-cooperative controversy. The Court further emphasized the provisions of Republic Act No. 6938, Article 121, which stipulates that:

ARTICLE 121. Settlement of Disputes. — Disputes among members, officers, directors, and committee members, and intra-cooperative disputes shall, as far as practicable,’ be settled amicably in accordance with the conciliation or mediation mechanisms embodied in the by-laws of the cooperative, and in applicable laws.

Should such a conciliation/mediation proceeding fail, the matter shall be settled in a court of competent jurisdiction.

Additionally, Section 8 of Republic Act No. 6939 reinforces this jurisdictional framework, requiring mediation and conciliation efforts before resorting to judicial action. Furthermore, the Court noted that the petitioners’ participation in mediation/conciliation proceedings before the Cooperative Development Authority implied their acceptance of the dispute as an intra-cooperative one.

The decision underscores the importance of distinguishing between the roles of officers and employees within a cooperative context. While employees typically fall under the protection of labor laws, officers, who are appointed by the board and involved in the management of the cooperative, are subject to the internal governance mechanisms of the organization. This distinction has significant implications for determining the proper forum for resolving disputes related to termination or removal.

FAQs

What was the key issue in this case?	The central issue was whether the dispute between the terminated officers and the cooperative was an illegal dismissal case (under the Labor Arbiter’s jurisdiction) or an intra-cooperative dispute (under the regular courts’ jurisdiction). The court had to determine if the officers’ termination fell under labor law or cooperative governance.
Who were the parties involved?	The petitioners were Celso F. Pascual, Sr. and Serafin Terencio, former General Manager and Collection Manager of Caniogan Credit and Development Cooperative (CCDC). The respondents were CCDC, represented by its Chairman of the Board, along with Atty. Venancio C. Reyes, Jr., and Nestor P. Tinio.
What was the role of the Board of Directors in this case?	The Board of Directors of CCDC made the decision to terminate the services of Pascual and Terencio. This decision triggered the legal dispute, with the central question being whether the Board’s action was within its authority and properly adjudicated in the regular courts.
What is an intra-cooperative dispute?	An intra-cooperative dispute refers to disagreements or conflicts that arise within a cooperative, typically involving its members, officers, directors, or committees. These disputes often concern the internal governance, management, or operations of the cooperative and are generally resolved within the cooperative’s framework or through the regular courts.
Why did the Court of Appeals initially dismiss the petition?	The Court of Appeals dismissed the petition due to prematurity, citing the petitioners’ failure to file a motion for reconsideration of the Regional Trial Court’s order. It also noted the lack of prior resort to settlement mechanisms required by cooperative laws, although this point was later clarified by the Supreme Court.
What is the significance of Republic Act No. 6938 and 6939?	Republic Act No. 6938 (Cooperative Code of the Philippines) and Republic Act No. 6939 (creating the Cooperative Development Authority) provide the legal framework for cooperatives in the Philippines. They outline the governance, operations, and dispute resolution mechanisms for cooperatives, including the requirement for mediation and conciliation before judicial action.
How did the court distinguish between an officer and an employee in this case?	The court used the definition from Tabang v. NLRC, stating that an officer is appointed by the board of directors or stockholders, while an employee is typically hired by a managing officer. In this case, Pascual and Terencio were deemed officers because they were appointed by the Board of Directors.
What was the final ruling of the Supreme Court?	The Supreme Court ultimately denied the petition, affirming the jurisdiction of the Regional Trial Court over the intra-cooperative dispute. The Court held that the termination of cooperative officers is a matter within the cooperative’s governance and not subject to the jurisdiction of the Labor Arbiter.

This case serves as a crucial reminder of the distinct legal landscape governing cooperatives and the importance of adhering to procedural requirements before seeking judicial intervention. It clarifies the jurisdictional boundaries between labor tribunals and regular courts in resolving disputes involving cooperative officers, emphasizing the primacy of intra-cooperative governance mechanisms.

For inquiries regarding the application of this ruling to specific circumstances, please contact ASG Law through contact or via email at frontdesk@asglawpartners.com.

Disclaimer: This analysis is provided for informational purposes only and does not constitute legal advice. For specific legal guidance tailored to your situation, please consult with a qualified attorney.
Source: CELSO F. PASCUAL, SR. AND SERAFIN TERENCIO, VS. CANIOGAN CREDIT AND DEVELOPMENT COOPERATIVE, G.R. No. 172980, July 22, 2015