VICTORIA MANUFACTURING CORPORATION EMPLOYEES UNION v.

VICTORIA MANUFACTURING CORPORATION, GR No. 234446, 2019-

07-24

Facts:

VMC vs VMCEU Wage Structure and Tax Issues

• VMC, a domestic textile corporation, sought the BIR's opinion on

the tax implications of its wage structure in a March 2014 letter.
• The BIR ruled that VMCEU's members were not exempt from income tax
as their earnings were above the statutory minimum wage.
• VMC withheld the income tax due on the wages of VMCEU's members.
• A grievance meeting was held in May 2015 to resolve the issue, but
the parties failed.
• After failing to reach an amicable settlement, VMC and VMCEU
executed a Submission Agreement, designating AVA Renato Q. Bello to
resolve the issue.
• On May 26, 2016, the VA ruled in favor of VMCEU, reversing the VA's
ruling.
• VMC sought relief before the CA through a petition for certiorari,
which was reaffirmed in May 2017.

Issues:

Whether or not the CA correctly set aside the VA's

decision on the ground of lack of jurisdiction

Ruling:

Court's Decision on Jurisdiction in Labor Disputes

Jurisdiction in Civil Cases

• Jurisdiction is the power of a court, tribunal, or officer to hear,
try, and decide a case.
• Two types of jurisdiction are required for valid civil case trials:
jurisdiction over the subject matter and jurisdiction over the
parties.
• Jurisdiction over the subject matter is determined by the
allegations in the complaint based on the character of the relief
sought.
• A judgment rendered by a court without jurisdiction over the
subject matter produces no legal effect.

Jurisdiction in the Labor Code

• The Labor Code vests in VAs the power to hear and decide labor
disputes.
• The Voluntary Arbitrator or panel of Voluntary Arbitrators has
original and exclusive jurisdiction to hear and decide all unresolved
grievances arising from the interpretation or implementation of the
Collective Bargaining Agreement and those arising from the
interpretation or enforcement of company personnel policies.
• The Voluntary Arbitrator or panel of Voluntary Arbitrators, upon
agreement of the parties, shall also hear and decide all other labor
disputes including unfair labor practices and bargaining deadlocks.

Jurisdiction in VMCEU's Arguments

• The Court found that VMC's execution of the Submission Agreement
and active participation in the arbitration proceedings did not
rectify the VA's lack of jurisdiction.
• Jurisdiction is conferred by law and cannot be conferred upon a
tribunal by the parties alone.
• The doctrine of estoppel by laches may operate to bar
jurisdictional challenges.

Court's Decision
• The Court cannot conclude that VMC was estopped from assailing the
VA's jurisdiction.
• Lack of jurisdiction was timely raised and VMC never prayed for
affirmative relief.
• Public policy considerations found no application in this case to
estop VMC from questioning the VA's jurisdiction.