G.R. No. L-19247, May 31, 1963
INSULAR SUGAR REFINING CORPORATION, petitioner, vs. COURT OF INDUSTRIAL RELATIONS and INSUREFCO & PAPER PULP PROJECT WORKERS UNION, respondents.

FACTS

The respondent Union staged a strike against the old Insular Refining Corporation (old INSUREFCO) in 1952. The Court of Industrial Relations (CIR) declared the strike illegal in 1953, authorizing the dismissal of responsible employees, an order affirmed by the Supreme Court. In 1954, the old INSUREFCO dismissed several employees. In 1955, the Union moved to reopen the CIR case, alleging that 39 specified workers were dismissed despite not being responsible for the illegal strike, and prayed for their reinstatement or payment of gratuity.
Subsequently, in 1961, the Philippine Sugar Institute (PHILSUGIN) and the National Development Company sold the assets of the old INSUREFCO to the newly incorporated petitioner, the new Insular Sugar Refining Corporation (new INSUREFCO). The Union moved to include both PHILSUGIN and the new INSUREFCO as additional parties in the pending CIR case. The contract of sale contained a clause stating the new INSUREFCO would retain necessary personnel at its discretion, with PHILSUGIN responsible for existing gratuities, and the new INSUREFCO obligated to pay a one-month separation pay to non-retained personnel. The new INSUREFCO entered a special appearance to contest the CIR’s jurisdiction over it.

ISSUE

Whether the Court of Industrial Relations acquired jurisdiction over the new Insular Sugar Refining Corporation when it was impleaded in the reopened case concerning the dismissal of employees by the old corporation.

RULING

The Supreme Court granted the petition, ruling that the CIR had no jurisdiction over the new INSUREFCO. The Court explained that jurisdiction over the original parties and subject matter existed when the Union filed to reopen the case, as the allegations of illegal dismissal were theoretically admitted, implying a continuing employer-employee relationship with the old INSUREFCO. However, the CIR’s jurisdiction to order reinstatement is primordial and cannot be exercised against an entity with which the employees never had an employer-employee relationship.
The old and new INSUREFCOs are distinct corporate entities, and the sale was not alleged to be fictitious or intended to evade liability. Mere knowledge by the new INSUREFCO of the pending labor case did not make it an accomplice to any unfair labor practice or create an employment relationship with the dismissed workers. Under the contract of sale, the new corporation had the discretion to retain personnel. Therefore, it could not be compelled to reinstate the 39 workers.
At most, if the CIR later found the dismissals improper, the workers’ claim against the new INSUREFCO would be limited to being considered as regular employees at the time of transfer, entitling them to the one-month separation pay stipulated in the contract for non-retained personnel. This constitutes a pure money claim, which falls outside the jurisdiction of the CIR and must be pursued in the regular courts. Consequently, the CIR’s order assuming jurisdiction over the new INSUREFCO was set aside.