PMI Colleges v. NLRC

PMI Colleges vs. NLRC,

G.R. No. 121466

FACTS OF THE CASE

On July 7, 1991, petitioner, an educational institution offering courses on basic seaman’s training and other marine-related courses, hired private respondent as contractual instructor with an agreement that the latter shall be paid at an hourly rate of P30.00 to P50.00, depending on the description of load subjects and on the schedule for teaching the same. 

Pursuant to this engagement, private respondent then organized classes in marine engineering.

Initially, private respondent and other instructors were compensated for services rendered during the first three periods of the above mentioned contract.  However, for reasons unknown to private respondent, he stopped receiving payment for the succeeding rendition of services. This claim of non-payment was embodied in a letter dated March 3, 1992, written by petitioner’s Acting Director, Casimiro A. Aguinaldo, addressed to its President, Atty. Santiago Pastor, calling attention to and appealing for the early approval and release of the salaries of its instructors including that of private respondent. 

Despite of the repeated demands, PMI refused to pay the private respondent. One of the Board member of PMI claiming that there was no valid employment contract since PMI’s by-laws clearly provides that only its Board Chairman can be a signatory to any of the contract it will enter into.

ISSUE

Whether the provisions in the corporation’s by-laws are binding against third parties.

RULING

No.  Since by-laws operate merely as internal rules among the stockholders, they cannot affect or prejudice third persons who deal with the corporation, unless they have knowledge of the same. No proof appears on record that private respondent ever knew anything about the provisions of said by-laws.  In fact, petitioner itself merely asserts the same without even bothering to attach a copy or excerpt thereof to show that there is such a provision.  How can it now expect the Labor Arbiter and the NLRC to believe it?  That this allegation has never been denied by private respondent does not necessarily signify admission of its existence because technicalities of law and procedure and the rules obtaining in the courts of law do not strictly apply to proceedings of this nature.