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    68-Madrigal & Co. Vs Zamora

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    Maryrose
    Madrigal & Company, Inc. (MCI) manages Rizal Cement Co., Inc. (RCC). A labor union sought to renew its collective bargaining agreement with MCI but MCI refused to negotiate. MCI claimed it was incurring losses but provided no documents. It dismissed employees. The labor arbiter ruled in favor of the union. MCI appealed but its appeal was denied. The Supreme Court held that while cash dividends belong to stockholders, MCI received dividends from RCC as profits, so its creditors (employees) could demand a share through salary increases. MCI's actions were a scheme to avoid negotiations rather than due to actual losses. The arbiter correctly ordered

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    68-Madrigal & Co. Vs Zamora

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    Maryrose
    494 views2 pages
    Madrigal & Company, Inc. (MCI) manages Rizal Cement Co., Inc. (RCC). A labor union sought to renew its collective bargaining agreement with MCI but MCI refused to negotiate. MCI claimed it was incurring losses but provided no documents. It dismissed employees. The labor arbiter ruled in favor of the union. MCI appealed but its appeal was denied. The Supreme Court held that while cash dividends belong to stockholders, MCI received dividends from RCC as profits, so its creditors (employees) could demand a share through salary increases. MCI's actions were a scheme to avoid negotiations rather than due to actual losses. The arbiter correctly ordered

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    68-Madrigal & Co. vs Zamora

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    68-Madrigal & Co. vs Zamora

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    Madrigal & Company, Inc. (MCI) manages Rizal Cement Co., Inc. (RCC). A labor union sought to renew its collective bargaining agreement with MCI but MCI refused to negotiate. MCI claimed it was incurring losses but provided no documents. It dismissed employees. The labor arbiter ruled in favor of the union. MCI appealed but its appeal was denied. The Supreme Court held that while cash dividends belong to stockholders, MCI received dividends from RCC as profits, so its creditors (employees) could demand a share through salary increases. MCI's actions were a scheme to avoid negotiations rather than due to actual losses. The arbiter correctly ordered

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    © All Rights Reserved
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    494 views2 pages

    68-Madrigal & Co. Vs Zamora

    Uploaded by

    Maryrose
    Madrigal & Company, Inc. (MCI) manages Rizal Cement Co., Inc. (RCC). A labor union sought to renew its collective bargaining agreement with MCI but MCI refused to negotiate. MCI claimed it was incurring losses but provided no documents. It dismissed employees. The labor arbiter ruled in favor of the union. MCI appealed but its appeal was denied. The Supreme Court held that while cash dividends belong to stockholders, MCI received dividends from RCC as profits, so its creditors (employees) could demand a share through salary increases. MCI's actions were a scheme to avoid negotiations rather than due to actual losses. The arbiter correctly ordered

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    © All Rights Reserved
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    of 2

    G.R. No.

    L-48237
    June 30, 1987
    MADRIGAL & COMPANY, INC., petitioner,
    vs.
    HON. RONALDO B. ZAMORA, PRESIDENTIAL ASSISTANT FOR LEGAL AFFAIRS,
    THE HON. SECRETARY OF LABOR, and MADRIGAL CENTRAL OFFICE
    EMPLOYEES UNION, respondents.

    Facts:
    Madrigal & Company, Inc. (MCI) manages the business of another corporation, Rizal Cement
    Co., Inc. (RCC). In 1973, a labor union in MCI sought the renewal of the collective bargaining
    agreement (CBA). The union proposes a P200.00 monthly wage increase and an additional P100
    monthly allowance. MCI refused to negotiate. Later, MCI reduced its authorized capital stocks. It
    then wrote a letter to the Department of Labor averring that it is incurring losses and so it will
    enforce a retrenchment program. The letter is however unsupported by documents and so the
    Department of Labor ignored it. However, MCI went on to dismiss several employees which led
    the labor union to sue MCI for unfair labor practices and illegal dismissal. The labor arbiter ruled
    in favor of the labor union. The issue reached the Office of the President. The then Presidential
    Assistant For Legal Affairs, Ronaldo Zamora, denied MCIs appeal.
    On appeal, MCI insists that it is incurring losses; that as such, it has to reduce its capitalization;
    that the profits it is earning are cash dividends from RCC; that under the law, dividends are the
    absolute property of a stockholder like MCI and cannot be compelled to share it with creditors
    (like the employees).

    Issue:
    Whether or not cash dividends are absolute property of the stockholders and cannot be made
    available for disposition to a corporations creditors.

    Held:
    No. As found by the labor arbiter, MCI is in fact making significant profits. MCIs reduction of
    its capitalization is simply a scheme to avoid negotiations with the labor union. It is therefore
    correct for the arbiter to order MCI to comply with the unions demands.

    It is true that cash dividends are the absolute property of the stockholders and cannot be made
    available for disposition to a corporations creditors. However, this should be viewed in context.
    This is only true in the case of corporation distributing dividends to its stockholders. If this is the
    case (if the dividends are still with the corporation, in this case RCC), then creditors cannot touch
    such dividends. But if the stockholder already receives the dividends, then it becomes a profit on
    the part of the stockholder hence its creditors (like the employees) can make some demands out
    of it. In this case, MCI is a stockholder of RCC. While RCC still has not distributed the
    dividends, creditors cannot demand it because such dividends are owned by stockholders like
    MCI. But when MCI already receives the dividends, then MCIs creditors can already demand
    share from the dividends because such dividends are already the profits of the stockholder/MCI.
    So in this case, the employees can demand their share from said profits (not strictly viewed as
    dividends now) by way of salary increase.

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