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[ G.R. No. 142281. June 14, 2000]

ENRIQUE DAVILA vs. NLRC, et al.

THIRD DIVISION

Gentlemen:

Quoted hereunder, for your information, is a resolution of this Court dated JUN 14 2000.

G.R. No. 142281 (Enrique Davila vs. National Labor Relations Commission, Arbiter S. Nambi and Thomas Cook (Phils.)., Inc.)

Private respondent Thomas Cook Philippines, Inc. (TCPI) was formerly known as Smith Bell Travel & Tours, Inc., a Philippine Joint venture of Smith Bell & Co., Inc. which owned 60% interest and Thomas Cook Group Ltd. Which held 40% interest.

In January 1975 TCPI entered into a management contract with Smith Bell & Co. wherein the latter agreed to manage the day-to-day affairs of TCPI in consideration of a management fee equivalent to 15% of its yearly net profits plus reimbursements of actual expenses.

In managing TCPI's affairs, Smith Bell assigned employees and among them was petitioner who assumed the position of president and chief operating officer of TCPI. Together with two other Smith Bell officers, petitioner headed TCPI's Executive Committee for the duration of the management contract.

On March 5, 1996, the Executive Committee, Presided by petitioner, recommended to TCPI's Board of Directors a grant of an incentive compensation of P425,000.00, to petitioner. However, before said recommendation could be submitted to TCPI's Board of Directors, Smith Bell sold its entire 60% interest in TCPI to Thomas Cook Group Ltd. This resulted in the termination of the management contract and the subsequent recall of petitioner, together with all the Smith Bell Officers.

Thereafter, petitioner demanded the payment of the earlier mentioned incentive compensation but TCPI refused on the ground that the recommendation made by the Executive Committee in favor of the petitioner was a self-dealing act because petitioner himself, with the cooperation of two other Smith Bell officers, made the recommendation; that the recommendation for the incentive compensation was grossly unconscionable and unfair to TCPI considering that it had been huge management fees to petitioner's employer, Smith Bell; and that the incentive compensation is not enforceable against respondent inasmuch as the recommendation made by the Executive Committee was never approved by the Board of Directors.

On January 13, 1987, petitioner filed a money claim with the National :Labor Relations Arbitration Branch.

The labor arbiter decided in favor of TCPI and upon appeal, the NLRC affirmed.

Subsequent recourse to the Court of Appeals proved unavailing.

Thus, the instant petition which must likewise fail.

Pertinent to the resolution of the case at bar is Section 4, Article II, of the Amended by-Laws of private respondent Thomas Cook Philippines, Inc. which provides:

"the corporate powers of the Company shall be controlled by the Board of Directors."

Corollarily, Section 2, Article IV, Section 2 of the same by-laws states:

"the compensation of all officers elected as appointed by the board of directors shall be fixed by the Board."

The grant of incentive compensation to petitioner was merely a recommendation which had to be approved by the Board of Directors for it to ripen into a demandable right. Regrettably, however, TCPI's Board of Directors disapproved the recommendation. It is of no moment that Smith Bell approved the incentive compensation because it is TCPI's Board of Directors which is empowered to act on the recommendation.

Likewise crucial is the finding of the NLRC that petitioner would not have been president of TCPI had his true employer, Smith Bell, not assigned him to the TCPI pursuant to a management contract. Petitioner continued to draw his salaries from Smith Bell during his temporary assignment with the TCPI, hence he has no reason to complain because private respondent had paid P450,000.00 and P926,000.00 by way of management fees under the management contract.

WHEREFORE, petition is denied due course.

SO ORDERED.

Very truly yours,

(Sgd.) JULIETA Y. CARREON

Clerk of Court

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