Professional Documents
Culture Documents
LESLIE OKOL,
- versus SLIMMERS
WORLD ,*
INTERNATIONAL,
BEHAVIOR
MODIFICATIONS,
INC.,
and
RONALD JOSEPH MOY,
December 11, 2009
Respondents.
DECISION
The Case
Before the Court is a petition for review on
certiorari[1] assailing the Decision[2] dated 18 October 2002 and
Resolution dated 22 September 2003 of the Court of Appeals
in CA-G.R. SP No. 69893, which set aside the Resolutions
dated 29 May 2001 and 21 December 2001 of the National
Labor Relations Commission (NLRC).
The Facts
Respondent Slimmers World International operating
under the name Behavior Modifications, Inc. (Slimmers World)
employed petitioner Leslie Okol (Okol) as a management
trainee on 15 June 1992. She rose up the ranks to become
Head Office Manager and then Director and Vice President
from 1996 until her dismissal on 22 September 1999.
On 28 July 1999, prior to Okols dismissal, Slimmers
World preventively suspended Okol. The suspension arose
from the seizure by the Bureau of Customs of seven Precor
elliptical machines and seven Precor treadmills belonging to or
consigned to Slimmers World. The shipment of the equipment
was placed under the names of Okol and two customs brokers
for a value less than US$500. For being undervalued, the
equipment were seized.
On 2 September 1999, Okol received a memorandum
that her suspension had been extended from 2 September until
1 October 1999 pending the outcome of the investigation on
the Precor equipment importation.
On 17 September 1999, Okol received another
memorandum from Slimmers World requiring her to explain
why no disciplinary action should be taken against her in
connection with the equipment seized by the Bureau of
Customs.
Article II
The Board of Directors
1. Qualifications and Election The general
management of the corporation shall be vested in a board of
five directors who shall be stockholders and who shall be
elected annually by the stockholders and who shall serve until
the election and qualification of their successors.
Article III
Officers
4. Vice-President Like the Chairman of the Board and
the President, the Vice-President shall be elected by the Board
of Directors from [its] own members.
The Vice-President shall be vested with all the powers
and authority and is required to perform all the duties of the
President during the absence of the latter for any cause.
The Vice-President will perform such duties as the
Board of Directors may impose upon him from time to time.
xxx
Clearly, from the documents submitted by respondents,
petitioner was a director and officer of Slimmers World. The
charges of illegal suspension, illegal dismissal, unpaid
commissions, reinstatement and back wages imputed by
petitioner against respondents fall squarely within the ambit of
intra-corporate disputes. In a number of cases,[17] we have
held that a corporate officers dismissal is always a corporate
act, or an intra-corporate controversy which arises between a
stockholder and a corporation. The question of remuneration
involving a stockholder and officer, not a mere employee, is not
a simple labor problem but a matter that comes within the area
of corporate affairs and management and is a corporate
controversy in contemplation of the Corporation Code.[18]
Prior to its amendment, Section 5(c) of Presidential
Decree No. 902-A[19] (PD 902-A) provided that intra-corporate
disputes fall within the jurisdiction of the Securities and
Exchange Commission (SEC):
Sec. 5. In addition to the regulatory and adjudicative
functions of the Securities and Exchange Commission over
corporations, partnerships and other forms of associations
registered with it as expressly granted under existing laws and
decrees, it shall have original and exclusive jurisdiction to hear
and decide cases involving:
c) Controversies in the election or appointments of
directors, trustees, officers or managers of such corporations,
partnerships or associations.
Subsection 5.2, Section 5 of Republic Act No. 8799, which took
effect on 8 August 2000, transferred to regional trial courts the
SECs jurisdiction over all cases listed in Section 5 of PD 902A:
5.2. The Commissions jurisdiction over all cases
enumerated under Section 5 of Presidential Decree No. 902-A
is hereby transferred to the Courts of general jurisdiction or the
appropriate Regional Trial Court.
December 6, 2006
P658,000.00
315,000.00
Unpaid Salary
25,900.00
Attorneys fees
106,190.00
P1,168,090.00
TO
RESOLVE
THE
ISSUE
OF
Atty. Virgilio R. Garcia illegal, and dismissed the case for lack
of jurisdiction.
ETPI and Atty. Hizon appealed the decision to the NLRC, filing
a Notice of Appeal and Memorandum of Appeal,[33] which
appeal was opposed by Atty. Garcia.[34] The appeal was
docketed as NLRC NCR CA Case No. 028901-01. ETPI and
Atty. Hizon filed a Supplemental Appeal Memorandum
dated 23 January 2003 (With Very Urgent Motion for Issuance
of Temporary Restraining Order).[35] In a Manifestation ad
Cautelam dated 28 January 2003, without waiving their right to
continue to question the jurisdiction of the Labor Arbiter, they
informed the Labor Arbiter that they had filed a Supplemental
Appeal Memorandum before the NLRC and asked that all
processes relating to the implementation of the reinstatement
order be held in abeyance so as not to render moot the reliefs
prayed for in said Supplemental Appeal Memorandum.[36] They
likewise filed on 31 January 2003 a Very Urgent Motion to
Lift/Quash Order of Garnishment ad Cautelam, praying that the
notice of garnishment on ETPIs bank account with Metrobank,
Dela Costa Branch, or with other banks with which ETPI
maintained an account and which received said notice of
garnishment be immediately lifted/quashed.[37] On 12 February
2003, Atty. Garcia filed his Opposition to said Supplemental
Appeal Memorandum.[38]
On 3 February 2003, Atty. Garcia filed an Ex-Parte Motion for
the Issuance of a 2nd Alias Writ of Execution.[39] In an Order
dated 5 February 2003, Labor Arbiter Reyes lifted the notice of
garnishment on ETPIs bank account with Metrobank, Dela
Costa Branch.[40] On 10 February 2003, Labor Arbiter Reyes
issued a 2nd Writ of Execution.[41]
In a Manifestation ad Cautelam[42] dated 10 February 2003,
ETPI and Atty. Hizon said that they filed with the NLRC on 7
February 2003 an Urgent Petition (for Preliminary Injunction
With Issuance of Temporary Restraining Order) [43] which
prayed, inter alia, for the issuance of a temporary restraining
order to restrain the execution pending appeal of the order of
reinstatement and to enjoin the Labor Arbiter from issuing writs
of execution or other processes implementing the decision
dated 30 September 2002. They added that they also filed
on 7 February 2003 a Notice to Withdraw[44] their Supplemental
Appeal Memorandum dated 23 January 2003.
ETPI and Atty. Hizon, without waiving their right to continue to
question the jurisdiction of the Labor Arbiter over the case, filed
on 18 February 2003 a Motion to Inhibit, seeking the inhibition
of Labor Arbiter Reyes for allegedly evident partiality in favor of
the complainant in issuing writs of execution in connection with
the order of reinstatement contained in his decision dated 30
September 2002, despite the pendency of an Urgent Petition
(for Preliminary Injunction With Prayer for the Issuance of
Temporary Restraining Order) with the NLRC, which sought
the restraining of the execution pending appeal of the order of
reinstatement.[45] The petition for injunction was docketed
as NLRC NCR IC No. 0001193-02. Atty. Garcia filed an
opposition,[46] to which ETPI and Atty. Hizon filed a reply.
[47]
Said motion to inhibit was subsequently granted by Labor
Arbiter Reyes.[48] The case was re-raffled to Labor Arbiter Elias
H. Salinas.[49]
In an Order dated 26 February 2003, the NLRC, in NLRC NCR
IC No. 0001193-02, issued a temporary restraining order
(TRO) enjoining Labor Arbiter Reyes from executing pending
appeal the order of reinstatement contained in his decision
ARTICLE V
II
Officers
III
THE COURT OF APPEALS ERRED IN RULING THAT THE
NLRC DID NOT COMMIT GRAVE ABUSE OF DISCRETION
AMOUNTING TO LACK OR EXCESS OF JURISDICTION IN
ISSUING ITS ORDER DATED 23 AUGUST 2004 AND
RESOLUTION DATED 10 JANUARY 2005 CONSIDERING
THAT RESPONDENT GARCIA MAY NOT ASSAIL THE
FINALITY OF RESOLUTION DATED 16 DECEMBER 2003
THROUGH A MERE MOTION.
IV
THE COURT OF APPEALS ERRED IN FAILING TO RULE ON
PETITIONERS COUNTER-MOTION TO CITE RESPONDENT
GARCIA IN CONTEMPT OF COURT DESPITE ITS
PREVIOUS RESOLUTION DATED 30 MAY 2005 STATING
THAT IT SHALL ADDRESS THE SAME IN THE DECISION ON
THE MERITS OF THE CASE.[86]
The issue raised by Atty. Garcia whether the
termination or removal of an officer of a corporation is an intracorporate controversy that falls under the original exclusive
jurisdiction of the regional trial courts is not novel. The
Supreme Court, in a long line of cases, has decreed that a
corporate officers dismissal or removal is always a
corporate act and/or an intra-corporate controversy, over
which the Securities and Exchange Commission [SEC] (now
the Regional Trial Court)[87] has original and exclusive
jurisdiction.[88]
We have ruled that an intra-corporate controversy is one
which pertains to any of the following relationships: (1)
between the corporation, partnership or association and the
public; (2) between the corporation, partnership or association
and the State insofar as the formers franchise, permit or
license to operate is concerned; (3) between the corporation,
partnership or association and its stockholders, partners,
members or officers; and (4) among the stockholders,
partners or associates themselves.[89] In Lozon v. National
Labor Relations Commission,[90] we declared that Presidential
Decree No. 902-A confers on the SEC original and exclusive
jurisdiction to hear and decide controversies and cases
involving intra-corporate and partnership relations between or
among the corporation, officers and stockholders and partners,
including their elections or appointments x x x.
Before a dismissal or removal could properly fall within
the jurisdiction of the SEC, it has to be first established that the
person removed or dismissed was a corporate officer.
[91]
Corporate officers in the context of Presidential Decree
No. 902-A[92] are those officers of the corporation who are
given that character by the Corporation Code or by the
corporations by-laws.[93] There are three specific officers
whom a corporation must have under Section 25 of the
Corporation Code.[94] These are the president, secretary and
the treasurer. The number of officers is not limited to these
three. A corporation may have such other officers as may be
provided for by its by-laws like, but not limited to, the vicepresident, cashier, auditor or general manager. The number of
corporate officers is thus limited by law and by the
corporations by-laws.
x --------x
We resolve the motion for reconsideration[1] of our
Resolution[2] dated December 8, 2008 denying the petition for
review on certiorari[3] filed on November 10, 2004 by petitioner
Miriam B. Elleccion Vda. de Lecciones.
The case arose on November 8, 2002 when the petitioner filed
a complaint[4] for illegal dismissal with several money claims
against the NNA Philippines Co., Inc. (respondent). The
respondent, a research and translation service company with
less than ten (10) employees, is a wholly-owned subsidiary of
NNA Japan Co., Ltd.[5] (NNA Japan).
The respondent employed the petitioner on August 1,
1997, and she held various positions in the company, the latest
of which as Administrator.[6] Additionally, she served as
Corporate Secretary until July 3, 2002. She alleged that she
usually worked from 9:00 a.m. to 10:00 p.m. - 12:00 midnight
and sometimes even until 2:00 a.m. or 9:00 a.m.[7] She
claimed that the respondent promised to compensate her for
extra hours, as well as for doing tasks other than that what she
was contracted for.
On May 17, 2002, the Board of Directors of NNA Japan
decided to streamline the operations of its subsidiaries
including the respondent, and thus issued a memorandum
directing the respondent to transfer the corporate secretarys
functions to the external counsel. The memorandum also gave
management the discretion to determine which positions
should be declared redundant.[8]
On July 4, 2002, the respondents Board of Directors held an
organizational meeting where the petitioner was not re-elected
as corporate secretary. The board also directed the
respondents President at the time, Ms. Kimi Kimura (Kimura),
to reorganize the corporation and abolish any redundant
position.[9]
On October 17, 2002, the petitioner received a notice of
termination of employment on the ground that her position as
Administrator had been declared redundant.[10] On the same
day, the respondent filed a report of the petitioners separation
from service with the Office of the Department of Labor and
Employment in the National Capital Region (DOLE-NCR).[11]
On November 15, 2002, the respondent issued the petitioner a
memorandum advising her of the release of checks in her favor
representing her salary and accrued benefits including her
separation pay.[12] On the same day, she accepted the checks
for her last salary (P23,097.13); 13th month pay (P46,084.00);
unused leave credits for seven (7) days (P8,028.10); year-end
tax refund (P803.24); and reimbursement of advances made to
the company (P71,197.05). She refused to accept the check
representing her separation pay in the amount of P244, 182.07
(based on her salary and allowances).[13]
On January 16, 2004, Labor Arbiter Aliman D. Mangandog
dismissed the complaint for lack of merit, but ordered the
respondent to pay the petitioner separation pay computed at
one (1) months salary for every year of service.[14] The
petitioner appealed the decision to the National Labor
Relations Commission (NLRC).
In a decision promulgated on May 15, 2006,[15] the NLRC
affirmed the petitioners separation from the service; modified
the monetary benefits awarded to her; and affirmed the
Arbiters denial of the petitioners claim for additional
compensation as corporate secretary on the ground that it was
an intra-corporate matter. In addition to the separation pay of
P244,182.07, the NLRC ordered the petitioner reimbursement
of cash advances made by the petitioner to the company
amounting to P248,712.72.
xxx
xxx
xxx
xxx
1.
The Organization shall enjoy in the territory of its
Members such privileges and immunities as are necessary for
the fulfillment of its purposes.
2.
Representatives of the Members of the United
Nations and officials of the Organization shall similarly enjoy
such privileges and immunities as are necessary for the
independent exercise of their functions in connection with the
organization.
Corollary to the cited article is the Convention on the Privileges
and Immunities of the Specialized Agencies of the United
Nations, to which the Philippines was a signatory (Vol. 1,
Philippine Treaty Series, p. 621). We quote Sections 4 and 5 of
Article III thereof:
Sec. 4. The specialized agencies, their property and assets,
wherever located and by whomsoever held shall enjoy
immunity from every form of legal process except insofar as in
any particular case they have expressly waived their immunity.
It is, however, understood that no waiver of immunity shall
extend to any measure of execution (Emphasis supplied).
Sec. 5. The premises of the specialized agencies shall be
inviolable. The property and assets of the specialized
agencies, wherever located and by whomsoever held, shall be
immune from search, requisition, confiscation, expropriation
and any other form of interference, whether by executive,
administrative, judicial or legislative action (Emphasis
supplied).
As a matter of state policy as expressed in the Constitution, the
Philippine Government adopts the generally accepted
principles of international law (1987 Constitution, Art. II, Sec.
2). Being a member of the United Nations and a party to the
Convention on the Privileges and Immunities of the Specialized
Agencies of the United Nations, the Philippine Government
adheres to the doctrine of immunity granted to the United
Nations and its specialized agencies. Both treaties have the
force and effect of law.
In World Health Organization v. Aquino, 48 SCRA 242, (1972),
we had occasion to rule that:
It is a recognized principle of international law and under our
system of separation of powers that diplomatic immunity is
essentially a political question and courts should refuse to look
beyond a determination by the executive branch of the
government, and where the plea of diplomatic immunity is
recognized and affirmed by the executive branch of the
government as in the case at bar, it is then the duty of the
courts to accept the claim of immunity upon appropriate
suggestion by the principal law officer of the government, the
Solicitor General or other officer acting under his direction.
Hence, in adherence to the settled principle that courts may
not so exercise their jurisdiction by seizure and detention of
property, as to embarrass the executive arm of the government
in conducting foreign relations, it is accepted doctrine that "in
such cases the judicial department of (this) government follows
the action of the political branch and will not embarrass the
latter by assuming an antagonistic jurisdiction (Emphasis
supplied).
We recognize the growth of international organizations
dedicated to specific universal endeavors, such as health,
agriculture, science and technology and environment. It is not
surprising that their existence has evolved into the concept of
international immunities. The reason behind the grant of
privileges and immunities to international organizations, its
officials and functionaries is to secure them legal and practical
independence in fulfilling their duties (Jenks, International
Immunities 17 [1961]).
xxx
The Facts
The facts are narrated by the Court of Appeals as follows:
In late 1998, [herein Respondent Florence Cabansag] arrived
in Singapore as a tourist. She applied for employment, with
the Singapore Branch of the Philippine National Bank, a private
banking corporation organized and existing under the laws of
the Philippines, with principal offices at the PNB Financial
Center, Roxas Boulevard, Manila. At the time, the Singapore
PNB Branch was under the helm of Ruben C. Tobias, a lawyer,
as General Manager, with the rank of Vice-President of the
Bank. At the time, too, the Branch Office had two (2) types of
employees: (a) expatriates or the regular employees, hired in
Manila and assigned abroad including Singapore, and (b)
locally (direct) hired. She applied for employment as Branch
Credit Officer, at a total monthly package of $SG4,500.00,
effective upon assumption of duties after approval. Ruben C.
Tobias found her eminently qualified and wrote on October 26,
1998, a letter to the President of the Bank in Manila,
recommending the appointment of Florence O. Cabansag, for
the position.
xxx
xxx
xxx
xxx
xxx
xxx
xxx
4.
You will devote your full time during business hours in
promoting the business and interest of the Bank.
5.
You will not, without prior written consent of the Bank,
be employed in anyway for any purpose whatsoever outside
business hours by any person, firm or company.
6.
Termination of your employment with the Bank may
be made by either party after notice of one (1) day in writing
during probation, one month notice upon confirmation or the
equivalent of one (1) days or months salary in lieu of notice.
Issues
Petitioner submits the following issues for our consideration:
1. Whether or not the arbitration branch of the NLRC in the
National Capital Region has jurisdiction over the instant
controversy;
2. Whether or not the arbitration of the NLRC in the National
Capital Region is the most convenient venue or forum to hear
and decide the instant controversy; and
3. Whether or not the respondent was illegally dismissed,
and therefore, entitled to recover moral and exemplary
damages and attorneys fees.[8]
In addition, respondent assails, in her Comment,[9] the propriety
of Rule 45 as the procedural mode for seeking a review of the
CA Decision affirming the NLRC Resolution. Such issue
deserves scant consideration. Respondent miscomprehends
the Courts discourse in St. Martin Funeral Home v. NLRC,
[10]
which has indeed affirmed that the proper mode of review of
NLRC decisions, resolutions or orders is by a special civil
action for certiorari under Rule 65 of the Rules of Court. The
Supreme
Court
and
the
Court
of
Appeals
haveconcurrent original jurisdiction
over
such
petitions
for certiorari. Thus, in observance of the doctrine on the
hierarchy of courts, these petitions should be initially filed with
the CA.[11]
Rightly, the bank elevated the NLRC Resolution to the CA by
way of a Petition for Certiorari. In seeking a review by this
Court of the CA Decision -- on questions of jurisdiction, venue
and validity of employment termination -- petitioner is likewise
correct in invoking Rule 45.[12]
It is true, however, that in a petition for review on certiorari, the
scope of the Supreme Courts judicial review of decisions of
the Court of Appeals is generally confined only to errors of law.
It does not extend to questions of fact. This doctrine applies
with greater force in labor cases. Factual questions are for the
labor tribunals to resolve. [13] In the present case, the labor
arbiter and the NLRC have already determined the factual
issues. Their findings, which are supported by substantial
evidence, were affirmed by the CA. Thus, they are entitled to
great respect and are rendered conclusive upon this Court,
absent a clear showing of palpable error or arbitrary disregard
of evidence.[14]
The Courts Ruling
The Petition has no merit.
First Issue:
Jurisdiction
The jurisdiction of labor arbiters and the NLRC is specified in
Article 217 of the Labor Code as follows:
ART. 217. Jurisdiction of Labor Arbiters and the Commission.
(a) Except as otherwise provided under this Code the Labor
Arbiters shall have original and exclusive jurisdiction to hear
and decide, within thirty (30) calendar days after the
submission of the case by the parties for decision without
extension, even in the absence of stenographic notes, the
following cases involving all workers, whether agricultural or
non-agricultural:
1. Unfair labor practice cases;
2. Termination disputes;
(b)
The commission shall have exclusive appellate
jurisdiction over all cases decided by Labor Arbiters.
xxx
xxx
x x x.
xxx
x x x
Second Issue:
Proper Venue
Section 1(a) of Rule IV of the NLRC Rules of Procedure reads:
Section 1. Venue (a) All cases which Labor Arbiters have
authority to hear and decide may be filed in the Regional
Arbitration Branch having jurisdiction over the workplace of the
complainant/petitioner; Provided, however that cases of
Overseas Filipino Worker (OFW) shall be filed before the
Regional Arbitration Branch where the complainant resides or
where the principal office of the respondent/employer is
situated, at the option of the complainant.
For purposes of venue, workplace shall be understood as the
place or locality where the employee is regularly assigned
when the cause of action arose. It shall include the place
where the employee is supposed to report back after a
temporary detail, assignment or travel. In the case of field
employees, as well as ambulant or itinerant workers, their
workplace is where they are regularly assigned, or where they
are supposed to regularly receive their salaries/wages or work
instructions from, and report the results of their assignment to
their employers.
Under the Migrant Workers and Overseas Filipinos Act of
1995 (RA 8042), a migrant worker refers to a person who is
to be engaged, is engaged or has been engaged in a
remunerated activity in a state of which he or she is not a legal
resident; to be used interchangeably with overseas Filipino
worker.[21] Undeniably, respondent was employed by petitioner
in its branch office in Singapore. Admittedly, she is a Filipino
and not a legal resident of that state. She thus falls within the
category of migrant worker or overseas Filipino worker.
As such, it is her option to choose the venue of her Complaint
against petitioner for illegal dismissal. The law gives her two
choices: (1) at the Regional Arbitration Branch (RAB) where
she resides or (2) at the RAB where the principal office of her
employer is situated. Since her dismissal by petitioner,
respondent has returned to the Philippines -- specifically to her
residence at Filinvest II, Quezon City. Thus, in filing her
Complaint before the RAB office in Quezon City, she has made
a valid choice of proper venue.
Third Issue:
Illegal Dismissal
The appellate court was correct in holding that respondent was
already a regular employee at the time of her dismissal,
because her three-month probationary period of employment
had already ended. This ruling is in accordance with Article
281 of the Labor Code: An employee who is allowed to work
after a probationary period shall be considered a regular
employee. Indeed, petitioner recognized respondent as such
at the time it dismissed her, by giving her one months salary in
lieu of a one-month notice, consistent with provision No. 6 of
her employment Contract.
Notice and Hearing
Not Complied With
As a regular employee, respondent was entitled to all rights,
benefits and privileges provided under our labor laws. One of
her fundamental rights is that she may not be dismissed
without due process of law. The twin requirements of notice
and hearing constitute the essential elements of procedural
due process, and neither of these elements can be eliminated
without running afoul of the constitutional guarantee.[22]
xxx
xxx
On May 19, 1988, the Palace Hotel Manager, Mr. Hans J. Henk
mailed a ready to sign employment contract to respondent
Santos. Mr. Henk advised respondent Santos that if the
contract was acceptable, to return the same to Mr. Henk in
Manila, together with his passport and two additional pictures
for his visa to China.
PARDO, J.:
The Palace Hotel and Mr. Shmidt were not served with
summons and neither participated in the proceedings before
the Labor Arbiter.18
Even assuming that the NLRC was the proper forum, even on
the merits, the NLRC's decision cannot be sustained.
ROSE
CARTALLA, petitioners,
vs.
HON. RODOLFO D. RODRIGO, as Presiding Judge of
Branch 7, Regional Trial Court (BAGUIO CITY), La
Trinidad, Benguet and FABIAN GENOVE, respondents.
G.R. No. 80018 February 26, 1990
UNITED STATES OF AMERICA, TOMI J. KINGI, DARREL D.
DYE
and
STEVEN
F.
BOSTICK, petitioners,
vs.
HON. JOSEFINA D. CEBALLOS, As Presiding Judge,
Regional Trial Court, Branch 66, Capas, Tarlac, and LUIS
BAUTISTA, respondents.
G.R. No. 80258 February 26, 1990
UNITED STATES OF AMERICA, MAJOR GENERAL
MICHAEL P. C. CARNS, AIC ERNEST E. RIVENBURGH, AIC
ROBIN BLEVINS, SGT. NOEL A. GONZALES, SGT.
THOMAS MITCHELL, SGT. WAYNE L. BENJAMIN, ET
AL., petitioners,
vs.
HON. CONCEPCION S. ALARCON VERGARA, as Presiding
Judge, Branch 62 REGIONAL TRIAL COURT, Angeles City,
and RICKY SANCHEZ, FREDDIE SANCHEZ AKA FREDDIE
RIVERA, EDWIN MARIANO, AKA JESSIE DOLORES
SANGALANG, ET AL., respondents.
These cases have been consolidated because they all involve
the doctrine of state immunity. The United States of America
was not impleaded in the complaints below but has moved to
dismiss on the ground that they are in effect suits against it to
which it has not consented. It is now contesting the denial of its
motions by the respondent judges.
In G.R. No. 76607, the private respondents are suing several
officers of the U.S. Air Force stationed in Clark Air Base in
connection with the bidding conducted by them for contracts
for barber services in the said base.
On February 24, 1986, the Western Pacific Contracting Office,
Okinawa Area Exchange, U.S. Air Force, solicited bids for such
contracts through its contracting officer, James F. Shaw.
Among those who submitted their bids were private
respondents Roberto T. Valencia, Emerenciana C. Tanglao,
and Pablo C. del Pilar. Valencia had been a concessionaire
inside Clark for 34 years; del Pilar for 12 years; and Tanglao for
50 years.
The bidding was won by Ramon Dizon, over the objection of
the private respondents, who claimed that he had made a bid
for four facilities, including the Civil Engineering Area, which
was not included in the invitation to bid.
The private respondents complained to the Philippine Area
Exchange (PHAX). The latter, through its representatives,
petitioners Yvonne Reeves and Frederic M. Smouse explained
that the Civil Engineering concession had not been awarded to
Dizon as a result of the February 24, 1986 solicitation. Dizon
was already operating this concession, then known as the
NCO club concession, and the expiration of the contract had
been extended from June 30, 1986 to August 31, 1986. They
further explained that the solicitation of the CE barbershop
would be available only by the end of June and the private
respondents would be notified.
On June 30, 1986, the private respondents filed a complaint in
the court below to compel PHAX and the individual petitioners
to cancel the award to defendant Dizon, to conduct a rebidding
for the barbershop concessions and to allow the private
respondents by a writ of preliminary injunction to continue
operating the concessions pending litigation. 1
The motion to dismiss was denied by the trial court in its order
dated August 10, 1987, reading in part as follows:
asserted and relief prayed for, the relief being founded on the
same acts; and (c) the identity in the two cases should be such
that the judgment which may be rendered in one would,
regardless of which party is successful, amount to res
judicata in the other.[50]
In case at bar, not all the requirements for litis pendentia are
present. While there may be identity of parties,
notwithstanding the presence of other respondents,[51] as well
as the reversal in positions of plaintiffs and defendants [52], still
the other requirements necessary for litis pendentia were not
shown by petitioner. It merely mentioned that civil cases were
filed in Hongkong and England without however showing the
identity of rights asserted and the reliefs sought for as well as
the presence of the elements of res judicata should one of the
cases be adjudged.
As the Court of Appeals aptly observed:
xxx [T]he petitioners, by simply enumerating the civil actions
instituted abroad involving the parties herein xxx, failed to
provide this Court with relevant and clear specifications that
would show the presence of the above-quoted elements or
requisites for res judicata. While it is true that the petitioners in
their motion for reconsideration (CA Rollo, p. 72), after
enumerating the various civil actions instituted abroad, did aver
that Copies of the foreign judgments are hereto attached and
made integral parts hereof as Annexes B, C, D and E,
they failed, wittingly or inadvertently, to include a single foreign
judgment in their pleadings submitted to this Court as annexes
to their petition. How then could We have been expected to
rule on this issue even if We were to hold that foreign
judgments could be the basis for the application of the
aforementioned principle of res judicata?[53]
Consequently, both courts correctly denied the dismissal of
herein subject complaint.
WHEREFORE, the petition is DENIED for lack of merit.
Costs against petitioners.
SO ORDERED.
G.R. No. 166920
January 1998
Letter of Employment
This Letter of Employment with the attached General
Conditions of Employment constitutes the agreement under
which you will be engaged by our Company on the terms and
conditions defined hereunder. In case of any discrepancies or
contradictions between this Letter of Employment and the
General Conditions of Employment, this Letter of Employment
will prevail.
You will, from the date of commencement, be ["seconded"] to
our subsidiary Pacicon Philippines, Inc. in Manila, hereinafter
referred as Pacicon. Pacicon will provide you with a separate
contract, which will define that part of the present terms and
conditions for which Pacicon is responsible. In case of any
discrepancies or contradictions between the present Letter of
Employment and the contract with Pacicon Philippines, Inc. or
in the case that Pacicon should not live up to its obligations,
this Letter of Employment will prevail.
1. Project Country: The Philippines with possible short-term
assignments in other countries.
2. Duty Station: Manila, the Philippines.
3. Family Status: Married.
21 Arbitration
Any question of interpretation, understanding or fulfillment of
the conditions of employment, as well as any question arising
between the Employee and the Company which is in
consequence of or connected with his employment with the
Company and which can not be settled amicably, is to be
finally settled, binding to both parties through written
submissions, by the Court of Arbitration in London.5
Respondent arrived in the Philippines and assumed his
position as PPI Sector Manager. He was accorded the status
of a resident alien.
As required by Rule XIV (Employment of Aliens) of the
Omnibus Rules Implementing the Labor Code, PPI applied for
an Alien Employment Permit (Permit) for respondent before the
Department of Labor and Employment (DOLE). It appended
respondents
contract
of
employment
to
the
application.1awphi1.net
On February 26, 1999, the DOLE granted the application and
issued the Permit to respondent. It reads:
Republic
of
Department
of
National Capital Region
the
Labor
&
Philippines
Employment
PERMIT
By:
MAXIMO
REGIONAL DIRECTOR
B.
ANITO
(Emphasis supplied)6
Respondent received his compensation from PPI for the
following periods: February to June 1998, November to
December 1998, and January to August 1999. He was also
reimbursed by PPI for the expenses he incurred in connection
with his work as sector manager. He reported for work in
Manila except for occasional assignments abroad, and
received instructions from Henrichsen.7
On May 5, 1999, respondent received a letter from Henrichsen
informing him that his employment had been terminated
effective August 4, 1999 for the reason that PCIJ and PPI had
not been successful in the water and sanitation sector in the
Philippines.8 However, on July 24, 1999, Henrichsen, by
electronic mail,9 requested respondent to stay put in his job
after August 5, 1999, until such time that he would be able to
report on certain projects and discuss all the opportunities he
had developed.10 Respondent continued his work with PPI until
the end of business hours on October 1, 1999.
Respondent filed with PPI several money claims, including
unpaid salary, leave pay, air fare from Manila to Canada, and
cost of shipment of goods to Canada. PPI partially settled
some of his claims (US$5,635.99), but refused to pay the rest.
On December 5, 2000, respondent filed a Complaint11 for
Illegal Dismissal against petitioners PPI and Henrichsen with
the Labor Arbiter. It was docketed as NLRC-NCR Case No. 3012-04787-00.
In his Complaint, respondent alleged that he was illegally
dismissed; PPI had not notified the DOLE of its decision to
close one of its departments, which resulted in his dismissal;
and they failed to notify him that his employment was
terminated after August 4, 1999. Respondent also claimed for
separation pay and other unpaid benefits. He alleged that the
company acted in bad faith and disregarded his rights. He
prayed for the following reliefs:
1. Judgment be rendered in his favor ordering the respondents
to reinstate complainant to his former position without loss of
seniority and other privileges and benefits, and to pay his full
backwages from the time compensation was with held (sic)
from him up to the time of his actual reinstatement. In the
alternative, if reinstatement is no longer feasible, respondents
must pay the complainant full backwages, and separation pay
equivalent to one month pay for every year of service, or in the
amount of US$16,400.00 as separation pay;
2. Judgment be rendered ordering the respondents to pay the
outstanding monetary obligation to complainant in the amount
of US$10,131.76 representing the balance of unpaid salaries,
leave pay, cost of his air travel and shipment of goods from
Manila to Canada; and
3. Judgment be rendered ordering the respondent company to
pay the complainant damages in the amount of no less than
US $10,000.00 and to pay 10% of the total monetary award as
attorneys fees, and costs.
Other reliefs just and equitable under the premises are,
likewise, prayed for.12 1awphi1.net
Petitioners filed a Motion to Dismiss the complaint on the
following grounds: (1) the Labor Arbiter had no jurisdiction over
the subject matter; and (2) venue was improperly laid. It
averred that respondent was a Canadian citizen, a transient
expatriate who had left the Philippines. He was employed and
dismissed by PCIJ, a foreign corporation with principal office in
Tokyo, Japan. Since respondents cause of action was based
II
person for whom the services are performed reserves the right
to control not only the end to be achieved but also the means
to be used in reaching such end.29 We quote with approval the
following ruling of the CA:
[T]here is, indeed, substantial evidence on record which would
erase any doubt that the respondent company is the true
employer of petitioner. In the case at bar, the power to control
and supervise petitioners work performance devolved upon
the respondent company. Likewise, the power to terminate the
employment relationship was exercised by the President of the
respondent company. It is not the letterhead used by the
company in the termination letter which controls, but the
person who exercised the power to terminate the employee. It
is also inconsequential if the second letter of employment
executed in the Philippines was not signed by the petitioner. An
employer-employee relationship may indeed exist even in the
absence of a written contract, so long as the four elements
mentioned in the Mafinco case are all present.30
The settled rule on stipulations regarding venue, as held by
this Court in the vintage case of Philippine Banking
Corporation v. Tensuan,31 is that while they are considered
valid and enforceable, venue stipulations in a contract do not,
as a rule, supersede the general rule set forth in Rule 4 of the
Revised Rules of Court in the absence of qualifying or
restrictive words. They should be considered merely as an
agreement or additional forum, not as limiting venue to the
specified place. They are not exclusive but, rather permissive.
If the intention of the parties were to restrict venue, there must
be accompanying language clearly and categorically
expressing their purpose and design that actions between
them be litigated only at the place named by them.32
In the instant case, no restrictive words like "only," "solely,"
"exclusively in this court," "in no other court save ,"
"particularly," "nowhere else but/except ," or words of equal
import were stated in the contract.33 It cannot be said that the
court of arbitration in London is an exclusive venue to bring
forth any complaint arising out of the employment contract.
Petitioners contend that respondent should have filed his
Complaint in his place of permanent residence, or where the
PCIJ holds its principal office, at the place where the contract
of employment was signed, in London as stated in their
contract. By enumerating possible venues where respondent
could have filed his complaint, however, petitioners themselves
admitted that the provision on venue in the employment
contract is indeed merely permissive.
Petitioners insistence on the application of the principle of
forum non conveniens must be rejected. The bare fact that
respondent is a Canadian citizen and was a repatriate does not
warrant the application of the principle for the following
reasons:
First. The Labor Code of the Philippines does not include
forum non conveniens as a ground for the dismissal of the
complaint.34
Second. The propriety of dismissing a case based on this
principle requires a factual determination; hence, it is properly
considered as defense.35
Third. In Bank of America, NT&SA, Bank of America
International, Ltd. v. Court of Appeals,36 this Court held that:
x x x [a] Philippine Court may assume jurisdiction over the
case if it chooses to do so; provided, that the following
requisites are met: (1) that the Philippine Court is one to which
the parties may conveniently resort to; (2) that the Philippine
Court is in a position to make an intelligent decision as to the
law and the facts; and, (3) that the Philippine Court has or is
likely to have power to enforce its decision. x x x
fact. The prima facie presumption under the Rule had not
been rebutted.
In the case at bar, it cannot be said that petitioners were given
the opportunity to challenge the judgment of the U.S. court as
basis for declaring it res judicata or conclusive of the rights of
private respondents. The proceedings in the trial court were
summary. Neither the trial court nor the appellate court was
even furnished copies of the pleadings in the U.S. court or
apprised of the evidence presented thereat, to assure a proper
determination of whether the issues then being litigated in the
U.S. court were exactly the issues raised in this case such that
the judgment that might be rendered would constitute res
judicata. As the trial court stated in its disputed order dated
March 9, 1988:
On the plaintiffs claim in its Opposition that the causes of
action of this case and the pending case in the United States
are not identical, precisely the Order of January 26, 1988 never
found that the causes of action of this case and the case
pending before the USA Court, were identical. (emphasis
added)
It was error therefore for the Court of Appeals to summarily rule
that petitioners action is barred by the principle of res judicata.
Petitioners in fact questioned the jurisdiction of the U.S. court
over their persons, but their claim was brushed aside by both
the trial court and the Court of Appeals.[13]
Moreover, the Court notes that on April 22, 1992, 1488, Inc.
and Daic filed a petition for the enforcement of judgment in the
Regional Trial Court of Makati, where it was docketed as Civil
Case No. 92-1070 and assigned to Branch 134, although the
proceedings were suspended because of the pendency of this
case. To sustain the appellate courts ruling that the foreign
judgment constitutes res judicata and is a bar to the claim of
petitioners would effectively preclude petitioners from repelling
the judgment in the case for enforcement. An absurdity could
then arise: a foreign judgment is not subject to challenge by
the plaintiff against whom it is invoked, if it is pleaded to resist
a claim as in this case, but it may be opposed by the defendant
if the foreign judgment is sought to be enforced against him in
a separate proceeding. This is plainly untenable. It has been
held therefore that:
[A] foreign judgment may not be enforced if it is not recognized
in the jurisdiction where affirmative relief is being
sought. Hence, in the interest of justice, the complaint
should be considered as a petition for the recognition of the
Hongkong judgment under Section 50 (b), Rule 39 of the
Rules of Court in order that the defendant, private respondent
herein, may present evidence of lack of jurisdiction, notice,
collusion, fraud or clear mistake of fact and law, if applicable.[14]
Accordingly, to insure the orderly administration of justice, this
case and Civil Case No. 92-1070 should be consolidated.
[15]
After all, the two have been filed in the Regional Trial Court
of Makati, albeit in different salas, this case being assigned to
Branch 56 (Judge Fernando V. Gorospe), while Civil Case No.
92-1070 is pending in Branch 134 of Judge Ignacio
Capulong. In such proceedings, petitioners should have the
burden of impeaching the foreign judgment and only in the
event they succeed in doing so may they proceed with their
action against private respondents.
Second. Nor is the trial courts refusal to take cognizance of
the case justifiable under the principle of forum non
conveniens. First, a motion to dismiss is limited to the grounds
under Rule 16, 1, which does not include forum non
conveniens.[16] The propriety of dismissing a case based on this
principle requires a factual determination, hence, it is more
properly considered a matter of defense. Second, while it is
within the discretion of the trial court to abstain from assuming
October 2, 2007
CORAZON
C.
SIM, petitioners,
vs.
NATIONAL LABOR RELATIONS COMMISSION and
EQUITABLE PCI-BANK, respondents*.
Corazon Sim (petitioner) filed a case for illegal dismissal with
the Labor Arbiter, alleging that she was initially employed by
Equitable PCI-Bank (respondent) in 1990 as Italian Remittance
Marketing Consultant to the Frankfurt Representative Office.
Eventually, she was promoted to Manager position, until
September 1999, when she received a letter from Remegio
David -- the Senior Officer, European Head of PCIBank, and
Managing Director of PCIB- Europe -- informing her that she
was being dismissed due to loss of trust and confidence based
on alleged mismanagement and misappropriation of funds.
Respondent denied any employer-employee relationship
between them, and sought the dismissal of the complaint.
On September 3, 2001, the Labor Arbiter rendered its Decision
dismissing the case for want of jurisdiction and/or lack of
merit.1 According to the Labor Arbiter:
motion
for
University of Asia and the Pacific, and studied law for two (2)
years at Adamson University. He also has a good professional
record, which highlights his marketability. Thus, his reliance on
the case of Molave Tours Corporation v. NLRC,[20] where the
employee found to have been forced to resign was a mere
garage custodian, is clearly misplaced.
In termination cases, the employer decides for the employee.
It is different in resignation cases for resignation is a formal
pronouncement of relinquishment of an office. It is made with
the intention of relinquishing the office accompanied by an act
of relinquishment.[21] In the instant case, petitioner relinquished
his position when he submitted his letter of resignation. His
subsequent act of receiving and keeping his requested soft
landing financial assistance of P300,000.00, and his retention
and use of the car subject of his arrangement with private
respondents showed his resolve to relinquish his post.
Thus, we affirm the findings of the Labor Arbiter, the NLRC and
the Court of Appeals that private respondents were able to
prove through substantial evidence that petitioner was not
illegally dismissed.
II.
The next issue involves the jurisdiction of the Labor Arbiter to
hear and decide the question on the transfer of ownership of
the car assigned to petitioner. He contends that it is the
regular courts that have jurisdiction over the question and not
the Labor Arbiter.
This is not an issue of first impression. The jurisdiction of
Labor Arbiters is provided under Article 217(a) of the Labor
Code, as amended, viz:
(a) Except as otherwise provided under this Code the Labor
Arbiters shall have original and exclusive jurisdiction to hear
and decide, within thirty (30) calendar days after the
submission of the case by the parties for decision without
extension, even in the absence of stenographic notes, the
following cases involving all workers, whether agricultural or
non-agricultural:
1.
2.
Termination disputes;
3.
If accompanied with a claim for reinstatement, those
cases that workers may file involving wages, rates of pay,
hours of work and other terms and conditions of employment;
4.
Claims for actual, moral, exemplary and other forms of
damages arising from employer-employee relations;
5.
Cases arising from any violation of Article 264 of this
Code, including questions involving the legality of strikes and
lockouts;
6.
Except claims for Employees Compensation, Social
Security, Medicare and maternity benefits, all other claims,
arising from employer-employee relations, including those of
persons in domestic or household service, involving an amount
exceeding five thousand pesos (P5,000.00) regardless of
whether accompanied with a claim for reinstatement.
In all these instances, the matrix is the existence of an
employer-employee relationship. In the case at bar, there is no
dispute that petitioner is an employee of the respondents.
In Baez v. Valdevilla,[23] we held:
x x x Presently, and as amended by R.A. 6715, the jurisdiction
of Labor Arbiters and the NLRC in Article 217 is
comprehensive enough to include claims for all forms of
damages arising from the employer-employee relations.
the
Cabin Attendants
1996:
hired
before
22
xxxx
3.
Compulsory Retirement
SO ORDERED.
Petitioner filed a motion for reconsideration, [13] which
was denied by the CA in its Resolution dated March 7, 2006.
Hence, the instant petition assigning the following error:
[25]
Educational assistance:
465,000.00
[G.R.
No.
L-75837.
December
11,
1987.]
judgment
SO ORDERED.
is
immediately
executory.
INTERCONTINENTAL BROADCASTING CORPORATION (IBC), represented by ATTY. RENATOQ. BELLO, in his capacity as CEO
and
President, petitioner,
vs.
NOEMI B. AMARILLA, CORSINI R. LAGAHIT, ANATOLIO G. OTADOY, and CANDIDO C. QUIONES, JR.,respondents.
Before us is a Petition for Review on Certiorari filed by petitioner Intercontinental Broadcasting Corporation (IBC) assailing the
Decision1 of the Court of Appeals in CA-G.R. SP No. 72414, which in turn affirmed the Decision 2 of the National Labor Relations
Commission (NLRC) in NLRC Case No. V-000660-2000.
On various dates, petitioner employed the following persons at its Cebu station: Candido C. Quiones, Jr.; on February 1,
1975;3 Corsini R. Lagahit, as Studio Technician, also on February 1, 1975; 4 Anatolio G. Otadoy, as Collector, on April 1, 1975; 5 and
Noemi Amarilla, as Traffic Clerk, on July 1, 1975.6 On March 1, 1986, the government sequestered the station, including its properties,
funds and other assets, and took over its management and operations from its owner, Roberto Benedicto. 7 However, in December
1986, the government and Benedicto entered into a temporary agreement under which the latter would retain its management and
operation. On November 3, 1990, the Presidential Commission on Good Government (PCGG) and Benedicto executed a Compromise
Agreement,8 where Benedicto transferred and assigned all his rights, shares and interests in petitioner station to the government. The
PCGG submitted the Agreement to the Sandiganbayan in Civil Case No. 0034 entitled "Republic of the Philippines v. Roberto S.
Benedicto, et al."9
In the meantime, the four (4) employees retired from the company and received, on staggered basis, their retirement benefits under the
1993 Collective Bargaining Agreement (CBA) between petitioner and the bargaining unit of its employees.
Name of Employee
Date of Retirement
Retirement Benefit
P 766,532.97
Noemi B. Amarilla
P 1,134,239.47
Corsini R. Lagahit
P 1,298,879.50
Anatolio G. Otadoy
P 751,914.30
In the meantime, a P1,500.00 salary increase was given to all employees of the company, current and retired, effective July 1994.
However, when the four retirees demanded theirs, petitioner refused and instead informed them via a letter that their differentials would
be used to offset the tax due on their retirement benefits in accordance with the National Internal Revenue Code (NIRC). Amarilla was
informed that the P71,480.00 of the amount due to her would be used to offset her tax liability of P340,641.42.10 Otadoy was also
informed in a letter dated July 5, 1999, that his salary differential of P170,250.61 would be used to pay his tax liability which amounted
to P127,987.57. Since no tax liability was withheld from his retirement benefits, he even owed the company P17,727.26 after the
offsetting. Quiones was informed that he should have retired compulsorily in 1992 at age 55 as provided in the CBA, and that since he
was already 58 when he retired, he was no longer entitled to receive salary increases from 1992 to 1995. Consequently, he was
overpaid by P137,932.22 for the "extension" of his employment from 1992 to 1995, which amount he was obliged to return to the
company. In any event, his claim for salary differentials had expired pursuant to Article 291 of the Labor Code of the
Philippines.11 Lagahits claim for salary differential of P73,165.23 was rejected by petitioner in a letter dated July 6, 1999, on the ground
that he had a tax liability of P396,619.03; since the amount would be used as partial payment for his tax liability, he still owed the
company P323,453.80.12
The four (4) retirees filed separate complaints13 against IBC TV-13 Cebu and Station Manager Louella F. Cabaero for unfair labor
practice and non-payment of backwages before the NLRC, Regional Arbitration Branch VII. As all of the complainants had the same
causes of action, their complaints were docketed as NLRC RAB-VII Case No. 10-1625-99.
The complainants averred that their retirement benefits are exempt from income tax under Article 32 of the NIRC. Sections 28 and 72 of
the NIRC, which petitioner relied upon in withholding their differentials, do not apply to them since these provisions deal with the
applicable income tax rates on foreign corporations and suits to recover taxes based on false or fraudulent returns. They pointed out
that, under Article VIII of the CBA, only those employees who reached the age of 60 were considered retired, and those under 60 had
the option to retire, like Quiones and Otadoy who retired at ages 58 and 51, respectively. They prayed that they be paid their salary
differentials, as follows:
Otadoy
P 170,250.61
Quiones
P 170,250.61
Lagahit
P 73,165.23
Amarilla
P 71,480.0014
For its part, petitioner averred that under Section 21 of the NIRC, the retirement benefits received by employees from their employers
constitute taxable income. While retirement benefits are exempt from taxes under Section 28(b) of said Code, the law requires that
such benefits received should be in accord with a reasonable retirement plan duly registered with the Bureau of Internal Revenue (BIR)
after compliance with the requirements therein enumerated. Since its retirement plan in the 1993 CBA was not approved by the BIR,
complainants were liable for income tax on their retirement benefits. Petitioner claimed that it was mandated to withhold the income tax
due from the retirement benefits of said complainants. It was not estopped from correcting the mistakes of its former officers. Under the
law, complainants are obliged to return what had been mistakenly delivered to them.15
In reply, complainants averred that the claims for the retirement salary differentials of Quiones and Otadoy had not prescribed
because the said CBA was implemented only in 1997. They pointed out that they filed their claims with petitioner on April 3, 1999. They
maintained that they availed of the optional retirement because of petitioners inducement that there would be no tax deductions.
Petitioner IBC did not commit any mistake in not withholding the taxes due on their retirement benefits as shown by the fact that the
PCCG, the Commission on Audit (COA) and the Bureau of Internal Revenue (BIR) did not even require them to explain such mistake.
They pointed out that petitioner paid their retirement benefits on a staggered basis, and nonetheless failed to deduct any amount as
taxes.16
Petitioner countered that the retirement benefits received by the complainants were based on the CBA between it and its bargaining
units. Under Sections 72 and 73 of the NIRC, it is obliged to deduct and withhold taxes determined in accordance with the rules and
regulations to be prepared by the Secretary of Finance. It was its duty to withhold the taxes on complainants retirement benefits,
otherwise, it would be held civilly and criminally liable under Sections 251, 254 and 255 of the NIRC.
On February 14, 2000, the Labor Arbiter rendered judgment in favor of the retirees. The fallo of the decision reads:
WHEREFORE, premises considered, judgment is hereby rendered ordering the respondent Intercontinental Broadcasting
Corporation (IBC TV-13 Cebu) to pay the complainants Noemi Amarilla and Corsini Lagahit as follows:
1. Noemi E. Amarilla
P26,423.00
2. Corsino R. Lagahit
P26,423.00
Total
P52,846.00
The claim of complainants Anatolio Otadoy and Candido Quiones and the case against respondent Louella F. Cabaero are
dismissed for lack of merit.
SO ORDERED.17
The Labor Arbiter ruled that the claims of Quiones and Otadoy had prescribed. The retirement benefits of complainants Lagahit and
Amarilla, on the other hand, were exempt from income tax under Section 28(b) of the NIRC. However, the differentials due to the two
complainants were computed three years backwards due to the law on prescription.
Petitioner appealed the decision of the Labor Arbiter to the NLRC, arguing that the retirement benefits of Amarilla and Lagahit are not
tax exempt. It insisted that the Labor Arbiter erred in declaring as unlawful the act of withholding the employees salary differentials as
payment for the latters tax liabilities.
Otadoy and Quiones no longer appealed the decision.
On May 21, 2002, the NLRC rendered its decision dismissing the appeal and affirming that of the Labor Arbiter. The fallo of the decision
reads:
WHEREFORE, the Decision of the Labor Arbiter dated February 14, 2000 is hereby AFFIRMED. Respondents appeal is
dismissed for lack of merit.
SO ORDERED.18
The NLRC held that the benefits of the retirement plan under the CBAs between petitioner and its union members were subject to tax
as the scheme was not approved by the BIR. However, it had also been the practice of petitioner to give retiring employees their
retirement pay without tax deductions and there was no justifiable reason for the respondent to deviate from such practice. The NLRC
concluded that petitioner was deemed to have assumed the tax liabilities of the complainants on their retirement benefits, hence, had
no right to deduct taxes from their salary differentials. The NLRC thus ratiocinated:
The sole concern of the law is that tax shall be imposed on retirement benefits. The employer assuming the payment of tax on
behalf of the retiring employee to make the retirement attractive, does not contravene the tax law, because it is not contrary to
the law or public policy, morals and good customs. It is significant to note that respondent did not refute the complainants
allegations in their Position Papers, to wit:
"Complainants Amarilla and Lagahit availed themselves of the offer of the respondent company when they were
induced and were made to believe that respondent companys employees who avail of such early retirement can
avail of that exemption on their retirement benefits. Were it not for the offer of no tax liability, complainants would not
have availed of such optional or early retirement."
It is worthy to note that the retirement benefits of the complainants did not suffer any tax deductions when they were given at
the first instance. It is only after they claimed the salary differentials when the respondent withheld the backwages for the
payment of tax liabilities.
"From the facts it can be shown that the disbursement of retirement benefits of the complainants were made on
staggered basis, three (3) and four (4) times. So, if the company, as it claimed, is really vent on deducting the alleged
taxes due the complainants, they have three or four opportunities to do so."
The respondents history reveals that it was paying retirement pays to its retiring employees without tax deductions as a matter
of practice. There is no justifiable reason for the respondent to deviate from that practice now. It is deemed to have assumed
the tax liabilities of the complainants.19
Aggrieved, petitioner elevated the decision before the CA on the following grounds:
1. THE HONORABLE NLRC GRAVELY ABUSED ITS DISCRETION TANTAMOUNT TO LACK OF JURISDICTION WHEN IT
RULED THAT WHILE PETITIONER MAY NOT HAVE A RETIREMENT PLAN WHOSE BENEFITS THEREFROM ARE
EXEMPTED FROM TAXES UNDER SECTION 28 OF THE NIRC, BY VIRTUE OF ITS PREVIOUS PRACTICE THAT IT
ASSUMED THE PAYMENT OF TAX LIABILITES, IT IS DEEMED TO HAVE ANSWERED FOR THE TAX LIABILITES OF THE
COMPLAINANTS, WHICH ULTIMATE CONSEQUENCE, IF NOT RECTIFIED, SHALL CAUSE IRREPARABLE DAMAGE AND
INJURY TO THE PETITIONER CORPORATION.
2. THE HONORABLE NLRC GRAVELY ABUSED ITS DISCRETION TANTAMOUNT TO LACK OR EXCESS OF
JURISDICTION IN AFFIRMING THE DECISION RENDERED BY THE LABOR ARBITER ON FEBRUARY 14, 2000 WHICH
GRANTED RETIREMENT DIFFERENTIAL TO RESPONDENTS AMARILLA AND LAGAHIT AS THESE ARE CONTRARY TO
THE FACTS AND RETIREMENT LAWS PARTICULARLY THE PROVISIONS EMBODIED IN SECTIONS 21, 27, 28 OF THE
NATIONAL INTERNAL REVENUE CODE AND R.A. 7641 IMPLEMENTING ARTICLE 287 OF THE LABOR CODE AS WELL
AS SECTION 6 OF THE IMPLEMENTING RULES OF RA 7641.
3. CONSEQUENT TO NLRCS RULING GRANTING RETIREMENT DIFFERENTIAL TO RESPONDENTS AMARILLA AND
LAGAHIT, THE HONORABLE NLRC GRAVELY ABUSED ITS DISCRETION TANTAMOUNT TO LACK OR EXCESS OF
JURISDICTION IN HOLDING THAT PETITIONERS ACT OF WITHHOLDING COMPLAINANTS BACKWAGES AS PAYMENT
OF THEIR TAX LIABILITIES IS ILLEGAL.20
On December 3, 2003, the CA rendered judgment dismissing the petition for lack of merit.
The appellate court declared that the salary differentials of the respondents are part of their taxable gross income, considering
that the CBA was not approved, much less submitted to the BIR. However, petitioner could not withhold the corresponding tax
liabilities of respondents due to the then existing CBA, providing that such retirement benefits would not be subjected to any
tax deduction, and that any such taxes would be for its account. The appellate court relied on the allegations of respondents in
their Position Paper before the Labor Arbiter which petitioner failed to refute.
Petitioner filed a motion for reconsideration, which the appellate court denied. Hence, the present petition, where petitioner
avers that:
WITH ALL DUE RESPECT, THE COURT OF APPEALS COMMITTED REVERSIBLE ERROR WHEN IT RULED THAT SINCE
IT HAS BEEN THE PURPORTED PRACTICE OF PETITIONER IBC-13 NOT TO WITHHOLD TAXES DUE ON THE SALARY
DIFFERENTIAL AND THE RETIREMENT BENEFITS, PETITIONER IBC-13 NECESSARILY ASSUMED PAYMENT OF THE
TAXES AND COULD NOT THEREFORE WITHHOLD THE SAME NOTWITHSTANDING THE SUBSEQUENT DISCOVERY
THAT THE FAILURE TO WITHHOLD THE TAXES WAS DONE DUE TO THE OMISSION, MISTAKE, FRAUD OR
IRREGULARITY COMMITTED BY PREVIOUS MANAGEMENT.
WITH ALL DUE RESPECT, THE HONORABLE COURT OF APPEALS GLOSSED OVER THE FACT AND COMMITTED
REVERSIBLE ERROR WHEN IT AFFIRMED THE DECISION OF THE NATIONAL LABOR RELATIONS COMMISSION
DATED MAY 21, 2002 WHICH ORDERED PETITIONER IBC-13 TO PAY RETIREMENT DIFFERENTIAL TO RESPONDENTS
AMARILLA AND LAGAHIT AS THESE ARE CONTRARY TO THE FACTS AND RETIREMENT LAWS PARTICULARLY THE
PROVISIONS EMBODIED IN SECTIONS 21, 27, 28 OF THE NATIONAL INTERNAL REVENUE CODE (AS AMENDED BY
PRESIDENTIAL DECREE NO. 1994)21
Petitioner insists that respondents are liable for taxes on their retirement benefits because the retirement plan under the CBA was not
approved by the BIR. It insisted that it failed to comply with the requisites of Section 32 of the NIRC and Rule II, Section 6 of the Rules
Implementing the New Retirement Law which provides that retirement pay shall be tax exempt upon compliance with the requirements
under Section 2(b) of Revenue Regulation No. 12-86 dated August 1, 1986.
Petitioner maintains that respondents failed to present any document as proof that petitioner bound and obliged itself to pay the
withholding taxes on their retirement benefits. In fact, the Labor Arbiter did not make any finding that petitioner had obliged itself to pay
the withholding taxes on respondents retirement benefits. The NLRCs reliance on the statements in its Position Paper that it undertook
to pay for respondents withholding taxes is misplaced.
While petitioner admits that its "previous directors" had paid the withholding taxes on the retirement benefits of respondents, it explains
that this practice was stopped when the new management took over. The new management could not be expected to enforce and
follow through the illegal policy of the old management which is adverse to the interests of the petitioner; hence, the decisions of the
NLRC and the CA affirming such undertaking should be reversed. It points out that it is a government corporation, and as such, its
officials and employees may be held liable for violation of Section 3(a) of Republic Act Nos. 3019, and 6713.22 Moreover, its officers and
employees are mandated to preserve the companys assets, and may, likewise be held liable for failure to do so under Section 31 of the
Corporation Code.
The issues are (1) whether the retirement benefits of respondents are part of their gross income; and (2) whether petitioner is estopped
from reneging on its agreement with respondent to pay for the taxes on said retirement benefits.
We agree with petitioners contention that, under the CBA, it is not obliged to pay for the taxes on the respondents retirement benefits.
We have carefully reviewed the CBA and find no provision where petitioner obliged itself to pay the taxes on the retirement benefits of
its employees.
We also agree with petitioners contention that, under the NIRC, the retirement benefits of respondents are part of their gross income
subject to taxes. Section 28 (b) (7) (A) of the NIRC of 198623 provides:
Sec. 28. Gross Income.
xxxx
(b) Exclusions from gross income. - The following items shall not be included in gross income and shall be exempt from
taxation under this Title:
xxxx
(7) Retirement benefits, pensions, gratuities, etc. - (A) Retirement benefits received by officials and employees of private firms
whether individuals or corporate, in accordance with a reasonable private benefit plan maintained by the employer: Provided,
That the retiring official or employee has been in the service of the same employer for at least ten (10) years and is not less
than fifty years of age at the time of his retirement: Provided, further, That the benefits granted under this subparagraph shall
be availed of by an official or employee only once. For purposes of this subsection, the term "reasonable private benefit plan"
means a pension, gratuity, stock bonus or profit-sharing plan maintained by an employer for the benefit of some or all of his
officials or employees, where contributions are made by such employer for officials or employees, or both, for the purpose of
distributing to such officials and employees the earnings and principal of the fund thus accumulated, and wherein it is provided
in said plan that at no time shall any part of the corpus or income of the fund be used for, or be diverted to, any purpose other
than for the exclusive benefit of the said official and employees.
Revenue Regulation No. 12-86, the implementing rules of the foregoing provisions, provides:
(b) Pensions, retirements and separation pay. Pensions, retirement and separation pay constitute compensation subject to
withholding tax, except the following:
(1) Retirement benefit received by official and employees of private firms under a reasonable private benefit plan maintained
by the employer, if the following requirements are met:
(i) The retirement plan must be approved by the Bureau of Internal Revenue;
(ii) The retiring official or employees must have been in the service of the same employer for at least ten (10) years
and is not less than fifty (50) years of age at the time of retirement; and
(iii) The retiring official or employee shall not have previously availed of the privilege under the retirement benefit plan
of the same or another employer.
Thus, for the retirement benefits to be exempt from the withholding tax, the taxpayer is burdened to prove the concurrence of the
following elements: (1) a reasonable private benefit plan is maintained by the employer; (2) the retiring official or employee has been in
the service of the same employer for at least 10 years; (3) the retiring official or employee is not less than 50 years of age at the time of
his retirement; and (4) the benefit had been availed of only once.
Article VIII of the 1993 CBA provides for two kinds of retirement plans - compulsory and optional. Thus:
ARTICLE
RETIREMENT
VIII
Section 1: Compulsory Retirement Any employee who has reached the age of Fifty Five (55) years shall be retired from the
COMPANY and shall be paid a retirement pay in accordance with the following schedule:
LENGTH OF SERVICE
RETIREMENT BENEFITS
5 years 9 years
10 years 14 years
15 years 19 years
20 years or more
A supervisor who reached the age of Fifty (50) may at his/her option retire with the same retirement benefits provided above.
Section 2: Optional Retirement Any covered employee, regardless of age, who has rendered at least five (5) years of service to the
COMPANY may voluntarily retire and the COMPANY agrees to pay Long Service Pay to said covered employee in accordance with the
following schedule:
LENGTH OF SERVICE
RETIREMENT BENEFITS
5 9 years
10 14 years
15 19 years
Section 3: Fraction of a Year In computing the retirement under Section 1 and 2 of this Article, a fraction of at least six (6) months
shall be considered as one whole year. Moreover, the COMPANY may exercise the option of extending the employment of an
employee.
Section 4: Severance of Employment Due to Illness When a supervisor suffers from disease and/or permanent disability and her/his
continued employment is prohibited by law or prejudicial to her/his health of the health of his co-employees, the COMPANY shall not
terminate the employment of the subject supervisor unless there is a certification by a competent public health authority that the
disease is of such a nature or at such stage that it can not be cured within a period of six (6) months even with proper medical
treatment. The supervisor may be separated upon payment by the COMPANY of separation pay pursuant to law, unless the supervisor
falls within the purview of either Sections 1 or 2 hereof. In which case, the retirement benefits indicated therein shall apply, whichever is
higher.
Section 5: Loyalty Recognition The COMPANY shall recognize the services of the supervisor/director who have reached the following
number of years upon retirement by granting him/her a plaque of appreciation and any lasting gift:
(P 3,000.00) worth
(P 7,000.00) worth
(P10,000.00) worth
Respondents were qualified to retire optionally from their employment with petitioner. However, there is no evidence on record that the
1993 CBA had been approved or was ever presented to the BIR; hence, the retirement benefits of respondents are taxable.
Under Section 80 of the NIRC, petitioner, as employer, was obliged to withhold the taxes on said benefits and remit the same to the
BIR.
Section 80. Liability for Tax.
(A) Employer. The employer shall be liable for the withholding and remittance of the correct amount of tax required to be
deducted and withheld under this Chapter. If the employer fails to withhold and remit the correct amount of tax as required to
be withheld under the provision of this Chapter, such tax shall be collected from the employer together with the penalties or
additions to the tax otherwise applicable in respect to such failure to withhold and remit.
However, we agree with respondents contention that petitioner did not withhold the taxes due on their retirement benefits because it
had obliged itself to pay the taxes due thereon. This was done to induce respondents to agree to avail of the optional retirement
scheme. Thus, in its petition in this case, petitioner averred that:
While it may indeed be conceded that the previous dispensation of petitioner IBC-13 footed the bill for the withholding taxes ,
upon discovery by the new management, this was stopped altogether as this was grossly prejudicial to the interest of the
petitioner IBC-13. The policy of withholding the taxes due on the differentials as a remedial measure was a matter of sound
business judgment and dictates of good governance aimed at protecting the interests of the government. Necessarily, the
newly-appointed board and officers of the petitioner, who learned about this grossly disadvantageous mistake committed by
the former management of petitioner IBC-13 cannot be expected to just follow suit blindly. An illegal act simply cannot give rise
to an obligation. Accordingly, the new officers were correct in not honoring this highly suspect practice and it is now their duty
to rectify this anomalous occurrence, otherwise, they become remiss in the performance of their sworn responsibilities.
It need not be stressed that as board members and officers of the acquired asset of the government, they are committed to
preserve the assets thereof. Their concomitant obligations spring not only from their fiduciary responsibility as corporate
officers but as well as public officers.24
Respondents received their retirement benefits from the petitioner in three staggered installments without any tax deduction for the
simple reason that petitioner had remitted the same to the BIR with the use of its own funds conformably with its agreement with the
retirees. It was only when respondents demanded the payment of their salary differentials that petitioner alleged, for the first time, that it
had failed to present the 1993 CBA to the BIR for approval, rendering such retirement benefits not exempt from taxes; consequently,
they were obliged to refund to it the amounts it had remitted to the BIR in payment of their taxes. Petitioner used this "failure" as an
afterthought, as an excuse for its refusal to remit to the respondents their salary differentials. Patently, petitioner is estopped from doing
so. It cannot renege on its commitment to pay the taxes on respondents retirement benefits on the pretext that the "new management"
had found the policy disadvantageous.
It must be stressed that the parties are free to enter into any contract stipulation provided it is not illegal or contrary to public morals.
When such agreement freely and voluntarily entered into turns out to be advantageous to a party, the courts cannot "rescue" the other
party without violating the constitutional right to contract. Courts are not authorized to extricate the parties from the consequences of
their acts. Thus, the fact that the contract stipulations of the parties may turn out to be financially disadvantageous to them will not
relieve them of their obligation under the agreement.25
An agreement to pay the taxes on the retirement benefits as an incentive to prospective retirees and for them to avail of the optional
retirement scheme is not contrary to law or to public morals. Petitioner had agreed to shoulder such taxes to entice them to voluntarily
retire early, on its belief that this would prove advantageous to it. Respondents agreed and relied on the commitment of petitioner. For
petitioner to renege on its contract with respondents simply because its new management had found the same disadvantageous would
amount to a breach of contract. There is even no evidence that any "new management" was ever installed by petitioner after
respondents retirement; nor is there evidence that the Board of Directors of petitioner resolved to renege on its contract with
respondents and demand the reimbursement for the amounts remitted by it to the BIR.
The well-entrenched rule is that estoppel may arise from a making of a promise if it was intended that the promise should be relied
upon and, in fact, was relied upon, and if a refusal to sanction the perpetration of fraud would result to injustice. The mere omission by
the promisor to do whatever he promises to do is sufficient forbearance to give rise to a promissory estoppel.26
Petitioner cannot hide behind the fact that, under the compromise agreement between the PCGG and Benedicto, the latter had
assigned and conveyed to the Republic of the Philippines his shares, interests and rights in petitioner. Respondents retired only after
the Court affirmed the validity of the Compromise Agreement 27 and the execution by petitioner and the union of their 1993 CBA while
Civil Case No. 0034 was still pending in theSandiganbayan. There is no showing that before respondents demanded the payment of
their salary differentials, petitioner had rejected its commitment to shoulder the taxes on respondents retirement benefits and sought its
nullification before the court; nor is there any showing that petitioners "new management" filed any criminal or administrative charges
against the former officers/board of directors comprising the "old management" relative to the payment of the taxes on respondents
retirement benefits.
IN VIEW OF ALL THE FOREGOING, the petition is DENIED for lack of merit. The Decision of the Court of Appeals in CA-G.R. SP No.
72414 is AFFIRMED. Costs against the petitioner.
SO ORDERED.
G.R. No. 71818 August 19, 1986
METROPOLITAN
WATERWORKS
AND
SEWERAGE
SYSTEM
(MWSS), petitioner,
vs.
HON. BIENVENIDO S. HERNANDEZ, Labor Arbiter, NATIONAL LABOR RELATIONS COMMISSION, LEMUEL B. ALEGADO,
DANILO S. LOPEZ, FORTUNATO L. MADRONA, ETC., ET AL., respondents.
Petitioner Metropolitan Waterworks and Sewerage System (MWSS) was haled before the Arbitration Branch, National Capital Region of
the National Labor Relations Commission on charges of willfull failure to pay wage differentials, allowances and other monetary benefits
to its contractual employees numbering 2,500 or so. 1 In answer, MWSS assessed that:
(1) it "is a government-owned and controlled corporation and therefore ... (the NLRC) has no jurisdiction over the ...
case", and (2) assuming the contrary arguendo, "the terms and conditions of the complainants who are all contractual
employees are governed by their respective contracts. 2
On June 5, 1985, judgment was rendered by the labor Arbiter to whom the case was assigned, adverse to MWSS. As regards the claim
of MWSS of lack of jurisdiction in the NLRC over the case, the Arbiter made the following observations:
... This Commission agree (sic) with the respondent that if the complainants are regular employees of MWSS, it being
a government owned and controlled corporation, said employees are within the mantle of the civil service rules and
regulations, their salaries are standardized by the National Assembly, then this Commission has no jurisdiction in the
case. 3 ... (But an examination of the records shows) ... that complainants are not a regular employee of the
respondent MWSS, but one of a hired workers or employees for limited period, that is upon completion of the project
for which they were hired, they can be removed by the respondent, because there is no more work or the contract
has already been terminated (Sic).4
The proferred deduction: while controversies respecting terms and conditions of employment between MWSS and its regular
employees are not within the jurisdiction of the NLRC, said controversies do fall within the competence of the NLRC if they involve nonregular or contractual employees of the MWSS.
Anent the second argument of MWSS which the Arbiter understands to be "that the contract of employment by the complainants ... is
governed by their contract, (and) it is therefore incumbent for the respondent 5 to be governed and to comply with their contract, 6 he
has this to say:
Respondent (MWSS) is citing Article 277 of the Labor Code to vouchsafe (sic) its contention about the lack of
jurisdiction of the NLRC. The provision, however, refers to the governance of the Civil Service Law vis-a-vis the terms
and conditions of government employees, those of government corporations included. The complaint is not such a
case as it is for monetary claims about which the Civil Service Decree, PD 807 does not provide. In fact, the last
provision of Article 277 shows the ever protection (sic) by the State through the Code of the workers' right to due
wages and other benefits by enjoining not to reduce the privileges being enjoyed by workers at the time of the
adoption of the Code. 7
The propounded deduction: The Civil Service Decree applies to employees in government corporations in all matters except "monetary
claims"; as regards the latter, it is the Labor Code that governs.
It is to invalidate the decision of the Labor Arbiter as well as a subsequent order directing execution thereof 8 and all other proceedings
in the case 9 that MWSS has come to this Court on certiorari and prohibition.
Evidently, the case turns upon the question: Are employees of the MWSS covered by the Labor Code or by laws and regulations
governing the civil service?
That question, framed in Identical terms save only that it had reference to another entity, the National Housing Corporation, has already
been answered by this Court. In National Housing Corporation vs. Juco, 10 this Court ruled that
1) "The NHC is a one hundred percent (100%) government-owned corporation ...; 11
2) "There should no longer be any question at this time that employees of goverment-owned or controlled
corporations are governed by the civil service law and civil service rules and regulation "; 12 and
3) "The decision of the Labor Arbiter dismissing the case (filed against the NHC by an employee) for lack of
jurisdiction" was correct. 13
Now, the character of the MWSS as a government-owned or controlled corporation is not contested; it is, in any case, a proposition that
cannot be gainsaid. Republic Act No. 6234 created it as a "government corporation to be known as the Metropolitan Waterworks and
Sewerage System." As in the case of the National Housing Authority, therefore, employment in the MWSS is governed not by the Labor
Code but by the civil service law, rules and regulations; and controversies arising from or connected with that employment are not
cognizable by the National Labor Relations Commission.
The argument of the Labor Arbiter that it is only disputes between the MWSS and its regular employees that are beyond the jurisdiction
of the NLRC, not those between it and its "non-regular or contractual" employees, is sophistical. There is no legal or logical justification
for such a distinction. Indeed, it is ruled out by the fact that positions in the civil service are classified into career and non-career
service, 14 and that the non-career service includes inter alia... Contractual personnel or those whose employment in the government is in accordance with a special contract to
undertake a specific work or job, requiring special or technical skin not available in the employing agency, to be
accomplished within a specific period, which in no case shall exceed one year, and performs or accomplishes the
specific work or job, under his own responsibility with a minimum of direction and supervision from the hiring
agency. 15
The Labor Arbiter's other postulation, that the Civil Service Law governs employment in the MWSS in all aspect except "monetary
claims," and that as to the latter, it is the Labor Code that applies, is even more patently illogical and deserves no confutation.
But even more fallacious, almost unintelligible, is private respondents' contention that they "are not employees of Metropolitan
Waterworks and Sewerage System (MWSS)"; 16 and "not being employees of the petitioner ... (MWSS) ... this case therefore lies within
the National Labor Relations Commission (NLRC) through Arbiter Bienvenido Hernandez." 17 Such a contention also does not merit
refutation As absurd and as undeserving of response, too, is the claim that "Existence of employer-employee relationship (between the
MWSS and an individual) is not per se equivalent to being a government employee." 18
Arguments such as these, and the fractured syntax by which they are tendered, should really have no place in a judicial record. They
cannot persuade; they do but irritate. What is worse, they produce much waste of valuable time. They are symptomatic of defects in the
training and appointing processes which must be remedied.
WHEREFORE, the Decision of the Labor Arbiter dated June 5, 1985 and his Order of July 8, 1985, having been rendered without
jurisdiction, are hereby declared void and set aside. Said Labor Arbiter is enjoined to take no further action on Case No. NCR-9-316484 save to dismiss the same. Costs against private respondents.
SO ORDERED.
G.R. No. L-65377 May 28, 1984
MOLAVE
MOTOR
SALES,
INC., petitioner,
vs.
HON. CRISPIN C. LARON, Presiding Judge of the Regional Trial Court of Pangasinan, Branch XLIV and PEDRO
GEMENIANO, respondents.
Respondent Judge, presiding Branch XLIV of the Regional Trial Court in Dagupan City, had dismissed the case below for lack of
jurisdiction and had denied reconsideration for lack of merit.
Petitioner, PLAINTIFF in the case below, is a corporation engaged in the sale and repair of motor vehicles in Dagupan City. Private
respondent, the DEFENDANT in the case below, was, or is, the sales manager of PLAINTIFF. Whether or not there was still a
relationship of employer and employee between the parties when the complaint was filed is an unsettled question which need not be
resolved in this instance.
Alleging that DEFENDANT was a former employee, PLAINTIFF had sued him, on March 22, 1983, for payment of accounts pleaded as
follows:
That during his incumbency as such the defendant caused and without authority from the plaintiff incurred accounts
with the remaining balances in the total sum of P33,890.38 excluding interests, arising from
the purchases of vehicles and parts,
repair jobs of his personal cars and
cash advances,
faithful reproductions of the Vehicle Invoice, Debit Memos, Deed of Absolute Sale, Repair Orders, Charge Invoices,
Vouchers, Promissory Notes, Acknowledgement Letter and Statement of Account, hereto attached and marked as
Annexes "A", "B", "C", "D", "E", "F", "G", "H", "I", "J", "K", "L", "M", and "N" respectively and the contents of which
being herein additionally pleaded and made integral parts hereof; (Emphasis supplied)
In his Answer, DEFENDANT denied
... that he incurred any unpaid unauthorized accounts with the plaintiff in the total sum of P33,890.38 excluding
interests therefor, and,
specifically denies under oath that the annexed Vehicle Invoice, Debits Memos Deed of Absolute Sale, Repair
Orders, Charge Invoices, Vouchers, Promissory Notes, Acknowledgement Letter and Statement of Account
have remained unpaid as in fact the truth of the matter is as follows, to wit: (Emphasis supplied)
DEFENDANT further alleged in a counterclaim that he should still be considered an employee of PLAINTIFF inasmuch as there has
been no application for clearance in regards to his separation.
At the pre-trial conference, the DEFENDANT raised the question of jurisdiction of the Court stating that PLAINTIFF's complaint arose
out of employer-employee relationship, and he subsequently moved for dismissal. It was then when respondent Judge dismissed the
case finding that the sum of money and damages sued upon arose from employer-employee relationship and that jurisdiction belonged
to the Labor Arbiter and the NLRC.
Before the enactment of BP Blg. 227 on June 1, 1982, Labor Arbiters, under paragraph 5 of Article 217 of the Labor Code had
jurisdiction over "all other cases arising from employer-employee relation, unless expressly excluded by this Code." Even then, the
principle followed by this Court was that, although a controversy is between an employer and an employee, the Labor Arbiters have no
jurisdiction if the Labor Code is not involved. In Medina vs. Castro-Bartolome, 116 SCRA 597, 604, in negating jurisdiction of the Labor
Arbiter, although the parties were an employer and two employees, Mr. Justice Abad Santos stated:
The pivotal question to Our mind is whether or not the Labor Code has any relevance to the reliefs sought by the
plaintiffs. For if the Labor Code has no relevance, any discussion concerning the statutes amending it and whether or
not they have retroactive effect is unnecessary.
It is obvious from the complaint that the plaintiffs have not alleged any unfair labor practice. Theirs is a simple action
for damages for tortious acts allegedly committed by the defendants. Such being the case, the governing statute is
the Civil Code and not the Labor Code. It results that the orders under review are based on a wrong premise.
And in Singapore Airlines Limited vs. Pao, 122 SCRA 671, 677, the following was said:
Stated differently, petitioner seeks protection under the civil laws and claims no benefits under the Labor Code. The
primary relief sought is for liquidated damages for breach of a contractual obligation. The other items demanded are
not labor benefits demanded by workers generally taken cognizance of in labor disputes, such as payment of wages,
overtime compensation or separation pay. The items claimed are the natural consequences flowing from breach of an
obligation, intrinsically a civil dispute.
In the case below, PLAINTIFF had sued for monies loaned to DEFENDANT, the cost of repair jobs made on his personal cars, and for
the purchase price of vehicles and parts sold to him. Those accounts have no relevance to the Labor Code. The cause of action was
one under the civil laws, and it does not breach any provision of the Labor Code or the contract of employment of DEFENDANT. Hence,
the civil courts, not the Labor Arbiters and the NLRC, should have jurisdiction.
BP Blg. 227 has amended Article 217 of the Labor Code to read as follows:
ART. 217. Jurisdiction of Labor Arbiters and the Commission. (a) The Labor Arbiters shall have the original and
exclusive jurisdiction to hear and decide within thirty (30) working days after submission of the case by the parties for
decision, the following cases involving all workers, whether agricultural or non-agricultural:
1. Unfair labor practice cases;
2. Those that ( involve) WORKERS MAY FILE INVOLVING wages, hours of work and other terms and conditions of
employment;
3. All money claims of workers, including those based on non-payment or underpayment of wages, overtime
compensation, separation pay and other benefits provided by law or appropriate agreement, except claims for
employees compensation, social security, and maternity benefits;
4. Cases involving household services; and
5. CASES ARISING FROM ANY VIOLATION OF ARTICLE 265 OF THIS CODE, INCLUDING QUESTIONS
INVOLVING THE LEGALITY OF STRIKES AND LOCKOUTS.
6. All other claims arising from employer-employee relations, unless expressly excluded by this Code]. (Italics and
bracketed portions indicate the deletions, while the amendments introduced are capitalized).
The dismissal of the case below on the ground that the sum of money and damages sued upon arose from employer-employee
relationship was erroneous. Claims arising from employer-employee relations are now limited to those mentioned in paragraphs 2 and
3 of Article 217. There is no difficulty on our part in stating that those in the case below should not be faulted for not being aware of the
last amendment to the frequently changing Labor Code.
The claim of DEFENDANT that he should still be considered an employee of PLAINTIFF, because the latter has not sought clearance
for his separation from the service, will not affect the jurisdiction of respondent Judge to resolve the complaint of PLAINTIFF.
DEFENDANT could still be liable to PLAINTIFF for payment of the accounts sued for even if he remains an employee of PLAINTIFF.
WHEREFORE, the Petition is granted, and respondent Judge is hereby ordered to take cognizance of the case below and to render
judgment therein accordingly.
No costs.
SO ORDERED.
G.R. No. L-64313 January 17, 1985
NATIONAL
HOUSING
vs.
BENJAMIN JUCO AND THE NATIONAL LABOR RELATIONS COMMISSION, respondents.
CORPORATION, petitioner,
For although adherence to precedents (stare decisis) is a sum formula for achieving uniformity of action and
conducive to the smooth operation of an office, Idolatrous reverence for precedents which have outlived their validity
and usefulness retards progress and should therefore be avoided. In fact, even courts do reverse themselves for
reasons of justice and equity. This Commission as an Administrative body performing quasi judicial function is no
exception.
WHEREFORE, in the light of the foregoing, the decision appealed from is hereby, set aside. In view, however, of the
fact that the Labor Arbiter did not resolve the issue of illegal dismissal we have opted to remand this case to the
Labor Arbiter a quo for resolution of the aforementioned issue.
The NHC is a one hundred percent (100%) government-owned corporation organized in accordance with Executive Order No. 399, the
Uniform Charter of Government Corporations, dated January 5, 1951. Its shares of stock are owned by the Government Service
Insurance System the Social Security System, the Development Bank of the Philippines, the National Investment and Development
Corporation, and the People's Homesite and Housing Corporation. Pursuant to Letter of Instruction No. 118, the capital stock of NHC
was increased from P100 million to P250 million with the five government institutions above mentioned subscribing in equal proportion
to the increased capital stock. The NHC has never had any private stockholders. The government has been the only stockholder from
its creation to the present.
There should no longer be any question at this time that employees of government-owned or controlled corporations are governed by
the civil service law and civil service rules and regulations.
Section 1, Article XII-B of the Constitution specifically provides:
The Civil Service embraces every branch, agency, subdivision, and instrumentality of the Government, including
every government-owned or controlled corporation. ...
The 1935 Constitution had a similar provision in its Section 1, Article XI I which stated:
A Civil Service embracing all branches and subdivisions of the Government shall be provided by law.
The inclusion of "government-owned or controlled corporations" within the embrace of the civil service shows a deliberate effort of the
framers to plug an earlier loophole which allowed government-owned or controlled corporations to avoid the full consequences of the
an encompassing coverage of the civil service system. The same explicit intent is shown by the addition of "agency" and
"instrumentality" to branches and subdivisions of the Government. All offices and firms of the government are covered.
The amendments introduced in 1973 are not Idle exercises or a meaningless gestures. They carry the strong message that t civil
service coverage is broad and an- embracing insofar as employment in the government in any of its governmental or corporate arms is
concerned.
The constitutional provision has been implemented by statute. Presidential Decree No. 807 is unequivocal that personnel of
government-owned or controlled corporations belong to the civil service and are subject to civil service requirements.
It provides:
SEC. 56. Government-owned or Controlled Corporations Personnel. All permanent personnel of governmentowned or controlled corporations whose positions are now embraced in the civil service shall continue in the service
until they have been given a chance to qualify in an appropriate examination, but in the meantime, those who do not
possess the appropriate civil service eligibility shag not be promoted until they qualify in an appropriate civil service
examination. Services of temporary personnel may be terminated any time.
The very Labor Code, P. D. No. 442 as amended, which the respondent NLRC wants to apply in its entirety to the private respondent
provides:
ART. 277. Government employees. The terms and conditions of employment of all government employees,
including employees of government-owned and controlled corporations shall be governed by the Civil Service Law,
rules and regulations. Their salaries shall be standardized by the National Assembly as provided for in the New
Constitution. However, there shall be reduction of existing wages, benefits and other terms and conditions of
employment being enjoyed by them at the time of the adoption of the Code.
Our decision in Alliance of Government Workers, et al v. Honorable Minister of Labor and Employment et all. (124 SCRA 1) gives the
background of the amendment which includes government-owned or controlled corporations in the embrace of the civil service.
We stated:
Records of the 1971 Constitutional Convention show that in the deliberation held relative to what is now Section 1(1), Article XIIB, supra, the issue of the inclusion of government-owned or controlled corporations figured prominently.
The late delegate Roberto S. Oca, a recognized labor leader, vehemently objected to the inclusion of government-owned or controlled
corporations in the Civil Service. He argued that such inclusion would put asunder the right of workers in government corporations,
recognized in jurisprudence under the 1935 Constitution, to form and join labor unions for purposes of collective bargaining with their
employers in the same manner as in the private section (see: records of 1971 Constitutional Convention).
In contrast, other labor experts and delegates to the 1971 Constitutional Convention enlightened the members of the Committee on
Labor on the divergent situation of government workers under the 1935 Constitution, and called for its rectification. Thus, in a Position
Paper dated November 22, 197 1, submitted to the Committee on Labor, 1971 Constitutional Convention, then Acting Commissioner of
Civil Service Epi Rey Pangramuyen declared:
It is the stand, therefore, of this Commission that by reason of the nature of the public employer and the peculiar character of the public
service, it must necessary regard the right to strike given to unions in private industry as not applying to public employees and civil
service employees. It has been stated that the Government, in contrast to the private employer, protects the interests of all people in
the public service, and that accordingly, such conflicting interests as are present in private labor relations could not exist in the relations
between government and those whom they employ.
Moreover, determination of employment conditions as well as supervision of the management of the public service is in the hands of
legislative bodies. It is further emphasized that government agencies in the performance of their duties have a right to demand
undivided allegiance from their workers and must always maintain a pronounced esprit de corps or firm discipline among their staff
members. It would be highly incompatible with these requirements of the public service, if personnel took orders from union leaders or
put solidarity with members of the working class above solidarity with the Government. This would be inimical to the public interest.
Moreover, it is asserted that public employees by joining labor unions may be compelled to support objectives which are political in
nature and thus jeopardize the fundamental principle that the governmental machinery must be impartial and non-political in the sense
of party politics. (See: Records of 1971 Constitutional Convention).
Similar, Delegate Leandro P. Garcia, expressing for the inclusion of government-owned or controlled corporations in the Civil Service,
argued:
It is meretricious to contend that because Government-owned or controlled corporations yield profits, their employees are entitled to
better wages and fringe benefits than employees of Government other than Government-owned and controlled corporations which are
not making profits. There is no gainsaying the fact that the capital they use is the people's money. (see: Records of the 1971
Constitutional Convention).
Summarizing the deliberations of the 1971 Constitutional Convention on the inclusion of Government-owned or controlled corporation
Dean Joaquin G. Bernas, SJ., of the Ateneo de Manila University Professional School of Law, stated that government-owned
corporations came under attack as g cows of a privileged few enjoying salaries far higher than their counterparts in the various
branches of government, while the capital of these corporations belongs to the Government and government money is pumped into
them whenever on the brink of disaster, and they should therefore come under the strict surveillance of the Civil Service System.
(Bernas, The 1973 Philippine Constitution, Notes and Cases, 1974 ed., p. 524).
Applying the pertinent provisions of the Constitution, the Labor Code as amended, and the Civil Service Decree as amended and the
precedent in the Alliance of Government Workers decision, it is clear that the petitioner National Housing Corporation comes under the
jurisdiction of the Civil Service Commission, not the Ministry of Labor and Employment.
This becomes more apparent if we consider the fact that the NHC performs governmental functions and not proprietary ones.
The NHC was organized for the governmental objectives stated in its amended articles of incorporation as follows:
SECOND: That the purpose for which the corporation is organized is to assist and carry out the coordinated massive housing program
of the government, principally but not limited to low-cost housing with the integration cooperation and assistance of all governmental
agencies concerned, through the carrying on of any or all the following activities:
l) The acquisition, development or reclamation of lands for the purpose of construction and building therein preferably low-cost housing
so as to provide decent and durable dwelling for the greatest number of inhabitants in the country;
2) The promotion and development of physical social and economic community growth through the establishment of general physical
plans for urban, suburban and metropolitan areas to be characterized by efficient land use patterns;
3) The coordination and implementation of all projects of the government for the establishment of nationwide and massive low cost
housing;
4) The undertaking and conducting of research and technical studies of the development and promotion of construction of houses and
buildings of sound standards of design liability, durability, safety, comfort and size for improvement of the architectural and engineering
designs and utility of houses and buildings with the utilization of new and/or native materials economics in material and construction,
distribution, assembly and construction and of applying advanced housing and building technology.
5) Construction and installation in these projects of low-cost housing privately or cooperatively owned water and sewerage system or
waste disposal facilities, and the formulations of a unified or officially coordinated urban transportation system as a part of a
comprehensive development plan in these areas.
The petitioner points out that it was established as an instrumentality of the government to accomplish governmental policies and
objectives and extend essential services to the people. It would be incongruous if employees discharging essentially governmental
functions are not covered by the same law and rules which govern those performing other governmental functions. If government
corporations discharging proprietary functions now belong to the civil service with more reason should those performing governmental
functions be governed by civil service law.
The respondent NLRC cites a 1976 opinion of the Secretary of Justice which holds that the phrase "government-owned or controlled
corporations" in Section 1, Article XII-B of the Constitution contemplates only those government-owned or controlled
corporations created by special law. The opinion states that since the Constitution provides for the organization or regulation of private
corporations only by "general law", expressly excluding government-owned or controlled corporations, it follows that whenever the
Constitution mentions government-owned or controlled corporations, it must refer to those created by special law. P.D. No. 868 which
repeals all charters, laws, decrees, rules, and provisions exempting any branch, agency, subdivision, or instrumentality of the
government, including government- owned or controlled corporations from the civil service law and rules is also cited to show that
corporations not governed by special charters or laws are not to be brought within civil service coverage. The discussions in the
Constitutional Convention are also mentioned. It appears that at the time the Convention discussed government-owned or controlled
corporations, all such corporations were organized only under special laws or charters.
The fact that "private" corporations owned or controlled by the government may be created by special charter does not mean that such
corporations not created by special law are not covered by the civil service. Nor does the decree repealing all charters and special laws
granting exemption from the civil service law imply that government corporations not created by special law are exempt from civil
service coverage. These charters and statutes are the only laws granting such exemption and, therefore, they are the only ones which
could be repealed. There was no similar exempting provision in the general law which called for repeal. And finally, the fact that the
Constitutional Convention discussed only corporations created by special law or charter cannot be an argument to exclude petitioner
NHC from civil service coverage. As stated in the cited speech delivered during the convention sessions of March 9, 1972, all
government corporations then in existence were organized under special laws or charters. The convention delegates could not possibly
discuss government-owned or controlled corporations which were still non-existent or about whose existence they were unaware.
Section I of Article XII-B, Constitution uses the word "every" to modify the phrase "government-owned or controlled corporation."
"Every" means each one of a group, without exception It means all possible and all taken one by one. Of course, our decision in this
case refers to a corporation created as a government-owned or controlled entity. It does not cover cases involving private firms taken
over by the government in foreclosure or similar proceedings. We reserve judgment on these latter cases when the appropriate
controversy is brought to this Court.
The infirmity of the respondents' position lies in its permitting a circumvention or emasculation of Section 1, Article XII-B of the
Constitution It would be possible for a regular ministry of government to create a host of subsidiary corporations under the Corporation
Code funded by a willing legislature. A government-owned corporation could create several subsidiary corporations. These subsidiary
corporations would enjoy the best of two worlds. Their officials and employees would be privileged individuals, free from the strict
accountability required by the Civil Service Decree and the regulations of the Commission on Audit. Their incomes would not be subject
to the competitive restraints of the open market nor to the terms and conditions of civil service employment.
Conceivably, all government-owned or controlled corporations could be created, no longer by special charters, but through
incorporation under the general law. The constitutional amendment including such corporations in the embrace of the civil service would
cease to have application. Certainly, such a situation cannot be allowed to exist.
WHEREFORE, the petition is hereby GRANTED. The questioned decision of the respondent National Labor Relations Commission is
SET ASIDE. The decision of the Labor Arbiter dismissing the case before it for lack of jurisdiction is REINSTATED.
SO ORDERED.