[G.R. No. L-8967. May 31, 1956.
] “That the practice observed then and now in engaging the services
ANASTACIO VIAÑA, Petitioner, vs. ALEJO AL-LAGADAN
and FILOMENA PIGA, Respondents.
DECISION
CONCEPCION, J.:
Petitioner Anastacio Viaña owned the fishing sailboat
“Magkapatid”, which, in the night of September 3, 1948, sunk in the
waters between the province of Bataan and the island of Corregidor,
as a consequence of a collision with the USS “TINGLES”, a vessel
of the U.S. Navy. Inasmuch as Alejandro Al-Lagadan, a member of
the crew of the “Magkapatid”, disappeared with the craft, his
parents, Respondent Alejo Al-Lagadan and Filomena Piga, filed the
corresponding claim for compensation under Act No. 3428. After
appropriate proceedings, a Referee of the Workmen’s
Compensation Commission rendered a decision, dated February 23,
1953:chanroblesvirtuallawlibrary
“1. Ordering Mr. Anastacio Viaña to pay the above-named
claimants through the Workmen’s Compensation Commission,
Manila, the sum of P1,560 in lump sum with interest at 6 per cent
from September 3, 1948 until fully paid; chan
roblesvirtualawlibraryand.
“To pay the sum of P16 to the Workmen’s Compensation
Commission as costs.”
Said decision was, on petition for review filed by Viaña, affirmed
by the Workmen’s Compensation Commissioner, on or about
October 22, 1954, “with additional fee of P5.00”. Said
Commissioner, having subsequently denied a reconsideration of this
action, Viaña has brought the matter to us, for review by certiorari,
upon the ground that this case does not fall within the purview of
Act No. 3428, because the gross income of his business for the year
1947 was allegedly less than P10,000, and because Alejandro Al-
Lagadan was, at the time of his death, his (Petitioner’s) industrial
partner, not his employee.
The first ground is untenable, Petitioner not having invoked it
before the rendition of the Referee’s decision on February 23, 1953.
The objection to the application of Act No. 3428, upon said ground,
was made for the first time when Petitioner sought a review of said
decision by the Workmen’s Compensation Commissioner. The non-
applicability of said Act to employers whose gross income does not
reach P20,000 is, however, a matter of defense, which cannot be
availed of unless pleaded in the employer’s answer to the claim for
compensation filed by the employee or his heirs. Petitioner herein
having failed to do so, said defense may not now be entertained
(Rolan vs. Perez, 63 Phil., 80, 85-86).
As regards the second ground, Petitioner maintains, contrary to the
finding of the Referee and said Commissioner, that the deceased
was his industrial partner, not employee. In this connection, it is
alleged in paragraph (6) of the petition:chanroblesvirtuallawlibrary
of crewmen of sailboats plying between Mindoro and Manila is on a
partnership basis, to wit:chanroblesvirtuallawlibrary that the owner
of the vessel, on one hand receives one-half of the earnings of the
sailboat after deducting the expenses for the maintenance of the
crew, the other half is divided pro rata among the members of the
crew, the ‘patron’ or captain receiving four parts, the ‘piloto’ or
next in command three parts, the wheelsman or ‘timonel’ 1 1/2 parts
and the rest of the members of the crew one part each, as per Annex
‘B’ hereof.”
It appears that, before rendering his aforementioned decision, the
Referee requested Mr. Manuel O. Morente, an attorney of the
Workmen’s Compensation Commission, “to look into and inquire
and determine the method of and the basis of engaging the services
of crewmen for sailboats (batel) of twenty (20) tons or more plying
between Manila and Mariveles and moored along Manila North
Harbor”, and that, thereafter, said Atty. Morente
reported:chanroblesvirtuallawlibrary
“The basis of engaging the services of crewmen of a batel is
determined in accordance with the contract executed between the
owner and the patron. The contract commonly followed is on a
share basis after deducting all the expenses incurred on the voyage.
One half goes to the owner of the batel and the other half goes to the
patron and the members of the crew and divided among themselves
on a share basis also in accordance with their agreement with the
patron getting the lion’s share. The hiring of the crew is done by the
patron himself. Usually, when a patron enters into a contract with
the owner of the batel, he has a crew ready with him.” (Italics
supplied.)
In sustaining the Referee’s finding to the effect that the deceased
was an employee of Viaña, the Workmen’s Compensation
Commissioner said:chanroblesvirtuallawlibrary
“The trial referee found that there was an employer-employee
relation between the Respondentand the deceased, Alejandro Al-
Lagadan, and the share which the deceased received at the end of
each trip was in the nature of ‘wages’ which is defined under
section 39 of the Compensation Act. This is so because such share
could be reckoned in terms of money. In other words, there existed
the relation of employer and employee between the Respondent and
Alejandro Al-Lagadan at the time of the latter’s death.
“We believe that the trial referee did not err in finding the deceased
an employee of the Respondent. We cite the following cases which
illustrate the point at issue:chanroblesvirtuallawlibrary
‘The officers and crews of whaling and other fishing vessels who
are to receive certain proportions of produce of the voyage in lieu of
wages; chan roblesvirtualawlibrary(Rice vs. Austin, 17 Mass.
206; chan roblesvirtualawlibrary2Y & C. 61); chan
roblesvirtualawlibraryCaptains of merchant ships who, instead of
wages, receive shares in the profits of the adventure; chan
roblesvirtualawlibrary(4 Maule & C. 240); chan
roblesvirtualawlibraryor who take vessels under an agreement to
pay certain charges and receive a share of the earnings; chan
roblesvirtualawlibrary(Tagard vs. Loring, 16 Mass. 336, 8 Am. Dec.
140; chan roblesvirtualawlibraryWinsor vs. Cutts, 7 Greenl. Me.
261) have generally been held not to be partners with
the Respondent, and the like. Running a steamboat on shares does
not make the owners partners in respect to the vessel (The Daniel
Koine, 35 Fed. 785); chan roblesvirtualawlibraryso of an agreement
between two parties to farm on shares; chan
roblesvirtualawlibrary(Hooloway vs. Brinkley, 42 Ga. 226); chan
roblesvirtualawlibraryA seaman who is to receive pay in proportion
to the amount of fish caught is not a partner; chan
roblesvirtualawlibrary(Holdren vs. French, 68 Me. 241); chan
roblesvirtualawlibrarysharing profits in lieu of wages is not a
partnership. There is no true contribution; chan
roblesvirtualawlibrary(Crawford vs. Austin, 34 Md. 49; chan
roblesvirtualawlibraryWhitehill vs. Shickle, 43 Mo. 538; chan
roblesvirtualawlibrarySankey vs. Iron Works, 44 Ga. 228.)’“ (Italics
supplied.)
In other words, in the opinion of the Referee, as well as of said
Commissioner, the mere fact that Alejandro’s share in the
understanding “could be reckoned in terms of money”, sufficed to
characterize him as an employee of Viaña. We do not share this
view. Neither can we accept, however, Petitioner’s theory to the
effect that the deceased was his partner, not an employee, simply
because he (the deceased) shared in the profits, not in the losses. In
determining the existence of employer-employee relationship, the
following elements are generally considered,
namely:chanroblesvirtuallawlibrary (1) the selection and
engagement of the employee; chan roblesvirtualawlibrary(2) the
payment of wages; chan roblesvirtualawlibrary(3) the power of
dismissal; chan roblesvirtualawlibraryand (4) the power to control
the employees’ conduct — although the latter is the most important
element (35 Am. Jur. 445). Assuming that the share received by the
deceased could partake of the nature of wages — on which we need
not, and do not, express our view — and that the second element,
therefore, exists in the case at bar, the record does not contain any
specific data regarding the third and fourth elements.
Upon the other hand, the very allegations of the petition show
otherwise, for Petitioner explicitly averred therein that the deceased
Alejandro Al-Lagadan was his “industrial partner”. This implies
that a contract of partnership existed between them and that,
accordingly, if the crew was selected and engaged by the “patron”,
the latter did so merely as agent or representative
of Petitionerherein. Again, if Petitioner were a partner of the crew
members, then neither the former nor the patron could control or
dismiss the latter.
In the interest of justice and equity, and considering that a decision
on the merits of the issue before us may establish an important
precedent, it would be better to remand the case to the Workmen’s
Compensation Commission for further evidence and findings on the
following questions:chanroblesvirtuallawlibrary (1) who selected
the crew of the “Magkapatid” and engaged their services; chan
roblesvirtualawlibrary(2) if selected and engaged by the “patron”,
did the latter act in his own name and for his own account, or on
behalf and for the account of Viaña; chan roblesvirtualawlibrary(3)
could Viaña have refused to accept any of the crew members chosen
and engaged by the “patron”; chan roblesvirtualawlibrary(4)
did Petitioner have authority to determine the time when, the place
where and/or the manner or conditions in or under which the crew
would work; chan roblesvirtualawlibraryand (5) who could dismiss
its members.
Wherefore, let the case be remanded to the Workmen’s
Compensation Commission, for further proceedings in conformity
with this decision, without special pronouncement as to costs. SO
ORDERED.

With respect to the first element, the facts before us are insufficient
to warrant a reasonable conclusion, one way or the other. On the
one hand, Atty. Morente said, in his aforementioned report, that “the
contract commonly followed is on a share basis cralaw The hiring
of a crew is done by the patron himself. Usually, when a patron
enters into a contract with the owner of the batel, he has a crew
ready with him”. This statement suggests that the members of the
crew are chosen by the patron, seemingly, upon his sole
responsibility and authority. It is noteworthy, however, that said
report referred to a practice commonly and “usually” observed in a
given place. The record is silent on whether such practice had been
followed in the case under consideration. More important still, the
language used in said report may be construed as intimating, not
only that the “patron” selects and engages the crew, but, also, that
the members thereof are subject to his control and may be dismissed
by him. To put it differently, the literal import of said report is open
to the conclusion that the crew has a contractual relation, not with
the owner of the vessel, but with the patron, and that the latter, not
the former, is either their employer or their partner.
G.R. No. L-28280-81 November 28, 1969
GERONIMO DE LOS REYES, petitioner,
vs.
GREGORIO ESPINELI, RUPERTO ALCANTARA, JORGE
LOBREN, PEDRO AMANTE, MATEO GUTIERREZ,
ISIDRO RAMOS, SANTOS DANGUE, MIGUEL RAMOS,
CORNELIO GARCIA, MARGARITO BELARMINO,
IRENEO BATRALO, SIMPLICIO CASTRO, VICENTE
ANIVES, MIGUEL HERNANDEZ, EUGENIO DALISAY,
LEON LACSAMANA, and BELEN ALVAREZ, respondents.
Luis A. L. Javellana and Yolanda Q. Javellana for petitioner.
Manuel A. Cordero for respondents.
CASTRO, J.:
Petition for review of the decision of the Court of Appeals in C.A.-
G.R. No. 37689-R and C.A.-G.R. No. 37690-R modifying that of
the Court of Agrarian Relations in CAR cases 1185 and 1186.
The petitioner Geronimo de los Reyes is the owner of a 200-hectare
coconut plantation located in Calauan, Laguna. In 1958 his overseer
("katiwala") therein was Gonzalo Belarmino, who took into the land
the 17 respondents under an agreement that the latter were to
receive 1/7 portion of every coconut harvest. Sometime in October,
1962, the petitioner dismissed Belarmino, upon the suspicion that
the latter had been deceiving him, in connivance with the
respondents.
On March 2, 1963 Ruperto Alcantara, et al., and Gregorio Espineli
(respondents here) filed separate petitions (subsequently amended)
against De los Reyes in the Court of Agrarian Relations, seeking the
delivery to them of the difference between the 1/7 share which the
petitioner had been giving them and the 30% share to which they, as
share tenants, were allegedly entitled. Upon the finding that the
respondents were mere agricultural workers of the petitioner, the
CAR ordered the latter to retain them as such and to pay them the
sum of P4,559.07 "which is the total of their unpaid share of 1/7 of
the net coconut harvests for the period from September 13 to
December 23, 1962 and February 25 to May 28, 1963," plus P500
as attorney's fees. Upon respondents' appeal, the Court of Appeals
modified the decision of the CAR, by declaring the respondents
tenants of the petitioner and ordering the latter to pay them "the
difference between the one-seventh (1/7) share of the crops and the
thirty (30%) per cent provided for in the Tenancy Law from the year
1958 up to the filing of the petitions and so on; the resulting amount
for this purpose to be arrived at in a liquidation to be submitted, if
and when this judgment shall have become final and the record
remanded to the lower court."
Basically, the petitioner contends that (1) there existed no
contractual relationship between him and the respondents; (2) the
respondents were not his tenants; and (3) the decision of the Court
of Appeals deprives him of his property without due process of law.
The respondents attempted to have the present appeal dismissed on
the ground that it involves questions of fact. If indeed the issues
posed by the petitioner necessarily invite calibration of the entire
evidence,1 then the appeal should be dismissed since issues only of
law may be raised in an appeal from the Court of Appeals to this
Court.2 It seems to us clear, however, that the petitioner accepts the
findings of fact made by the appellate court, but takes exception to
the conclusions drawn therefrom. Such being the case, the questions
here tendered for resolution are purely of law. 3
At the outset, we must resolve the question of existence of a
contract, the petitioner alleging, as he does, that his consent, express
or implied, had never been given. His position, simply stated, is that
at the time the respondents were taken into his land by Belarmino,
the latter was a mere laborer and therefore without the requisite
authority to contract in his behalf, and it was only later that he was
promoted to the position of overseer. However, in his "Amended
Complaint" of April 22, 1968,4 the petitioner prayed that "judgment
be rendered ... finding the defendants guilty of a breach of their
contractual obligation with the plaintiff," and in the body thereof he
incorporated statements from which it can plainly be seen that a
contractual relationship existed between the parties.
Verily, there was and still is a contractual relationship between the
petitioner and the respondents. In our view the pith of the problem
is, actually, whether the relationship is that of agricultural share
tenancy (as averred by the respondents) or that of farm employer
and agricultural laborer (as asserted by the petitioner). On a
determination of this question depends the respective rights of the
parties, more particularly the proper assessment of the share of the
respondents under the law.
Of fundamental relevance in this discussion are definitions of basic
terms.
"Agricultural tenancy" is the physical possession by a person of
land devoted to agriculture belonging to, or legally possessed by,
another for the purpose of production through the labor of the
former and of the members of his immediate farm household, in
consideration of which the former agrees to share the harvest with
the latter, or to pay a price certain or ascertainable, either in produce
or in money, or in both.5 "Share tenancy" exists whenever two
persons agree on a joint undertaking for agricultural production
wherein one party furnishes the land and the other his labor, with
either or both contributing any one or several of the items of
production, the tenant cultivating the land personally with the aid of
labor available from members of his immediate farm household, and
the produce thereof to be divided between the landholder and the
tenant in proportion to their respective contributions. 6 And a "share
tenant" is a person who, himself and with the aid available from
within his immediate farm household, cultivates the land belonging
to or possessed by another, with the latter's consent, for purposes of
production, sharing the produce with the landholder." 7
It is to be readily deduced from the foregoing definitions that aside
from the usual essential requisites of a contract,8the characteristics
of a share tenancy contract are: (1) the parties are a landholder, who
is a natural or juridical person and is the owner, lessee, usufructuary
or legal possessor of agricultural land,9 and a tenant who, himself
and with the aid available from within his immediate farm
household, cultivates the land which is the subject-matter of the
tenancy; (2) the subject-matter is agricultural land; (3) the purpose
of the contract is agricultural production; and (4) the cause or
consideration is that the landholder and the share tenant would
divide the agricultural produce between themselves in proportion to
their respective contributions.
While the Agricultural Tenancy Act did not define the term
"agricultural laborer" or "agricultural worker," the Agricultural
Land Reform Code does. A "farm worker" is "any agricultural
wage, salary or piece worker but is not limited to a farm worker of a
particular farm employer unless this Code explicitly states
otherwise, and any individual whose work has ceased as a
consequence of, or in connection with, a current agrarian dispute or
an unfair labor practice and who has not obtained a substantially
equivalent and regular employment." The term includes "farm
laborer and/or farm employees." 10 An "agricultural worker" is not a
whit different from a "farm worker."
From the definition of a "farm worker" thus fashioned, it is quite
apparent that there should be an employer-employee relationship
between the "farm employer"11 and the farm worker. In determining
the existence of an employer-employee relationship, the elements
that are generally considered are the following: (1) the selection and
engagement of the employee; (2) the payment of wages; (3) the
power of dismissal; and (4) the employer's power to control the
employee's conduct. It is this last element that constitutes the most
important index of the existence of relationship. 12
This is not to say that agricultural workers or farm laborers are
industrial workers. Not by any means, although they may both
appear in the same establishment. The difference lies in the kind of
work they do. Those whose labor is devoted to purely agricultural
work are agricultural laborers. All others are industrial
workers.13 Nonetheless, they belong to the same class. Both are
workers. Both are employees.
We are here primarily interested in the basic differences between a
farm employer-farm worker relationship and an agricultural
sharehold tenancy relationship. Both, of course, are leases, but there
the similarity ends. In the former, the lease is one of labor, with the
agricultural laborer as the lessor of his services, and the farm
employer as the lessee thereof.14 In the latter, it is the landowner
who is the lessor, and the sharehold tenant is the lessee of
agricultural land. As lessee he has possession of the leased
premises.15 But the relationship is more than a mere lease. It is a
special kind of lease, the law referring to it as a "joint
undertaking."16 For this reason, not only the tenancy laws are
applicable, but also, in a suppletory way, the law on leases, the
customs of the place and the civil code provisions on
partnership.17 The share tenant works for that joint venture. The
agricultural laborer works for the farm employer, and for his labor
he receives a salary or wage, regardless of whether the employer
makes a profit.18 On the other hand, the share tenant participates in
the agricultural produce. His share is necessarily dependent on the
amount of the harvest.
Since the relationship between farm employer and agricultural
laborer is that of employer and employee, the decisive factor is the
control exercised by the former over the latter. On the other hand,
the landholder has the "right to require the tenant to follow those
proven farm practices which have been found to contribute towards
increased agricultural production and to use fertilizer of the kind or
kinds shown by proven farm practices to be adapted to the
requirements of the land." This is but the right of a partner to protect
his interest, not the control exercised by an employer. If landholder
and tenant disagree as to farm practices, the former may not dismiss
the latter. It is the court that shall settle the conflict according to the
best interests of both parties.19
The record is devoid of evidentiary support for the notion that the
respondents are farm laborers. They do not observe set hours of
work. The petitioner has not laid down regulations under which they
are supposed to do their work. The argument tendered is that they
are guards. However, it does not appear that they are under
obligation to report for duty to the petitioner or his agent. They do
not work in shifts. Nor has the petitioner prescribed the manner by
which the respondents were and are to perform their duties as
guards. We do not find here that degree of control and supervision
evincive of an employer-employee relationship. Furthermore, if the
respondents are guards, then they are not agricultural laborers,
because the duties and functions of a guard are not agricultural in
nature.20 It is the Industrial Court that has jurisdiction over any
dispute that might arise between employer and employee. Yet, the
petitioner filed his complaint against the respondents in the Court of
Agrarian Relations.
We now proceed to determine if there are present here the salient
characteristics of an agricultural share tenancy contract. The
subject-matter is coconut land, which is considered agricultural land
under both the Agricultural Land Tenancy ACT 21 and the
Agricultural Land Reform Code.22 The purpose of the contract is the
production of coconuts; the respondents would receive 1/7 of the
harvest. The petitioner is the landholder of the coconut plantation.
The crucial factors are that the tenant must have physical possession
of the land for the purpose of production23and he must personally
cultivate the land. If the tenant does not cultivate the land personally
he cannot be considered a tenant even if he is so designated in the
written agreement of the parties.24
"Cultivation" is not limited to the plowing and harrowing of the
land. It includes the various phrases of farm labor described and
provided by law, the maintenance, repair and weeding of dikes,
paddies and irrigation canals in the holding. Moreover, it covers
attending to the care of the growing plants.25 Where the parties
agreed that they would "operate a citrus nursery upon the condition
that they would divide the budded citrus in the proportion of 1/3
share of respondents and 2/3 as share of petitioner," and that the
"petitioner would furnish all the necessary seedlings and seeds, as
well as the technical know-how in the care, cultivation, budding and
balling of the budded citrus, while respondents would furnish the
land necessary for the nursery, the farm labor that may be needed to
plant and cultivate, and all the chemicals, fertilizers, and bud tapes
that may be necessary for such cultivation," then "the tenancy
agreement entered into between the parties has relation to the
possession of agricultural land to be devoted to the production of
agricultural products thru the labor of one of the parties, and as such
comes within the purview of the term 'agricultural tenancy' as
defined in section 3 of Republic Act No. 1199 as amended." 26
27
In one instance, the landholder claimed that his caretaker was not
an agricultural tenant because he "does not till or cultivate the land
in order to grow the fruit bearing trees because they are already full
grown," and "he does not even do the actual gathering of the fruits"
but "merely supervises the gathering, and after deducting the
expenses, he gives one-half of the fruits to plaintiff all in
consideration of his stay in the land." This Court's answer was to the
point:
Anyone who has had fruit trees in his yard will disagree with the
above description of the relationship. He knows the caretaker, must
water the trees, even fertilize them for better production, uproot
weeds and turn the soil, sometimes fumigate to eliminate plant
pests, etc. Those chores obviously mean "working or cultivating"
the land. Besides, it seems that defendant planted other crops, [i.e.,
cultivated the lot] giving the landowner his corresponding share.
The Court of Appeals made some essential findings of fact. The
respondents were called "kasama." They have plowing implements.
The respondent Pedro Amante even used to have a carabao which
he subsequently exchanged for a horse. Almost all of the
respondents have banana plantations on the land. They live in the
landholding. They are charge with the obligation to clean their
respective landholdings. Certain portions of the land are planted to
palay.
These factual findings may not be reviewed by the Supreme
Court.28 Furthermore, the said facts are supported by the testimony
of the petitioner himself, who admitted that the respondents are his
"kasama," although he tried to minimize the effect of this admission
by alleging that although called "kasama," the respondents "do not
perform the work of a "kasama," and that in Quezon the "kasama"
plow the land, they plant rice, but here in Laguna, they do not do
anything." The appellate court was correct in concluding that
"kasama" means "tenant,"29 not worker or laborer, which is
translated into our national language as
"manggagawa."30 Respecting farm implements, the petitioner
admitted that "they have the implements," but again he tried to
minimize the significance of his statement by adding that "they have
not used it in the farm." However, the report of the CAR clerk of
court, based on his ocular inspection, pertinently states that he found
"certain portions planted with palay."
The petitioner cannot deny that the respondents were all living in
the landholding and that "all of them have banana plantation, small
or big, "though he averred," not one single banana was given to me
as my share."
We now come to the all-important question of whether the
respondents have the duty to cultivate the land in order that the trees
would bear more coconuts. The petitioner's answers on cross-
examination are quite revealing. Thus:
Q. Where these petitioners duty bound to do any cleaning or
clearing of the underbrush within the coconut land?
A. These laborers clean the land from where . . . They are
getting their food and subsistence.
COURT: The question is that, are they duty bound to clean the
landholding in question?
A. To make my answer short, I say that the responsibility is to
Gonzalo Belarmino, to him, because he is the one who engaged
them.
xxx xxx xxx
A. One, to guard the property and use their names as threat to
people who might ... have the intention of stealing my coconuts, and
two, to assist in the clearing of the land because that is the
responsibility of Gonzalo Belarmino. . . . 31
Undeniably, the petitioner considers it one of the duties of the
respondents to clear and clean the land. Additionally, in his
complaint the petitioner claimed that "the defendants have
abandoned their posts at the plaintiff's plantation and have likewise
failed and refused to comply with their contractual obligation with
the plaintiff to keep the areas respectively assigned to them clean
and clear of undergrowths and cogonal grass at all times, with the
result that it is now impossible for the plaintiff to harvest the mature
coconuts as these would only be lost amid the undergrowth and
cogonal which have now grown to unreasonable heights, thereby
causing further damage and prejudice to the plaintiff." (Emphasis
supplied).
The petitioner clearly expected the respondents to perform the
duties of a tenant, especially, to maintain the land clean and clear
"at all times," which not only would facilitate harvesting but, more
importantly, would necessarily result in greater production. As
found by the CAR clerk of court during the ocular inspection,
the planting of palay has a direct effect on the growing of the
coconuts because in the places he found planted with palay, the
coconut trees displayed white leaves gray in color with plenty of
nuts or fruits, compared to the portion in the hacienda where we
encountered cogon grasses, under brushes and ipil-ipil tress, there is
a need for thorough cleaning, especially the ipil-ipil trees which are
growing high for years already in-between the rows of coconut
trees.32
Therefore, the parties to the contract understood, in sum and
substance, that the respondents were to "cultivate" the land.
Whether the latter had been remiss in the performance of their
contractual obligations, does not affect the nature of the contract
which the appellate court analyzed and found to be that of share
tenancy. It is the principal features and stipulations which determine
the true essence of a contract.33 Considering then that the
respondents are duty bound to cultivate their respective holdings (of
which they have possession), and that they share in the harvest, the
Court of Appeals' conclusion must be upheld. This, especially in the
light of the facts that the respondents raise secondary crops and
have their homes in their respective holdings.
The petitioner having entered into a share tenancy contract with the
respondents, it certainly cannot be seriously claimed that the
relationship of landlord and tenant is unjustifiably being imposed on
him without due process of law. It was the petitioner himself who
voluntarily entered the relationship, and, therefore, should shoulder
the consequences thereof, one of which is that the tenants must be
given, as they are entitled to, a 30% share in the produce. 34
ACCORDINGLY, the decision appealed from is affirmed, at
petitioner's cost.
G.R. No. 87700 June 13, 1990
SAN MIGUEL CORPORATION EMPLOYEES UNION-
PTGWO, DANIEL S.L. BORBON II, HERMINIA REYES,
MARCELA PURIFICACION, ET AL., petitioners,
vs.
HON. JESUS G. BERSAMIRA, IN HIS CAPACITY AS
PRESIDING JUDGE OF BRANCH 166, RTC, PASIG, and
SAN MIGUEL CORPORATION, respondents.
Romeo C. Lagman for petitioners.
Jardeleza, Sobrevinas, Diaz, Mayudini & Bodegon for respondents.
MELENCIO-HERRERA, J.:
Respondent Judge of the Regional Trial Court of Pasig, Branch 166,
is taken to task by petitioners in this special civil action for
certiorari and Prohibition for having issued the challenged Writ of
Preliminary Injunction on 29 March 1989 in Civil Case No. 57055
of his Court entitled "San Miguel Corporation vs. SMCEU-
PTGWO, et als."
Petitioners' plea is that said Writ was issued without or in excess of
jurisdiction and with grave abuse of discretion, a labor dispute being
involved. Private respondent San Miguel Corporation (SanMig. for
short), for its part, defends the Writ on the ground of absence of any
employer-employee relationship between it and the contractual
workers employed by the companies Lipercon Services, Inc.
(Lipercon) and D'Rite Service Enterprises (D'Rite), besides the fact
that the Union is bereft of personality to represent said workers for
purposes of collective bargaining. The Solicitor General agrees with
the position of SanMig.
The antecedents of the controversy reveal that:
Sometime in 1983 and 1984, SanMig entered into contracts for
merchandising services with Lipercon and D'Rite (Annexes K and I,
SanMig's Comment, respectively). These companies are
independent contractors duly licensed by the Department of Labor
and Employment (DOLE). SanMig entered into those contracts to
maintain its competitive position and in keeping with the
imperatives of efficiency, business expansion and diversity of its
operation. In said contracts, it was expressly understood and agreed
that the workers employed by the contractors were to be paid by the
latter and that none of them were to be deemed employees or agents
of SanMig. There was to be no employer-employee relation
between the contractors and/or its workers, on the one hand, and
SanMig on the other.
Petitioner San Miguel Corporation Employees Union-PTWGO (the
Union, for brevity) is the duly authorized representative of the
monthly paid rank-and-file employees of SanMig with whom the
latter executed a Collective Bargaining Agreement (CBA) effective
1 July 1986 to 30 June 1989 (Annex A, SanMig's Comment).
Section 1 of their CBA specifically provides that "temporary,
probationary, or contract employees and workers are excluded from
the bargaining unit and, therefore, outside the scope of this
Agreement."
In a letter, dated 20 November 1988 (Annex C, Petition), the Union
advised SanMig that some Lipercon and D'Rite workers had signed
up for union membership and sought the regularization of their
employment with SMC. The Union alleged that this group of
employees, while appearing to be contractual workers supposedly
independent contractors, have been continuously working for
SanMig for a period ranging from six (6) months to fifteen (15)
years and that their work is neither casual nor seasonal as they are
performing work or activities necessary or desirable in the usual
business or trade of SanMig. Thus, it was contended that there
exists a "labor-only" contracting situation. It was then demanded
that the employment status of these workers be regularized.
On 12 January 1989 on the ground that it had failed to receive any
favorable response from SanMig, the Union filed a notice of strike
for unfair labor practice, CBA violations, and union busting (Annex
D, Petition).
On 30 January 1989, the Union again filed a second notice of strike
for unfair labor practice (Annex F, Petition).
As in the first notice of strike. Conciliatory meetings were held on
the second notice. Subsequently, the two (2) notices of strike were
consolidated and several conciliation conferences were held to settle
the dispute before the National Conciliation and Mediation Board
(NCMB) of DOLE (Annex G, Petition).
Beginning 14 February 1989 until 2 March 1989, series of pickets
were staged by Lipercon and D'Rite workers in various SMC plants
and offices.
On 6 March 1989, SMC filed a verified Complaint for Injunction
and Damages before respondent Court to enjoin the Union from:
a. representing and/or acting for and in behalf of the employees of
LIPERCON and/or D'RITE for the purposes of collective
bargaining;
b. calling for and holding a strike vote, to compel plaintiff to hire
the employees or workers of LIPERCON and D'RITE;
c. inciting, instigating and/or inducing the employees or workers of
LIPERCON and D'RITE to demonstrate and/or picket at the plants
and offices of plaintiff within the bargaining unit referred to in the
CBA,...;
d. staging a strike to compel plaintiff to hire the employees or
workers of LIPERCON and D'RITE;
e. using the employees or workers of LIPERCON AND D'RITE to
man the strike area and/or picket lines and/or barricades which the
defendants may set up at the plants and offices of plaintiff within
the bargaining unit referred to in the CBA ...;
f. intimidating, threatening with bodily harm and/or molesting the
other employees and/or contract workers of plaintiff, as well as
those persons lawfully transacting business with plaintiff at the
work places within the bargaining unit referred to in the CBA, ..., to
compel plaintiff to hire the employees or workers of LIPERCON
and D'RITE;
g. blocking, preventing, prohibiting, obstructing and/or impeding
the free ingress to, and egress from, the work places within the
bargaining unit referred to in the CBA .., to compel plaintiff to hire
the employees or workers of LIPERCON and D'RITE;
h. preventing and/or disrupting the peaceful and normal operation of
plaintiff at the work places within the bargaining unit referred to in
the CBA, Annex 'C' hereof, to compel plaintiff to hire the
employees or workers of LIPERCON and D'RITE. (Annex H,
Petition)
Respondent Court found the Complaint sufficient in form and
substance and issued a Temporary Restraining Order for the
purpose of maintaining the status quo, and set the application for
Injunction for hearing.
In the meantime, on 13 March 1989, the Union filed a Motion to
Dismiss SanMig's Complaint on the ground of lack of jurisdiction
over the case/nature of the action, which motion was opposed by
SanMig. That Motion was denied by respondent Judge in an Order
dated 11 April 1989.
After several hearings on SanMig's application for injunctive relief,
where the parties presented both testimonial and documentary
evidence on 25 March 1989, respondent Court issued the questioned
Order (Annex A, Petition) granting the application and enjoining the
Union from Committing the acts complained of, supra.
Accordingly, on 29 March 1989, respondent Court issued the
corresponding Writ of Preliminary Injunction after SanMig had
posted the required bond of P100,000.00 to answer for whatever
damages petitioners may sustain by reason thereof.
In issuing the Injunction, respondent Court rationalized:
The absence of employer-employee relationship negates the
existence of labor dispute. Verily, this court has jurisdiction to take
cognizance of plaintiff's grievance.
The evidence so far presented indicates that plaintiff has contracts
for services with Lipercon and D'Rite. The application and contract
for employment of the defendants' witnesses are either with
Lipercon or D'Rite. What could be discerned is that there is no
employer-employee relationship between plaintiff and the
contractual workers employed by Lipercon and D'Rite. This,
however, does not mean that a final determination regarding the
question of the existence of employer-employee relationship has
already been made. To finally resolve this dispute, the court must
extensively consider and delve into the manner of selection and
engagement of the putative employee; the mode of payment of
wages; the presence or absence of a power of dismissal; and the
Presence or absence of a power to control the putative employee's
conduct. This necessitates a full-blown trial. If the acts complained
of are not restrained, plaintiff would, undoubtedly, suffer irreparable
damages. Upon the other hand, a writ of injunction does not
necessarily expose defendants to irreparable damages.
Evidently, plaintiff has established its right to the relief demanded.
(p. 21, Rollo)
Anchored on grave abuse of discretion, petitioners are now before
us seeking nullification of the challenged Writ. On 24 April 1989,
we issued a Temporary Restraining Order enjoining the
implementation of the Injunction issued by respondent Court. The
Union construed this to mean that "we can now strike," which it
superimposed on the Order and widely circulated to entice the
Union membership to go on strike. Upon being apprised thereof, in
a Resolution of 24 May 1989, we required the parties to
"RESTORE the status quo ante declaration of strike" (p. 2,62
Rollo).
In the meantime, however, or on 2 May 1989, the Union went on
strike. Apparently, some of the contractual workers of Lipercon and
D'Rite had been laid off. The strike adversely affected thirteen (13)
of the latter's plants and offices.
On 3 May 1989, the National Conciliation and Mediation Board
(NCMB) called the parties to conciliation. The Union stated that it
would lift the strike if the thirty (30) Lipercon and D'Rite employees
were recalled, and discussion on their other demands, such as wage
distortion and appointment of coordinators, were made. Effected
eventually was a Memorandum of Agreement between SanMig and
the Union that "without prejudice to the outcome of G.R. No. 87700
(this case) and Civil Case No. 57055 (the case below), the laid-off
individuals ... shall be recalled effective 8 May 1989 to their former
jobs or equivalent positions under the same terms and conditions
prior to "lay-off" (Annex 15, SanMig Comment). In turn, the Union
would immediately lift the pickets and return to work.
After an exchange of pleadings, this Court, on 12 October 1989,
gave due course to the Petition and required the parties to submit
their memoranda simultaneously, the last of which was filed on 9
January 1990.
The focal issue for determination is whether or not respondent Court
correctly assumed jurisdiction over the present controversy and
properly issued the Writ of Preliminary Injunction to the resolution
of that question, is the matter of whether, or not the case at bar
involves, or is in connection with, or relates to a labor dispute. An
affirmative answer would bring the case within the original and
exclusive jurisdiction of labor tribunals to the exclusion of the
regular Courts.
Petitioners take the position that 'it is beyond dispute that the
controversy in the court a quo involves or arose out of a labor
dispute and is directly connected or interwoven with the cases
pending with the NCMB-DOLE, and is thus beyond the ambit of the
public respondent's jurisdiction. That the acts complained of (i.e.,
the mass concerted action of picketing and the reliefs prayed for by
the private respondent) are within the competence of labor tribunals,
is beyond question" (pp. 6-7, Petitioners' Memo).
On the other hand, SanMig denies the existence of any employer-
employee relationship and consequently of any labor dispute
between itself and the Union. SanMig submits, in particular, that
"respondent Court is vested with jurisdiction and judicial
competence to enjoin the specific type of strike staged by petitioner
union and its officers herein complained of," for the reasons that:
A. The exclusive bargaining representative of an employer unit
cannot strike to compel the employer to hire and thereby create an
employment relationship with contractual workers, especially were
the contractual workers were recognized by the union, under the
governing collective bargaining agreement, as excluded from, and
therefore strangers to, the bargaining unit.
B. A strike is a coercive economic weapon granted the bargaining
representative only in the event of a deadlock in a labor dispute over
'wages, hours of work and all other and of the employment' of the
employees in the unit. The union leaders cannot instigate a strike to
compel the employer, especially on the eve of certification
elections, to hire strangers or workers outside the unit, in the hope
the latter will help re-elect them.
C. Civil courts have the jurisdiction to enjoin the above because this
specie of strike does not arise out of a labor dispute, is an abuse of
right, and violates the employer's constitutional liberty to hire or not
to hire. (SanMig's Memorandum, pp. 475-476, Rollo).
We find the Petition of a meritorious character.
A "labor dispute" as defined in Article 212 (1) of the Labor Code
includes "any controversy or matter concerning terms and
conditions of employment or the association or representation of
persons in negotiating, fixing, maintaining, changing, or arranging
the terms and conditions of employment, regardless of whether the
disputants stand in the proximate relation of employer and
employee."
While it is SanMig's submission that no employer-employee
relationship exists between itself, on the one hand, and the
contractual workers of Lipercon and D'Rite on the other, a labor
dispute can nevertheless exist "regardless of whether the disputants
stand in the proximate relationship of employer and employee"
(Article 212 [1], Labor Code, supra) provided the controversy
concerns, among others, the terms and conditions of employment or
a "change" or "arrangement" thereof (ibid). Put differently, and as
defined by law, the existence of a labor dispute is not negative by
the fact that the plaintiffs and defendants do not stand in the
proximate relation of employer and employee.
That a labor dispute, as defined by the law, does exist herein is
evident. At bottom, what the Union seeks is to regularize the status
of the employees contracted by Lipercon and D'Rite in effect, that
they be absorbed into the working unit of SanMig. This matter
definitely dwells on the working relationship between said
employees vis-a-vis SanMig. Terms, tenure and conditions of their
employment and the arrangement of those terms are thus involved
bringing the matter within the purview of a labor dispute. Further,
the Union also seeks to represent those workers, who have signed
up for Union membership, for the purpose of collective bargaining.
SanMig, for its part, resists that Union demand on the ground that
there is no employer-employee relationship between it and those
workers and because the demand violates the terms of their CBA.
Obvious then is that representation and association, for the purpose
of negotiating the conditions of employment are also involved. In
fact, the injunction sought by SanMig was precisely also to prevent
such representation. Again, the matter of representation falls within
the scope of a labor dispute. Neither can it be denied that the
controversy below is directly connected with the labor dispute
already taken cognizance of by the NCMB-DOLE (NCMB-NCR-
NS-01- 021-89; NCMB NCR NS-01-093-83).
Whether or not the Union demands are valid; whether or not
SanMig's contracts with Lipercon and D'Rite constitute "labor-only"
contracting and, therefore, a regular employer-employee
relationship may, in fact, be said to exist; whether or not the Union
can lawfully represent the workers of Lipercon and D'Rite in their
demands against SanMig in the light of the existing CBA; whether
or not the notice of strike was valid and the strike itself legal when it
was allegedly instigated to compel the employer to hire strangers
outside the working unit; — those are issues the resolution of which
call for the application of labor laws, and SanMig's cause's of action
in the Court below are inextricably linked with those issues.
The precedent in Layno vs. de la Cruz (G.R. No. L-29636, 30 April
1965, 13 SCRA 738) relied upon by SanMig is not controlling as in
that case there was no controversy over terms, tenure or conditions,
of employment or the representation of employees that called for the
application of labor laws. In that case, what the petitioning union
demanded was not a change in working terms and conditions, or the
representation of the employees, but that its members be hired as
stevedores in the place of the members of a rival union, which
petitioners wanted discharged notwithstanding the existing contract
of the arrastre company with the latter union. Hence, the ruling
therein, on the basis of those facts unique to that case, that such a
demand could hardly be considered a labor dispute.
As the case is indisputably linked with a labor dispute, jurisdiction
belongs to the labor tribunals. As explicitly provided for in Article
217 of the Labor Code, prior to its amendment by R.A. No. 6715 on
21 March 1989, since the suit below was instituted on 6 March
1989, Labor Arbiters have original and exclusive jurisdiction to hear
and decide the following cases involving all workers including "1.
unfair labor practice cases; 2. those that workers may file involving
wages, hours of work and other terms and conditions of
employment; ... and 5. cases arising from any violation of Article
265 of this Code, including questions involving the legality of
striker and lockouts. ..." Article 217 lays down the plain command
of the law.

The claim of SanMig that the action below is for damages under
Articles 19, 20 and 21 of the Civil Code would not suffice to keep
the case within the jurisdictional boundaries of regular Courts. That
claim for damages is interwoven with a labor dispute existing
between the parties and would have to be ventilated before the
administrative machinery established for the expeditious settlement
of those disputes. To allow the action filed below to prosper would
bring about "split jurisdiction" which is obnoxious to the orderly
administration of justice (Philippine Communications, Electronics
and Electricity Workers Federation vs. Hon. Nolasco, L-24984, 29
July 1968, 24 SCRA 321).

We recognize the proprietary right of SanMig to exercise an

inherent management prerogative and its best business judgment to
determine whether it should contract out the performance of some
of its work to independent contractors. However, the rights of all
workers to self-organization, collective bargaining and negotiations,
and peaceful concerted activities, including the right to strike in
accordance with law (Section 3, Article XIII, 1987 Constitution)
equally call for recognition and protection. Those contending
interests must be placed in proper perspective and equilibrium.

WHEREFORE, the Writ of certiorari is GRANTED and the Orders

of respondent Judge of 25 March 1989 and 29 March 1989 are SET
ASIDE. The Writ of Prohibition is GRANTED and respondent
Judge is enjoined from taking any further action in Civil Case No.
57055 except for the purpose of dismissing it. The status quo ante
declaration of strike ordered by the Court on 24 May 1989 shall be
observed pending the proceedings in the National Conciliation
Mediation Board-Department of Labor and Employment, docketed
as NCMB-NCR-NS-01-02189 and NCMB-NCR-NS-01-093-83. No
costs.

SO ORDERED.
G.R. No. 106231 November 16, 1994
HAWAIIAN-PHILIPPINE COMPANY, petitioner,
vs.
REYNALDO J. GULMATICO, Labor Arbiter, Regional
Arbitration Branch No. VI, AND NATIONAL FEDERATION
OF SUGAR WORKERS-FOOD AND GENERAL TRADES
representing all the sugar farm workers of the HAWAIIAN
PHILIPPINE MILLING DISTRICT, respondents.
Angara, Abella, Concepcion, Regala & Cruz for petitioner.
Manlapao, Ymballa and Chaves for private respondent.
BIDIN, J.:
This petition for certiorari and prohibition with preliminary
injunction seeks to annul the Order dated June 29, 1992 issued by
public respondent Labor Arbiter Reynaldo J. Gulmatico denying
petitioner's motion for "Claims on R.A. 809" in RAB VI Case No.
06-07-10256-89, the dispositive portion of which reads, in part:
WHEREFORE, premises considered, the motion to dismiss dated
July 31, 1989 and the supplement thereto dated September 19, 1989
filed by respondent company together with the motion to dismiss
filed by respondent Ramon Jison dated August 27, 1990 and
Francisco Jison dated September 20, 1990, respectively, are hereby
DENIED.
xxx xxx xxx
(Rollo, p. 59)
The antecedent facts are as follows:
On July 4, 1989, respondent union, the National Federation of Sugar
Workers-Food and General Trades (NFSW-FGT) filed RAB VI
Case No. 06-07-10256-89 against herein petitioner Hawaiian-
Philippine Company for claims under Republic Act 809 (The Sugar
Act of 1952). Respondent union claimed that the sugar farm
workers within petitioner's milling district have never availed of the
benefits due them under the law.
Under Section 9 of R.A 809, otherwise known as the Sugar Act of
1952, it is provided, to wit:
Sec. 9. In addition to the benefits granted by the Minimum Wage
Law, the proceeds of any increase in participation granted to
planters under this Act and above their present share shall be
divided between the planter and his laborers in the following
proportions;
Sixty per centum of the increase participation for the laborers and
forty per centum for the planters. The distribution of the share
corresponding to the laborers shall be made under the supervision of
the Department of Labor.
xxx xxx xxx
(Emphasis supplied.)
On July 31, 1989, petitioner filed a "Motion to Dismiss," followed
by a "Supplemental Motion to Dismiss" on September 19, 1989.
Petitioner contended that public respondent Labor Arbiter has no
jurisdiction to entertain and resolve the case, and that respondent
union has no cause of action against petitioner.
On August 23, 1989, respondent union filed an "Opposition to
Motion to Dismiss."
On October 3,1989, petitioner applied a "Reply to Opposition"
followed by a "Citation of Authorities in Support of Motion to
Dismiss."
On December 20, 1989, respondent union filed an amended
complaint additionally impleading as complainants Efren Elaco,
Bienvenido Gulmatico, Alberto Amacio, Narciso Vasquez, Mario
Casociano and all the other farm workers of the sugar planters
milling with petitioner from 1979 up to the present, and as
respondents, Jose Maria Regalado, Ramon Jison, Rolly Hernaez,
Rodolfo Gamboa, Francisco Jison and all other sugar planters
milling their canes with petitioner from 1979 up to the present.
On August 27, 1990, Ramon Jison, one of the respondents
impleaded in the amended complaint, filed a "Motion to Dismiss
and/or to Include Necessary Parties," praying for the inclusion as
co-respondents of the Asociacion de Hacenderos de Silan-Saravia,
Inc. and the Associate Planters of Silay-Saravia, Inc.
On June 29, 1992, public respondent promulgated the assailed
Order denying petitioner's Motion to Dismiss and Supplemental
Motion to Dismiss.
Hence, this petition filed by Hawaiian-Philippine Company.
Petitioner reasserts the two lesson earlier raised in its Motion to
Dismiss which public respondent unfavorably resolved in the
assailed Order.
These two issues are first, whether public respondent Labor Arbiter
has jurisdiction to hear and decide the case against petitioner; and
the second, whether respondent union and/or the farm workers
represented by it have a cause of action against petitioner.
Petitioner contends that the complaint filed against it cannot be
categorized under any of the cases falling within the jurisdiction of
the Labor Arbiter as enumerated in Article 217 of the Labor Code,
as amended, considering that no employer-employee relationship
exists between petitioner milling company and the farm workers
represented by respondent union. Article 217 of the Labor Code
provides:
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;
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;
and
6. Except claims for employees' compensation, social security,
medicare from 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), whether or not accompanied with a
claim for reinstatement. (Emphasis supplies)
In support of the contention that the Labor Arbiter has no
jurisdiction to hear and decide the case against petitioner, the latter
cites the ruling in San Miguel Corporation vs. NLRC, 161 SCRA
719 [1988], wherein it was held that a single unifying element runs
through the cases and disputes falling under the jurisdiction of the
Labor Arbiter and that is that all the enumerated cases and disputes
arise out of or are in connection with an employer-employee
relationship, or some aspect or incident of such relationship.
Likewise, in Federation of Free Farmers vs. Court of Appeals, 107
SCRA 411 [1981], this Court held that:
. . . . From the beginning of the sugar industry, the centrals have
never had any privity with the plantation laborers, since they had
their own laborers to take care of. . . . Nowhere in Republic Act 809
(the Sugar Act of 1952) can we find anything that creates any
relationship between the laborers of the planters and the centrals. . .
.
. . . Under no principle of law or equity can we impose on the
central . . . any liability to the plantation laborers. . . . (Emphasis
supplied)
On the strength of the aforecited authorities, petitioner contends that
it is not a proper party and has no involvement in the case filed by
respondent union as it is not the employer of the respondent sugar
workers.
Furthermore, to bolster its contention, petitioner cites the Rules and
Regulations Implementing RA 809 issued by the then Wage
Administration Service pursuant to the Administrative Order of the
Labor Secretary dated October 1, 1952. Section 1 thereof states:
Sec. 1. The payment of the proceeds derived from the sixty per
centum of any increase in the participation due the laborers shall
be directly paid to the individual laborer concerned at the end of
each milling season by his respective planter under the Supervision
of the Secretary of Labor or his duly authorized representative by
means of payrolls prepared by said planter. (Emphasis supplied)
In addition, under Letter of Instruction No. 854 dated May 1, 1979,
it is provided:
1. Payment subject to supervision. The workers' share shall be paid
directly by the planter concerned to the workers or claimants
entitled thereto subject to the supervision of the Minister of Labor
or his duly designated representative.
The responsibility for the payment of the sugar workers' benefits
under R.A. 809 was categorically ruled upon in the Federation of
Free Farmers case, supra., to wit:
. . . the matter of paying the plantation laborers of the respective
planters becomes exclusively the concern of the planters, the
laborers and the Department of Labor. Under no principle of law or
equity can we impose on the Central — here VICTORIAS any
liability to the respective plantation laborers, should any of their
respective planters-employers fail to pay their legal share. After all,
since under the law it is the Department of Labor which is the office
directly called upon to supervise such payment, it is but reasonable
to maintain that if any blame is to be fixed for the unfortunate
situation of the unpaid laborers, the same should principally be laid
on the planters and secondarily on the Department of Labor, but
surely never on the central.
Whatever liability there exists between favor of the plantation
laborers should be pinned on the PLANTERS, their respective
employers. (Emphasis supplied)
On the other hand, public respondent and respondent union maintain
the position that privity exists between petitioner and the sugar
workers. Actually, public respondent, in resolving petitioner's
Motion to Dismiss, skirted the issue of whether an employer-
employee relationship indeed exists between petitioner milling
company and the sugar workers. He did not categorically rule
thereon but instead relied on the observation that when petitioner
delivered to its planters the quedans representing its share, petitioner
did not first ascertain whether the shares of all workers or claimants
were fully paid/covered pursuant to LOI No. 854, and that petitioner
did not have the necessary certification from the Department of
Labor attesting to such fact of delivery. In view of these
observations, public respondent subscribed to the possibility that
petitioner may still have a liability vis-a-vis the workers' share.
Consequently, in order that the workers would not have to litigate
their claim separately, which would be tantamount to tolerating the
splitting of a cause of action, public respondent held that petitioner
should still be included in this case as an indispensable party
without which a full determination of this case would not be
obtained.
We find for petitioner.
The Solicitor General, in its adverse Comment, correctly agreed
with petitioner's contention that while the jurisdiction over
controversies involving agricultural workers has been transferred
from the Court of Agrarian Relations to the Labor Arbiters under
the Labor Code as amended, the said transferred jurisdiction is
however, not without limitations. The dispute or controversy must
still fall under one of the cases enumerated under Article 217 of the
Labor Code, which cases, as ruled in San Miguel, supra., arise out
of or are in connection with an employer-employee relationship.
In the case at bar, it is clear that there is no employer-employee
relationship between petitioner milling company and respondent
union and/or its members-workers, a fact which, the Solicitor
General notes, public respondent did not dispute or was silent about.
Absent the jurisdictional requisite of an employer-employee
relationship between petitioner and private respondent, the
inevitable conclusion is that public respondent is without
jurisdiction to hear and decide the case with respect to petitioner.
Anent the issue of whether respondent union and/or its members-
workers have a cause of action against petitioner, the same must be
resolved in the negative. To have a cause of action, the claimant
must show that he has a legal right and the respondent a correlative
duty in respect thereof, which the latter violated by some wrongful
act or omission (Marquez vs. Varela, 92 Phil. 373 [1952]). In the
instant case, a simple reading of Section 9 of R.A. 809 and Section
1 of LOI 845 as aforequoted, would show that the payment of the
workers' share is a liability of the planters-employers, and not of the
milling company/sugar central. We thus reiterate Our ruling on this
matter, as enunciated in Federation of Free Farmers, supra., to wit:
. . . . Nowhere in Republic Act No. 809 can we find anything that
creates any relationship between the laborers of the planters and the
centrals. Under the terms of said Act, the old practice of the centrals
issuing the quedans to the respective PLANTERS for their share of
the proceeds of milled sugar per their milling contracts has not been
altered or modified. In other words, the language of the Act does not
in any manner make the central the insurer on behalf of the
plantation laborers that the latter's respective employers-planters
would pay them their share. . . .
. . . . Accordingly, the only obligation of the centrals (under Section
9 of the Act), like VICTORIAS, is to give to the respective planters,
like PLANTERS herein, the planters' share in the proportion
stipulated in the milling contract which would necessarily include
the portion of 60% pertaining to the laborers. Once this has been
done, the central is already out of the picture. . . . (Emphasis
supplied)
In the case at bar, it is disputed that petitioner milling company has
already distributed to its planters their respective shares.
Consequently, petitioner has fulfilled its part and has nothing more
to do with the subsequent distribution by the planters of the workers'
share.
Public respondent's contention that petitioner is an indispensable
party is not supported by the applicable provisions of the Rules of
Court. Under Section 7, Rule 3 thereof, indispensable parties are
"parties in interest" without whom no final determination of the
action can be obtained. In this case, petitioner cannot be deemed as
a party in interest since there is no privity or legal obligation linking
it to respondent union and/or its members-workers.
In order to further justify petitioner's compulsory joinder as a party
to this case, public respondent relies on petitioners' lack of
certification from the Department of Labor of its delivery of the
planters' shares as evidence of an alleged "conspicuous display of
concerted conspiracy between the respondent sugar central
(petitioner) and its adherent planters to deprive the workers or
claimants of their shares in the increase in participation of the
adherent planters." (Rollo, p. 56)
The assertion is based on factual conclusions which have yet to be
proved. And even assuming for the sake of argument that public
respondent's conclusions are true, respondent union's and/or its
workers' recourse lies with the Secretary of Labor, upon whom
authority is vested under RA 809 to supervise the payment of the
workers' shares. Any act or omission involving the legal right of the
workers to said shares may be acted upon by the Labor Secretary
either motu proprio or at the instance of the workers. In this case
however, no such action has been brought by the subject workers,
thereby raising the presumption that no actionable violation has
been committed.
Public respondent is concerned that the respondent planters may
easily put up the defense that the workers' share is with petitioner
milling company, giving rise to multiplicity of suits. The Solicitor
General correctly postulates that the planters cannot legally set up
the said defense since the payment of the workers' share is a direct
obligation of the planters to their workers that cannot be shifted to
the miller/central. Furthermore, the Solicitor General notes that
there is nothing in RA 809 which suggests directly or indirectly that
the obligation of the planter to pay the workers' share is dependent
upon his receipt from the miller of his own share. If indeed the
planter did not receive his just and due share from the miller, he is
not without legal remedies to enforce his rights. The proper recourse
against a reneging miller or central is for the planter to implead the
former not as an indispensable party but as a third party defendant
under Section 12, Rule 6 of the Rules of Court. In such case, herein
petitioner milling company would be a proper third party dependent
because it is directly liable to the planters (the original defendants)
for all or part of the workers' claim. However, the planters involved
in this controversy have not filed any complaint of such a nature
against petitioner, thereby lending credence to the conclusion that
petitioner has fulfilled its part vis-a-vis its obligation under RA 809.
WHEREFORE, premises considered, the petition is GRANTED.
Public respondent Reynaldo J. Gulmatico is hereby ORDERED to
DISMISS RAB VI Case No. 06-07-10256-89 with respect to herein
petitioner Hawaiian-Philippine Company and to PROCEED WITH
DISPATCH in resolving the said case.
SO ORDERED.
G.R. No. L-60716 October 27, 1983
AGUSAN DEL NORTE ELECTRIC COOPERATIVE, INC.,
ANTONIO L. SUAREZ, as General Manager and Ex-Oficio
Member of the Board of Directors, et al., petitioners,
vs.
HON. FORTUNATO A. VAILOCES, in his capacity as Judge
of the Court of First Instance of Agusan del Norte & Butuan
City, 15th Judicial District, and PERLITA S.
JONGKO, respondents.
Balanon & Acain Law Office for petitioners.
Jesus S. Delfin for private respondent.
PLANA, J.:
This is a petition for certiorari with preliminary injunction set
against the following background:
From 1977 to December 1981, Perlita S. Jongko was employed by
the Agusan del Norte Electric Company, Inc. (ANECO) initially as
accountant and later as office manager. on December 7, 1981,
allegedly in the absence of a substantial basis and without giving
Jongko reasonably sufficient opportunity to put up her defense, the
ANECO general manager, Antonio Suarez, with the concurrence of
the ANECO board of directors, dismissed Jongko as office manager
for alleged dishonesty, conflicting interest, abuse of authoritv and
insubordination.
On December 22, 1981, Jongko filed with the Court of First
Instance of Agusan del Norte and Butuan City a petition for
prohibition and mandamus against ANECO and its officers based
on illegal dismissal, with a praver for reinstatement with back
salary. (Civil Case No. 410.) The defendants filed a motion to
dismiss on the ground, among others, that the CFI had no
jurisdiction over the subject matter of the action. The court denied
the motion and refused to reconsider the same. Hence, this petition
for certiorari filed on June 14, 1982 assailing the denial of the
motion to dismiss on the ground that ordinary courts have no
jurisdiction over illegal dismissal cases which have been assigned
by law exclusively to labor arbiters.
Meanwhile, on the same date that the instant petition was filed,
Jongko also filed with the court a quo an amended petition seeking
not only reinstatement with back salary but also moral and
exemplary damages.
Under Article 217 of Presidential Decree 442 (Labor Code), as
amended by Presidential Decree 1367, labor arbiters had exclusive
jurisdiction over labor cases involving illegal dismissal and all other
cases arising from employer- employee relations, exclusive of
claims for damages. For under P.D. 1367, "labor-arbiters shall not
entertain claims of moral or other forms of damages."
On May 1, 1980, however, PD 1691 amended the Labor Code by
deleting the ban against labor arbiters taking cognizance of claims
for damages, This amendment had the effect of restoring the
jurisdiction of labor arbiters over said claims under their broad and
exclusive authority to hear and decide-
All money claims of workers, including those based on non-
payment ... of wages ... and other benefits provided by law ...
All other claims arising from employer-employee relations, unless
expressly excluded by this Code. [Article 217 (a). See Aguda vs.
Vallejos, 113 SCRA 69; Cardinal Industries, Inc. vs. Vallejos, 114
SCRA 472; Getz Corp. (Phil.), Inc. vs. Court of Appeals, 116
SCRA 86.]
The legal situation remained despite the subsequent enactment of
Batas Pambansa 130 on August 21, 1980.
Thus, when in December, 1981 the services of private respondent
Jongko were terminated by ANECO and Jongko filed her petition
for prohibition and mandamus against ANECO with the Court of
First Instance of Agusan del Norte and Butuan City praying for
reinstatement with back salary (without asking for damages), the
applicable law was Article 217 of the Labor Code, as amended on
August 21, 1980 by Batas Pambansa 130 giving labor arbiters
exclusive jurisdiction over all money claims of workers (including
those based on non-payment of wages and other benefits provided
by law) as well as all other claims arising from employer-employee
relations, including moral and other forms of damages.
And when Jongko filed on June 14, 1982 her amended petition
praying not only for reinstatement and backwages but also moral
and exemplary damages, the law applicable was the same Article
217 of the Labor Code, as amended by Batas Pambansa 227
effective June 1, 1982, under which "all money claims of workers
including those based on non-payment . . . of wages . . . and other
benefits provided by law" were still under the exclusiue jurisdiction
of labor arbiters, inclusive of illegal dismissal cases with prayer for
reinstatement, backwages and damages, notwithstanding the fact
that Batas Pambansa 227 deleted the basket clause in Article 217 of
the Labor Code which previously gave labor arbiters jurisdiction
over 11 all other claims arising from employer-employee relations,"
For as observed by this Court in Ebon vs. De Guzman, 113 SCRA
52 at 56 -
The provisions ... that the Labor Arbiters and the NLRC have
jurisdiction over "all money claims of workers ..." . . . are
comprehensive enough to include claims for moral and exemplary
damages of a dismiss employee against his employer. (See also
Getz Corp. (Phil.), Inc. 116 SCRA 86.)
Therefore, when the court a quo denied petitioner' motion to dismiss
the illegal dismissal case instituted by private respondent, it
resolved to take cognizance of a case over which it had no
jurisdiction.
WHEREFORE, the petition is granted. Respondent judge or his
successor is directed to dismiss Civil Case 410 without prejudice to
the right of private respondent to re-file her claim with the proper
labor arbiter. No costs.
SO ORDERED.
G.R. No. 75837 December 11, 1987
DOMINADOR BASAYA JR., FLORENCIO ABELLA,
DOMINADOR ORDINEZA, FLORO ROSALEJOS, PABLO
PADILLA, ELVIN ELISORIO PATRICIO GUTIB, JOSE
LEOPOLDO, HONORATO SININA, EFREMIO CATUBAY,
RAUL DE REAL, VIRGINIO ALEGRIA, EDUARDO BULAK,
BALTAZAR DACARA, DIOSDADO REAL, MICHAEL
DUMALAGAN, RAMON FLORES, WILFREDO BACATAN,
PEDRO CANAZARES, LUCIFERO PESQUERA,
FLORENTINO DURAN, CATALINO TIENGCO, EDUARDO
CABRERA, and RENATO ANTONINO, petitioners,
vs.
HON. FRANCIS MILITANTE, President Judge, Regional Trial
Court, 7th Judicial Region, Branch XII, Cebu City, and
PHILIPPINE TUNA VENTURES, INC., respondents.
In this Petition for Review on Certiorari, petitioners challenge the
assumption of jurisdiction by Respondent Judge of the Regional
Trial Court of Cebu City, Branch XI 1, over a complaint for
Replevin filed by private respondent, Philippine Tuna Ventures, Inc.
against petitioners, upon the allegation that it is intertwined with a
labor dispute so that exclusive jurisdiction belongs to the National
Labor Relations Commission (NLRC).
Respondent Philippine Tuna Ventures, Inc. (TUNA, Inc., for short),
is the charterer of the fishing vessel, the F/B Caribbean (hereinafter
referred to simply as the Vessel). TUNA, Inc. has been operating
this Vessel in its deep-sea fishing business since 1977 together with
eight (8) other fishing boats. Sometime in 1985, TUNA, Inc.
transferred the operation of the Vessel to a sister corporation, the
Eastship Fishing Corporation (Eastship, for brevity). Petitioners,
twenty-four (24) in all, constitute the crew of the Vessel, with
petitioner Dominador Basaya Jr., as its Captain.
On 9 July 1986, TUNA, Inc. sought the remedy of Replevin (the
Replevin Case) against petitioners before the Regional Trial Court
presided over by Respondent Judge, praying that petitioners
(defendants in that case) be ordered to deliver to it the possession of
its Vessel, which petitioners were allegedly possessing in violation
of its rights.
In their defense below petitioners maintained that they were in
possession of the Vessel as its crew; that their possession is "an
extension of the possession of the plaintiff over the Vessel" and that
to deprive them of its possession by a Writ of Replevin would
amount to an illegal termination of their employment.
On 10 July 1986, the Writ of Replevin was ordered issued upon
TUNA, Inc.'s filing of a bond in the amount of P2M. The Sheriff
served the Writ on petitioners on 12 July 1986 and they
disembarked from the Vessel in the evening of that day. However,
after about an hour, they re-embarked and re-took possession.
On 29 August 1986 judgment was rendered in the Replevin Case
declaring TUNA, Inc. to have a better right to the possession of the
Vessel and ordering petitioners to immediately deliver possession
thereof.
On 15 September 1986 petitioners resorted to this appeal by
certiorari on a question of law with a prayer for a restraining order.
On 17 September 1986 we issued a Temporary Restraining Order
enjoining respondents from enforcing the judgment in the Replevin
Case or any Writ of Execution issued therein.
The only issue for resolution is whether or not the Trial Court had
jurisdiction to hear and decide the Replevin Case.
Said Court upheld its jurisdiction and ruled, as heretofore stated,
that the charterer, TUNA, Inc., has a better right to the possession of
the Vessel and ordered petitioners to immediately deliver
possession.
In this Petition, petitioners argue that the Trial Court erred in:
I. ... assuming a split jurisdiction over the civil rights of the
respondent corporation to possess the vessel F/B Caribbean and oust
the petitioners- appellants separately from the labor rights of the
petitioners-appellants to be protected from their sudden arbitrary
ouster from their positions in the said vessel as crew members and
officers thereof.
II. ... holding that the legal responsibility of the respondent,
Philippine Tuna Ventures, Inc. as the employer of the petitioners-
appellants has been transferred to Eastship Fishing Corporation.
III. ... assuming jurisdiction over this case which involves the labor
violation of unfair labor practice committed by the respondent Phil.
Tuna Ventures, Inc. and which, therefore, appertains to the
exclusive jurisdiction of the National Labor Relations Commission.
It appears that on 26 June 1986, petitioners had presented to the
management of TUNA, Inc., a set of labor demands; that on 28 June
1986 they had informed Eastship that they would not move the
Vessel to any destination until their demands were met; that on 2
July 1986 TUNA, Inc., had applied for a "shut-down" or closure
allegedly due to business losses; that on 8 July 1986 Eastship filed
with the National Labor Relations Commission, Regional Office
No. 7, Cebu City, a Petition to declare petitioners' strike illegal; and
that on 8 August 1986, petitioners instituted a Complaint for Unfair
Labor Practice against TUNA, Inc. and Eastship. Incidentally,
petitioners allege that they are not on strike,
Developments subsequent to the judgment in the Replevin Case also
disclose that on 18 November 1986, in NLRC Injunction Case No.
1270 entitled Eastship Fishing Corporation vs. Concerned Seamen
of the Philippines, the NLRC issued an Injunction Writ enjoining
petitioners from blocking the free ingress and egress to the Vessel
and seven (7) other fishing boats and to disembark from and vacate
the Vessel without prejudice to the exercise of their right to lawful
and peaceful picketing; that on 28 November 1986, the NLRC
Sheriffs attempted to enforce the Injunction but petitioners refused
to comply thereby compelling the NLRC on the same date to seek
the assistance of the Philippine Constabulary and the Philippine
Coast Guard; that it was only on 11 December 1986, after a series of
refusals, that petitioners left the Vessel peacefully only to retake
possession on 16 December 1986.
An ocular inspection on 10 January 1987 by Eastship disclosed that SO ORDERED.
petitioners were still in possession.

Upon the facts and issue involved, we uphold the jurisdiction of the
Civil Court.

Replevin is a possessory action, the gist of which is the right of

possession in the plaintiff. The primary relief sought therein is the
return of the property in specie wrongfully detained by another
person. It is an ordinary statutory proceeding to adjudicate rights to
the title or possession of personal property (Francisco, The Revised
Rules of Court, Provisional Remedies, 1985, p. 386, citing 46 Am.
Jur. 7). The question of whether or not a party has the right of
possession over the property involved and if so, whether or not the
adverse party has wrongfully taken and detained said property as to
require its return to plaintiff, is outside the pale of competence of a
labor tribunal; it is beyond the field of specialization of Labor
Arbiters.

The Trial Court, therefore, rightfully assumed jurisdiction over the

Replevin Case and aptly held that, as charterer of the Vessel,
TUNA, Inc. has the better right of possession and that petitioners'
alleged right to possess the Vessel as the crew thereof is not in any
way superior to the right of TUNA, Inc. as such charterer or lessee.

The labor dispute involved is not intertwined with the issue in the
Replevin Case. The respective issues raised in each forum can be
resolved independently of the other. In fact, on 18 November 1986,
the NLRC in the case before it had issued an Injunctive Writ
enjoining petitioners from blocking the free ingress and egress to
the Vessel and ordering petitioners to disembark and vacate. That
aspect of the controversy is properly settled under the Labor Code.
So also with petitioners' right to picket. But the determination of the
question of who has the better right to take possession of the Vessel
and whether petitioners can deprive the Charterer, as the legal
possessor of the Vessel, of that right to possess is addressed to the
competence of Civil Courts.

In thus ruling, this Court is not sanctioning split jurisdiction but

defining avenues of jurisdiction as laid down by pertinent laws.

The Court takes note that petitioners have defied not only the Writ
of Replevin issued by the Civil Court but also the Injunction
ordered by the NLRC. Petitioners must be reminded that rights are
not their exclusive prerogative but are enjoyed by others as well.
They must yield to the rule of law and not rely on the law of force,
specially where adjudicative bodies and Courts have ruled upon the
merits of their claims although adversely to them.

WHEREFORE, the judgment under review is hereby AFFIRMED

and petitioners are hereby ORDERED to disembark from the F/B
Caribbean and to turn over possession of said vessel to private
respondent Philippine Tuna Ventures, Inc., without prejudice to the
continued prosecution of their demands for labor benefits before the
labor tribunal, which will surely be protective of their just deserts.
The Temporary Restraining Order issued by this Court on 17
September 1986 is hereby LIFTED. Treble costs against petitioners.

This judgment is immediately executory.

G.R. No. 74621 February 7, 1990
BROKENSHIRE MEMORIAL HOSPITAL, INC., petitioner,
vs.
THE HONORABLE MINISTER OF LABOR &
EMPLOYMENT AND BROKENSHIRE MEMORIAL
HOSPITAL EMPLOYEES AND WORKER'S UNION-FFW
Represented by EDUARDO A. AFUAN, respondents.
Renato B. Pagatpatan for petitioner.
PARAS, J.:
This petition for review by certiorari seeks the annulment or
modification of the Order of public respondent Minister of Labor
dated December 9, 1985 in a case for non-compliance with Wage
Order Nos. 5 and 6 docketed as ROXI-LSED Case No. 14-85 which
1) denied petitioner's Motion for Reconsideration dated February 3,
1986 and 2) affirmed the Order of Regional Director Eugenio I.
Sagmit, Jr., Regional Office No. XI Davao City, dated April 12,
1985, the dispositive portion of which reads as follows:
WHEREFORE, premises considered, respondent Brokenshire
Memorial Hospital, Incorporated is hereby ordered to pay the
above-named workers, through this Office, within fifteen (15) days
from receipt hereof, the total sum of TWO HUNDRED EIGHTY-
FOUR THOUSAND SIX HUNDRED TWENTY FIVE
(P284,625.00) PESOS representing their living allowance under
Wage Order No. 5 covering the period from October 16, 1984 to
February 28, 1985 and under Wage Order No. 6 effective November
1, 1984 to February 28, 1985. Respondent is further ordered to pay
the employees who are likewise entitled to the claims here
presented, but whose names were inadvertently omitted in the list
and computation. (Rollo, p. 7)
Petitioner contends that the respondent Minister of Labor and
Employment acted without, or in excess of his jurisdiction or with
grave abuse of discretion in failing to hold:
A) That the Regional Director committed grave abuse of discretion
in asserting exclusive jurisdiction and in not certifying this case to
the Arbitration Branch of the National Labor Relations Commission
for a full-blown hearing on the merits;
B) That the Regional Director erred in not ruling on the
counterclaim raised by the respondent (in the labor case, and now
petitioner in this case);
C) That the Regional Director erred -in skirting the constitutional
and legal issues raised. (Rollo, p. 4)
This case originated from a complaint filed by private respondents
against petitioner on September 21, 1984 with the Regional Office
of the MOLE, Region XI, Davao City for non-compliance with the
provisions of Wage Order No. 5. After due healing the Regional
Director rendered a decision dated November 16, 1984 in favor of
private respondents. Judgment having become final and executory,
the Regional Director issued a Writ of Execution whereby some
movable properties of the hospital (petitioner herein) were levied
upon and its operating expenses kept with the bank were garnished.
The levy and garnishment were lifted when petitioner hospital paid
the claim of the private respondents (281 hospital employees)
directly, in the total amount of P163,047.50 covering the period
from June 16 to October 15, 1984.
After making said payment, petitioner hospital failed to continue to
comply with Wage Order No. 5 and likewise, failed to comply with
the new Wage Order No. 6 which took effect on November 1, 1984,
prompting private respondents to file against petitioner another
complaint docketed as ROXI-LSED-14-85, which is now the case at
bar.
In its answer, petitioner raised the following affirmative defenses:
1) That the Regional Office of the Ministry of Labor did not acquire
jurisdiction over it for want of allegation that it has the capacity to
be sued and
2) That Wage Order Nos. 5 and 6 are non-constitutional and
therefore void. Significantly petitioner never averred any
counterclaim in its Answer.
After the complainants had filed their reply, petitioner filed a
Motion for the Certification of the case to the National Labor
Relations Commission for a full-blown hearing on the matter,
including the counterclaim interposed that the complainants had
unpaid obligations with the Hospital which might be offset with the
latter's alleged obligation to the former.
Issues having been joined, the Regional Director rendered a
decision on April 12, 1985 in favor of the complainants (private
respondents herein) declaring that petitioner (respondent therein) is
estopped from questioning the acquisition of jurisdiction because its
appearance in the hearing is in itself submission to jurisdiction and
that this case is merely a continuance of a previous case where the
hospital already willingly paid its obligations to the workers on
orders of the Regional Office. On the matter of the constitutionality
of the Wage Order Nos. 5 and 6, the Regional Director declared that
only the court can declare a law or order unconstitutional and until
so declared by the court, the Office of the Regional Director is duly
bound to enforce the law or order.
Aggrieved, petitioner appealed to the Office of the Minister of
Labor, which dismissed the appeal for lack of merit. A motion for
reconsideration was likewise denied by said Office, giving rise to
the instant petition reiterating the issues earlier mentioned.
The crucial issue We are tasked to resolve is whether or not the
Regional Director has jurisdiction over money claims of workers
concurrent with the Labor Arbiter.
It is worthy of note that the instant case was deliberated upon by
this Court at the same time that Briad Agro Development
Corporation v. de la Cerna, G.R. No. 82805 and L.M. Camus
Engineering Corporation v. Hon. Secretary of Labor, et al. G.R.
No. 83225, promulgated on June 29,1989 and Maternity Children's
Hospital vs. Hon. Secretary of Labor, et al., G.R. No. 78909,
promulgated 30 June 1989, where deliberated upon; for all three (3)
cases raised the same issue of jurisdiction of the Regional Director
of the Department of Labor to pass upon money claims of
employees. Hence, we will be referring to these cases, most
especially the case of Briad Agro which, as will be seen later, was
reconsidered by the court.
Contrary to the claim of petitioners that the original and exclusive
jurisdiction over said money claims is properly lodged in the Labor
Arbiter (relying on the case of Zambales Base Metals Inc. v.
Minister of Labor, 146 SCRA 50) and the Regional Director has no
jurisdiction over workers' money claims, the Court in the three (3)
cases above-mentioned ruled that in view of the promulgation of
Executive Order No. 111, the ruling in the earlier case of Zambales
Base Metals is already abandoned. In accordance with the rulings in
Briad Agro, L.M. Camus, and Maternity Children's Hospital, the
Regional Director exercises concurrent jurisdiction with the Labor
Arbiter over money claims. Thus,
. . . . Executive Order No. 111 is in the character of a curative law,
that is to say, it was intended to remedy a defect that, in the opinion
of the legislative (the incumbent Chief Executive in this case, in the
exercise of her lawmaking power under the Freedom Constitution)
had attached to the provision subject of the amendment. This is
clear from the proviso: "The provisions of Article 217 to the
contrary notwithstanding . . ." Plainly, the amendment was meant to
make both the Secretary of Labor (or the various Regional
Directors) and the Labor Arbiter share jurisdiction. (Briad Agro
Dev. Corp. v. Sec. of Labor, supra).
Under the present rules, a Regional Director exercises both visitorial
and enforcement power over labor standards cases, and is therefore
empowered to adj udicate money claims, provided there
still existsan employer-employee relationship, and the findings of
the regional office is not contested by the employer concerned.
(Maternity Children's Hospital v. Sec. of Labor, supra).
However, it is very significant to note, at this point, that the decision
in the consolidated cases of Briad Agro Development Corp. and
L.M. Camus Engineering Corp. was reconsidered and set aside by
this Court in a Resolution promulgated on November 9,1989. In
view of the enactment of Republic Act No. 6715, approved on
March 2, 1989, the Court found that reconsideration was proper.
RA 6715 amended Art. 129 and Art. 217 of the Labor Code, to read
as follows:
ART. 129. Recovery of wages, simple money claims and other
benefits.—Upon complaint of any interested party, the Regional
Director of the Department of Labor and Employment or any of the
duly authorized hearing officers of the Department is empowered,
through summary proceeding and after due notice, to hear and
decide any matter involving the recovery of wages and other
monetary claims and benefits, including legal interest, owing to an
employee or person employed in domestic or household service or
househelper under this code, arising from employer-employee
relations, Provided, That such complaint does not include a claim
for reinstatement; Provided, further, That the aggregate money
claims of each employee or househelper do not exceed five
thousand pesos (P5,000.00). The Regional Director or hearing
officer shall decide or resolve the complaint within thirty (30)
calendar days from the date of the filing of the same . . .
Any decision or resolution of the Regional Director or hearing
officer pursuant to this provision may be appealed on the same
grounds provided in Article 223 of this Code, within five (5)
calendar days from 11 receipt of a copy of said decision or
resolution, to the National Labor Relations Commission which shall
resolve the appeal within ten (10) calendar days from the
submission of the last pleading required or allowed under its rules.
ART. 217. Jurisdiction of Labor Arbiters and the Commission. —
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
steno graphic notes, the following cases involving all workers,
whether agricultural or non-agricultural:
(1) Unfair labor practice cases;
(2) Termination disputes;
(3) If accompanied with a claim of 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 the employer-employee relation;
(5) Cases arising from any violation of Article 264 of this Code,
including questions involving the legality of strikes and lockouts;
and
(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 not exceeding
five thousand pesos (P5,000.00), whether or not accompanied with a
claim for reinstatement.
It will be observed that what in fact conferred upon Regional
Directors and other hearing officers of the Department of Labor
(aside from the Labor Arbiters) adjudicative powers, i.e., the power
to try and decide, or hear and determine any claim brought before
them for recovery of wages, simple money claims, and other
benefits, is Republic Act 6715, provided that the following
requisites concur, to wit:
1) The claim is presented by an employee or person employed in
domestic or household service, or househelper under the code;
2) The claimant, no longer being employed, does not seek
reinstatement; and
3) The aggregate money claim of the employee or househelper does
not exceed five thousand pesos (P5,000.00).
In the absence of any of the three (3) requisites, the Labor Arbiters the Freedom Constitution and the 1987 Constitution) violated by
have exclusive original jurisdiction over all claims arising from said Wage Orders, which Orders are without doubt for the benefit of
employer-employee relations, other than claims for employee's labor.
compensation, social security, medicare and maternity benefits.
Based on the foregoing considerations, it is our shared view that the
We hereby adopt the view taken by Mr. Justice Andres Narvasa in findings of the labor regulations officers may not be deemed
his Separate Opinion in the case of Briad Agro Dev. Corp., as uncontested as to bring the case at bar within the competence of the
reconsidered, a portion of which reads: Regional Director, as duly authorized representative of the
Secretary of Labor, pursuant to Article 128 of the Labor Code, as
In the resolution, therefore, of any question of jurisdiction over a amended. Considering further that the aggregate claims involve an
money claim arising from employer-employee relations, the first amount in excess of P5,000.00, We find it more appropriate that the
inquiry should be into whether the employment relation does indeed issue of petitioner hospital's liability therefor, including the proposal
still exist between the claimant and the respondent. of petitioner that the obligation of private respondents to the former
in the aggregate amount of P507,237.57 be used to offset its
If the relation no longer exists, and the claimant does not seek
obligations to them, be ventilated and resolved, not in a summary
reinstatement, the case is cognizable by the Labor Arbiter, not by
proceeding before the Regional Director under Article 128 of the
the Regional Director. On the other hand, if the employment
Labor Code, as amended, but in accordance With the more formal
relation still exists, or reinstatement is sought, the next inquiry
and extensive proceeding before the Labor Arbiter. Nevertheless, it
should be into the amount involved.
should be emphasized that the amount of the employer's liability is
If the amount involved does not exceed P5,000.00, the Regional not quite a factor in determining the jurisdiction of the Regional
Director undeniably has jurisdiction. But even if the amount of the Director. However, the power to order compliance with labor
claim exceeds P5,000.00, the claim is not on that account necessary standards provisions may not be exercised where the employer
removed from the Regional Director's competence. In respect contends or questions the findings of the labor regulation officers
thereof, he may still exercise the visitorial and enforcement powers and raises issues which cannot be determined without taking into
vested in him by Article 128 of the Labor Code, as amended, supra; account evidentiary matters not verifiable in the normal course of
that is to say, he may still direct his labor regulations officers or inspection, as in the case at bar.
industrial safety engineers to inspect the employer's premises and
Viewed in the light of RA 6715 and read in consonance with the
examine his records; and if the officers should find that there have
case of Briad Agro Development Corp., as reconsidered, We hold
been violations of labor standards provisions, the Regional Director
that the instant case falls under the exclusive original jurisdiction of
may, after due notice and hearing, order compliance by the
the Labor Arbiter RA 6715 is in the nature of a curative statute.
employer therewith and issue a writ of execution to the appropriate
Curative statutes have long been considered valid in our
authority for the enforcement thereof. However, this power may not,
jurisdiction, as long as they do not affect vested rights. In this case,
to repeat, be exercised by him where the employer contests the labor
We do not see any vested right that will be impaired by the
regulation officers' findings and raises issues which cannot be
application of RA 6715. Inasmuch as petitioner had already paid the
resolved without considering evidentiary matters not verifiable in
claims of private respondents in the amount of P163,047.50
the normal course of inspection. In such an event, the case will have
pursuant to the decision rendered in the first complaint, the only
to be referred to the corresponding Labor Arbiter for adjudication,
claim that should be deliberated upon by the Labor Arbiter should
since it falls within the latter's exclusive original jurisdiction.
be limited to the second amount given by the Regional Director in
Anent the other issue involved in the instant case, petitioner's the second complaint together with the proposal to offset the
contention that the constitutionality of Wage Order Nos. 5 and 6 obligations.
should be passed upon by the National Labor Relations
WHEREFORE, the assailed decision of the Regional Director dated
Commission, lacks merit. The Supreme Court is vested by the
April 12, 1985, is SET ASIDE. The case is REFERRED, if the
Constitution with the power to ultimately declare a law
respondents are so minded, to the Labor Arbiter for proper
unconstitutional. Without such declaration, the assailed legislation
proceedings.
remains operative and can be the source of rights and duties
especially so in the case at bar when petitioner complied with Wage SO ORDERED.
Order No. 5 by paying the claimants the total amount of
P163,047.50, representing the latter's minimum wage increases up
to October 16, 1984, instead of questioning immediately at that
stage before paying the amount due, the validity of the order on
grounds of constitutionality. The Regional Director is plainly
,without the authority to declare an order or law unconstitutional
and his duty is merely to enforce the law which stands valid, unless
otherwise declared by this Tribunal to be unconstitutional. On our
part, We hereby declare the assailed Wage Orders as constitutional,
there being no provision of the 1973 Constitution (or even of both
G.R. No. L-68544 October 27, 1986
LORENZO C. DY, ZOSIMO DY, SR., WILLIAM IBERO,
RICARDO GARCIA AND RURAL BANK OF AYUNGON,
INC., petitioners,
vs.
NATIONAL LABOR RELATIONS COMMISSION AND
EXECUTIVE LABOR ARBITER ALBERTO L.
DALMACION, AND CARLITO H. VAILOCES, respondents.
NARVASA, J.:
Petitioners assail in this Court the resolution of the National Labor
Relations Commission (NLRC) dismissing their appeal from the
decision of the Executive Labor Arbiter 1 in Cebu City which found
private respondent to have been illegally dismissed by them.
Said private respondent, Carlito H. Vailoces, was the manager of
the Rural Bank of Ayungon (Negros Oriental), a banking institution
duly organized under Philippine laws. He was also a director and
stockholder of the bank.
On June 4, 1983, a special stockholders' meeting was called for the
purpose of electing the members of the bank's Board of Directors.
Immediately after the election the new Board proceeded to elect the
bank's executive officers.
Pursuant to Article IV of the bank's by-laws, 2 providing for the
election by the entire membership of the Board of the executive
officers of the bank, i.e., the president, vice-president, secretary,
cashier and bank manager, in that board meeting of June 4, 1983,
petitioners Lorenzo Dy, William Ibero and Ricardo Garcia were
elected president, vice-president and corporate secretary,
respectively. Vailoces was not re-elected as bank
manager, 3 Because of this development, the Board, on July 2, 1983,
passed Resolution No. 5, series of 1983, relieving him as bank
manager.
On August 3, 1983, Vailoces filed a complaint for illegal dismissal
and damages with the Ministry of Labor and Employment against
Lorenzo Dy and Zosimo Dy, Sr. The complaint was amended on
September 22, 1983 to include additional respondents-William
Ibero, Ricardo Garcia and the Rural Bank of Ayungon, and
additional causes of action for underpayment of salary and non-
payment of living allowance.
In his complaint and position paper, Vailoces asserted that Lorenzo
Dy, after obtaining control of the majority stock of the bank by
buying the shares of Marcelino Maximo, called an illegal
stockholders' meeting and elected a Board of Directors controlled
by him; that after its illegal constitution, said Board convened on
July 2, 1983 and passed a resolution dismissing him as manager,
without giving him the opportunity to be heard first; that his
dismissal was motivated by Lorenzo Dy's desire to take over the
management and control of the bank, not to mention the fact that he
(Dy) harbored ill feelings against Vailoces on account of the latter's
filing of a complaint for violation of the corporation code against
him and another complaint for compulsory recognition of natural
child with damages against Zosimo Dy, Sr. 4
In their answer, Lorenzo Dy, et al. denied the charge of illegal
dismissal. They pointed out that Vailoces' position was an elective
one, and he was not re-elected as bank manager because of the
Board's loss of confidence in him brought about by his absenteeism
and negligence in the performance of his duties; and that the Board's
action was taken to protect the interest of the bank and was
"designed as an internal control measure to secure the check and
balance of authority within the organization." 5
The Executive Labor Arbiter found that Vailoces was:
(a) Illegally dismissed, first not because of absenteeism and
negligence, but of the resentment of petitioners against Vailoces
which arose from the latter's filing of the cases for recognition as
natural child against Zosimo Dy, Sr. and for violation of the
corporation code against Lorenzo Dy; and second, because he was
not afforded the due process of law when he was dismissed during
the Board meeting of July 2, 1983 the validity of which is seriously
doubted;
(b) Not paid his cost of living allowance; and
(c) Underpaid with only P500 monthly salary,
and consequently ordered the individual petitioners — Lorenzo Dy
and Zosimo Dy-but not the Bank itself, to:
(a) Pay Vailoces jointly and severally, the sum of P111,480.60
representing his salary differentials, cost of living allowances, back
wages from date of dismissal up to the date of the decision
(November 29, 1983), moral and exemplary damages, and attorney's
fees; and
(b) Reinstate Vailoces to his position as bank manager, with
additional backwages from December 1, 1983 on the adjusted salary
rate of P620.00 r month until he is actually reinstated, plus cost-of-
living allowance. 6
Lorenzo Dy, et al. appealed to the NLRC, assigning error to the
decision of the Labor Arbiter on various grounds, among them: that
Vailoces was not entitled to notice of the Board meeting of July 2,
1983 which decreed his relief because he was no longer a member
of the Board on said date; that he nonetheless had the opportunity to
refute the charges against him and seek a formal investigation
because he received a copy of the minutes of said meeting while he
was still the bank manager (his removal was to take effect only on
August 15, 1983), instead of which he simply abandoned the work
he was supposed to perform up to the effective date of his relief;
and that the matter of his relief was within the adjudicatory powers
of the Securities and Exchange Commission.7
The NLRC, however bypassed the issues raised and simply
dismissed the appeal for having been filed late. It ruled that:
The record shows that a copy of the decision sent by registered mail
to respondents' counsel, Atty. Edmund Tubio, was received on
January 11, 1984 by a certain Atty. Ramon Elesteria, a law office
partner of Atty. Tubio. ... This fact is corroborated by the
certification issued by the Postmaster of Dumaguete City...
Moreover, the same is admitted by no less than Atty. Ramon
Elesteria himself in his affidavit. It further appears in the record that
on January 30, 1984 a certain Atty. Francisco Zerna, a new lawyer
engaged by the respondents for the appeal, received a copy of the
decision in this case as certified by Julia Pepito in an affidavit
subscribed before the Senior Labor Arbitration Specialist. The
appeal was filed only on February 17, 1984.
Considering that it was a law partner of the respondents' counsel
who received on January 11, 1984 the registered letter, his actual
receipt thereof completes the service. ... And even assuming that
such was not a valid service, since the respondents received another
copy of the decision on January 30, 1984, through their newly
engaged counsel, it is therefore our opinion that the appeal herein
was filed out of time, whether the time is reckoned from the receipt
by Atty. Elesteria or Atty. Zerna, and, for this reason, we can not
give due course to his appeal. 8
In this Court, petitioners assail said ruling as an arbitrary
deprivation of their right to appeal through unreasonable adherence
to procedural technicality. They argue that they should not be bound
by the service of the Labor Arbiter's decision by Atty. Elesteria on
January 11, 1984 or by Atty. Zerna on January 30, 1984, because
neither lawyer was authorized to accept service for their counsel
Atty. Tubio, and that their 10 day period of appeal should be
counted from February 10, 1984 when they actually received the
copy of the decision from Atty. Zerna. On the merits, they assert
that the Arbiter's finding of illegal dismissal was without
evidentiary basis, that it was error to impose the obligation to pay
damages upon the individual petitioners, instead of the Rural Bank
of Ayungon, which was Vailoces' real employer, and that the
damages awarded are exorbitant and oppressive.
While the comment of Vailoces traverses the averments of the
petition, that of the Solicitor General on behalf of public
respondents perceives the matter as an intracorporate controversy of
the class described in Section 5, par. (c), of Presidential Decree No.
902-A, namely:
(c) Controversies in the election or appointments of directors,
trustees, officers or managers of such corporations, partnerships or
associations.
explicitly declared to be within the original and exclusive
jurisdiction of the Securities and Exchange Commission, and
recommends that the questioned resolution of the NLRC as well as
the decision of the Labor Arbiter be set aside as null and void. 9
In truth, the issue of jurisdiction is decisive and renders unnecessary
consideration of the other questions raised.
There is no dispute that the position from which private respondent
Vailoces claims to have been illegally dismissed is an elective
corporate office. He himself acquired that position through election
by the bank's Board of Directors at the organizational meeting of
November 17, 1979. 10 He lost that position because the Board that
was elected in the special stockholders' meeting of June 4, 1983 did
not re-elect him. And when Vailoces, in his position paper
submitted to the Labor Arbiter, impugned said stockholders'
meeting as illegally convoked and the Board of Directors thereby
elected as illegally constituted, 11 he made it clear that at the heart of
the matter was the validity of the directors' meeting of June 4, 1983
which, by not re-electing him to the position of manager, in effect
caused termination of his services.
The case thus falls squarely within the purview of Section 5, par.
(c), No. 902-A just cited. In PSBA vs. Leaño, 12 this Court,
confronted with a similar controversy, ruled that the Securities and
Exchange Commission, not the NLRC, has jurisdiction:
It was at a Board regular monthly meeting held on August 1, 1981,
that three directors were elected to fill vacancies. And, it was at the
regular Board meeting of September 5, 1981 that all corporate
positions were declared vacant in order to effect a reorganization,
and at the ensuing election of officers, Tan was not re-elected as
Executive Vice-President.
Basically, therefore, the question is whether the election of directors
on August 1, 1981 and the election of officers on September 5,
1981, which resulted in Tan's failure to be re-elected, were validly
held. This is the crux of the question that Tan has raised before the
SEC. Even in his position paper before the NLRC, Tan alleged that
the election on August 1, 1981 of the three directors was in
contravention of the PSBA By-Laws providing that any vacancy in
the Board shall be filled by a majority vote of the stockholders at a
meeting specially called for the purpose. Thus, he concludes, the
Board meeting on September 5, 1981 was tainted with irregularity
on account of the presence of illegally elected directors without
whom the results could have been different.
Tan invoked the same allegations in his complaint filed with the
SEC. So much so, that on December 17, 1981, the SEC (Case No.
2145) rendered a Partial Decision annulling the election of the three
directors and ordered the convening of a stockholders' meeting for
the purpose of electing new members of the Board. The correctness
of d conclusion is not for us to pass upon in this case. Tan was
present at said meeting and again sought the issuance of injunctive
relief from the SEC.
The foregoing indubitably show that, fundamentally, the
controversy is intra-corporate in nature. It revolves around the
election of directors, officers or managers of the PSBA, the relation
between and among its stockholders, and between them and the
corporation. Private respondent also contends that his "ouster" was a
scheme to intimidate him into selling his shares and to deprive him
of his just and fair return on his investment as a stockholder
received through his salary and allowances as Executive Vice-
President. Vis-a-vis the NLRC, these matters fall within the
jurisdiction of the SEC. Presidential Decree No. 902-A vests in the
Securities and Exchange Commission:
... Original and exclusive jurisdiction to hear and decide cases
involving:
a) Devices or schemes employed by or any acts, of the board of
directors, business associates, its officers or partners, amounting to
fraud and misrepresentation) which may be detrimental to the
interest of the public and/or of the stockholders, partners, members
of associations or organizations registered with the Commission.
b) Controversies arising out of intracorporate or partnership
relations, between and among stockholders, members or associates;
between any of all of them and the corporation, partnership or
association of which they are stockholders, members or associates,
respectively; and between such corporation, partnership or
association and the state insofar as it concerns their individual
franchise or right to exist as such entity;
c) Controversies in the election or appointments of directors,
trustees, officers or managers of such corporations, partnership or
associations.
This is not a case of dismissal. The situation is that of a corporate
office having been declared vacant, and of Tan's not having been
elected thereafter. The matter of whom to elect is a prerogative that
belongs to the Board, and involves the exercise of deliberate choice
and the faculty of discriminative selection. Generally speaking, the
relationship of a person to corporation, whether as officer or as
agent or employee, is not determined by the nature of the services
performed, but by the incidents of the relationship as they actually
exist.
Respondent Vailoces' invocation of estoppel as against petitioners
with respect to the issue of jurisdiction is unavailing. In the first
place, it is not quite correct to state that petitioners did not raise the
point in the lower tribunal. Although rather off handedly, in their
appeal to the NLRC they called attention to the Labor Arbiter's lack
of jurisdiction to rule on the validity of the meeting of July 2, 1983,
but the dismissal of the appeal for alleged tardiness effectively
precluded consideration of that or any other question raised in the
appeal. More importantly, estoppel cannot be invoked to prevent
this Court from taking up the question of jurisdiction, which has
been apparent on the face of the pleadings since the start of
litigation before the Labor Arbiter. It is well settled that the decision
of a tribunal not vested with appropriate jurisdiction is null and
void. Thus, in Calimlim vs. Ramirez, 13 this Court held:
A rule that had been settled by unquestioned acceptance and upheld
in decisions so numerous to cite is that the jurisdiction of a court
over the subject matter of the action is a matter of law and may not
be conferred by consent or agreement of the parties. The lack of
jurisdiction of a court may be raised at any stage of the proceedings,
even on appeal. This doctrine has been qualified by recent
pronouncements which stemmed principally from the ruling in the
cited case of Sibonghanoy. It is to be regretted, however, that the
holding in said case had been applied to situations which were
obviously not contemplated therein. The exceptional circumstances
involved in Sibonghanoy which justified the departure from the
accepted concept of non-waivability of objection to jurisdiction has
been ignored and, instead a blanket doctrine had been repeatedly
upheld that rendered the supposed ruling in Sibonghanoy not as the
exception, but rather the general rule, virtually overthrowing
altogether the time-honored principle that the issue of jurisdiction is
not lost by waiver or by estoppel.
xxx xxx xxx
It is neither fair nor legal to bind a party by the result of a suit or
proceeding which was taken cognizance of in a court which lacks
jurisdiction over the same irrespective of the attendant
circumstances. The equitable defense of estoppel requires
knowledge or consciousness of the facts upon which it is based .
The same thing is true with estoppel by conduct which may be
asserted only when it is shown, among others, that the
representation must have been made with knowledge of the facts
and that the party to whom it was made is ignorant of the truth of
the matter (De Castro vs. Gineta, 27 SCRA 623). The filing of an
action or suit in a court that does not possess jurisdiction to entertain
the same may not be presumed to be deliberate and intended to
secure a ruling which could later be annulled if not favorable to the
party who filed such suit or proceeding in a court that lacks
jurisdiction to take cognizance of the same, such act may not at
once be deemed sufficient basis of estoppel. It could have been the
result of an honest mistake or of divergent interpretation of doubtful
legal provisions. If any fault is to be imputed to a party taking such
course of action, part of the blame should be placed on the court
which shall entertain the suit, thereby lulling the parties into
believing that they pursued their remedies in the correct forum.
Under the rules, it is the duty of the court to dismiss an action
'whenever it appears that court has no jurisdiction over the subject
matter.' (Section 2, Rule 9, Rules of Court) Should the Court render
a judgment without jurisdiction, such judgment may be impeached
or annulled for lack of jurisdiction (Sec. 30, Rule 132, Ibid), within
ten (10) years from the finality of the same (Art. 1144, par. 3, Civil
Code).
To be sure, petitioners failed to raise the issue of jurisdiction in their
petition before this Court. But this, too, is no hindrance to the
Court's considering said issue.
The failure of the appellees to invoke anew the aforementioned
solid ground of want of jurisdiction of the lower court in this appeal
should not prevent this Tribunal to take up that issue as the lack of
jurisdiction of the lower court is apparent upon the face of the
record and it is fundamental that a court of justice could only validly
act upon a cause of action or subject matter of a case over which it
has jurisdiction and said jurisdiction is one conferred only by law;
and cannot be acquired through, or waived by, any act or omission
of the parties (Lagman vs. CA, 44 SCRA 234 [1972]); hence may
be considered by this court motu proprio (Gov't. vs. American
Surety Co., 11 Phil. 203 [1908])... 14
These considerations make inevitable the conclusion that the
judgment of the Labor Arbiter and the resolution of the NLRC are
void for lack of cause of jurisdiction, and this Court must set
matters aright in the exercise of its judicial power. It is of no
moment that Vailoces, in his amended complaint, seeks other relief
which would seemingly fan under the jurisdiction of the Labor
Arbiter, because a closer look at these-underpayment of salary and
non-payment of living allowance-shows that they are actually part
of the perquisites of his elective position, hence, intimately linked
with his relations with the corporation. The question of
remuneration, involving as it does, a person who is not a mere
employee but a stockholder and officer, an integral part, it might be
said, of the corporation, is not a simple labor problem but a matter
that comes within the area of corporate affairs and management, and
is in fact a corporate controversy in contemplation of the
Corporation Code.
WHEREFORE, the questioned decision of the Labor Arbiter and
the Resolution of the NLRC dismissing petitioners' appeal from said
decision are hereby set aside because rendered without jurisdiction.
The amended complaint for illegal dismissal, etc., basis of said
decision and Resolution, is ordered dismissed, without prejudice to
private respondent's seeking recourse in the appropriate forum.SO
ORDERED.
G.R. No. 79762 January 24, 1991
FORTUNE CEMENT CORPORATION, petitioner,
vs.
NATIONAL LABOR RELATIONS COMMISSION (First
Division) and ANTONIO M. LAGDAMEO, respondents.
GRIÑO-AQUINO, J.:
This is a petition for certiorari with prayer to annul the resolution
dated May 29, 1987 of respondent National Labor Relations
Commission (NLRC) reversing the order dated December 3, 1985
of the Labor Arbiter which dismissed private respondent Antonio
M. Lagdameo's (Lagdameo for brevity) complaint for Illegal
Dismissal (NLRC NCR Case No. 1-228-85) against petitioner
Fortune Cement Corporation (FCC for brevity) for lack of
jurisdiction.
Lagdameo is a registered stockholder of FCC.
On October 14, 1975, at the FCC Board of Directors' regular
monthly meeting, he was elected Executive Vice-President of FCC
effective November 1, 1975 (p. 3, Rollo).
Some eight (8) years later, or on February 10, 1983, during a regular
meeting, the FCC Board resolved that all of its incumbent corporate
officers, including Lagdameo, would be "deemed" retained in their
respective positions without necessity of yearly reappointments,
unless they resigned or were terminated by the Board (p. 4, Rollo).
At subsequent regular meetings held on June 14 and 21, 1983, the
FCC Board approved and adopted a resolution dismissing
Lagdameo as Executive Vice-President of the company, effective
immediately, for loss of trust and confidence (p. 4, Rollo).
On June 21, 1983, Lagdameo filed with the National Labor
Relations Commission (NLRC), National Capital Region, a
complaint for illegal dismissal against FCC (NLRC-NCR Case No.
1-228-85) alleging that his dismissal was done without a formal
hearing and investigation and, therefore, without due process (p.
63, Rollo).
On August 5, 1985, FCC moved to dismiss Lagdameo's complaint
on the ground that his dismiss as a corporate officer is a purely
intra-corporate controversy over which the Securities and Exchange
Commission (SEC) has original and exclusive jurisdiction.
The Labor Arbiter granted the motion to dismiss (p. 22, Rollo). On
appeal, however, the NLRC set aside the Labor Arbiter's order and
remanded the case to the Arbitration Branch "for appropriate
proceedings" (NLRC Resolution dated April 30, 1987). The NLRC
denied FCC's motion for reconsideration (p. 5, Rollo). Dissatisfied,
FCC filed this petition for certiorari.
We find merit in the petition.
The sole issue to be resolved is whether or not the NLRC has
jurisdiction over a complaint filed by a corporate executive vice-
president for illegal dismissal, resulting from a board resolution
dismissing him as such officer.
Section 5 of Presidential Decree No. 902-A vests in the SEC
original and exclusive jurisdiction over this controversy:
Sec. 5. In addition to the regulatory and adjudicative functions of
the Securities and Exchange Commissionover 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:
a) Devices and schemes employed by or any acts, of the board of
directors, business associates, its officers or partners, amounting to
fraud and misrepresentation which may be detrimental to the
interest of the public and/or stockholders, partners, members of
associations or organization registered with the Commission;
b) Controversies arising out of intra-corporate or partnership
relations, between and among stockholders, members, or associates;
between any or all of them and the corporation, partnership or
association of which they are stockholders, members or associates,
respectively; and between such corporation, partnership or
association and the state insofar as it concerns their individual
franchise or right to exist as such entity;
c) Controversies in the election or appointments of directors,
trustees, officers or managers of such corporations, partnership or
associations." (Section 5, P.D. 902-A; Emphasis supplied.)
In reversing the decision of Labor Arbiter Porfirio E. Villanueva,
respondent NLRC held:
. . . . It is not disputed that complainant Lagdameo was an employee
of respondent Fortune Cement Corporation, being then the
Executive Vice-President. For having been dismissed for alleged
loss of trust and confidence, complainant questioned his dismissal
on such ground and the manner in which he was dismissed,
claiming that no investigation was conducted, hence, there was and
is denial of due process. Predicated on the above facts, it is clear to
Us that a labor dispute had arisen between the appellant and the
respondent corporation, a dispute which falls within the original and
exclusive jurisdiction of the NLRC. A labor dispute as defined in
the Labor Code includes any controversy or matter concerning
terms or conditions of employment or the association or
representation of persons in negotiating, fixing, maintaining,
changing or arranging the terms and conditions of employment
regardless of whether or not the disputants stand in the proximate
relations of employers and employees." (pp. 16-17, Rollo).
The issue of the SEC's power or jurisdiction is decisive and renders
unnecessary a consideration of the other questions raised by
Lagdameo. Thus did this Court rule in the case of Dy vs. National
Labor Relations Commission(145 SCRA 211) which involved a
similar situation:

The Solicitor General, declining to defend public respondent in its
pleading entitled "Manifestation in Lieu of Comment," aptly
observed:
The position of "Executive Vice-President," from which private
respondent Lagdameo claims to have been illegally dismissed, is an
elective corporate office. He himself acquired that position through
election by the corporation's Board of Directors, although he also
lost the same as a consequence of the latter's resolution.
Indeed the election, appointment and/or removal of an executive
vice-president is a prerogative vested upon a corporate board.
And it must be, not only because it is a practice observed in
petitioner Fortune Cement Corporation, but more so, because of an
express mandate of law. (p. 65, Rollo.)
The Solicitor General pointed out that "a corporate officer's
dismissal is always a corporate act and/or intra-corporate
controversy and that nature is not altered by the reason or wisdom
which the Board of Directors may have in taking such action." The
dispute between petitioner and Lagdameo is of the class described
in Section 5, par. (c) of Presidential Decree No. 902-A, hence,
within the original and exclusive jurisdiction of the SEC. The
Solicitor General recommended that the petition be granted and
NLRC-NCR Case No. 1-228-85 be dismissed by respondent NLRC
for lack of jurisdiction (p. 95, Rollo).
It is of no moment that Vailoces, in his amended complaint, seeks
other reliefs which would seemingly fall under the jurisdiction of
the Labor Arbiter, because a closer look at these — underpayment
of salary and non-payment of living allowance — shows that they
are actually part of the perquisites of his elective position, hence,
intimately linked with his relations with the
corporation.1âwphi1 The question of remuneration, involving as it
does, a person who is not a mere employee but a stockholder and
officer, an integral part, it might be said, of the corporation, is not a
simple labor problem but a matter that comes within the area of
corporate affairs and management, and is in fact a corporate
controversy in contemplation of the Corporation Code. (Emphasis
ours.)
WHEREFORE, the questioned Resolution of the NLRC reversing
the decision of the Labor Arbiter, having been rendered without
jurisdiction, is hereby reversed and set aside. The decision of the
Labor Arbiter dated December 3, 1985 dismissing NLRC-NCR
Case No. 1-228-85 is affirmed, without prejudice to private
respondent Antonio M. Lagdameo's seeking recourse in the
appropriate forum. No costs.
SO ORDERED.

In PSBA vs. Leaño (127 SCRA 778), this Court, confronted with a
similar controversy, ruled that the SEC, not the NLRC, has
jurisdiction:

This is not a case of dismissal. The situation is that of a corporate

office having been declared vacant, and of Tan's not having been
elected thereafter. The matter of whom to elect is a prerogative that
belongs to the Board, and involves the exercise of deliberate choice
and the faculty of discriminative selection. Generally speaking, the
relationship of a person to a corporation, whether as officer or as
agent or employee is not determined by the nature of the services
performed, but by the incidents of the relationship as they actually
exist.

Lagdameo claims that his dismissal was wrongful, illegal, and

arbitrary, because the "irregularities" charged against him were not
investigated (p. 85, Rollo); that the case of PSBA vs. Leaño (supra)
cited by the Labor Arbiter finds no application to his case because it
is not a matter of corporate office having been declared vacant but
one where a corporate officer was dismissed without legal and
factual basis and without due process; that the power of dismissal
should not be confused with the manner of exercising the same; that
even a corporate officer enjoys security of tenure regardless of his
rank (p. 97, Rollo); and that the SEC is without power to grant the
reliefs prayed for in his complaint (p. 106, Rollo).
G.R. No. L-30211 October 5, 1976
GOODRICH EMPLOYEES ASSOCIATION, petitioner,
vs.
THE HONORABLE DELFIN B. FLORES, JUDGE OF THE
COURT OF FIRST INSTANCE OF RIZAL, PASIG BRANCH
XI and B. F. GOODRICH PHILIPPINES, INC., respondents.
J.C. Espinas B.C. Pineda & Associates for petitioner.
Manuel O. Chan for private respondent.
FERNANDO, J.:
The crucial question raised by petitioner B. F. Goodrich Employees
Association in this certiorari and prohibition proceeding is whether
respondent Judge Delfin B. Flores, since deceased, could entertain a
suit for damages filed by private respondent . B. F. Goodrich
Philippines, Inc., the employer, because of a strike by such union
characterized by management as an unfair labor practice. Previously
there was instituted by it the very same unfair labor practice charge
with now defunct Court of Industrial Relations. The answer
supplied in categorical language both by Associated Labor Union v.
Gomez 1 and Progressive Labor Association v. Atlas Consolidated
Mining and Development Corporation, 2 is that a court of first
instance is devoid of jurisdiction, the matter being appropriately for
the Court of Industrial Relations. It is true that the Gomez decision
was not promulgated until February 9, 1967, while the suit for
damages by private respondent based on an unfair labor practice
was filed with respondent Judge as early as October 12, 1965, as
noted during the pendency of an unfair labor practice complaint
based on the same strike in the Court of Industrial Relations. 3 It
could be said that respondent Judge, when he assumed jurisdiction
in 1965, could not have known any better. No such excuse could be
relied upon, however, as of June 5, 1967 when the motion to
dismiss precisely on the ground of lack of jurisdiction was presented
to him. For the Gomez ruling had in the meanwhile, on February 9,
1967, to be exact, made its appearance. That circumstance ought to
have prompted him to grant such motion and thus terminate the civil
suit for damages allegedly arising from the unfair labor practice,
Instead, he denied it. 4
That was to act not in accordance with but contrary to our
controlling decisions. It ought not to have been the case. Since
jurisdiction was lacking, a case for certiorari and prohibition has
been made out.
1. This is the doctrine announced by this Court through Justice
Sanchez with such clarity in Gomez: "Nor will Sugecos averment
below that it suffers damages by reason of the strike, work to defeat
the CIR's jurisdiction to hear the unfair labor practice charge,
Reason for this is that the right to damages "would still to depend on
the evidence in the unfair labor practice case"—in the CIR. To hold
otherwise is to sanction split jurisdiction—which is obnoxious to
the orderly administration of justice. 5 Justice J.B.L. Reyes in
Progressive Labor Association decision was equally explicit: "In its
effort to sustain the jurisdiction of the lower court over the present
case, appellants also advance the argument that their demand for
damages anyway cannot be entertained by the Industrial Court. This
does not improve the situation at all. As already held b this Court,
mere allegation that the plaintiff suffered damages because of the
complained acts does not work to divest the Court of Industrial
Relations of jurisdiction to hear the unfair labor practice charge. For
it must be realized that the right to damages would still have to
depend on the evidence to be presented in the unfair labor case. To
hold that the demand for damages is to be passed upon by the
regular courts independently or separately from the unfair labor
practice accusation would be to sanction split jurisdiction, which is
prejudicial to the orderly administration of justice. 6 Thereafter the
same jurist had occasion to reiterate the doctrine in the two
subsequent decisions of Leoquenio v. Dry Bottling
Co. 7 and Associated Labor Union v. Cruz. 8
2. Associated Labor Union v. Gomez 9 is also notable for this
categorical pronouncement concerning the exclusive jurisdiction of
the Court of Industrial Relations over unfair labor practice
controversies. To quote from Justice Sanchez anew: "A rule
buttressed upon statute and reason that is frequently reiterated in
jurisprudence is that labor cases involving unfair labor practice are
within the exclusive jurisdiction of the CIR. By now, this rule has
ripened into dogma. It thus commands adherence, not
breach. 10 This excerpt was referred to with approval by Justice
Teehankee, speaking for this Court in Veteran Security Free
Workers Union v. Cloribel, 11 thus: "It has long been accepted as
dogma that cases involving unfair labor practice fall within the
exclusive jurisdiction of the Court of Industrial Relations, by virtue
of the explicit provision of Section 5(a) of the Industrial Peace Act
... . 12 As was further clarified by the ponencia of Justice Dizon
in Meralco Workers Union v. Gaerlan, 13 where the subject matter is
within the competence of the CIR, it "must be deemed to have
jurisdiction of all incidental matters connected with the main issue
... ." 14 So it was repeated in Lakas ng Manggagawang Makabayan
v. Abiera. 15 There has been since then no deviation from such a
controlling doctrine in accordance with the express terms of the
Industrial Peace Act. 16
3. Rightfully, the able counsel for petitioner, Attorney J. C. Espinas,
concentrated on the crucial and decisive aspect of lack of
jurisdiction. Understandably, the knowledgeable Attorney Manuel
Chan for private respondent sought refuge in the minute resolution
of this Court of October 28, 1968 dismissing a case of similar nature
by the same parties "without prejudice to asking suspension of
proceedings in the Court of First Instance. 17 That is hardly relevant
to the disposition of this present petition. There is no res judicata.
The principle underlying Social Security System v. Court of
Appeals 18 cautions against such an approach. The very resolution,
in the traditional language of the law, can rightfully be interpreted
as evincing respect for the well-settled doctrine of ripeness for
appellate review. With respondent Judge apparently unable to
perceive the clear and manifest import of authoritative decisions,
this Court, in its resolution of March 4, 1969, left no doubt that the
question raised in this petition was of such moment, indicative as it
was of the failure of the lower court to abide by the controlling
doctrines, that it forthwith required respondents "to file an answer to
the petition for certiorari and prohibition. 19 This it did
notwithstanding the investment in the petition that there was a
previous proceeding filed b the same union against the same judge,
and the same employer which resulted in the aforesaid resolution of
October 25, 1968. 20 It cannot be doubted, therefore, that this Court
took into consideration that particular defense raised and found it
lacking in merit.
4. The conclusion reached by this Court to nullify on jurisdictional
ground the challenged order gains added reinforcement from their
draconian Character. On August 31, 1968, the dispositive portion of
the decision reached by respondent Judge was amended to read as
follows: "[Wherefore], judgment is hereby rendered in favor of the
plaintiff B. F. Goodrich Philippines, Incorporated, and against the
defendants Goodrich Employees Association (PLUM) Celedonio
Francisco, Melencio Bautista, Luis V. Mendez, Loreto R. Sotto,
Gabino Magdamit, Jose Porcuna, Igm . Idio Tayag, Teofilo
Malicdem Leonardo Pilande, Leonardo Calimotan, Eleuterio
Alvarez, August Lopez, and L. de los Reyes, directing the said
defendants to pay the plaintiff the amount of Six Hundred Eighty-
Six
as evidenced by the expanded and more generous scope to both
concepts of protection to labor 29 and social justice. 30Thereby the
goal of what in the inspired language of the First Lady is, "a
compassionate society" 31 may be truly achieved.
WHEREFORE, the writ of prohibition is granted and the successor
of respondent Judge Delfin B. Flores in Branch XI of the Court of
First Instance of Rizal is hereby perpetually restrained from taking
any further action in Civil Case No. 8962 entitled B. F. Goodrich
Philippines, Inc. v. Philippine Labor Unity Movement, Goodrich
Employees Association, et al., except for the purpose of dismissing
the same. The writ of certiorari is likewise granted setting aside,
nullifying and declaring without any force or effect respondent
Judge's decision of August 31, 1968 and his order of January 20,
1969, for having been issued without jurisdiction. No costs.
Barredo, Antonio, Aquino, and Concepcion Jr. JJ., concur.

Thousand Seven Hundred (P686,700.00) Pesos plus interest at the

rate of 1% per month from January 1, 1966 until the said amount is
fully paid; P25,000.00 as moral damages; P25,000.00 as exemplary
damages; P50,000.00 as attorney's fees and to pay the costs of this
suit." 21 Then came on January 20, 1969 an order that could deal a
death-blow to petitioner union: "Let a writ of execution issue in
favor of the plaintiff B. F. Goodrich Philippines, Inc., and against
the defendants Goodrich Employees Association (PLUM),
Celedonio Francisco, Melencio Bautista, Luis V. Mendez, Loreto R.
Sotto, Gabino Magdamit, Jose Porcuna, Igmidio Tayag, Teofilo
Malicdem Leonardo Pilande, Leonardo Calimotan, Eleuterio
Alvarez, August Lopez. and L. de los Reyes for the full satisfaction
of its claims." 22Thus there is the sad spectacle of a court acting
without jurisdiction, guided solely by its own unaided appraisal of a
matter clearly beyond its competence, inflicting what in the apt
phrase of Justice Laurel could very well be a "mortal wound" to the
labor movement. There is no better illustration of the wisdom of the
view of Justice J.B.L. Reyes that labor controversies should be left
for disposition not to an ordinary court but to an agency better
equipped by training, experience and background to handle them.
This observation was made by him as far back as 1957. 23 The
regular courts, as he pointed out, "have not intervened in labor cases
[since 1936] and are therefore illprepared to apply labor laws and
policies. And the frequency with which this Court has had to upset
their labor injunctions attest to the fact. 24 What is more, that is not
protect labor as required by the 1935 Constitution that was in force
when this litigation arose. 25 That is to make a mockery of the
fundamental principle of social justice, again as therein
enshrined. 26 If there is one case then where the vivid rhetoric of
Justice Street in Banco Espanol-Filipino v. Palanca 27 finds
application, this is it: "Where a judgment or judicial order is void in
this sense it may be said to be a lawless thing, which can be treated
as an outlaw and slain at sight or ignored wherever and whenever it
exhibits its head. 28Only thus may there be fidelity to the even
greater concern shown by the present Constitution for the workers
G.R. No. 85750 September 28, 1990
INTERNATIONAL CATHOLIC IMMIGRATION
COMMISSION, petitioner
vs
HON. PURA CALLEJA IN HER CAPACITY AS DIRECTOR
OF THE BUREAU OF LABOR RELATIONS AND TRADE
UNIONS OF THE PHILIPPINES AND ALLIED SERVICES
(TUPAS) WFTU respondents.
G.R. No. 89331 September 28, 1990
KAPISANAN NG MANGGAGAWA AT TAC SA IRRI-
ORGANIZED LABOR ASSOCIATION IN LINE
INDUSTRIES AND AGRICULTURE, petitioner,
vs
SECRETARY OF LABOR AND EMPLOYMENT AND
INTERNATIONAL RICE RESEARCH INSTITUTE,
INC., respondents.
Araullo, Zambrano, Gruba, Chua Law Firm for petitioner in 85750.
Dominguez, Armamento, Cabana & Associates for petitioner in
G.R. No. 89331.
Jimenez & Associates for IRRI.
Alfredo L. Bentulan for private respondent in 85750.
MELENCIO-HERRERA, J.:
Consolidated on 11 December 1989, these two cases involve the
validity of the claim of immunity by the International Catholic
Migration Commission (ICMC) and the International Rice Research
Institute, Inc. (IRRI) from the application of Philippine labor laws.
I
Facts and Issues
A. G.R. No. 85750 — the International Catholic Migration
Commission (ICMC) Case.
As an aftermath of the Vietnam War, the plight of Vietnamese
refugees fleeing from South Vietnam's communist rule confronted
the international community.
In response to this crisis, on 23 February 1981, an Agreement was
forged between the Philippine Government and the United Nations
High Commissioner for Refugees whereby an operating center for
processing Indo-Chinese refugees for eventual resettlement to other
countries was to be established in Bataan (Annex "A", Rollo, pp.
22-32).
ICMC was one of those accredited by the Philippine Government to
operate the refugee processing center in Morong, Bataan. It was
incorporated in New York, USA, at the request of the Holy See, as a
non-profit agency involved in international humanitarian and
voluntary work. It is duly registered with the United Nations
Economic and Social Council (ECOSOC) and enjoys Consultative
Status, Category II. As an international organization rendering
voluntary and humanitarian services in the Philippines, its activities
are parallel to those of the International Committee for Migration
(ICM) and the International Committee of the Red Cross (ICRC)
[DOLE Records of BLR Case No. A-2-62-87, ICMC v. Calleja,
Vol. 1].
On 14 July 1986, Trade Unions of the Philippines and Allied
Services (TUPAS) filed with the then Ministry of Labor and
Employment a Petition for Certification Election among the rank
and file members employed by ICMC The latter opposed the
petition on the ground that it is an international organization
registered with the United Nations and, hence, enjoys diplomatic
immunity.
On 5 February 1987, Med-Arbiter Anastacio L. Bactin sustained
ICMC and dismissed the petition for lack of jurisdiction.
On appeal by TUPAS, Director Pura Calleja of the Bureau of Labor
Relations (BLR), reversed the Med-Arbiter's Decision and ordered
the immediate conduct of a certification election. At that time,
ICMC's request for recognition as a specialized agency was still
pending with the Department of Foreign Affairs (DEFORAF).
Subsequently, however, on 15 July 1988, the Philippine
Government, through the DEFORAF, granted ICMC the status of a
specialized agency with corresponding diplomatic privileges and
immunities, as evidenced by a Memorandum of Agreement between
the Government and ICMC (Annex "E", Petition, Rollo, pp. 41-
43), infra.
ICMC then sought the immediate dismissal of the TUPAS Petition
for Certification Election invoking the immunity expressly granted
but the same was denied by respondent BLR Director who, again,
ordered the immediate conduct of a pre-election conference.
ICMC's two Motions for Reconsideration were denied despite an
opinion rendered by DEFORAF on 17 October 1988 that said BLR
Order violated ICMC's diplomatic immunity.
Thus, on 24 November 1988, ICMC filed the present Petition for
Certiorari with Preliminary Injunction assailing the BLR Order.
On 28 November 1988, the Court issued a Temporary Restraining
Order enjoining the holding of the certification election.
On 10 January 1989, the DEFORAF, through its Legal Adviser,
retired Justice Jorge C. Coquia of the Court of Appeals, filed a
Motion for Intervention alleging that, as the highest executive
department with the competence and authority to act on matters
involving diplomatic immunity and privileges, and tasked with the
conduct of Philippine diplomatic and consular relations with foreign
governments and UN organizations, it has a legal interest in the
outcome of this case.
Over the opposition of the Solicitor General, the Court allowed
DEFORAF intervention.
On 12 July 1989, the Second Division gave due course to the ICMC
Petition and required the submittal of memoranda by the parties,
which has been complied with.
As initially stated, the issue is whether or not the grant of diplomatic
privileges and immunites to ICMC extends to immunity from the
application of Philippine labor laws.
ICMC sustains the affirmative of the proposition citing (1) its
Memorandum of Agreement with the Philippine Government giving
it the status of a specialized agency, (infra); (2) the Convention on
the Privileges and Immunities of Specialized Agencies, adopted by
the UN General Assembly on 21 November 1947 and concurred in
by the Philippine Senate through Resolution No. 91 on 17 May
1949 (the Philippine Instrument of Ratification was signed by the
President on 30 August 1949 and deposited with the UN on 20
March 1950) infra; and (3) Article II, Section 2 of the 1987
Constitution, which declares that the Philippines adopts the
generally accepted principles of international law as part of the law
of the land.
Intervenor DEFORAF upholds ICMC'S claim of diplomatic
immunity and seeks an affirmance of the DEFORAF determination
that the BLR Order for a certification election among the ICMC
employees is violative of the diplomatic immunity of said
organization.
Respondent BLR Director, on the other hand, with whom the
Solicitor General agrees, cites State policy and Philippine labor laws
to justify its assailed Order, particularly, Article II, Section 18 and
Article III, Section 8 of the 1987 Constitution, infra; and Articles
243 and 246 of the Labor Code, as amended, ibid. In addition, she
contends that a certification election is not a litigation but a mere
investigation of a non-adversary, fact-finding character. It is not a
suit against ICMC its property, funds or assets, but is the sole
concern of the workers themselves.
B. G.R. No. 89331 — (The International Rice Research Institute
[IRRI] Case).
Before a Decision could be rendered in the ICMC Case, the Third
Division, on 11 December 1989, resolved to consolidate G.R. No.
89331 pending before it with G.R. No. 85750, the lower-numbered
case pending with the Second Division, upon manifestation by the
Solicitor General that both cases involve similar issues.
The facts disclose that on 9 December 1959, the Philippine
Government and the Ford and Rockefeller Foundations signed a
Memorandum of Understanding establishing the International Rice
Research Institute (IRRI) at Los Baños, Laguna. It was intended to
be an autonomous, philanthropic, tax-free, non-profit, non-stock
organization designed to carry out the principal objective of
conducting "basic research on the rice plant, on all phases of rice
production, management, distribution and utilization with a view to
attaining nutritive and economic advantage or benefit for the people
of Asia and other major rice-growing areas through improvement in
quality and quantity of rice."
Initially, IRRI was organized and registered with the Securities and
Exchange Commission as a private corporation subject to all laws
and regulations. However, by virtue of Pres. Decree No. 1620,
promulgated on 19 April 1979, IRRI was granted the status,
prerogatives, privileges and immunities of an international
organization.
The Organized Labor Association in Line Industries and Agriculture
(OLALIA), is a legitimate labor organization with an existing local
union, the Kapisanan ng Manggagawa at TAC sa IRRI (Kapisanan,
for short) in respondent IRRI.
On 20 April 1987, the Kapisanan filed a Petition for Direct
Certification Election with Region IV, Regional Office of the
Department of Labor and Employment (DOLE).
IRRI opposed the petition invoking Pres. Decree No. 1620
conferring upon it the status of an international organization and
granting it immunity from all civil, criminal and administrative
proceedings under Philippine laws.
On 7 July 1987, Med-Arbiter Leonardo M. Garcia, upheld the
opposition on the basis of Pres. Decree No. 1620 and dismissed the
Petition for Direct Certification.
On appeal, the BLR Director, who is the public respondent in the
ICMC Case, set aside the Med-Arbiter's Order and authorized the
calling of a certification election among the rank-and-file employees
of IRRI. Said Director relied on Article 243 of the Labor Code, as
amended, infra and Article XIII, Section 3 of the 1987
Constitution, 1 and held that "the immunities and privileges granted
to IRRI do not include exemption from coverage of our Labor
Laws." Reconsideration sought by IRRI was denied.
On appeal, the Secretary of Labor, in a Resolution of 5 July 1989,
set aside the BLR Director's Order, dismissed the Petition for
Certification Election, and held that the grant of specialized agency
status by the Philippine Government to the IRRI bars DOLE from
assuming and exercising jurisdiction over IRRI Said Resolution
reads in part as follows:
Presidential Decree No. 1620 which grants to the IRRI the status,
prerogatives, privileges and immunities of an international
organization is clear and explicit. It provides in categorical terms
that:
Art. 3 — The Institute shall enjoy immunity from any penal, civil
and administrative proceedings, except insofar as immunity has
been expressly waived by the Director-General of the Institution or
his authorized representative.
Verily, unless and until the Institute expressly waives its immunity,
no summons, subpoena, orders, decisions or proceedings ordered by
any court or administrative or quasi-judicial agency are enforceable
as against the Institute. In the case at bar there was no such waiver
made by the Director-General of the Institute. Indeed, the Institute,
at the very first opportunity already vehemently questioned the
jurisdiction of this Department by filing an ex-parte motion to
dismiss the case.
Hence, the present Petition for Certiorari filed by Kapisanan
alleging grave abuse of discretion by respondent Secretary of Labor
in upholding IRRI's diplomatic immunity.
The Third Division, to which the case was originally assigned,
required the respondents to comment on the petition. In a
Manifestation filed on 4 August 1990, the Secretary of Labor
declared that it was "not adopting as his own" the decision of the
BLR Director in the ICMC Case as well as the Comment of the
Solicitor General sustaining said Director. The last pleading was
filed by IRRI on 14 August 1990.
Instead of a Comment, the Solicitor General filed a Manifestation
and Motion praying that he be excused from filing a comment "it
appearing that in the earlier case of International Catholic
Migration Commission v. Hon. Pura Calleja, G.R. No. 85750. the
Office of the Solicitor General had sustained the stand of Director
Calleja on the very same issue now before it, which position has
been superseded by respondent Secretary of Labor in G.R. No.
89331," the present case. The Court acceded to the Solicitor
General's prayer.
The Court is now asked to rule upon whether or not the Secretary of
Labor committed grave abuse of discretion in dismissing the
Petition for Certification Election filed by Kapisanan.
Kapisanan contends that Article 3 of Pres. Decree No. 1620
granting IRRI the status, privileges, prerogatives and immunities of
an international organization, invoked by the Secretary of Labor, is
unconstitutional in so far as it deprives the Filipino workers of their
fundamental and constitutional right to form trade unions for the
purpose of collective bargaining as enshrined in the 1987
Constitution.
A procedural issue is also raised. Kapisanan faults respondent
Secretary of Labor for entertaining IRRI'S appeal from the Order of
the Director of the Bureau of Labor Relations directing the holding
of a certification election. Kapisanan contends that pursuant to
Sections 7, 8, 9 and 10 of Rule V 2 of the Omnibus Rules
Implementing the Labor Code, the Order of the BLR Director had
become final and unappeable and that, therefore, the Secretary of
Labor had no more jurisdiction over the said appeal.
On the other hand, in entertaining the appeal, the Secretary of Labor
relied on Section 25 of Rep. Act. No. 6715, which took effect on 21
March 1989, providing for the direct filing of appeal from the Med-
Arbiter to the Office of the Secretary of Labor and Employment
instead of to the Director of the Bureau of Labor Relations in cases
involving certification election orders.
III
Findings in Both Cases.
There can be no question that diplomatic immunity has, in fact,
been granted ICMC and IRRI.
Article II of the Memorandum of Agreement between the Philippine
Government and ICMC provides that ICMC shall have a status
"similar to that of a specialized agency." Article III, Sections 4 and
5 of the Convention on the Privileges and Immunities of Specialized
Agencies, adopted by the UN General Assembly on 21 November
1947 and concurred in by the Philippine Senate through Resolution
No. 19 on 17 May 1949, explicitly provides:
Art. III, Section 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.
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).
IRRI is similarly situated, Pres. Decree No. 1620, Article 3, is
explicit in its grant of immunity, thus:
Art. 3. Immunity from Legal Process. — The Institute shall enjoy
immunity from any penal, civil and administrative proceedings,
except insofar as that immunity has been expressly waived by the
Director-General of the Institute or his authorized representatives.
Thus it is that the DEFORAF, through its Legal Adviser, sustained
ICMC'S invocation of immunity when in a Memorandum, dated 17
October 1988, it expressed the view that "the Order of the Director
of the Bureau of Labor Relations dated 21 September 1988 for the
conduct of Certification Election within ICMC violates the
diplomatic immunity of the organization." Similarly, in respect of
IRRI, the DEFORAF speaking through The Acting Secretary of
Foreign Affairs, Jose D. Ingles, in a letter, dated 17 June 1987, to
the Secretary of Labor, maintained that "IRRI enjoys immunity
from the jurisdiction of DOLE in this particular instance."
The foregoing opinions constitute a categorical recognition by the
Executive Branch of the Government that ICMC and IRRI enjoy
immunities accorded to international organizations, which
determination has been held to be a political question conclusive
upon the Courts in order not to embarrass a political department of
Government.
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 . . . or other officer acting under his direction. Hence, in
adherence to the settled principle that courts may not so exercise
their jurisdiction . . . 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. 3
A brief look into the nature of international organizations and
specialized agencies is in order. The term "international
organization" is generally used to describe an organization set up by
agreement between two or more states. 4 Under contemporary
international law, such organizations are endowed with some degree
of international legal personality 5 such that they are capable of
exercising specific rights, duties and powers. 6 They are organized
mainly as a means for conducting general international business in
which the member states have an interest. 7 The United Nations, for
instance, is an international organization dedicated to the
propagation of world peace.
"Specialized agencies" are international organizations having
functions in particular fields. The term appears in Articles 57 8 and
63 9 of the Charter of the United Nations:
The Charter, while it invests the United Nations with the general
task of promoting progress and international cooperation in
economic, social, health, cultural, educational and related matters,
contemplates that these tasks will be mainly fulfilled not by organs
of the United Nations itself but by autonomous international
organizations established by inter-governmental agreements outside
the United Nations. There are now many such international agencies
having functions in many different fields, e.g. in posts,
telecommunications, railways, canals, rivers, sea transport, civil
aviation, meteorology, atomic energy, finance, trade, education and
culture, health and refugees. Some are virtually world-wide in their
membership, some are regional or otherwise limited in their
membership. The Charter provides that those agencies which have
"wide international responsibilities" are to be brought into
relationship with the United Nations by agreements entered into
between them and the Economic and Social Council, are then to be
known as "specialized agencies." 10
The rapid growth of international organizations under contemporary
international law has paved the way for the development of the
concept of international immunities.
It is now usual for the constitutions of international organizations to
contain provisions conferring certain immunities on the
organizations themselves, representatives of their member states and
persons acting on behalf of the organizations. A series of
conventions, agreements and protocols defining the immunities of
various international organizations in relation to their members
generally are now widely in force; . . . 11
There are basically three propositions underlying the grant of
international immunities to international organizations. These
principles, contained in the ILO Memorandum are stated thus: 1)
international institutions should have a status which protects them
against control or interference by any one government in the
performance of functions for the effective discharge of which they
are responsible to democratically constituted international bodies in
which all the nations concerned are represented; 2) no country
should derive any national financial advantage by levying fiscal
charges on common international funds; and 3) the international
organization should, as a collectivity of States members, be
accorded the facilities for the conduct of its official business
customarily extended to each other by its individual member
States. 12 The theory behind all three propositions is said to be
essentially institutional in character. "It is not concerned with the
status, dignity or privileges of individuals, but with the elements of
functional independence necessary to free international institutions
from national control and to enable them to discharge their
responsibilities impartially on behalf of all their
members. 13 The raison d'etre for these immunities is the assurance
of unimpeded performance of their functions by the agencies
concerned.
The grant of immunity from local jurisdiction to ICMC and IRRI is
clearly necessitated by their international character and respective
purposes. The objective is to avoid the danger of partiality and
interference by the host country in their internal workings. The
exercise of jurisdiction by the Department of Labor in these
instances would defeat the very purpose of immunity, which is to
shield the affairs of international organizations, in accordance with
international practice, from political pressure or control by the host
country to the prejudice of member States of the organization, and
to ensure the unhampered performance of their functions.
ICMC's and IRRI's immunity from local jurisdiction by no means
deprives labor of its basic rights, which are guaranteed by Article II,
Section 18, 14 Article III, Section 8, 15 and Article XIII, Section 3
(supra), of the 1987 Constitution; and implemented by Articles 243
and 246 of the Labor Code, 16 relied on by the BLR Director and by
Kapisanan.
For, ICMC employees are not without recourse whenever there are
disputes to be settled. Section 31 of the Convention on the
Privileges and Immunities of the Specialized Agencies of the United
Nations 17 provides that "each specialized agency shall make
provision for appropriate modes of settlement of: (a) disputes
arising out of contracts or other disputes of private character to
which the specialized agency is a party." Moreover, pursuant to
Article IV of the Memorandum of Agreement between ICMC the
the Philippine Government, whenever there is any abuse of
privilege by ICMC, the Government is free to withdraw the
privileges and immunities accorded. Thus:
Art. IV. Cooperation with Government Authorities. — 1. The
Commission shall cooperate at all times with the appropriate
authorities of the Government to ensure the observance of
Philippine laws, rules and regulations, facilitate the proper
administration of justice and prevent the occurrences of any abuse
of the privileges and immunities granted its officials and alien
employees in Article III of this Agreement to the Commission.
2. In the event that the Government determines that there has been
an abuse of the privileges and immunities granted under this
Agreement, consultations shall be held between the Government
and the Commission to determine whether any such abuse has
occurred and, if so, the Government shall withdraw the privileges
and immunities granted the Commission and its officials.
Neither are the employees of IRRI without remedy in case of
dispute with management as, in fact, there had been organized a
forum for better management-employee relationship as evidenced
by the formation of the Council of IRRI Employees and
Management (CIEM) wherein "both management and employees
were and still are represented for purposes of maintaining mutual
and beneficial cooperation between IRRI and its employees." The
existence of this Union factually and tellingly belies the argument
that Pres. Decree No. 1620, which grants to IRRI the status,
privileges and immunities of an international organization, deprives
its employees of the right to self-organization.
The immunity granted being "from every form of legal process
except in so far as in any particular case they have expressly waived
their immunity," it is inaccurate to state that a certification election
is beyond the scope of that immunity for the reason that it is not a
suit against ICMC. A certification election cannot be viewed as an
independent or isolated process. It could tugger off a series of
events in the collective bargaining process together with related
incidents and/or concerted activities, which could inevitably involve
ICMC in the "legal process," which includes "any penal, civil and
administrative proceedings." The eventuality of Court litigation is
neither remote and from which international organizations are
precisely shielded to safeguard them from the disruption of their
functions. Clauses on jurisdictional immunity are said to be standard
provisions in the constitutions of international Organizations. "The
immunity covers the organization concerned, its property and its
assets. It is equally applicable to proceedings in personam and
proceedings in rem." 18
contrary to Kapisanan's allegations. The pertinent portion of that
law provides:
Art. 259. — Any party to an election may appeal the order or results
of the election as determined by the Med-Arbiter directly to the
Secretary of Labor and Employment on the ground that the rules
and regulations or parts thereof established by the Secretary of
Labor and Employment for the conduct of the election have been
violated. Such appeal shall be decided within 15 calendar days
(Emphasis supplied).
En passant, the Court is gratified to note that the heretofore
antagonistic positions assumed by two departments of the executive
branch of government have been rectified and the resultant
embarrassment to the Philippine Government in the eyes of the
international community now, hopefully, effaced.
WHEREFORE, in G.R. No. 85750 (the ICMC Case), the Petition is
GRANTED, the Order of the Bureau of Labor Relations for
certification election is SET ASIDE, and the Temporary Restraining
Order earlier issued is made PERMANENT.
In G.R. No. 89331 (the IRRI Case), the Petition is Dismissed, no
grave abuse of discretion having been committed by the Secretary
of Labor and Employment in dismissing the Petition for
Certification Election.
No pronouncement as to costs.
SO ORDERED.

We take note of a Manifestation, dated 28 September 1989, in the

ICMC Case (p. 161, Rollo), wherein TUPAS calls attention to the
case entitled "International Catholic Migration Commission v.
NLRC, et als., (G.R. No. 72222, 30 January 1989, 169 SCRA 606),
and claims that, having taken cognizance of that dispute (on the
issue of payment of salary for the unexpired portion of a six-month
probationary employment), the Court is now estopped from passing
upon the question of DOLE jurisdiction petition over ICMC.

We find no merit to said submission. Not only did the facts of said
controversy occur between 1983-1985, or before the grant to ICMC
on 15 July 1988 of the status of a specialized agency with
corresponding immunities, but also because ICMC in that case did
not invoke its immunity and, therefore, may be deemed to have
waived it, assuming that during that period (1983-1985) it was
tacitly recognized as enjoying such immunity.

Anent the procedural issue raised in the IRRI Case, suffice it to state
that the Decision of the BLR Director, dated 15 February 1989, had
not become final because of a Motion for Reconsideration filed by
IRRI Said Motion was acted upon only on 30 March 1989 when
Rep. Act No. 6715, which provides for direct appeals from the
Orders of the Med-Arbiter to the Secretary of Labor in certification
election cases either from the order or the results of the election
itself, was already in effect, specifically since 21 March 1989.
Hence, no grave abuse of discretion may be imputed to respondent
Secretary of Labor in his assumption of appellate jurisdiction,
G.R. No. 108813 December 15, 1994
JUSMAG PHILIPPINES, petitioner,
vs.
THE NATIONAL LABOR RELATIONS COMMISSION
(Second Division) and FLORENCIO SACRAMENTO, Union
President, JPFCEA, respondents.
Juan, Luces, Luna and Associates for petitioner.
Galutera & Aguilar Law Offices for private respondent.
PUNO, J.:
The immunity from suit of the Joint United States Military
Assistance Group to the Republic of the Philippines (JUSMAG-
Philippines) is the pivotal issue in the case at bench.
JUSMAG assails the January 29, 1993 Resolution of the
NATIONAL LABOR RELATIONS COMMISSION (public
respondent), in NLRC NCR CASE NO. 00-03-02092-92, reversing
the July 30, 1991 Order of the Labor Arbiter, and ordering the latter
to assume jurisdiction over the complaint for illegal dismissal filed
by FLORENCIO SACRAMENTO (private respondent) against
petitioner.
First, the undisputed facts.
Private respondent was one of the seventy-four (74) security
assistance support personnel (SASP) working at JUSMAG-
Philippines. 1 He had been with JUSMAG from December 18, 1969,
until his dismissal on April 27, 1992. When dismissed, he held the
position of Illustrator 2 and was the incumbent President of
JUSMAG PHILIPPINES-FILIPINO CIVILIAN EMPLOYEES
ASSOCIATION (JPFCEA), a labor organization duly registered
with the Department of Labor and Employment. His services were
terminated allegedly due to the abolition of his position. 2He was
also advised that he was under administrative leave until April 27,
1992, although the same was not charged against his leave.
On March 31, 1992, private respondent filed a complaint with the
Department of Labor and Employment on the ground that he was
illegally suspended and dismissed from service by JUSMAG. 3 He
asked for his reinstatement.
JUSMAG then filed a Motion to Dismiss invoking its immunity
from suit as an agency of the United States. It further alleged lack of
employer-employee relationship and that it has no juridical
personality to sue and be sued.4
In an Order dated July 30, 1991, Labor Arbiter Daniel C. Cueto
dismissed the subject complaint " for want of jurisdiction."5 Private
respondent appealed6 to the National Labor Relations Commission
(public respondent), assailing the ruling that petitioner is immune
from suit for alleged violation of our labor laws. JUSMAG filed its
Opposition, 7 reiterating its immunity from suit for its non-
contractual, governmental and/or public acts.
In a Resolution, dated January 29, 1993, the NLRC8 reversed the
ruling of the Labor Arbiter as it held that petitioner had lost its right
not to be sued. The resolution was predicated on two grounds: (1)
the principle of estoppel — that JUSMAG failed to refute the
existence of employer-employee relationship under the "control
test"; and (2) JUSMAG has waived its right to immunity from suit
when it hired the services of private respondent on December 18,
1969.
The NLRC relied on the case of Harry Lyons vs. United States of
America,9 where the "United States Government (was considered to
have) waived its immunity from suit by entering into (a) contract of
stevedoring services, and thus, it submitted itself to the jurisdiction
of the local courts."
Accordingly, the case was remanded to the labor arbiter for
reception of evidence as to the issue on illegal dismissal.
Hence, this petition, JUSMAG contends:
I
THE PUBLIC RESPONDENT COMMITTED GRAVE ABUSE
OF DISCRETION AMOUNTING TO LACK AND/OR EXCESS
OF JURISDICTION —
A. IN REVERSING THE DECISION OF THE LABOR ARBITER
AND IN NOT AFFIRMING THE DISMISSAL OF THE
COMPLAINT IT BEING A SUIT AGAINST THE UNITED
STATES OF AMERICA WHICH HAD NOT GIVEN ITS
CONSENT TO BE SUED; AND
B. IN FINDING WAIVER BY JUSMAG OF IMMUNITY FROM
SUIT;
II
THE PUBLIC RESPONDENT COMMITTED GRAVE ABUSE
OF DISCRETION AMOUNTING TO LACK AND/OR EXCESS
OF JURISDICTION —
A. WHEN IT FOUND AN EMPLOYER-EMPLOYEE
RELATIONSHIP BETWEEN JUSMAG AND PRIVATE
RESPONDENT; AND
B. WHEN IT CONSIDERED JUSMAG ESTOPPED FROM
DENYING THAT PRIVATE RESPONDENT IS ITS EMPLOYEE
FOR FAILURE TO PRESENT PROOF TO THE CONTRARY.
We find the petition impressed with merit.
It is meet to discuss the historical background of the JUSMAG to
determine its immunity from suit.
JUSMAG was created pursuant to the Military Assistance
Agreement 10 dated March 21, 1947, between the Government of
the Republic of the Philippines and the Government of the United
States of America. As agreed upon, JUSMAG shall consist of Air,
Naval and Army group, and its primary task was to advise and assist
the Philippines, on air force, army and naval matters. 11
Article 14 of the 1947 Agreement provides, inter alia, that "the cost
of all services required by the Group, including compensation
of locally employed interpreters, clerks, laborers, and other
personnel, except personal servants, shall be borne by the Republic
of the Philippines."
This set-up was to change in 1991. In Note No 22, addressed to the
Department of Foreign Affairs (DFA) of the Philippines, dated
January 23, 1991, the United States Government, thru its Embassy,
manifested its preparedness "to provide funds to cover the salaries
of security assistance support personnel" and security guards, the
rent of JUSMAG occupied buildings and housing, and the cost of
utilities. 12 This offer was accepted by our Government, thru the
DFA, in Note No. 911725, dated April 18, 1991.13
Consequently, a Memorandum of Agreement 14 was forged between
the Armed Forces of the Philippines and JUSMAG-Philippines, thru
General Lisandro C. Abadia and U.S. Brigadier General Robert G.
Sausser. The Agreement delineated the terms of the assistance-in-
kind of JUSMAG for 1991, the relevant parts of which read:
a. The term salaries as used in this agreement include those for the
security guards currently contracted between JUSMAG and A'
Prime Security Services Inc., and the Security Assistance Support
Personnel (SASP). . . . .
b. The term Security Assistance Support Personnel (SASP)
does not include active duty uniformed members of the Armed
Forces of the Philippines performing duty at JUSMAG.
c. It is understood that SASP are employees of the Armed Forces of
the Philippines (AFP). Therefore, the AFP agrees to appoint, for
service with JUSMAG, no more than 74 personnel to designated
positions with JUSMAG.
d. SASP are under the total operational control of the Chief,
JUSMAG-Philippines. The term "Operational Control" includes, but
is not limited to, all personnel administrative actions, such as: hiring
recommendations; firing recommendations; position classification;
discipline; nomination and approval of incentive awards; and
payroll computation. Personnel administration will be guided by
Annex E of JUSMAG-Philippines Memo 10-2. For the period of
time that there is an exceptional funding agreement between the
government of the Philippines and the United States Government
(USG), JUSMAG will pay the total payroll costs for the SASP
employees. Payroll costs include only regular salary; approved
overtime, costs of living allowance; medical insurance; regular
contributions to the Philippine Social Security System, PAG-IBIG
Fund and Personnel Economic Relief Allowance (PERA); and the
thirteenth-month bonus. Payroll costs do not include gifts or other
bonus payments in addition to those previously defined above.
Entitlements not considered payroll costs under this agreement will
be funded and paid by the AFP.
e. All SASP employed as of July 1, 1990 will continue their service
with JUSMAG at their current rate of pay and benefits up to 30
June 1991, with an annual renewal of employment
thereafter subject to renewal of their appointment with the AFP
(employees and rates of pay are indicated at Enclosure 3). No
promotion or transfer internal to JUSMAG of the listed personnel
will result in the reduction of their pay and benefits.
f. All SASP will, after proper classification, be paid salaries and
benefits at established AFP civilian rates. Rules for computation of
pay and allowances will be made available to the Comptroller,
JUSMAG, by the Comptroller, GHQ, AFP. Additionally, any
legally mandated changes in salary levels or methods of
computation shall be transmitted within 48 hours of receipt by
Comptroller, GHQ to Comptroller, JUSMAG.
g. The AFP agrees not to terminate SASP without 60 days prior
written notice to Chief, JUSMAG-Philippines. Any termination of
these personnel thought to be necessary because of budgetary
restrictions or manpower ceiling will be subject to consultations
between AFP and JUSMAG to ensure that JUSMAG's mission of
dedicated support to the AFP will not be degraded or harmed in any
way.
h. The AFP agrees to assume the severance pay/retirement pay
liability for all appointed SASP. (Enclosure 3 lists the severance pay
liability date for current SASP). Any termination of services, other
than voluntary resignations or termination for cause, will result in
immediate payments of AFP of all termination pay to the entitled
employee. Vouchers for severance/retirement pay and accrued
bonuses and annual leave will be presented to the Comptroller,
GHQ, AFP, not later than 14 calendar days prior to required date of
payment.
i. All SASP listed in Enclosure 3 will continue to participate in the
Philippine Social Security System.
A year later, or in 1992, the United States Embassy sent another
note of similar import to the Department of Foreign Affairs (No.
227, dated April 8, 1992), extending the funding agreement for the
salaries of SASP and security guards until December 31, 1992.
From the foregoing, it is apparent that when JUSMAG took the
services of private respondent, it was performing a governmental
function on behalf of the United States pursuant to the Military
Assistance Agreement dated March 21, 1947. Hence, we agree with
petitioner that the suit is, in effect, one against the United States
Government, albeit it was not impleaded in the complaint.
Considering that the United States has not waived or consented to
the suit, the complaint against JUSMAG cannot not prosper.
In this jurisdiction, we recognize and adopt the generally accepted
principles of international law as part of the law of the
land. 15 Immunity of State from suit is one of these universally
recognized principles. In international law, "immunity" is
commonly understood as an exemption of the state and its organs
from the judicial jurisdiction of another state. 16 This is anchored on
the principle of the sovereign equality of states under which one
state cannot assert jurisdiction over another in violation of the
maxim par in parem non habet imperium (an equal has no power
over an equal).17
Under the traditional rule of State immunity, a state cannot be sued
in the courts of another State, without its consent or waiver.
However, in Santos, et al., vs. Santos, et al., 18 we recognized an
exception to the doctrine of immunity from suit by a state, thus:
. . . . Nevertheless, if, where and when the state or its government
enters into a contract, through its officers or agents, in furtherance
of a legitimate aim and purpose and pursuant to constitutional
legislative authority, whereby mutual or reciprocal benefits accrue
and rights and obligations arise therefrom, and if the law granting
the authority to enter into such contract does not provide for or
name the officer against whom action may be brought in the event
of a breach thereof, the state itself may be sued, even without its
consent, because by entering into a contract, the sovereign state has
descended to the level of the citizen and its consent to be sued is
implied from the very act of entering into such contract. . . . .
(emphasis ours)
It was in this light that the state immunity issue in Harry Lyons,
Inc., vs. United States of America 19 was decided.
In the case of Harry Lyons, Inc., the petitioner entered into a
contract with the United States Government for stevedoring services
at the U.S. Naval Base, Subic Bay, Philippines. It then sought to
collect from the US government sums of money arising from the
contract. One of the issues posed in the case was whether or not the
defunct Court of First Instance had jurisdiction over the defendant
United States, a sovereign state which cannot be sued without its
consent. This Court upheld the contention of Harry Lyons, Inc., that
"when a sovereign state enters into a contract with a private person,
the state can be sued upon the theory that it has descended to the
level of an individual from which it can be implied that it has given
its consent to be sued under the contract."
The doctrine of state immunity from suit has undergone further
metamorphosis. The view evolved that the existence of a contract
does not, per se, mean that sovereign states may, at all times, be
sued in local courts. The complexity of relationships between
sovereign states, brought about by their increasing commercial
activities, mothered a more restrictive application of the
doctrine. 20 Thus, in United States of America vs. Ruiz, 21 we
clarified that our pronouncement in Harry Lyons, supra, with
respect to the waiver of State immunity, was obiter and "has no
value as an imperative authority."
As it stands now, the application of the doctrine of immunity from
suit has been restricted to sovereign or governmental
activities ( jure imperii). 22 The mantle of state immunity cannot be
extended to commercial, private and proprietary acts ( jure
gestionis). As aptly stated by this Court (En banc) in US vs. Ruiz,
supra:
The restrictive application of State immunity is proper when the
proceedings arise out of commercial transactions of the foreign
sovereign, its commercial activities or economic affairs. Stated
differently, a State may be said to have descended to the level of an
individual and thus can be deemed to have tacitly given its consent
to be used only when it enters into business contracts. It
does not apply where the contract relates to the exercise of
its sovereign functions. (emphasis ours)
We held further, that the application of the doctrine of state
immunity depends on the legal nature of the act. Ergo, since
a governmental function was involved — the transaction dealt with
the improvement of the wharves in the naval installation at Subic
Bay — it was held that the United States was not deemed to have
waived its immunity from suit.
Then came the case of United States vs. Hon. Rodrigo, et al. 23 In
said case, Genove was employed as a cook in the Main Club located
at U.S. Air Force Recreation Center, John Hay Air Station. He was
dismissed from service after he was found to have polluted the stock
of soup with urine. Genove countered with a complaint for
damages. Apparently, the restaurant services offered at the John
Hay Air Station partake of the nature of a business enterprise
undertaken by the United States government in its proprietary
capacity. The Court then noted that the restaurant is well known and
available to the general public, thus, the services are operated for
profit, as a commercial and not a governmental activity. Speaking
through Associate Justice Isagani Cruz, the Court (En Banc) said:
The consequence of this finding is that the petitioners cannot invoke
the doctrine of state immunity to justify the dismissal of the damage
suit against them by Genove. Such defense will not prosper even if
it be established that they were acting as agents of the United States
when they investigated and later dismissed Genove. For the matter,
not even the United States government itself can claim such
immunity. The reason is that by entering into the employment
contract with Genove in the discharge of its proprietary functions, it
impliedly divested itself of its sovereign immunity from suit.
(emphasis ours)
Conversely, if the contract was entered into in the discharge of
its governmental functions, the sovereign state cannot be deemed to
have waived its immunity from suit. 24 Such is the case at bench.
Prescinding from this premise, we need not determine whether
JUSMAG controls the employment conditions of the private
respondent.
We also hold that there appears to be no basis for public respondent
to rule that JUSMAG is stopped from denying the existence of
employer-employee relationship with private respondent. On the
contrary, in its Opposition before the public respondent, JUSMAG
consistently contended that the (74) SASP, including private
respondent, working in JUSMAG, are employees of the Armed
Forces of the Philippines. This can be gleaned from: (1) the Military
Assistance Agreement, supra, (2) the exchange of notes between
our Government, thru Department of Foreign Affairs, and the
United States, thru the US Embassy to the Philippines, and (3) the
Agreement on May 21, 1991, supra between the Armed Forces of
the Philippines and JUSMAG.
We symphatize with the plight of private respondent who had
served JUSMAG for more than twenty (20) years. Considering his
length of service with JUSMAG, he deserves a more compassionate
treatment. Unfortunately, JUSMAG is beyond the jurisdiction of
this Court. Nonetheless, the Executive branch, through the
Department of Foreign Affairs and the Armed Forces of the
Philippines, can take the cudgel for private respondent and the other
SASP working for JUSMAG, pursuant to the aforestated Military
Assistance Agreement.

IN VIEW OF THE FOREGOING, the petition for certiorari is

GRANTED. Accordingly, the impugned Resolution dated January
29, 1993 of the National Labor Relations Commission is
REVERSED and SET ASIDE. No costs.

SO ORDERED.
G.R. No. 107660 January 2, 1995
RAMON C. LOZON, petitioner,
vs.
NATIONAL LABOR RELATIONS COMMISSION (Second
Division) and PHILIPPINE AIRLINES, INC., respondents.
VITUG, J.:
Petitioner Ramon C. Lozon, a certified public accountant, was a
Senior
Vice-President-Finance of Private respondent Philippine Airlines,
Inc. ("PAL"), when his services were terminated on 19 December
1990 in the aftermath of the much-publicized "two-billion-peso
PALscam." Lozon started to work for the national carrier on 23
August 1967 and, for twenty-three years, steadily climbed the
corporate ladder until he became one of its vice-presidents.1
His termination from the service was spawned by a letter sent some
time in June 1990 by a member of PAL's board of directors, then
Solicitor General Francisco Chavez, to PAL President Dante Santos.
Chavez demanded an investigation of twenty-three irregularities
allegedly committed by twenty-two high-ranking PAL officials.
Among these officials was petitioner; he had been administratively
charged by Romeo David, Senior Vice-President for Corporate
Services and Logistics Group, for his (Lozon) purported
involvement in four cases, labeled "Goldair," "Autographics," "Big
Bang of 1983" and "Middle
East."2 Pending the investigation of these cases by a
panel3 constituted by then President Corazon C. Aquino, petitioner
was placed under preventive suspension.
In the organizational meeting of the PAL board of directors on 19
October 1990 which occasion Feliciano R. Belmonte, Jr., was
elected chairman of the board while Dante G. Santos was
designated president and chief executive officer,4 the board deferred
action on the election or appointment of some senior officers of the
company who, like petitioner, had been charged with various
offenses.
On 18 January 1991, the PAL board of directors issued two
resolutions relative to the investigation conducted by the
presidential investigating panel in the "Autographics" and "Goldair"
cases. In "Autographics," petitioner was charged, along with three
other officials,5 with "gross inefficiency, negligence, imprudence,
mismanagement, dereliction of duty, failure to observe and/or
implement administrative and executive policies" and with the
"concealment, or cover-up and prevention of the seasonal discovery
of the anomalous transactions" had with Autographics, Inc.,
resulting in, among other things, an overpayment by PAL to
Autographics in the amount of around P12 million. Petitioner was
forthwith considered "resigned from the service . . . for loss of
confidence and for acts inimical to the interests of the company." 6 A
similar conclusion was arrived at by the PAL board of directors
with regard to petitioner in the "Goldair" case where he, together
with six other PAL officials,7 were charged with like "offenses" that
had caused PAL's defraudation by Goldair, PAL's general sales
agent in Australia, of 14.6 million Australian dollars. 8
Aggrieved by the action taken by the PAL board of directors,
petitioner, on 26 June 1991 filed with the National Labor Relations
Commission ("NLRC") in Manila a complaint (docketed NLRC-
NCR Case No. 00-06-03684-91) for illegal dismissal and for
reinstatement, with backwages and "fringe benefits such as
Vacation leave, Sick leave, 13th month pay, Christmas Bonus,
Medical Expenses, car expenses, trip pass entitlement, etc., plus
moral damages of P40 Million, exemplary damages of P10 Million
and reasonable attorney's fees."9
On 09 August 1991, 10 the PAL board of directors also held
petitioner as "resigned from the company" for loss of confidence
and for acts inimical to the interests of the company in the "Big
Bang of 1983" case for his alleged role in the irregularities that had
precipitated the write-down (write-off) of assets amounting to P553
million from the books and financial statements of PAL. 11 In the
"Middle East" case, the PAL board of directors, on the anomalous
administration of commercial marketing arrangements in which
PAL had lost an estimated P120 million. 12
PAL defended the validity of petitioner's dismissal before the Labor
Arbiter. It questioned at the same time the jurisdiction of the NLRC,
positing the theory that since the investigating panel was constituted
by then President Aquino, said panel, along with the PAL board of
directors, became "a parallel arbitration unit" which, in legal
contemplation, should be deemed to have substituted for the NLRC.
Thus, PAL averred, petitioner's recourse should have been to appeal
his case to the Office of the President. 13 On the other hand,
petitioner questioned the authority of the panel to conduct the
investigation, asseverating that the charges leveled against him were
purely administrative in nature that could have well been ventilated
under the grievance procedure outline in PAL's Code of Discipline.
On 17 March 1992, Labor Arbiter Jose G. de Vera rendered a
decision ruling for petitioner.14 The decretal portion of the decision
read:
WHEREFORE, all the foregoing premises being considered,
judgment is hereby rendered ordering the respondent Philippine
Airlines, Inc., to reinstate the complainant to his former position
with all the rights, privileges, and benefits appertaining thereto plus
backwages, which as of March 15, 1992 already amounted to
P2,632,500.00, exclusive of fringes. Further, the respondent
company is ordered to pay complainant as follows: P5,000.00 as
moral damages; P1,000,000.00 as exemplary damages, and
attorney's fees equivalent to ten percent (10%) of all of the
foregoing awards.
SO ORDERED. 15
A day after promulgating the decision, the labor arbiter issued a writ
of execution. PAL filed a motion to quash the writ petitioner
promptly opposed. After the labor arbiter had denied the motion to
quash, PAL filed a petition for injunction with the NLRC (docketed
NLRC IC Case No. 00261-92). No decision was rendered by NLRC
on this petition. 16
Meanwhile, PAL appealed the decision of the labor arbiter by filing
a memorandum on appeal, 17 assailing, once again, the jurisdiction
of the NLRC but this time on the ground that the issue pertaining to
the removal or dismissal of petitioner, a corporate officer, was
within the exclusive and original jurisdiction of the Securities and
Exchange Commission ("SEC"). Petitioner interposed a partial
appeal praying for an increase in the amount of moral and
exemplary damages awarded by the labor arbiter. 18
On 24 July 1992, the NLRC rendered a decision (in NLRC NCR
Case No. 00-06-03684-91) 19 dismissing the case on the strength of
PAL's new argument on the issue of jurisdiction. 20 Petitioner's
motion for reconsideration was denied by the NLRC.
The instant petition for certiorari filed with this Court raises these
issues: (a) Whether or not the NLRC has jurisdiction over the illegal
dismissal case, and (b) on the assumption that the SEC has that
jurisdiction, whether or not private respondent is estopped from
raising NLRC's lack of jurisdiction over the controversy.
We sustain NLRC's dismissal of the case.
Presidential Decree No. 902-A confers on the SEC original and
exclusive jurisdiction to hear and decide controversies and cases
involving —
a. Intra-corporate and partnership relations between or among the
corporation, officers and stockholders and partners, including their
elections or appointments;
b. State and corporate affairs in relation to the legal existence of
corporations, partnerships and associations or to their franchises;
and
c. Investors and corporate affairs, particularly in respect of devices
and schemes, such as fraudulent practices, employed by directors,
officers, business associates, and/or other stockholders, partners, or
members of registered firms; as well as
d. Petitions for suspension of payments filed by corporations,
partnerships or associations possessing sufficient property to cover
all their debts but which foresee the impossibility of meeting them
when they respectively fall due, or possessing insufficient assets to
cover their liabilities and said entities are upon petition or motu
propio, placed under the management of a Rehabilitation Receiver
or Management Committee.
Specifically, in intra-corporate matters concerning the election or
appointment of officers of a corporation, the decree provides:
Sec. 5. In addition to the regulatory and adjudicative functions of
the Securities and Exchange Commission over corporations,
partnerships and other forms of association registered with it as
expressly granted under existing laws and decrees, it shall have
original and exclusive jurisdiction to hear and decide cases
involving:
xxx xxx xxx
(c) Controversies in the election or appointments of directors,
trustees, officers or managers of such corporations, partnerships or
association.
Petitioner himself admits that vice presidents are senior members of
management, 21 whose designations are no longer than just by
means of ordinary promotions. In his own case, petitioner has been
elected to the position of Senior Vice-President — Finance Group
by PAL's board of directors at its organizational meeting held on 20
October 1989 pursuant to the By-laws, 22 under which, he would
serve for a term of one year and until his successor shall have been
elected and qualified. 23 Petitioner, for reasons already mentioned,
did not get to be re-elected thereafter. 24
In Fortune Cement Corporation v. NLRC, 25 the Court has quoted
with approval the Solicitor General's contention that "a corporate
officer's dismissal is always a corporate act and/or intra-corporate
controversy and that nature is not altered by the reason or wisdom
which the Board of Directors may have in taking such action." Not
the least insignificant in the case at bench is that petitioner's
dismissal is intertwined with still another intra-corporate affair,
earlier so ascribed as the "two-billion-peso PALscam," that
inevitably places the case under the specialized competence of the
SEC and well beyond the ambit of a labor arbiter's normal
jurisdiction under the general provisions of Article 217 of the Labor
Code. 26
Petitioner contends that the jurisdiction of the SEC excludes its
cognizance over claims for vacation and sick leaves, 13th month
pay, Christmas bonus, medical expenses, car expenses, and other
benefits, as well as for moral damages and attorney's fees. 27 Dy
v. NLRC28 categorically states that the question of remuneration
being asserted by an officer of a corporation is "not a simple labor
problem but a matter that comes within the area of corporate affairs
and management, and is in fact, a corporate controversy in
contemplation of the Corporation Code." With regard to the matter
of damages, in Andaya v.
Abadia 29 where, in a complaint filed before the Regional Trial
Court, the president and general manager of the Armed Forces and
Police Savings and Loan Association ("AFPSLAI") questioned his
ouster from the stewardship of the association, this Court, in
dismissing the petition assailing the order of the trial court which
ruled that SEC, not the regular courts, had jurisdiction over the case,
has said:
The allegations against herein respondents in the amended
complaint unquestionably reveal intra-corporate controversies
cleverly conceals, although unsuccessfully, by use of civil law terms
and phrases. The amended complaint impleads herein respondents
who, in their capacity as directors of AFPSLAI, allegedly convened
an illegal meeting and voted for the reorganization of management
resulting in petitioner's ouster as corporate officer. While it may be
said that the same corporate acts also give rise to civil liability for
damages, it does not follow that the case is necessarily taken out of
the jurisdiction of the SEC as it may award damages which can be
considered consequential in the exercise of its adjudicative
powers. Besides, incidental issues that properly fall within the
authority of a tribunal may also be considered by it to avoid
multiplicity of actions. Consequently, in intra-corporate matters
such as those affecting the corporation, its directors, trustees,
officers, shareholders, the issue of consequential damages may just
as well be resolved and adjudicated by the SEC. (Emphasis
supplied.)
We here reiterate the above holdings for, indeed, controversies
within the purview of Section 5 of P.D. No. 902-A must not be so
constricted as to deny to the SEC the sound exercise of its expertise
and competence in resolving all closely related aspects of such
corporate disputes.
Petitioner maintains that PAL is estopped, nevertheless, from
questioning the jurisdiction of the NLRC considering that PAL did
not hold the dispute to be intra-corporate until after the case had
already been brought on appeal to the NLRC.
Petitioner points to "PAL's scandalous duplicity" in questioning the
jurisdiction of the NLRC in this particular controversy while
upholding it (NLRC's jurisdiction) in "Robin Dui v. Philippine
Airlines" (Case No. 00-4-20267) pending before the Commission.
We need not delve into whether or not PAL's conduct does indeed
smack of opportunities; suffice it to say that Robin Dui is entirely an
independent and separate case and, more than that, it is not before
us in this instance.
WHEREFORE, the herein petition for certiorari is DISMISSED,
and the decision appealed from is AFFIRMED, without prejudice to
petitioner's seeking, if circumstances permit, a recourse in the
proper forum. No costs.
SO ORDERED.

In the first place, there would not be much basis to indicate that
PAL was "effectively barred by estoppel." 30 As early as the initial
stages of the controversy PAL had already raised the issue of
jurisdiction albeit mistakenly at first on the ground that petitioner's
recourse was an appeal to the Office of the President. The error
could not alter the fact that PAL did question even then the
jurisdiction of both the labor arbiter and the NLRC.

It has long been the established rule, moreover, that jurisdiction

over a subject matter is conferred by law, 31 and the question of lack
of jurisdiction may be raised at anytime even on appeal. 32 In the
recent case of La Naval Drug Corporation vs. Court of Appeals,
G.R. No. 103200, 31 August 1994, this Court said:

Lack of jurisdiction over the subject matter of the suit is yet another
matter. Whenever it appears that the court has no jurisdiction over
the subject matter, the action shall be dismissed (Section 2, Rule 9,
Rules of Court). This defense may be interpose at any time, during
appeal (Roxas vs. Rafferty, 37 Phil. 957) or even after final
judgment (Cruzcosa vs. Judge Concepcion, et al., 101 Phil. 146).
Such is understandable, as this kind of jurisdiction is conferred by
law and not within the courts, let alone the parties, to themselves
determine or conveniently set aside. In People vs. Casiano (111
Phil. 73, 93-94), this Court, on the issue of estoppel, held:

"The operation of the principle of estoppel on the question of

jurisdiction seemingly depends upon whether the lower court
actually had jurisdiction or not. If it had no jurisdiction, but the case
was tried and decided upon the theory that it had jurisdiction, the
parties are not barred, on appeal, from assailing such jurisdiction,
for the same "must exist as a matter of law, and may not be
conferred by consent of the parties or by estoppel" (5 C.J.S., 861-
863). However, if the lower court had jurisdiction, and the case was
heard and decided upon a given theory, such, for instance, as that
the court had no jurisdiction, the party who induced it to adopt such
theory will not be permitted, on appeal, to assume a inconsistent
position — that the lower court had jurisdiction. Here, the principle
of estoppel applies. The rule that jurisdiction is conferred by law,
and does not depend upon the will of the parties, has no bearing
thereon."
G.R. No. L-61236 January 31, 1984
NATIONAL FEDERATION OF LABOR and ZAMBOWOOD
MONTHLY EMPLOYEES UNION, ITS OFFICERS AND
MEMBERS, petitioners,
vs.
THE HONORABLE CARLITO A. EISMA, LT. COL. JACOB
CARUNCHO, COMMANDING OFFICER, ZAMBOANGA
DISTRICT COMMAND, PC, AFP, and ZAMBOANGA
WOOD PRODUCTS, respondents.
FERNANDO, C.J.:
This Court is confronted once again with the question of whether or
not it is a court or a labor arbiter that can pass on a suit for damages
filed by the employer, here private respondent Zamboanga Wood
Products. Respondent Judge Carlito A. Eisma 1 then of the Court of
First Instance, now of the Regional Trial Court of Zamboanga City,
was of the view that it is a court and denied a motion to dismiss
filed by petitioners National Federation of labor and Zambowood
Monthly Employees Union, its officers and members. It was such an
order dated July 20, 1982 that led to the filing of this certiorari and
prohibition proceeding. In the order assailed, it was required that the
officers and members of petitioner union appear before the court to
show cause why a writ of preliminary injunction should not be
issued against them and in the meanwhile such persons as well as
any other persons acting under their command and on their behalf
were "temporarily restrained and ordered to desist and refrain from
further obstructing, impeding and impairing plaintiff's use of its
property and free ingress to or egress from plaintiff's Manufacturing
Division facilities at Lumbayao, Zamboanga City and on its road
right of way leading to and from said plaintiff's facilities, pending
the determination of the litigation, and unless a contrary order is
issued by this Court." 2
The record discloses that petitioner National Federation of Labor,
on March 5, 1982, filed with the Ministry of Labor and
Employment, Labor Relations Division, Zamboanga City, a petition
for direct certification as the sole exclusive collective bargaining
representative of the monthly paid employees of the respondent
Zamboanga Wood Products, Inc. at its manufacturing plant in
Lumbayao, Zamboanga City. 3 Such employees, on April 17, 1982
charged respondent firm before the same office of the Ministry of
Labor for underpayment of monthly living allowances. 4Then came,
on May 3, 1982, from petitioner union, a notice of strike against
private respondent, alleging illegal termination of Dionisio Estioca,
president of the said local union; unfair labor practice, non-payment
of living allowances; and "employment of oppressive alien
management personnel without proper permit. 5 It was followed by
the union submitting the minutes of the declaration of strike,
"including the ninety (90) ballots, of which 79 voted for yes and
three voted for no." 6 The strike began on May 23, 1982. 7 On July
9, 1982, private respondent Zambowood filed a complaint with
respondent Judge against the officers and members of petitioners
union, for "damages for obstruction of private property with prayer
for preliminary injunction and/or restraining order." 8 It was alleged
that defendants, now petitioners, blockaded the road leading to its
manufacturing division, thus preventing customers and suppliers
free ingress to or egress from such premises. 9 Six days later, there
was a motion for the dismissal and for the dissolution of the
restraining order and opposition to the issuance of the writ of
preliminary injunction filed by petitioners. It was contended that the
acts complained of were incidents of picketing by defendants then
on strike against private respondent, and that therefore the exclusive
jurisdiction belongs to the Labor Arbiter pursuant to Batas
Pambansa Blg. 227, not to a court of first instance.10 There was, as
noted earlier, a motion to dismiss, which was denied. Hence this
petition for certiorari.
Four days after such petition was filed, on August 3, 1982, this
Court required respondents to answer and set the plea for a
preliminary injunction to be heard on Thursday, August 5,
1982. 11 After such hearing, a temporary restraining order was
issued, "directing respondent Judge and the commanding officer in
Zamboanga and his agents from enforcing the ex-parte order of
injunction dated July 20, 1982; and to restrain the respondent Judge
from proceeding with the hearing of the until otherwise case
effective as of [that] date and continuing ordered by [the] Court. In
the exercise of the right to peaceful picketing, petitioner unions
must abide strictly with Batas Pambansa Blg. 227, specifically
Section 6 thereof, amending Article 265 of the Labor Code, which
now reads: '(e) No person engaged in picketing shall commit any act
of violence, coercion or intimidation or obstruct the free ingress to
or egress from the employer's premises for lawful purposes, or
obstruct public thoroughfares.' " 12
On August 13, 1982, the answer of private respondent was filed
sustaining the original jurisdiction of respondent Judge and
maintaining that the order complained of was not in excess of such
jurisdiction, or issued with grave abuse of discretion. Solicitor
General Estelito P. Mendoza, 13 on the other hand, instead of filing
an answer, submitted a Manifestation in lieu thereof. He met
squarely the issue of whether or not respondent Judge had
jurisdiction, and answered in the negative. He (i)ncluded that "the
instant petition has merit and should be given due course."
He traced the changes undergone by the Labor Code, citing at the
same time the decisions issued by this Court after each of such
changes. As pointed out, the original wording of Article 217 vested
the labor arbiters with jurisdictional. 14 So it was applied by this
Court in Garcia v. Martinez 15 and in Bengzon v. Inciong. 16 On
May 1, 1978, however, Presidential Decree No. 1367 was issued,
amending Article 217, and provided "that the Regional Directors
shall not indorse and Labor Arbiters shall not entertain claims for
moral and other forms of damages." 17 The ordinary courts were
thus vested with jurisdiction to award actual and moral damages in
the case of illegal dismissal of employees. 18 That is not, as pointed
out by the Solicitor General, the end of the story, for on May 1,
1980, Presidential Decree No. 1691 was issued, further amending
Article 217, returning the original jurisdiction to the labor arbiters,
thus enabling them to decide "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, medicare and maternity benefits;
[and] (5) All other claims arising from employer-employee relations
unless expressly excluded by tills Code." 19 An equally conclusive
manifestation of the lack of jurisdiction of a court of first instance
then, a regional trial court now, is Batas Pambansa Blg. 130,
amending Article 217 of the Labor Code. It took effect on August
21, 1981. Subparagraph 2, paragraph (a) is now worded thus: "(2)
those that involve wages, hours of work and other terms and
conditions of employment." 20 This is to be compared with the
former phraseology "(2) unresolved issue in collective bargaining,
including those that involve wages, hours of work and other terms
and conditions of employment." 21 It is to be noted that Batas
Pambansa Blg. 130 made no change with respect to the original and
exclusive jurisdiction of Labor Arbiters with respect to money
claims of workers or claims for damages arising from employer-
employee relations.
Nothing becomes clearer, therefore, than the meritorious character
of this petition. certiorari and prohibition lie, respondent Judge
being devoid of jurisdiction to act on the matter.
1. Article 217 is to be applied the way it is worded. The exclusive
original jurisdiction of a labor arbiter is therein provided for
explicitly. It means, it can only mean, that a court of first instance
judge then, a regional trial court judge now, certainly acts beyond
the scope of the authority conferred on him by law when he
entertained the suit for damages, arising from picketing that
accompanied a strike. That was squarely within the express terms of
the law. Any deviation cannot therefore be tolerated. So it has been
the constant ruling of this Court even prior to Lizarraga Hermanos
v. Yap Tico, 22 a 1913 decision. The ringing words of the ponencia
of Justice Moreland still call for obedience. Thus, "The first and
fundamental duty of courts, in our judgment, is to apply the law.
Construction and interpretation come only after it has been
demonstrated that application is impossible or inadequate without
them." 23 It is so even after the lapse of sixty years. 24
2. On the precise question at issue under the law as it now stands,
this Court has spoken in three decisions. They all reflect the utmost
fidelity to the plain command of the law that it is a labor arbiter, not
a court, that ossesses original and exclusive jurisdiction to decide a
claim for damages arising from picketing or a strike. In Pepsi-Cola
Bottling Co. v. Martinez, 25 the issue was set forth in the opening
paragraph, in the ponencia of Justice Escolin: "This petition for
certiorari, prohibition and mandamus raises anew the legal question
often brought to this Court: Which tribunal has exclusive
jurisdiction over an action filed by an employee against his
employer for recovery of unpaid salaries, separation benefits and
damages — the court of general jurisdiction or the Labor Arbiter of
the National Labor Relations Commission [NLRC]?" 26 It was
categorically held: "We rule that the Labor Arbiter has exclusive
jurisdiction over the case." 27 Then came this portion of the opinion:
"Jurisdiction over the subject matter in a judicial proceeding is
conferred by the sovereign authority which organizes the court; and
it is given only by law. Jurisdiction is never presumed; it must be
conferred by law in words that do not admit of doubt. Since the
jurisdiction of courts and judicial tribunals is derived exclusively
from the statutes of the forum, the issue before us should be
resolved on the basis of the law or statute now in force. We find that
law in presidential Decree 1691 which took effect on May 1, 1980,
Section 3 of which reads as follows: ... Article 217. Jurisdiction of
Labor Arbiters and the Commission. — (a) The Labor Arbiters shall
have the original and exclusive jurisdiction to hear and decide the
following cases involving all workers, whether agricultural or non-
agricultural: ... 3. All money claims of workers, including those
based on nonpayment or underpayment of wages, overtime
compensation, separation pay and other benefits provided by law or
appropriate agreement, except claims for employees' compensation,
social security, medicare and maternity benefits; 4. Cases involving
household services; and 5. All other claims arising from employer-
employee relations, unless expressly excluded by this Code." 28 That
same month, two other cases were similarly decided, Ebon v. De
Guzman 29 and Aguda v. Vallejos. 30
3. It is regrettable that the ruling in the above three decisions,
decided in March of 1982, was not followed by private respondent
when it filed the complaint for damages on July 9, 1982, more than
four months later. 31 On this point, reference may be made to our
decision in National Federation of Labor, et al. v. The Honorable
Minister of Labor and Employment, 32 promulgated on September
15, 1983. In that case, the question involved was the failure of the
same private respondent, Zamboanga Wood Products, Inc., to admit
the striking petitioners, eighty-one in number, back to work after an
order of Minister Blas F. Ople certifying to the National Labor
Relations Commission the labor dispute for compulsory arbitration
pursuant to Article 264 (g) of the Labor Code of the Philippines. It
was noted in the first paragraph of our opinion in that case: "On the
face of it, it seems difficult to explain why private respondent would
not comply with such order considering that the request for
compulsory arbitration came from it. It ignored this notification by
the presidents of the labor unions involved to its resident manager
that the striking employees would lift their picket line and start
returning to work on August 20, 1982. Then, too, Minister Ople
denied a partial motion for reconsideration insofar as the return-to-
work aspect is concerned which reads: 'We find no merit in the said
Motion for Reconsideration. The Labor code, as amended,
specifically Article 264 (g), mandates that whenever a labor dispute
is certified by the Minister of Labor and Employment to the
National Labor Relations Commission for compulsory arbitration
and a strike has already taken place at the time of certification, "all
striking employees shall immediately return to work and the
employees shall immediately resume operations and readmit all
workers under the same terms and conditions prevailing before the
strike." ' " 33 No valid distinction can be made between the exercise
of compulsory arbitration vested in the Ministry of Labor and the
jurisdiction of a labor arbiter to pass over claims for damages in the
light of the express provision of the Labor Code as set forth in
Article 217. In both cases, it is the Ministry, not a court of justice,
that is vested by law with competence to act on the matter.
4. The issuance of Presidential Decree No. 1691 and the enactment
of Batas Pambansa Blg. 130, made clear that the exclusive and
original jurisdiction for damages would once again be vested in
labor arbiters. It can be affirmed that even if they were not that
explicit, history has vindicated the view that in the appraisal of what
was referred to by Philippine American Management & Financing
Co., Inc. v. Management & Supervisors Association of the
Philippine-American Management & Financing Co., Inc. 34 as "the
rather thorny question as to where in labor matters the dividing line
is to be drawn"35 between the power lodged in an administrative
body and a court, the unmistakable trend has been to refer it to the
former. Thus: "Increasingly, this Court has been committed to the
view that unless the law speaks clearly and unequivocally, the
choice should fall on [an administrative agency]." 36 Certainly, the
present Labor Code is even more committed to the view that on
policy grounds, and equally so in the interest of greater promptness
in the disposition of labor matters, a court is spared the often
onerous task of determining what essentially is a factual matter,
namely, the damages that may be incurred by either labor or
management as a result of disputes or controversies arising from
employer-employee relations.

WHEREFORE, the writ of certiorari is granted and the order of July

20, 1982, issued by respondent Judge, is nullified and set aside. The
writ of prohibition is likewise granted and respondent Judge, or
whoever acts in his behalf in the Regional Trial Court to which this
case is assigned, is enjoin from taking any further action on Civil
Case No. 716 (2751), except for the purpose of dismissing it. The
temporary restraining order of August 5, 1982 is hereby made
permanent.

Teehankee, Makasiar, Aquino, Guerrero, Melencio-Herrera, Plana,

Escolin Relova and Gutierrez, Jr., JJ., concur.

Separate Opinions

ABAD SANTOS, J., concurring:

I concur and express the hope that Art. 217 should not undergo
repeated amendments.
G.R. No. 80774 May 31, 1988
SAN MIGUEL CORPORATION, petitioner,
vs.
NATIONAL LABOR RELATIONS COMMISSION and
RUSTICO VEGA, respondents.
Siguion Reyna, Montecillo & Ongsiako Law Offices for petitioner.
The Solicitor General for public respondent.
FELICIANO, J.:
In line with an Innovation Program sponsored by petitioner San
Miguel Corporation ("Corporation;" "SMC") and under which
management undertook to grant cash awards to "all SMC employees
... except [ED-HO staff, Division Managers and higher-ranked
personnel" who submit to the Corporation Ideas and suggestions
found to be beneficial to the Corporation, private respondent
Rustico Vega submitted on 23 September 1980 an innovation
proposal. Mr. Vega's proposal was entitled "Modified Grande
Pasteurization Process," and was supposed to eliminate certain
alleged defects in the quality and taste of the product "San Miguel
Beer Grande:"
Title of Proposal
Modified Grande Pasteurization Process
Present Condition or Procedure
At the early stage of beer grande production, several cases of beer
grande full goods were received by MB as returned beer fulls
(RBF). The RBF's were found to have sediments and their contents
were hazy. These effects are usually caused by underpasteurization
time and the pasteurzation units for beer grande were almost similar
to those of the steinie.
Proposed lnnovation (Attach necessary information)
In order to minimize if not elienate underpasteurization of beer
grande, reduce the speed of the beer grande pasteurizer thereby,
increasing the pasteurization time and the pasteurization acts for
grande beer. In this way, the self-life (sic) of beer grande will also
be increased. 1
Mr. Vega at that time had been in the employ of petitioner
Corporation for thirteen (1 3) years and was then holding the
position of "mechanic in the Bottling Department of the SMC Plant
Brewery situated in Tipolo, Mandaue City.
Petitioner Corporation, however, did not find the aforequoted
proposal acceptable and consequently refused Mr. Vega's
subsequent demands for a cash award under the Innovation
Program. On 22 February 1983., a Complaint 2(docketed as Case
No. RAB-VII-0170-83) was filed against petitioner Corporation
with Regional Arbitration Branch No. VII (Cebu City) of the then.",
Ministry of Labor and Employment. Frivate respondent Vega
alleged there that his proposal "[had] been accepted by the methods
analyst and implemented by the Corporation [in] October 1980,"
and that the same "ultimately and finally solved the problem of the
Corporation in the production of Beer Grande." Private respondent
thus claimed entitlement to a cash prize of P60,000.00 (the
maximum award per proposal offered under the Innovation
Program) and attorney's fees.
In an Answer With Counterclaim and Position Paper, 3 petitioner
Corporation alleged that private respondent had no cause of action.
It denied ever having approved or adopted Mr. Vega's proposal as
part of the Corporation's brewing procedure in the production of
San Miguel Beer Grande. Among other things, petitioner stated that
Mr. Vega's proposal was tumed down by the company "for lack of
originality" and that the same, "even if implemented [could not]
achieve the desired result." Petitioner further alleged that the Labor
Arbiter had no jurisdiction, Mr. Vega having improperly bypassed
the grievance machinery procedure prescribed under a then existing
collective bargaining agreement between management and
employees, and available administrative remedies provided under
the rules of the Innovation Program. A counterclaim for moral and
exemplary damages, attorney's fees, and litigation expenses closed
out petitioner's pleading.
In an Order 4 dated 30 April 1986, the Labor Arbiter, noting that the
money claim of complainant Vega in this case is "not a necessary
incident of his employment" and that said claim is not among those
mentioned in Article 217 of the Labor Code, dismissed the
complaint for lack of jurisdiction. However, in a gesture of
"compassion and to show the government's concern for the
workingman," the Labor Arbiter also directed petitioner to pay Mr.
Vega the sum of P2,000.00 as "financial assistance."
The Labor Arbiter's order was subsequently appealed by both
parties, private respondent Vega assailing the dismissal of his
complaint for lack of jurisdiction and petitioner Corporation
questioning the propriety of the award of "financial assistance" to
Mr. Vega. Acting on the appeals, the public respondent National
Labor Relations Commission, on 4 September 1987, rendered a
Decision, 5 the dispositive portion of which reads:
WHEREFORE, the appealed Order is hereby set aside and another
udgment entered, order the respondent to pay the complainant the
amount of P60,000.00 as explained above.
SO ORDERED.
In the present Petition for certiorari filed on 4 December 1987,
petitioner Corporation, invoking Article 217 of the Labor Code,
seeks to annul the Decision of public respondent Commission in
Case No. RAB-VII-01 70-83 upon the ground that the Labor Arbiter
and the Commission have no jurisdiction over the subject matter of
the case.
The jurisdiction of Labor Arbiters and the National Labor Relations
Commission is outlined in Article 217 of the Labor Code, as last
amended by Batas Pambansa Blg. 227 which took effect on 1 June
1982:
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 are workers, whether agricultural or non-
agricultural:
1. Unfair labor practice cases;
2. Those that 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, medicare 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.
(b) The Commission shall have exclusive appellate jurisdiction over
all cases decided by Labor Arbiters. (Emphasis supplied)
While paragraph 3 above refers to "all money claims of workers," it
is not necessary to suppose that the entire universe of money claims
that might be asserted by workers against their employers has been
absorbed into the original and exclusive jurisdiction of Labor
Arbiters. In the first place, paragraph 3 should be read not in
isolation from but rather within the context formed by paragraph 1
related to unfair labor practices), paragraph 2 (relating to claims
concerning terms and conditions of employment), paragraph 4
(claims relating to household services, a particular species of
employer-employee relations), and paragraph 5 (relating to certain
activities prohibited to employees or to
employers).<äre||anº•1àw> It is evident that there is a unifying
element which runs through paragraphs 1 to 5 and that is, that they
all refer to cases or disputes arising out of or in connection with an
employer-employee relationship. This is, in other words, a situation
where the rule of noscitur a sociis may be usefully invoked in
clarifying the scope of paragraph 3, and any other paragraph of
Article 217 of the Labor Code, as amended. We reach the above
conclusion from an examination of the terms themselves of Article
217, as last amended by B.P. Blg. 227, and even though earlier
versions of Article 217 of the Labor Code expressly brought within
the jurisdiction of the Labor Arbiters and the NLRC "cases arising
from employer employee relations," 6 which clause was not
expressly carried over, in printer's ink, in Article 217 as it exists
today. For it cannot be presumed that money claims of workers
which do not arise out of or in connection with their employer-
employee relationship, and which would therefore fall within the
general jurisdiction of the regular courts of justice, were intended by
the legislative authority to be taken away from the jurisdiction of
the courts and lodged with Labor Arbiters on an exclusive basis.
The Court, therefore, believes and so holds that the money claims of
workers" referred to in paragraph 3 of Article 217 embraces money
claims which arise out of or in connection with the employer-
employee relationship, or some aspect or incident of such
relationship. Put a little differently, that money claims of workers
which now fall within the original and exclusive jurisdiction of
Labor Arbiters are those money claims which have some reasonable
causal connection with the employer-employee relationship.
Applying the foregoing reading to the present case, we note that
petitioner's Innovation Program is an employee incentive scheme
offered and open only to employees of petitioner Corporation, more
specifically to employees below the rank of manager. Without the
existing employer-employee relationship between the parties here,
there would have been no occasion to consider the petitioner's
Innovation Program or the submission by Mr. Vega of his proposal
concerning beer grande; without that relationship, private
respondent Vega's suit against petitioner Corporation would never
have arisen. The money claim of private respondent Vega in this
case, therefore, arose out of or in connection with his employment
relationship with petitioner.
The next issue that must logically be confronted is whether the fact
that the money claim of private respondent Vega arose out of or in
connection with his employment relation" with petitioner
Corporation, is enough to bring such money claim within the
original and exclusive jurisdiction of Labor Arbiters.
In Molave Motor Sales, Inc. v. Laron, 7 the petitioner was a
corporation engaged in the sale and repair of motor vehicles, while
private respondent was the sales Manager of petitioner. Petitioner
had sued private respondent for non-payment of accounts which had
arisen from private respondent's own purchases of vehicles and
parts, repair jobs on cars personally owned by him, and cash
advances from the corporation. At the pre-trial in the lower court,
private respondent raised the question of lack of jurisdiction of the
court, stating that because petitioner's complaint arose out of the
employer-employee relationship, it fell outside the jurisdiction of
the court and consequently should be dismissed. Respondent Judge
did dismiss the case, holding that the sum of money and damages
sued for by the employer arose from the employer-employee
relationship and, hence, fell within the jurisdiction of the Labor
Arbiter and the NLRC. In reversing the order of dismissal and
requiring respondent Judge to take cognizance of the case below,
this Court, speaking through Mme. Justice Melencio-Herrera, said:
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, 11 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 v. Paño, 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. 8
Applying the foregoing to the instant case, the Court notes that the
SMC Innovation Program was essentially an invitation from
petitioner Corporation to its employees to submit innovation
proposals, and that petitioner Corporation undertook to grant cash
awards to employees who accept such invitation and whose
innovation suggestions, in the judgment of the Corporation's
officials, satisfied the standards and requirements of the Innovation
Program 10 and which, therefore, could be translated into some
substantial benefit to the Corporation. Such undertaking, though
unilateral in origin, could nonetheless ripen into an enforceable
contractual (facio ut des) 11 obligation on the part of petitioner
Corporation under certain circumstances. Thus, whether or not an
enforceable contract, albeit implied arid innominate, had arisen
between petitioner Corporation and private respondent Vega in the
circumstances of this case, and if so, whether or not it had been
breached, are preeminently legal questions, questions not to be
resolved by referring to labor legislation and having nothing to do
with wages or other terms and conditions of employment, but rather
having recourse to our law on contracts.
WEREFORE, the Petition for certiorari is GRANTED. The decision
dated 4 September 1987 of public respondent National Labor
Relations Commission is SET ASIDE and the complaint in Case
No. RAB-VII-0170-83 is hereby DISMISSED, without prejudice to
the right of private respondent Vega to file a suit before the proper
court, if he so desires. No pronouncement as to costs.
SO ORDERED.

It seems worth noting that Medina v. Castro-Bartolome, referred to

in the above excerpt, involved a claim for damages by two (2)
employees against the employer company and the General Manager
thereof, arising from the use of slanderous language on the occasion
when the General Manager fired the two (2) employees (the Plant
General Manager and the Plant Comptroller). The Court treated the
claim for damages as "a simple action for damages for tortious acts"
allegedly committed by private respondents, clearly if impliedly
suggesting that the claim for damages did not necessarily arise out
of or in connection with the employer-employee
relationship. Singapore Airlines Limited v. Paño, also cited
in Molave, involved a claim for liquidated damages not by a worker
but by the employer company, unlike Medina. The important
principle that runs through these three (3) cases is that where the
claim to the principal relief sought 9 is to be resolved not by
reference to the Labor Code or other labor relations statute or a
collective bargaining agreement but by the general civil law, the
jurisdiction over the dispute belongs to the regular courts of justice
and not to the Labor Arbiter and the NLRC. In such situations,
resolution of the dispute requires expertise, not in labor
management relations nor in wage structures and other terms and
conditions of employment, but rather in the application of the
general civil law. Clearly, such claims fall outside the area of
competence or expertise ordinarily ascribed to Labor Arbiters and
the NLRC and the rationale for granting jurisdiction over such
claims to these agencies disappears.
G.R. No. L-58877 March 15, 1982
PEPSI-COLA BOTTLING COMPANY, COSME DE
ABOITIZ, and ALBERTO M. DACUYCUY, petitioners,
vs.
HON. JUDGE ANTONIO M. MARTINEZ, in his official
capacity, and ABRAHAM TUMALA, JR., respondents.
This petition for certiorari, prohibition and mandamus raises anew
the legal question often brought to this Court: Which tribunal has
exclusive jurisdiction over an action filed by an employee against
his employer for recovery of unpaid salaries, separation benefits and
damages — the court of general jurisdiction or the Labor Arbiter of
the National Labor Relations Commission [NLRC]?
The facts that gave rise to this petition are as follows:
On September 19, 1980, respondent Abraham Tumala, Jr. filed a
complaint in the Court of First Instance of Davao, docketed as Civil
Case No. 13494, against petitioners Pepsi-Cola Bottling Co., Inc.,
its president Cosme de Aboitiz and other company officers. Under
the first cause of action, the complaint averred inter alia that
Tumala was a salesman of the company in Davao City from 1977
up to August 21, 1980; that in the annual "Sumakwel" contest
conducted by the company in 1979, Tumala was declared winner of
the "Lapu-Lapu Award" for his performance as top salesman of the
year, an award which entitled him to a prize of a house and lot; and
that petitioners, despite demands, have unjustly refused to deliver
said prize Under the second cause of action, it was alleged that on
August 21, 1980, petitioners, "in a manner oppressive to labor" and
"without prior clearance from the Ministry of Labor", "arbitrarily
and ilegally" terminated his employment. He prayed that petitioners
be ordered, jointly and severally, to deliver his prize of house and
lot or its cash equivalent, and to pay his back salaries and separation
benefits, plus moral and exemplary damages, attorney's fees and
litigation expenses. He did not ask for reinstatement.
Petitioners moved to dismiss the complaint on grounds of lack of
jurisdiction and cause of action. Petitioners further alleged that
Tumala was not entitled to the "Sumakwel" prize for having misled
the company into declaring him top salesman for 1979 through
various deceitful and fraudulent manipulations and machinations in
the performance of his duties as salesman and depot in-charge of the
bottling company in Davao City, which manipulations consisted of
"unremitted cash collections, fictitious collections of trade accounts,
fictitious loaned empties, fictitious product deals, uncollected
loaned empties, advance sales confirmed as fictitious, and route
shortages which resulted to the damage and prejudice of the bottling
company in the amount of P381,851.76." The alleged commission
of these fraudulent acts was also advanced by petitioners to justify
Tumala's dismissal.
The court below, sustaining its jurisdiction over the case, denied the
motion for reconsideration. Hence the present recourse.
We rule that the Labor Arbiter has exclusive jurisdiction over the
case.
Jurisdiction over the subject matter in a judicial proceeding is
conferred by the sovereign authority which organizes the court; and
it is given only by law. 1 Jurisdiction is never presumed; it must be
conferred by law in words that do not admit of doubt. 2
Since the jurisdiction of courts and judicial tribunals is derived
exclusively from the statutes of the forum, the issue efore Us should
be resolved on the basis of the law or statute now in force. We find
that law in Presidential Decree 1691 which took effect on May 1,
1980, Section 3 of which reads as follows:
SEC. 3. Article 217, 222 and 262 of Book V of the Labor Code are
hereby amended to read as follows:
Article 217. Jurisdiction of Labor Arbiters and the Commission. —
The Labor Arbiters shall have the original and exclusive jurisdiction
to hear and decide the following cases involving all workers,
whether agricultural or non-agricultural:
1. Unfair labor practice cases;
2. Unresolved issues in collective bargaining, including those that
involve waged 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, medicare and maternity benefits;
4. Cases involving household services; and
5. All other claims arising from employer-employee relations,
unless expressly excluded by this Code.
Under paragraphs 3 and 5 of the above Presidential Decree, the case
is exclusively cognizable by the Labor Arbiters of the National
Labor Relations Commission.
It is to be noted that P.D. 1691 is an exact reproduction of Article
217 of the Labor Code (P.D. 442), which took effect on May 1,
1974. In Garcia vs. Martinez 3, an action filed on August 2, 1976 in
the Court of First Instance of Davao by a dismissed employee
against his employer for actual, moral and exemplary damages, We
held that under Article 217 of the Labor Code, the law then in force,
the case was within the exclusive jurisdiction of the Labor Arbiters
and the National Labor Relations Commission [NLRC]. This Court,
per Justice Aquino, rational this holding thus:
The provisions of paragraph 3 and 5 of Article 217 are broad and
comprehensive enough to cover Velasco's [employee's] claim for
damages allegedly arising from his unjustified dismissal by Garcia
[employer]. His claim was a consequence of the termination of their
employer-employee relations [Compare with Ruby Industrial
Corporation vs. Court of First Instance of Manila, L- 38893, August
31, 1977, 78 SCRA 499].
Article 217 of the Labor Code words amended by P.D. 1367, which
was promulgated on May 1, 1978, the full text of which is quoted as
follows:
SECTION 1. Paragraph [a] of Art, 217 of the Labor Code as
amended is hereby further amended to read as follows:
[a] The Labor Arbiters shall have exclusive jurisdiction hear and
decide the following cases involving all workers, whether
agricultural or non-agricultural:
1] Unfair labor practice cases;
2] Unresolved issues in collective bargaining, including those which
involve wages, hours of work, and other terms conditions of
employment; and
3] All other cases arising from employer-employee relations duly
indorsed by the Regional Directors in accordance with the
provisions of this Code.
Provided, that the Regional Directors shall not indorse and Labor
Arbiters shall not entertain claims for moral or other forms of
damages.
It will be noted that paragraphs 3 and 5 of Article 217 were deleted
from the text of the above decree and a new provision incorporated
therein, to wit: "Provided that the Regional Directors shall not
indorse and Labor Arbiters shall not en certain claims for moral or
other forms of damages." This amendatory act thus divested the
Labor Arbiters of their competence to pass upon claims for damages
by employees against their employers.
However, on May 1, 1980, Article 217, as amended by P.D. 1367,
was amended anew by P.D. 1691. This last decree, which is a
verbatim reproduction of the original test of Article 217 of the
Labor Code, restored to the Labor Arbiters of the NLRC exclusive
jurisdiction over claims, money or otherwise, arising from
employer-employee relations, except those expressly excluded
therefrom.
unless expressly excluded by this Code." Indeed, Tumala would not
have qualitfied for the content, much less won the prize, if he was
not an employee of the company at the time of the holding of the
contest. Besides, the cause advanced by petitioners to justify their
refusal to deliver the prize—the alleged fraudulent manipulations
committed by Tumala in connection with his duties as salesman of
the company—involves an inquiry into his actuations as an
employee.
Besides, to hold that Tumala's claim for the prize should be passed
upon by the regular court of justice, independently and separately
from his claim for back salaries, retirement benefits and damages,
would be to sanction split juridiction and multiplicity of suits which
are prejudicial to the orderly administration of justice.
One last point. Petitioners content that Tumala has no cause of
action to as for back salaries and damages because his dimissal was
authorized by the Regional Director of the MInistry of Labor. This
question calls for the presentaiton of evidence and the same may
well be entilated before the labor Arbiter who has jurisdiction over
the case. Besides, the issue raised is not for Us to determine in this
certiorari proceeding. The extraordinary remedy of certiorari
proceeding. The extraordinary remedy of certiorari offers only a
limited form of review and its principal function is to keep an
inferior tribunal within its jurisdiction. 5
WHEREFORE, the petition is granted, and respondent judge is
hereby directed to dismiss Civil Case No. 13494, without prejudice
to the right of respondent Tumala to refile the same with the Labor
Arbiter. No costs.
SO ORDERED.

In sustaining its jurisdiction over the case at bar, the respondent

court relied on Calderon vs. Court of Appeals 4 , where We ruled
that an employee's action for unpaid salaries, alowances and other
reimbursable expenses and damages was beyond the periphery of
the jurisdictional competence of the Labor Arbiters. Our ruling in
Calderon, however, no longer applaies to this case because P.D.
1367, upon which said decision was based, had already been
superceded by P.D. 1691. As heretofore stated, P.D. 1691 restored
to the Labor Arbiters their exlcusive jurisdiction over said classes of
claims.

Respondent Tumala maintains that his action for delivery of the

house and lot, his prize as top salesman of the company for 1979, is
a civil controversy triable exclusively by the court of the general
jurisdiction. We do not share this view. The claim for said prize
unquestionably arose from an employer-employee relation and,
therefore, falls within the coverage of par. 5 of P.D. 1691, which
speaks of "all claims arising from employer-employee relations,
G.R. No. L-39084 February 23, 1988
PHILIPPINE ASSOCIATION OF FREE LABOR UNIONS
(PAFLU), petitioner,
vs.
EMILIO V. SALAS, Judge of the Court of First Instance of
Rizal, Seventh Judicial District, Branch I, Pasig, Rizal and
WONG KING YUEN, respondents.
GANCAYCO, J.:
This is a petition for certiorari under Rule 65 of the Rules of Court.
The record of the case discloses that the herein petitioner Philippine
Association of Free Labor Unions (PAFLU) is a labor organization
registered with the Department of Labor and Employment.
Sometime in 1963, the petitioner filed a Complaint for unfair labor
practice with the then Court of Industrial Relations (CIR) against
the Northwest manufacturing Corporation and a certain Gan Hun.
The suit was docketed as Case No. 3901-ULP.
On September 25, 1972, the CIR rendered a Decision in favor of the
petitioner labor organization. Pursuant to a writ of execution issued
by the CIR, the provincial sheriff of Rizal commenced levying the
personal properties of the said Gan Hun, particularly the properties
found in his residential apartment unit in San Juan, then a town of
Rizal province.
The herein private respondent Wong King Yuen however, claims
that Gan Hun is his boarder in the apartment unit mentioned earlier
and that the properties inside the apartment unit levied by the
provincial sheriff belong to him and not to Gan Hun.
Thus, on October 18, 1973, the private respondent filed a Complaint
for damages with the then Court of First Instance (CFI) of Rizal
against the provincial sheriff. The suit was docketed as Civil Case
No. 18460. The amount of money involved in the said case is about
P24,680.00.
As sought by the private respondent, the CFI, with the herein
respondent Judge Emilio V. Salas presiding therein, issued an
injunctive writ restraining the provincial sheriff from proceeding
with the sale of the properties in question.
After having been allowed by the CFI to intervene in Civil Case No.
18460, the petitioner labor organization sought to dismiss the
Complaint on the ground that the said court had no jurisdiction over
the case filed by the private respondent.1 The petitioner argued that
Civil Case No. 18460 relates to an existing labor dispute and as
such the proper forum for the same is the industrial court.
In an Order dated July 9, 1974, the CFI denied the Motion to
Dismiss filed by the petitioner. 2 The petitioner sought a
reconsideration of the said case but did not succeed in doing so. 3
On August 8, 1974, the petitioner elevated the case to this Court by
way of the instant Petition.4 The petitioner maintains its stand that
the CFI has no jurisdiction over Civil Case No. 18460.
In an Answer filed with this Court on August 29, 1974, the private
respondent contends that Civil Case No. 18460 is not a labor dispute
recognizable by the industrial court. The private respondent points
out that Civil Case No. 18460 is an ordinary civil action for
damages against the provincial sheriff and directed against the
sheriffs bond required under Section 17, Rule 39 of the Rules of
Court. The private respondent adds that it is an entirely separate
proceeding distinct from the labor case filed with the CIR and that,
accordingly, it is the Court of First Instance which has jurisdiction
over the same.5
After a careful examination of the entire record of the case, We find
that instant Petition to be devoid of merit.
The sole issue in this case is whether or not the CFI has the
jurisdiction to issue the injunctive relief questioned by the
petitioner. We rule in the affirmative.
It is clear that Civil Case No. 18460 is an ordinary civil action for
damages, not a labor dispute. The case is directed against the
provincial sheriff and the recovery of damages is sought against the
bond provided for Section 17, Rule 39 of the Rules of Court
governing execution and satisfaction of judgments.
Even if the act complained of by the private respondent arose from a
labor dispute between the petitioner and another party, the
inevitable conclusion remains the same — there is no labor dispute
between the petitioner and the private respondent. Civil Case No.
18460 has no direct bearing with the case flied with the industrial
court. The civil case remains distinct from the labor dispute pending
with the CIR.
Under Commonwealth Act No. 103, the law creating the Court of
Industrial Relations, the jurisdiction of the industrial court is limited
to labor disputes. i.e., problems and controversies pertaining to the
relationship between employer and employee. Section I thereof
provides as follows —
Sec. 1. Jurisdiction. — There is created a Court of Industrial
Relations hereinafter called the court, which shall have jurisdiction
over the entire Philippines to consider, investigate, decide and settle
all questions, matters, controversies, or disputes arising between,
and/or affecting employers and employees or laborers, and regulate
the relations between them, . . . . (Emphasis supplied.)
From the foregoing, it is clear that the jurisdiction of the CIR can be
invoked only when there is a dispute arising between or affecting
employers and employees, or when an employer-employee
relationship exists between the parties.
There being no labor dispute between the petitioner and the private
respondent, the Court of First Instance 6 has the jurisdiction to issue
the injunctive relief sought by the private respondent in Civil Case
No. 18460.7 The latter case can proceed independently of the case
pending in the Court of Industrial Relations. 8
Accordingly, the writ of certiorari sought by the petitioner cannot
issue.
WHEREFORE, in view of the foregoing, the instant Petition for
certiorari is hereby DISMISSED for lack of merit. We make no
pronouncement as to costs:

SO ORDERED.
G.R. No. 72644 December 14, 1987
ALFREDO F. PRIMERO, petitioner,
vs.
INTERMEDIATE APPELLATE COURT and DM
TRANSIT, respondents.
NARVASA, J.:
The question on which the petitioner's success in the instant appeal
depends, and to which he would have us give an affirmative answer,
is whether or not, having recovered separation pay by judgment of
the Labor Arbiter — which held that he had been fired by
respondent DM Transit Corporation without just cause — he may
subsequently recover moral damages by action in a regular court,
upon the theory that the manner of his dismissal from employment
was tortious and therefore his cause of action was intrinsically civil
in nature.
Petitioner Primero was discharged from his employment as bus
driver of DM Transit Corporation (hereafter, simply DM) in
August, 1974 after having been employed therein for over 6 years.
The circumstances attendant upon that dismissal are recounted by
the Court of Appeals 1 as follows:
Undisputably, since August 1, 1974, appellee's bus dispatcher did
not assign any bus to be driven by appellant Primero. No reason or
cause was given by the dispatcher to appellant for not assigning a
bus to the latter for 23 days (pp. 6-14, 21-22, tsn, May 15, 1979).
Also, for 23 days, appellant was given a run-around from one
management official to another, pleading that he be allowed to work
as his family was in dire need of money and at the same time
inquiring (why) he was not allowed to work or drive a bus of the
company. Poor appellant did not only get negative results but was
given cold treatment, oftentimes evaded and given confusing
information, or ridiculed, humiliated, or sometimes made to wait in
the offices of some management personnel of the appellee (pp. 2-29,
tsn, May 15, 1979).
(The) General Manager and (the) Vice-President and Treasurer ...
wilfully and maliciously made said appellant ... seesaw or ... go
back and forth between them for not less than ten (10) times within
a period of 23 days ... but (he) got negative results from both
corporate officials. Worse, on the 23rd day of his ordeal appellant
was suddenly told by General Manager Briones to seek employment
with other bus companies because he was already dismissed from
his job with appellee (without having been) told of the cause of his
hasty and capricious dismissal ... (pp. 8, 11-13, 25, tsn, May 15,
1979).
Impelled to face the harsh necessities of life as a jobless person and
worried by his immediate need for money, appellant pleaded with
Corporate President Demetrio Munoz, Jr. for his reinstatement and
also asked P300.00 as financial assistance, but the latter told the
former that he (Munoz, Jr.) will not give him even one centavo and
that should appellant sue him in court, then that will be the time
President Munoz, Jr. will pay him, if Munoz, Jr. loses the case x x
(pp. 21-22, tsn, May 15, 1979).
Appellant also advised (the) President of the oppressive, anti-social
and inhumane acts of subordinate officers ... (but) Munoz, Jr. did
nothing to resolve appellant's predicament and ... just told the latter
to go back ... to ... Briones, who insisted that appellant seek
employment with other bus firms in Metro Manila ... (but) admitted
that the appellant has not violated any company rule or regulation ...
(pp. 23-26, tsn, May 15, 1979).
... In pursuance (of) defendant's determination to oppress plaintiff
and cause further loss, irreparable injury, prejudice and damage,
(D.M. Transit) in bad faith and with malice persuaded other firms
(California Transit, Pascual Lines, De Dios Transit, Negrita
Corporation, and MD Transit) not to employ (appellant) in any
capacity after he was already unjustly dismissed by said defendant
... (paragraph 8 of plaintiff's complaint).
These companies with whom appellant applied for a job called up
the D.M. Transit Office (which) ... told them ... that they should not
accept (appellant) because (he) was dismissed from that Office.
Primero instituted proceedings against DM with the Labor Arbiters
of the Department of Labor, for illegal dismissal, and for recovery
of back wages and reinstatement. It is not clear from the record
whether these proceedings consisted of one or two actions
separately filed. What is certain is that he withdrew his claims for
back wages and reinstatement, "with the end in view of filing a
damage suit" "in a civil court which has exclusive jurisdiction over
his complaint for damages on causes of action founded on tortious
acts, breach of employment contract ... and consequent effects
(thereof ). 2
In any case, after due investigation, the Labor Arbiter rendered
judgment dated January 24, 1977 ordering DM to pay complainant
Primero P2,000.00 as separation pay in accordance with the
Termination Pay Law. 3 The judgment was affirmed by the National
Labor Relations Commission and later by the Secretary of Labor,
the case having been concluded at this level on March 3, 1978. 4
Under the provisions of the Labor Code in force at that time, Labor
Arbiters had jurisdiction inter alia over —
1) claims involving non-payment or underpayment of wages,
overtime compensation, social security and medicare benefits, and
2) all other cases or matters arising from employer-employee
relations, unless otherwise expressly excluded. 5
And we have since held that under these "broad and
comprehensive" terms of the law, Labor Arbiters possessed original
jurisdiction over claims for moral and other forms of damages in
labor disputes. 6
The jurisdiction of Labor Arbiters over such claims was however
removed by PD 1367, effective May 1, 1978, which explicitly
provided that "Regional Directors shall not indorse and Labor
Arbiters shall not entertain claims for moral or other forms of
damages." 7
Some three months afterwards, Primero brought suit against DM in
the Court of First Instance of Rizal seeking recovery of damages
caused not only by the breach of his employment contract, but also
by the oppressive and inhuman, and consequently tortious, acts of
his employer and its officers antecedent and subsequent to his
dismissal from employment without just cause. 8
While this action was pending in the CFI, the law governing the
Labor Arbiters' jurisdiction was once again revised. The amending
act was PD 1691, effective May 1, 1980. It eliminated the restrictive
clause placed by PD 1367, that Regional Directors shall not indorse
and Labor Arbiters entertain claims for moral or other forms of
damages. And, as we have had occasion to declare in several cases,
it restored the principle that "exclusive and original jurisdiction for
damages would once again be vested in labor arbiters;" eliminated
"the rather thorny question as to where in labor matters the dividing
line is to be drawn between the power lodged in an administrative
body and a court;' " and, "in the interest of greater promptness in the
disposition of labor matters, ... spared (courts of) the often onerous
task of determining what essentially is a factual matter, namely, the
damages that may be incurred by either labor or management as a
result of disputes or controversies arising from employer-employee
relations." 9 Parenthetically, there was still another amendment of
the provision in question which, however, has no application to the
case at bar. The amendment was embodied in B.P. Blg. 227,
effective June 1, 1982. 10
On August 11, 1980 the Trial Court rendered judgment dismissing
the complaint on the ground of lack of jurisdiction, for the reason
that at the time that the complaint was filed. on August 17, 1978, the
law — the Labor Code as amended by PD 1367, eff. May 1, 1978
— conferred exclusive, original jurisdiction over claims for moral
or other damages, not on ordinary courts, but on Labor Arbiters.
This judgment was affirmed by the Intermediate Appellate Court,
by Decision rendered on June 29, 1984. This is the judgment now
subject of the present petition for review on certiorari. The decision
was reached by a vote of 3 to 2. The dissenters, placing reliance on
certain of our pronouncements, opined that Primero's causes of
action were cognizable by the courts, that existence of employment
relations was not alone decisive of the issue of jurisdiction, and that
such relations may indeed give rise to "civil" as distinguished
from purely labor disputes, as where an employer's right to dismiss
his employee is exercised tortiously, in a manner oppressive to
labor, contrary to morals, good customs or public policy. 11
Primero has appealed to us from this judgment of the IAC praying
that we overturn the majority view and sustain the dissent.
Going by the literal terms of the law, it would seem clear that at the
time that Primero filed his complaints for illegal dismissal and
recovery of backwages, etc. with the Labor Arbiter, the latter
possessed original and exclusive jurisdiction also over claims for
moral and other forms of damages; this, in virtue of Article
265 12 of PD 442, otherwise known as the Labor Code, effective
from May 1, 1974. In other words, in the proceedings before the
Labor Arbiter, Primero plainly had the right to plead and prosecute
a claim not only for the reliefs specified by the Labor Code itself for
unlawful termination of employment, but also for moral or other
damages under the Civil Code arising from or connected with that
termination of employment. And this was the state of the law when
he moved for the dismissal of his claims before the Labor Arbiter,
for reinstatement and recovery of back wages, so that he might later
file a damage suit "in a civil court which has exclusive jurisdiction
over his complaint ... founded on tortious acts, breach of
employment contract ... and consequent effects (thereof)." 13
The legislative intent appears clear to allow recovery in proceedings
before Labor Arbiters of moral and other forms of damages, in all
cases or matters arising from employer-employee relations. This
would no doubt include, particularly, instances where an employee
has been unlawfully dismissed. In such a case the Labor Arbiter has
jurisdiction to award to the dismissed employee not only the reliefs
specifically provided by labor laws, but also moral and other forms
of damages governed by the Civil Code. Moral damages would be
recoverable, for example, where the dismissal of the employee was
not only effected without authorized cause and/or due process for
which relief is granted by the Labor Code — but was attended by
bad faith or fraud, or constituted an act oppressive to labor, or was
done in a manner contrary to morals, good customs or public
policy 14 — for which the obtainable relief is determined by
the Civil Code 15 (not the Labor Code). Stated otherwise, if the
evidence adduced by the employee before the Labor Arbiter should
establish that the employer did indeed terminate the employee's
services without just cause or without according him due process,
the Labor Arbiter's judgment shall be for the employer to reinstate
the employee and pay him his back wages or, exceptionally, for the
employee simply to receive separation pay. These are reliefs
explicitly prescribed by the Labor Code. 16 But any award of moral
damages by the Labor Arbiter obviously cannot be based on
the Labor Code but should be grounded on the Civil Code. Such an
award cannot be justified solely upon the premise (otherwise
sufficient for redress under the Labor Code) that the employer fired
his employee without just cause or due process. Additional facts
must be pleaded and proven to warrant the grant of moral damages
under the Civil Code, these being, to repeat, that the act of dismissal
was attended by bad faith or fraud, or was oppressive to labor, or
done in a manner contrary to morals, good customs, or public
policy; and, of course, that social humiliation, wounded feelings,
grave anxiety, etc., resulted therefrom. 17
It is clear that the question of the legality of the act of dismissal is
intimately related to the issue of the legality of the manner by which
that act of dismissal was performed. But while the Labor Code
treats of the nature of, and the remedy available as regards the first
— the employee's separation from employment — it does not at all
deal with the second — the manner of that separation — which is
governed exclusively by the Civil Code. In addressing the first
issue, the Labor Arbiter applies the Labor Code; in addressing the
second, the Civil Code. And this appears to be the plain and patent
intendment of the law. For apart from the reliefs expressly set out in
the Labor Code flowing from illegal dismissal from employment, no
other damages may be awarded to an illegally dismissed employee actions, "a situation obnoxious to the orderly administration of
other than those specified by the Civil Code. Hence, the fact that the justice. 23 Actually we merely reiterate in this decision the doctrine
issue-of whether or not moral or other damages were suffered by an already laid down in other cases (Garcia v. Martinez, 84 SCRA 577;
employee and in the affirmative, the amount that should properly be Ebon v. de Guzman, 13 SCRA 52; Bengzon v. Inciong, 91 SCRA
awarded to him in the circumstances-is determined under the 248; Pepsi-Cola Bottling Co. v. Martinez, 112 SCRA 578; Aguda v.
provisions of the Civil Code and not the Labor Code, obviously was Vallejos, 113 SCRA 69; Getz v. C.A., 116 SCRA 86; Cardinal
not meant to create a cause of action independent of that for illegal Industries v. Vallejos, 114 SCRA 471; Sagmit v. Sibulo, 133 SCRA
dismissal and thus place the matter beyond the Labor Arbiter's 359) to the effect that the grant of jurisdiction to the Labor Arbiter
jurisdiction. by Article 217 of the Labor Code is sufficiently comprehensive to
include claims for moral and exemplary damages sought to be
Thus, an employee who has been illegally dismissed (i.e., recovered from an employer by an employee upon the theory of his
discharged without just cause or being accorded due process), in illegal dismissal. Rulings to the contrary are deemed abandoned or
such a manner as to cause him to suffer moral damages (as modified accordingly.
determined by the Civil Code), has a cause of action for
reinstatement and recovery of back wages and damages. When he WHEREFORE, the petition is DISMISSED, without
institutes proceedings before the Labor Arbiter, he should make a pronouncement as to costs.
claim for all said reliefs. He cannot, to be sure, be permitted to
prosecute his claims piecemeal. He cannot institute proceedings
separately and contemporaneously in a court of justice upon the
same cause of action or a part thereof. He cannot and should not be
allowed to sue in two forums: one, before the Labor Arbiter for
reinstatement and recovery of back wages, or for separation pay,
upon the theory that his dismissal was illegal; and two, before a
court of justice for recovery of moral and other damages, upon the
theory that the manner of his dismissal was unduly injurious, or
tortious. This is what in procedural law is known as splitting causes
of action, engendering multiplicity of actions. It is against such
mischiefs that the Labor Code amendments just discussed are
evidently directed, and it is such duplicity which the Rules of Court
regard as ground for abatement or dismissal of actions, constituting
either litis pendentia (auter action pendant) or res adjudicata, as the
case may be. 18 But this was precisely what Primero's counsel did.
He split Primero's cause of action; and he made one of the split parts
the subject of a cause of action before a court of justice.
Consequently, the judgment of the Labor Arbiter granting Primero
separation pay operated as a bar to his subsequent action for the
recovery of damages before the Court of First Instance under the
doctrine of res judicata, The rule is that the prior "judgment or order
is, with respect to the matter directly adjudged or as to any other
matter that could have been raised in relation thereto, conclusive
between the parties and their successors in interest by title
subsequent to the commencement of the action or special
proceeding, litigating for the same thing and under the same title
and in the same capacity. 19

We are not unmindful of our previous rulings on the matter cited in

the dissent to the decision of the Court of Appeals subject of the
instant petition, 20 notably, Quisaba v. Sta Ines-Melale Veneer &
Plywood Inc., where a distinction was drawn between the right of
the employer to dismiss an employee, which was declared to be
within the competence of labor agencies to pass upon, and the
"manner in which the right was exercised and the effects flowing
therefrom," declared to be a matter cognizable only by the regular
courts because "intrinsically civil." 21 We opine that it is this very
distinction which the law has sought to eradicate as being so
tenuous and so difficult to observe, 22 and, of course, as herein
pointed out, as giving rise to split jurisdiction, or to multiplicity of
G.R. No. 85840 April 26, 1990 Adopting the recommendation made by the Labor Standards and
Welfare Office, the Regional Director issued the 2 July 1987
SERVANDO'S INCORPORATED, petitioner, Order, 4 requiring petitioner to pay its employees the total amount of
vs. P964.952.50 as differentials, summarized as follows:
THE SECRETARY OF LABOR AND EMPLOYMENT AND
THE REGIONAL DIRECTOR, REGION VI, DEPARTMENT 1. Noel Cadiao P36,208.49
OF LABOR AND EMPLOYMENT, respondents.

PADILLA, J.: 2. Tranquilino Villaruel 18,132.64

This is a petition for certiorari to set aside the 23 August 1988 order
3. Edwin Cabaluna 27,572.99
of the Secretary of Labor, 1 sustaining the Director of the
Department of Labor and Employment, Region VI, in holding
herein petitioner company liable to fifty four (54) of its employees 4. Herdiolyn Garcia 27,572.99
in the aggregate amount of P964,952.50, representing their alleged
wage differentials. The antecedent facts of the case are as follows: 5. Eunice Dela Torre 22,041.67

On 28 April 1987, the Labor Standards and Welfare Office

conducted a routine inspection of petitioner's establishment. On that 6. Alfredo Canabe 22,041.67
same date, petitioner was furnished copy of a Notice of Inspection
Result and apprised of its violations of the labor 7. Julie Salon Cabaluna 22,041.67
standards/occupational health and safety measures, that were
discovered in the course of the inspection, namely: 8. Asuncion Zamora 31,966.54
LABOR STANDARDS LAWS:
9. Marilou Loceno 31,814.99
1. Some of the employees are underpaid under Wage Order No. 4,
covering the period from May 1, 1984 to June 15, 1984 averaging
10. Sandra Cadiao 31,814.99
from P6.00 below for salary and P9.00 below for living allowance.

2. Some of the employees are underpaid under Wage Order No. 5, 11. Menchie Ygonia 31,814.99
covering the period from June 16, 1984 to October 31, 1984
averaging from P7.00 below for salary and P3.00 for living 12. Imelda Perlin 31,814.99
allowance.

3. Some of the employees are underpaid under Wage Order No. 6 13. Julianita Salucio 10,491.37
covering the period from November 1, 1984 to present averaging
from P12.00 below for salary and P11.00 below for living 14. Rene Zarcino 10,491.37
allowance.

OCCUPATIONAL HEALTH AND SAFETY: 15. Gertrudes V. Besana 3,218.36

1. There were some obstacles in the passageway of the bodega as

16. Gilda Pahilanga 10,491.37
the waste materials are being scattered in the aisle.

2. The fire extinguisher is not being displayed inside the bodega. 2 17. Denia Pacheco 10,491.37

On 22 May 1987, the Regional Office issued a subpoena duces

18. Susan Gonzaga 10,491.37
tecum requiting petitioner to submit its payrolls and daily time
records, with a warning that failure to comply with the same will be
deemed a waiver of its right to present evidence. Petitioner ignored 19. Flor Gardo 10,491.37
said warning.
20. Emma Tortusa 13,218.36
On 17 June 1987, the Labor Standards and Welfare Officer
submitted his report to the Regional Director, recommending the
issuance of an order to require petitioner to pay fifty four (54) of its 21. Salvador Moleta, Jr. 10,491.37
employees the amount of P964,952.50, based on the computation
made by the Labor Standards and Welfare Office, representing the 22. Ditto Fernandez 10,491.37
deficiencies in wages and allowances of said employees. 3
23. Ma. Fe Termil 13,218.36 47. Johnny Delgado 13,521.37

24. Ma. Helen P. Yap 13,218.36 48. Lolita Noble 18,483.00

25. Tito Dalaorao 16,248.36 49. Tarcila Dimamay 20,604.00

26. Lorenda Dimaala 10,480.75 50. Anita Gravino 24,391.53

27. Nena Makilan 10,491.37 51. Ely Blancia 18,483.00

28. Nenita Sumagaysay 10,491.37 52. Estela Cerna 6,703.87

29. Felecidad Baticados 10,491.37 53. Laila Yee 19,506.12

30. Julie Baylon 10,491.37 54. Eulalio Agnes 33,357.27

31. Dorina Leonidas 22,199.00 GRAND TOTAL P964,952.505

32. Marlene Espinosa 22,199.00 Petitioner was likewise ordered to clear the passageway of its
warehouse of waste materials, and to put up fire extinguishers in
their proper places pursuant to the occupational safety and health
33. Daisy Anoche 19,221.55
rules.

34. Bernadette Chavez 19,221.55 A motion for reconsideration of said order was filed by petitioner,
but the same was denied. On appeal, the Secretary of Labor in his
order of 23 August 1988 affirmed the orders of the Regional
35. Monica Tejedo 19,221.55
Director. 6 Hence this petition.

36. Melanie Guancia 19,221.55 The sole issue raised in this case is whether or not the Regional
Director has the jurisdiction to hear and decide cases involving
37. Merlinda Poblete 19,221.55 recovery of wages and other monetary claims and benefits of
workers and employees.

38. Edna Delas Marias 19,221.55 The jurisdiction of the Regional Director to adjudicate money
claims of workers and employees is governed by Articles 129 and
39. Angelica Salon 10,491.37 217 of the Labor Code, as amended by Secs. 2 and 9, respectively,
of RA 6715, which provide that:

40. Teresa Narvas 10,491.37 Sec. 2. Article 129 of the Labor Code of the Philippines, as
amended, is hereby further amended to read as follows:
41. Rogelia Guinabo 10,491.37
Art. 129. Recovery of wages, simple money claims and other
benefits. — Upon complaint of any interested party, the Regional
42. Elizabeth Cuadra 10,491.37 Director of the Department of Labor and Employment or any of the
duly authorized hearing officers of the Department is empowered,
43. Liza Encabo 19,221.55 through summary proceeding and after due notice, to hear and
decide any matter involving the recovery of wages and other
44. Jovita Milleno 16,248.36 monetary claims and benefits, including legal interest, owing to an
employee or person employed in domestic or household service or
househelper under this Code, arising from employer-employee
45. Oscar Gonzaga 10,642.87 relations: Provided, That such complaint does not include a claim
for reinstatement: Provided, further, That the aggregate money
46. Doris Tabaculde 22,062.17 claims of each employee or househelper do not exceed Five
thousand pesos (P5,000.00) . . . (emphasis supplied)
Sec. 9. Article 217 of the same Code, as amended, is hereby further
amended to read as follows:
Article 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:
xxx xxx xxx
(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), whether or not accompanied with a
claim for reinstatement.
xxx xxx xxx
In order to fully appreciate the previous rulings of the Court on the
power of the Regional Directors to adjudicate money claims of
workers and employees, there is a need to trace back the grant of
said power by legislation. Prior to the enactment of RA 6715, Art.
217 of the Labor Code, as amended, conferred on the Labor
Arbiters the originaland exclusive jurisdiction to hear and decide all
cases involving household services, and 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, medicare and maternity
benefits. The Regional Director was not empowered to share in that
original and exclusive jurisdiction conferred on Labor Arbiters by
Art. 217. 7
Subsequently, Executive Order (EO) 111 was promulgated on 24
December 1986, Section 2 8 of which amended Article 128 par. (b)
of the Labor Code, as amended, by granting the Minister of Labor
or his duly authorized representative the power to order and
administer compliance with standards and other labor legislations.
In the case of Briad Agro Development Corp. vs. de la Cerna and
Camus Engineering Corp. v. Sec. of Labor, 9applying (EO) 111, the
Court recognized the concurrent jurisdiction of the Secretary of
Labor (or Regional Directors) and the Labor Arbiters to pass on
employees' money claims, including those cases over which the
Labor Arbiters had previously exercised exclusive jurisdiction.
However, in a subsequent modificatory resolution in the Briad Agro
case, dated 9 November 1989, the Court modified its original
decision in view of the enactment of RA 6715, and upheld the
power of the Regional Directors to adjudicate employees' money
claims subject to the conditions set forth in Section 2 of said
law (RA 6715).
The power then of the Regional Director (under the present state of
the law) to adjudicate employees' money claims is subject to the
concurrence of all the requisites provided under Sec. 2 of RA 6715,
to wit: (1) the claim is presented by an employee or person
employed in domestic or household service, or househelper; (2) the
claim arises from employer-employee relations; (3) the claimant
does not seek reinstatement; and (4) the aggregate money claim
of each employee or househelper does not exceed P5,000.00.
Going over the records of this case, we note that the aggregate
claims of each of the fifty four (54) employees of herein petitioner
are over and above the amount of P5,000.00. Under the
circumstances, the power to adjudicate such claims belongs to the
Labor Arbiter who has the exclusive jurisdiction over employees'
claims where the aggregate amount of the claim for each employee
exceeds P5,000.00.
WHEREFORE, the petition is GRANTED. The order of respondent
Secretary of Labor dated 23 August 1988 and the order of
respondent Regional Director dated 2 July 1987 are SET ASIDE.
The case is REFERRED to the appropriate Labor Arbiter for proper
determination. No costs.
SO ORDERED.
G.R. No. L-47739 June 22, 1983
SINGAPORE AIRLINES LIMITED, petitioner,
vs.
HON. ERNANI CRUZ PAÑO as Presiding Judge of Branch
XVIII, Court of First Instance of Rizal, CARLOS E. CRUZ and
B. E. VILLANUEVA, respondents.
Bengzon, Zarraga, Narciso, Cudala Pecson, Azucena & Bengzon
Law Offices for petitioner.
Celso P. Mariano Law Office for private respondent Carlos Cruz.
Romeo Comia for private respondent B. E. Villanueva.
MELENCIO-HERRERA, J.:
On the basic issue of lack of jurisdiction, petitioner company has
elevated to us for review the two Orders of respondent Judge dated
October 28, 1977 and January 24, 1978 dismissing petitioner's
complaint for damages in the first Order, and denying its Motion for
Reconsideration in the second.
On August 21, 1974, private respondent Carlos E. Cruz was offered
employment by petitioner as Engineer Officer with the opportunity
to undergo a B-707 I conversion training course," which he
accepted on August 30, 1974. An express stipulation in the letter-
offer read:
3. BONDING. As you win be provided with conversion training
you are required to enter into a bond with SIA for a period of 5
years. For this purpose, please inform me of the names and
addresses of your sureties as soon as possible.
Twenty six days thereafter, or on October 26, 1974, Cruz entered
into an "Agreement for a Course of Conversion Training at the
Expense of Singapore Airlines Limited" wherein it was stipulated
among others:
4. The Engineer Officer shall agree to remain in the service of the
Company for a period of five years from the date of commencement
of such aforesaid conversion training if so required by the
Company.
5. In the event of the Engineer Officer:
1. Leaving the service of the company during the period of five
years referred to in Clause 4 above, or
2. Being dismissed or having his services terminated by the
company for misconduct,
the Engineer Officer and the Sureties hereby bind themselves jointly
and severally to pay to the Company as liquidated damages such
sums of money as are set out hereunder:
(a) during the first year of the period of five years referred to in
Clause 4 above
...................................................................................... $ 67,460/
(b) during the second year of the period of five years referred to in
Clause 4 above ................................................................................. $
53,968/
(c) during the third year of the period of five years referred to in
Clause 4 above
...................................................................................... $ 40,476/
(d) during the fourth year of the period of five years referred to in
Clause 4 above ..................................................................................
$ 26,984/
(e) during the fifth year of the period of five years referred to in
Clause 4 above
....................................................................................... $ 13,492/
6. The provisions of Clause 5 above shall not apply in a case where
an Engineer Officer has his training terminated by the Company for
reasons other than misconduct or where, subsequent to the
completion of training, he -
1. loses his license to operate as a Flight Engineer due to medical
reasons which can in no way be attributable to any act or omission
on his part;
2. is unable to continue in employment with the Company because
his employment pass or work permit, as the case may be, has been
withdrawn or has not been renewed due to no act or omission on his
part;
3. has his services terminated by the Company as a result of being
replaced by a national Flight Engineer;
4. has to leave the service of the Company on valid compassionate
grounds stated to and accepted by the Company in writing. 1
Cruz signed the Agreement with his co-respondent, B. E.
Villanueva, as surety.
Claiming that Cruz had applied for "leave without pay" and had
gone on leave without approval of the application during the second
year of the Period of five years, petitioner filed suit for damages
against Cruz and his surety, Villanueva, for violation of the terms
and conditions of the aforesaid Agreement. Petitioner sought the
payment of the following sums: liquidated damages of $53,968.00
or its equivalent of P161,904.00 (lst cause of action); $883.91 or
about P2,651.73 as overpayment in salary (2nd clause of action);
$61.00 or about P183.00 for cost of uniforms and accessories
supplied by the company plus $230.00, or roughly P690.00, for the
cost of a flight manual (3rd cause of action); and $1,533.71, or
approximately P4,601.13 corresponding to the vacation leave he had
availed of but to which he was no longer entitled (4th cause Of
action); exemplary damages attorney's fees; and costs.
In his Answer, Cruz denied any breach of contract contending that
at no time had he been required by petitioner to agree to a straight
service of five years under Clause 4 of the Agreement (supra) and
that he left the service on "valid compassionate grounds stated to
and accepted by the company so that no damages may be awarded
against him. And because of petitioner-plaintiff's alleged
ungrounded causes of action, Cruz counterclaimed for attorney's
fees of P7,000.00.
The surety, Villanueva, in his own Answer, contended that his
undertaking was merely that of one of two guarantors not that of
surety and claimed the benefit of excussion, if at an found liable. He
then filed a cross-claim against Cruz for damages and for whatever
amount he may be held liable to petitioner-plaintiff, and a
counterclaim for actual, exemplary, moral and other damages plus
attorney's fees and litigation expenses against petitioner-plaintiff.
The issue of jurisdiction having been raised at the pre-trial
conference, the parties were directed to submit their respective
memoranda on that question, which they complied with in due time.
On October 28, 1977, respondent Judge issued the assailed Order
dismissing the complaint, counterclaim and cross-claim for lack of
jurisdiction stating.
2. The present case therefore involves a money claim arising from
an employer-employee relation or at the very least a case arising
from employer-employee relations, which under Art. 216 of the
Labor Code is vested exclusively with the Labor Arbiters of the
National Labor Relations Commission. 2
Reconsideration thereof having been denied in the Order of January
24, 1978, petitioner availed of the present recourse. We gave due
course.
We are here confronted with the issue of whether or not this case is
properly cognizable by Courts of justice or by the Labor Arbiters of
the National Labor Relations Commission.
Upon the facts and issues involved, jurisdiction over the present
controversy must be held to belong to the civil Courts. While
seemingly petitioner's claim for damages arises from employer-
employee relations, and the latest amendment to Article 217 of the one of suretyship or one of guaranty? Unquestionably, this question
Labor Code under PD No. 1691 and BP Blg. 130 provides that all is beyond the field of specialization of Labor Arbiters.
other claims arising from employer-employee relationship are
cognizable by Labor Arbiters, 3 in essence, petitioner's claim for WHEREFORE, the assailed Orders of respondent Judge are hereby
damages is grounded on the "wanton failure and refusal" without set aside. The records are hereby ordered remanded to the proper
just cause of private respondent Cruz to report for duty despite Branch of the Regional Trial Court of Quezon City, to which this
repeated notices served upon him of the disapproval of his case belongs, for further proceedings. No costs.
application for leave of absence without pay. This, coupled with the
SO ORDERED.
further averment that Cruz "maliciously and with bad faith" violated
the terms and conditions of the conversion training course
agreement to the damage of petitioner removes the present
controversy from the coverage of the Labor Code and brings it
within the purview of Civil Law.

Clearly, the complaint was anchored not on the abandonment per

se by private respondent Cruz of his job as the latter was not
required in the Complaint to report back to work but on
the manner and consequent effects of such abandonment of work
translated in terms of the damages which petitioner had to suffer.

Squarely in point is the ruling enunciated in the case of Quisaba vs.

Sta. Ines Melale Veneer & Plywood, Inc.4 the pertinent portion of
which reads:

Although the acts complied of seemingly appear to constitute

"matter involving employee employer" relations as Quisaba's
dismiss was the severance of a pre-existing employee-employer
relations, his complaint is grounded not on his dismissal per se, as
in fact he does not ask for reinstatement or backwages, but on the
manner of his dismiss and the consequent effects of such

Civil law consists of that 'mass of precepts that determine or

regulate the relations ... that exist between members of a society for
the protection of private interest (1 Sanchez Roman 3).

The "right" of the respondents to dismiss Quisaba should not be

confused with the manner in which the right was exercised and the
effects flowing therefrom. If the dismiss was done anti-socially or
oppressively, as the complaint alleges, then the respondents violated
article 1701 of the Civil Code which prohibits acts of oppression by
either capital or labor against the other, and article 21, which
makers a person liable for damages if he wilfully causes loss or
injury to another in a manner that is contrary to morals, good
customs or public policy, the sanction for which, by way of moral
damages, is provided in article 2219, No. 10 (Cf, Philippine
Refining Co. vs. Garcia, L-21962, Sept. 27, 1966, 18 SCRA 107).

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.

Additionally, there is a secondary issue involved that is outside the

pale of competence of Labor Arbiters. Is the liability of Villanueva
G.R. No. 82211-12 March 21, 1989
TERESITA MONTOYA, petitioner,
vs.
TERESITA ESCAYO, JOY ESCAYO, AIDA GANANCIAL,
MARY ANN CAPE, CECILIA CORREJADO, ERLINDA
PAYPON and ROSALIE VERDE, AND NATIONAL LABOR
RELATIONS COMMISSION, respondents.
Rolando N. Medalla and Segundo Y Chua for petitioner.
The Solicitor General for public respondent.
Archie S. Baribar for private respondents.
SARMIENTO, J.:
This petition for certiorari seeks the annullment and setting aside of
the resolution 1 9dated August 20, 1987 of the National Labor
Relations Commission (NLRC), Third Division, which reversed and
set aside the order dated September 27, 1985 of Labor Arbiter
Ethelwoldo R. Ovejera of the NLRC's Regional Arbitration Branch
No. VI, Bacolod City, dismissing the complaint filed by the private
respondents against the petitioner. This petition raises a singular
issue, i.e., the applicability of Presidential Decree (P.D.) No. 1508,
more commonly known as the Katarungang Pambarangay Law, to
labor disputes.
The chronology of events leading to the present controversy is as
follows:
The private respondents were all formerly employed as salesgirls in
the petitioner's store, the "Terry's Dry Goods Store," in Bacolod
City. On different dates, they separately filed complaints for the
collection of sums of money against the petitioner for alleged
unpaid overtime pay, holiday pay, 13th month pay, ECOLA, and
service leave pay: for violation of the minimum wage law, illegal
dismissal, and attorney's fees. The complaints, which were
originally treated as separate cases, were subsequently consolidated
on account of the similarity in their nature. On August 1, 1984, the
petitioner-employer moved (Annex "C" of Petition) for the
dismissal of the complaints, claiming that among others, the private
respondents failed to refer the dispute to the Lupong Tagapayapa for
possible settlement and to secure the certification required from the
Lupon Chairman prior to the filing of the cases with the Labor
Arbiter. These actions were allegedly violative of the provisions of
P.D. No. 1508, which apply to the parties who are all residents of
Bacolod City.
Acting favorably on the petitioner's motion, Labor Arbiter
Ethelwoldo R. Ovejera, on September 27, 1985, ordered the
dismissal of the complaints. The private respondents sought the
reversal of the Labor Arbiter's order before the respondent NLRC.
On August 20, 1987, the public respondent rendered the assailed
resolution reversing the order of Ovejera, and remanded the case to
the Labor Arbiter for further proceedings. A motion for
reconsideration was filed by the petitioner but this was denied for
lack of merit on October 28, 1987. Hence, this petition.
It is the petitioner's contention that the provisions of the
Katarungang Pambarangay Law (P.D. No. 1508) relative to the
prior amicable settlement proceedings before the Lupong
Tagapayapa as a jurisdictional requirement at the trial level apply to
labor cases. More particularly, the petitioner insists that the failure
of the private respondents to first submit their complaints for
possible conciliation and amicable settlement in the proper barangay
court in Bacolod City and to secure a certification from the Lupon
Chairman prior to their filing with the Labor Arbiter, divests the
Labor Arbiter, as well as the respondent Commission itself, of
jurisdiction over these labor controversies and renders their
judgments thereon null and void.
On the other hand, the Solicitor General, as counsel for the public
respondent NLRC, in his comment, strongly argues and
convincingly against the applicability of P.D. No. 1508 to labor
cases.
We dismiss the petition for lack of merit, there being no satisfactory
showing of any grave abuse of discretion committed by the public
respondent.
The provisions of P.D. No. 1508 requiring the submission of
disputes before the barangay Lupong Tagapayapa prior to their
filing with the court or other government offices are not applicable
to labor cases.
For a better understanding of the issue in this case, the provisions of
P.D. No. 1508 invoked by the petitioner are quoted:
SEC. 6. Conciliation pre-condition to filing of complaint. No
complaint, petition, action or proceeding involving any matter
within the authority of the Lupon as provided in Section 2 hereof
shall be filed or instituted in court or any other government office
for adjudication unless there has been a confrontation of the parties
before the Lupon Chairman or the Pangkat and no conciliation or
settlement has been reached as certified by the Lupon Secretary or
the Pangkat Secretary, attested by the Lupon or Pangkat Chairman,
or unless the settlement has been repudiated. However, the parties
may go directly to court in the following cases:
(1) Where the accused is under detention;
(2) Where a person has otherwise been deprived of per sonal liberty
calling for habeas corpus proceedings;
(3) Actions coupled with provisional remedies such as preliminary
injunction, attachment, delivery of personal property and support
pendente lite; and
(4) Where the action may otherwise be barred by the Statute of
Limitations.
As correctly pointed out by the Solicitor General in his comment to
the petition, even from the three "WHEREAS" clauses of P.D. No.
1508 can be gleaned clearly the decree's intended applicability only
to courts of justice, and not to labor relations commissions or labor
arbitrators' offices. The express reference to "judicial resources", to
"courts of justice", "court dockets", or simply to "courts" are
significant. On the other band, there is no mention at all of labor
relations or controversies and labor arbiters or commissions in the
clauses involved.
These "WHEREAS" clauses state:
WHEREAS, the perpetuation and official recognition of the time-
honored tradition of amicably settling disputes among family and
barangay members at the barangay level without judicial
resources would promote the speedy administration of justice and
implement the constitutional mandate to preserve and develop
Filipino culture and to strengthen the family as a basic social
institution;
WHEREAS, the indiscriminate filing of cases in the courts of
justice contributes heavily and unjustifiably to the congestion
of court dockets, thus causing a deterioration in the quality of
justice;
WHEREAS, in order to help relieve the courts of such docket
congestion and thereby enhance the quality of Justice dispensed by
the courts, it is deemed desirable to formally organize and
institutionalize a system of amicably settling disputes at the
barangay level; (Emphasis supplied.)
In addition, Letter of Instructions No. 956 and Letter of
Implementation No. 105, both issued on November 12, 1979 by the
former President in connection with the implementation of the
Katarungang Pambarangay Law, affirm this conclusion. These
Letters were addressed only to the following officials: all judges of
the Courts of first Instance, Circuit Criminal Courts, Juvenile and
Domestic Relations Courts, Courts of Agrarian Relations, City
Courts and Municipal Courts, and all Fiscals and other Prosecuting
Officers. These presidential issuances make clear that the only
official directed to oversee the implementation of the provisions of
the Katarungang Pambarangay Law (P.D. No. 1508) are the then
Minister of Justice, the then Minister of Local Governments and
Community Development, and the Chief Justice of the Supreme
Court. If the contention of the petitioner were correct, the then
Minister (now Secretary) of Labor and Employment would have
been included in the list, and the two presidential
issuances alsowould have been addressed to the labor relations
officers, labor arbiters, and the members of the National Labor
Relations Commission. Expressio unius est exclusio alterius.
Nor can we accept the petitioner's contention that the "other
government office" referred to in Section 6 of P.D. No. 1508
includes the Office of the Labor Arbiter and the Med-Arbiter. The
declared concern of the Katarungan Pambarangay Law is "to help
relieve the courts of such docket congestion and thereby enhance
the quality of justice dispensed by the courts." Thus, the" other
government office" mentioned in Section 6 of P.D. No. 1508 refers
only to such offices as the Fiscal's Office or, in localities where
there is no fiscal, the Municipal Trial Courts, where complaints for
crimes (such as those punishable by imprisonment of not more than
30 days or a, fine of not more than P 200.00) falling under the
jurisdiction of the barangay court but which are not amicably
settled, are subsequently filed for proper disposition.
But, the opinion of the Honorable Minister of Justice (Opinion No.
59, s. 1983) to the contrary notwithstanding, all doubts on this score
are dispelled by The Labor Code Of The Philippines (Presidential
Decree No. 442, as amended) itself. Article 226 thereof grants
original and exclusive jurisdiction over the conciliation and
mediation of disputes, grievances, or problems in the regional
offices of the Department of Labor and Employ- ment. It is the said
Bureau and its divisions, and not the barangay Lupong Tagapayapa,
which are vested by law with original and exclusive authority to
conduct conciliation and mediation proceedings on labor
controversies before their endorsement to the appropriate Labor
Arbiter for adjudication. Article 226, previously adverted to is clear
on this regard. It provides:
ART. 226. Bureau of Labor Relations.- The Bureau of Labor
Relations and the Labor relations divisions in the regional officer of
the Department of Labor shall have original and exclusive authority
to act, at their own initiative or upon request of either or both
parties, on all inter-union and intra-union conflicts, and all disputes,
grievances or problems arising from or affecting labor-management
relations in all workplaces whether agricultural or non-agricultural,
except those arising from the implementation or interpretation of
collective bargaining agreements which shall be the subject of
grievance procedure and/or voluntary arbitration.
The Bureau shall have fifteen (15) working days to act on all labor
cases, subject to extension by agreement of the parties, after which
the Bureau shall certify the cases to the appropriate Labor Arbiters.
The 15-working day deadline, however, shall not apply to cases
involving deadlocks in collective bargaining which the Bureau shall
certify to the appropriate Labor Arbiters only after all possibilities
of voluntary settlement shall have been tried.
Requiring conciliation of labor disputes before the barangay courts
would defeat the very salutary purposes of the law. Instead of
simplifying labor proceedings designed at expeditious settlement or
referral to the proper court or office to decide it finally, the position
taken by the petitioner would only duplicate the conciliation
proceedings and unduly delay the disposition of the labor case. The
fallacy of the petitioner's submission can readily be seen by
following it to its logical conclusion. For then, if the procedure
suggested is complied with, the private respondent would have to
lodge first their complaint with the barangay court, and then if not
settled there, they would have to go to the labor relations division at
the Regional Office of Region VI of the Department of Labor and
Employment, in Bacolod City, for another round of conciliation
proceedings. Failing there, their long travail would continue to the
Office of the Labor Arbiter, then to the NLRC, and finally to us.
This suggested procedure would destroy the salutary purposes of
P.D. 1508 and of The Labor Code Of The Philippines. And labor
would then be given another unnecessary obstacle to hurdle. We
reject the petitioner's submission. It does violence to the
constitutionally mandated policy of the State to afford full
protection to labor. 2
Finally, it is already well-settled that the ordinary rules on
procedure are merely suppletory in character vis-a-vis labor disputes
which are primarily governed by labor laws. 3 And "(A)ll doubts in
the implementation and interpretation of this Code (Labor),
including its implementing rules and regulations, shall be resolved
in favor of labor. 4

WHEREFORE, the petition is DISMISSED. Costs against the

petitioner.

SO ORDERED.
G.R. Nos. 117442-43 January 11, 1995
FEM'S ELEGANCE LODGING HOUSE, FENITHA
SAAVEDRA and IRIES ANTHONY SAAVEDRA, petitioners,
vs.
The Honorable LEON P. MURILLO, Labor Arbiter, Regional
Arbitration Branch, Region X, National Labor Relations
Commission, Cagayan de Oro City, ALFONSO GALLETO,
GEORGE VEDAD, ROLAND PANTONIAL, REYNALDO
DELAORAO, FELICISIMO BAQUILID, CECILIO SAJOL,
ANNABEL CASTRO, BENJAMIN CABRERA, RHONDEL
PADERANGA, ZENAIDA GUTIB, AIDA IMBAT and MARIA
GRACE ATUEL, respondents.
RESOLUTION
QUIASON, J.:
This is a petition for certiorari under Rule 65 of the Revised Rules
of court with temporary restraining order to reverse and set aside the
Order dated September 21, 1994 of the Labor Arbiter in the NLRC
RAB X Cases Nos. 10-04-00232 (-00233)-94.
Petitioner FEM's elegance Lodging House is a business enterprise
engaged in providing lodging accommodations. It is owned by
petitioner Fenitha Saavedra and managed by petitioner Iries
Anthony Saavedra. Private respondents are former employees of
petitioners whose services were terminated between March and
April, 1994.
Sometime after their dismissal from the employment of petitioners,
private respondents separately filed two cases against petitioners
before the National Labor Relations Commission (NLRC), Regional
Arbitration Branch No. X, Cagayan de Oro City, docketed as NLRC
RAB X Cases Nos. 10-04-00232-(0023)-94. Private respondents
sought for unpaid benefits such as minimum wage, overtime pay,
rest day pay, holiday pay, full thirteenth-month pay and separation
pay (Rollo, pp. 40-42).
On May 31, 1994, a pre-arbitration conference of the cases took
place before the Labor Arbiter. It was agreed therein: (1) that both
labor cases should be consolidated; and (2) that the parties would
file their respective position papers within thirty days from said date
or until June 30, 1994, after which the cases would be deemed
submitted for resolution (Rollo, p. 14).
On June 29, petitioners filed their position paper. On July 7, they
inquired from the NLRC whether private respondents had filed their
position paper. The receiving clerk of the NLRC confirmed that as
of said date private respondents had not yet filed their position
paper.
The following events then transpired: on July 8, petitioners filed a
Motion to dismiss for failure of private respondents to file their
position paper within the agreed period (Rollo, p. 38); on July 15,
private respondents belatedly filed their position paper; on July 18,
petitioners filed a Motion to Expunge [private respondents']
Position Paper from the records of the case (Rollo, p. 45); and on
August 23, the Labor Arbiter issued a notice of clarificatory
hearing, which was set for September 7 (Rollo, p. 47). Prior to the
hearing, petitioners filed a Motion to Resolve [petitioners'] Motion
to dismiss and Motion to Expunge [private respondent'] Position
Paper from the Records of the Case (Rollo, p. 48).
On September 21, the Labor Arbiter issued the order denying the
motions filed by petitioners. He held that a fifteen-day delay in
filing the position paper was not unreasonable considering that the
substantive rights of litigants should not be sacrificed by
technicality. He cited Article 4 of the Labor Code of the Philippines,
which provides that all doubts in the interpretation thereof shall be
resolved in favor of labor. He said that even under Section 15, Rule
5 of the Revised Rules of Court, a delay in the filing of a position
paper is not a ground for a motion to dismiss under the principle
of exclusio unius est excludio alterius (Rollo, pp. 51-52).
Hence, the present petition where petitioners charged the Labor
Arbiter with grave abuse of discretion for issuing the order in
contravention of Section 3, Rule V of The New Rules of Procedure
of the NLRC, Said section provides:
Submission of Position Papers/Memorandum. — . . . Unless
otherwise requested in writing by both parties, the Labor
Arbiter shall direct both parties to submit simultaneously their
position papers/memorandum with the supporting documents and
affidavits within fifteen (15) calendar days from the date of the last
conference, with proof of having furnished each other with copies
thereof (Emphasis supplied).
Petitioners claimed that they were denied due process and that the
Labor Arbiter should have cited private respondents in contempt for
their failure to comply with their agreement in the pre-arbitration
conference.
We dismiss the petition for failure of petitioners to exhaust their
remedies, particularly in seeking redress from the NLRC prior to the
filing of the instant petition. Article 223 of the Labor code of the
Philippines provides that decisions, awards or orders of the Labor
Arbiter are appealable to the NLRC. Thus, petitioners should have
first appealed the questioned order of the Labor Arbiter to the
NLRC, and not to this court. their omission is fatal to their cause.
However, even if the petition was given due course, we see no merit
in petitioners' arguments. The delay of private respondents in the
submission of their position paper is a procedural flaw, and the
admission thereof is within the discretion of the Labor Arbiter.
Well-settled is the rule that technical rules of procedure are not
binding in labor cases, for procedural lapses may be disregarded in
the interest of substantial justice, particularly where labor matters
are concerned (Ranara v. National Labor Relations commission, 212
SCRA 631 [1992]).
The failure to submit a position paper on time is not on of the
grounds for the dismissal of a complaint in labor cases (The New
Rules of procedure of the NLRC, Rule V, Section 15). It cannot
therefore be invoked by petitioners to declare private respondents as
non-suited. This stance is in accord with Article 4 of the Labor
Code of the Philippines, which resolves that all doubts in the
interpretation of the law and its implementing rules and regulations
shall be construed in favor of labor. Needless to state, our
jurisprudence is rich with decisions adhering to the State's basic
policy of extending protection to Labor where conflicting interests
between labor and management exist (Aquino v. National Labor
Relations Commission, 206 SCRA 118 [1992]).
Petitioners cannot claim that they were denied due process
inasmuch as they were able to file their position paper. The proper
party to invoke due process would have been private respondents,
had their position paper been expunged from the records for mere
technicality. Since petitioners assert that their defense is
meritorious, it is to their best interest that the cases be resolved on
the merits. In this manner, the righteousness of their cause can be
vindicated.
It is clear from Article 223 of the Labor Code that decisions, awards
or orders of the labor arbiter are appealable to the National Labor
Relations Commission. The proper remedy which petitioners should
have taken was to appeal to the NLRC the labor arbiter's order
denying their motion to dismiss and motion to expunge private
respondents' position paper. The present petition is therefore clearly
premature, a procedural flaw and should on this score be dismissed.
If this Court were to entertain appeals from orders of labor arbiters,
even in the form of a petition for certiorari for alleged grave abuse
of discretion under Rule 65 of the Rules of Court, we will be
opening the flood gates to petitions for certiorari against orders
(including interlocutory ones) of labor arbiters when the clear intent
of the law is to subject the decisions, awards and orders of labor
arbiters to review by the NLRC before they are brought to this
Court.

IN VIEW OF THE FOREGOING, the Court Resolved to DISMISS

the petition for lack of merit.

SO ORDERED.

Davide, Jr., Bellosillo and Kapunan, JJ., concur.

Separate Opinions

PADILLA, J., concurring:

The petition in this case should be dismissed because petitioners did

not exhaust their remedies in the National Labor Relations
Commission (NLRC) before coming to this Court.

It is clear from Article 223 of the Labor Code that decisions, awards
or orders of the labor arbiter are appealable to the National Labor
Relations Commission. The proper remedy which petitioners should
have taken was to appeal to the NLRC the labor arbiter's order
denying their motion to dismiss and motion to expunge private
respondents' position paper. The present petition is therefore clearly
premature, a procedural flaw and should on this score be dismissed.

If this Court were to entertain appeals from orders of labor arbiters,

even in the form of a petition for certiorari for alleged grave abuse
of discretion under Rule 65 of the Rules of Court, we will be
opening the flood gates to petitions for certiorari against orders
(including interlocutory ones) of labor arbiters when the clear intent
of the law is to subject the decisions, awards and orders of labor
arbiters to review by the NLRC before they are brought to this
Court.

Separate Opinions

PADILLA, J., concurring:

The petition in this case should be dismissed because petitioners did

not exhaust their remedies in the National Labor Relations
Commission (NLRC) before coming to this Court.
G.R. No. 70544 November 5, 1987
GELMART INDUSTRIES (PHILS.), INC., petitioner,
vs.
HON. VICENTE LEOGARDO, JR., in his capacity as Deputy
Minister of Labor and Employment, FRANCISCO
ESTRELLA, as the then Regional Director of MOLE Region
No. IV, and JENNY P. JUANILLO, respondents.
CORTES, J.:
In this special civil action for certiorari the petitioner Gelmart
Industries (Phils. Is.), Inc. GELMART seeks a reversal of the order
of public respondent Director Francisco L. Estrella of the Regional
Office No. 4, Ministry of Labor and Employment (MOLE), dated
June 15, 1979 requiring the immediate reinstatement of Jenny
Juanillo to her former position with full backwages reckoned from
August 8, 1977 to the date on actual reinstatement without loss of
seniority rights as affirmed by Deputy Minister Vicente Leogardo,
Jr. who dismissed petitioner's appeal and motion for
reconsideration.
The following antecedent facts are undisputed: GELMART is a
labor-intensive, export-oriented entity registered and operating
under Philippine law. It had a collective bargaining agreement with
the National Union of Garment, Textile Cordage and Allied
Workers of the Philippine (GATCORD) for the period January 25,
1976 to January 27, 1979 covering petitioner's 8,000 rank-and-file
workers among whom is the private respondent Juanillo. On August
1, 1977 GATCORD went on strike. After two return to work orders
were issued by the Ministry of Labor, the second one on August 2,
1977 giving a 48-hour deadline "or face the danger of losing
employment status," all workers complied except 334. Juanillo was
not among those who reported back to work within the period.
GELMART gave these workers notice and applied for clearance to
terminate their employment. Public respondent Vicente Leogardo,
Jr., Deputy Minister of Labor and Employment by order of October
5, 1977 sustained the preventive suspension imposed by
GELMART but certified the case for compulsory arbitration on the
issue of termination. The NLRC docketed the case as "National
Union of Garment, Textile, Cordage and Allied Workers of the
Philippines (GATCORD) v. GELMART Industries, Philippines,
Inc., NLRC RB- IV-13275-77 It took eleven months before the
labor arbiter issued a decision dated September 13, 1978 granting
clearance for dismissal, but with specific provision to exclude those
who did not participate in the strike because they were absent before
and during the same for justifiable causes such as illness or
"validated absences." [Rollo, p. 26]. In the decision was a list of
those ordered to be reinstated. Juanilo was not in the list.
Juanillo filed a complaint for illegal dismissal on February 15, 1979
docketed as Case No. R4-STF-2-1189-79 alleging that she was
employed by GELMART for the last seven (7) years as sewer with
a daily wage of P12.40, excluding allowance and other fringe
benefits, that on July 31, 1977 through a letter sent to the respondent
company, she applied for vacation leave effective August 1, 1977 to
August 7, 1977; that she went home to Laguna to take care of her
child who was then sick and stayed till August 7, 1977; that when
she reported back for work on August 8, 1977 she was refused
admittance and was served a copy of preventive suspension for
alleged participation in the mass walk-out by workers of the
company on August 1, 1977; that while a substantial number of
workers who had participated in the mass walk-out had already been
reinstated, despite repeated representations the company refused to
reinstate her; and that her dismissal in the guise of preventive
suspension was without just cause and prior clearance from the
Ministry of Labor. The complainant prayed for reinstatement with
full backwages, for damages in the amount of P10,000 and attorneys
fees.
The respondent, traversing Juanillo's complaint, asserted that the
subject of the complaint was barred by prior judgement citing the
decision of September 13, 1978, and the list in said decision of 63
workers who were excluded from the clearance to terminate.
Juanillo's name not appearing in said list.
On June 15, 1979, the public respondent Francisco L. Estrella, then
Regional Director of the Ministry of Labor and Employment
(MOLE) Region No. IV issued an order finding for petitioner
Juanillo, thus:
We find respondent's contentions untenable.
Firstly, at the time when the strike was staged by the workers of
respondent, complainant was already in the province. In fact, before
she went to the province, she even notified respondent and applied
for vacation leave of absence. Consequently, respondent could not
deny that she was on vacation and in the province and, therefore,
could not possibly join the strike. Furthermore, it appears that
complainant was dismissed without the required clearance in
violation of the mandatory provision of Art. 278 (b) of the Labor
Code, as amended. For these reasons therefore, we find and so hold
that the dismissal of complainant is illegal and without just cause.
WHEREFORE, premises considered, respondent is hereby ordered
to immediately reinstate complainant to her former position with
fun backwages reckoned from August 8, 1977 up to the date of
actual reinstatement without loss of seniority rights [Rollo, p. 40].
This order was affirmed on November 17, 1982 by respondent
Leogardo as Deputy Minister of MOLE. Petitioner's motion for
reconsideration dated March 11, 1985 having been denied, the
present petition was filed on April 18, 1985, assigning on the part of
public respondents the following errors:
1. IN GRAVE ABUSE OF DISCRETION, FAULTED GELMART
FOR THE ABSENCE OF RESPONDENTS' CLEARANCE IN
DISMISSING MS. JUANILLO, WHEN DEPUTY MOLE
MINISTER LEOGARDO HAD, IN FACT, PERSONALLY
SUSTAINED AND APPROVED GELMART'S CLEARANCE
SINCE OCTOBER 5,1977;
2. PUBLIC RESPONDENT LEOGARDO, IN GRAVE ABUSE OF
DISCRETION, DISREGARDED HIS OCTOBER 5, 1977 ORDER
TRANSMITTING MS. JUANILLO'S CASE TO THE NLRC FOR
COMPULSORY ARBITRATION WHICH, WITH GATCORD'S
OPPOSITION, WERE HEARD/DECIDED ON SEPTEMBER
13,1978 IN NLRC CASE NO. RB-IV-13275-77, WHEREAT MS.
JUANILLO'S TERMINATION WAS UPHELD IN A DECISION
CONCLUSIVE AND BINDING ON ALL THE RESPONDENTS;
3. RESPONDENT JUANILLO'S COMPLAINT OF FEBRUARY
15, 1979, WAS FILED SEVEN (7) MONTHS AFTER THE NLRC
DECISION ON HER CASE OF SEPTEMBER 13, 1978: IT IS,
THEREFORE, BARRED BY FINALITY OF JUDGMENT,
ESTOPPEL AND RES JUDICATA;
4. PUBLIC RESPONDENTS' SUMMARY AND CAVALIER
VALIDATION OF A GRATUITOUS AND EVIDENTIARILY
UNSUPPORTED REQUEST FOR AN ALLEGED LEAVE OF
ABSENCE WHICH, IF, TRUE, MS. JUANILLO PERVERSELY
AND WILLFULLY KEPT IN SECRET UNTIL AFTER SHE
LOST HER CASE AT THE NLRC, IS CONTRARY TO THE
NORMS OF JUSTICE, EQUITY AND MORALITY; THAT
THEY UNDULY PROCRASTINATED IN RESOLVING THE
CASE TO GELMART'S PREJUDICE AGGRAVATES THEIR
ABUSE OF DISCRETION. [Rollo, pp. 13-14].
The first three assigned errors charging the public respondents of
having disregarded the clearance obtained by GELMART to dismiss
workers who had staged a mass walkout and disobeyed the return to
work order and the decision in the NLRC Case No. RR-IV-13275-
77 upholding the dismissals are well taken. The strike was staged by
GATCORD members, the return to work orders were directed to
them and the decision on the Legal strike is binding on them. In this
particular case, the application for clearance with preventive
suspension and compulsory arbitration on the issue of termination
involved GATCORD members who had not returned to work. Of
these there were 334 and Juanilo was among them. However, she
has taken the position that since at the time of the Legal mass walk-
out she was already in the province on leave, she was not covered
by NLRC Case No. RB-IV-13275-77. The compulsory arbitration
precisely covered her case. All she needed to do was prove
"validated absences," during the proceeding and she would have
been in the list of those to be reinstated. But she did not choose to
present her proof in the arbitration proceeding. Instead, she waited
seven months after the decision became final before bringing a
separate case. If every member of a striking union not satisfied with
a decision in an arbitration case resolving the issues involved in a
labor dispute arising from the strike were to be accorded the right to
bring a separate individual action on an issue covered by that
decision, there can be no end or solution to the controversy. The
dismissal of Juanillo was an incident of the GATCORD strike
against GELMART. Her action is not distinct from the issues dealt
with in the compulsory arbitration case.
But even if the Court were to grant that she could bring this separate
action, Juanillo would have to prove her case. The only basis of her
action is the alleged leave of absence she had filed. The public
respondents decided in her favor. Was there substantial evidence
presented to support the decision under review?
The public respondents found as a fact Chat Juanillo had not
participated in the mass walk-out because at the time it took place
she was in the province taking care of a sick child: that before she
left she had by letter filed a leave of absence. The petitioner
GELMART denied having received any letter from Juanilo
requesting leave and assailed the letter offered as selfserving
evidence. Public respondents, however, found that leave was
obtained, that GELMART failed to prove that Juanilo was among
the workers who staged the mass walk out and that therefore her
dismissal without previous clearance was illegal.
This Court will not ordinarily disturb findings of fact of
administrative agencies like the public respondents. It is axiomatic
that in their exercise of adjudicative functions they are not bound by
strict rules of evidence and of procedure. When confronted with
conflicting versions of factual matters, it is for them in the exercise
of discretion to determine which party deserves credence on the
basis of evidence received. [Halili v. Floro, 90 Phil. 245 (1951);
Estate of Florencio Buan v. Pampanga Bus Co. and La Mallorca, 99
Phil. 373 (1956); Luzon Brokerage Co. v. Luzon Labor Union, 117
Phil. 118 (1963). 7 SCRA 116].
However, as the landmark case of Ang Tibay v. Court of Industrial
Relations [69 Phil. 635 (1940)] has pointed out there are "cardinal
primary rights which must be respected" in such proceedings. Not
the least among them are those which refer to the evidence required
to support a decision:
(3) "While the duty to deliberate does not impose the obligation to
decide right, it does imply a necessity which cannot be disregarded,
namely, that of having something to support the decision. A
decision with absolutely nothing to support it is a nullity, at least,
when directly attacked.". . .
4. Not only must there be some evidence to support a finding or
conclusion, but evidence must be "substantial." "Substantial
evidence is more than a mere scintilla. It means such relevant
evidence as a reasonable mind might accept as adequate to support a
conclusion.". . (at p. 642).
The Court finds merit in the respondents' fourth assignment of error.
A careful review of the basis on which the decision of the labor
arbiter as affirmed by the respondent Leogardo as deputy minister
of MOLE reveals that not only is there no substantial evidence to
support Juanillo's claim but also that the respondents' evidence to
the contrary contravenes it.
Juanillo asserts that at the time of the strike she was on leave, to
prove which she presented a letter purportedly requesting leave
dated Sunday, July 31, 1977, the day before the illegal strike began.
There is no proof that it was filed with or received by the company.
She asserts that she was denied admission upon her return on
August 8, 1977 and was served notice of "Termination with
Preventive Suspension" on August 10, 1977. In the case between
GELMART and GATCORD of which she is a member, the
respondent Leogardo sustained the preventive suspension of those
who failed to return to work but referred this case for compulsory
arbitration on the issue of termination on October 5, 1977. The
arbitral proceedings lasted eleven months, the decision became final
and executory on September 13, 1978. In the decision, specific
provision was made to exclude from termination.

. . . those who did not participate in the strike, who among others
were absent before and during the same for justifiable causes, as for
example, illness or validated absences, are herewith ordered
reinstated to their former positions without back wages. . . .

Since Juanillo had received notice of the termination in August

1977 and as she claims she had made repeated representation and
demands for reinstatement, it is passing strange that her claim was
not ventilated in the compulsory arbitration proceeding conducted
precisely on the issue of termination of GATCORD members who
had not complied with the return to work order. All that was needed
was to show that she had indeed not participated in the strike by
presenting her letter asking for leave. Instead she filed her case
seven months after the decision had become final and executory. By
way of evidence all she presented was a self- serving
uncorroborated letter purportedly asking for leave, receipt of which
was not proved. This quantum of evidence fails the substantiality of
evidence test to support a decision, a basic requirement in
administrative adjudication. [Ang Tibay v. Court of Industrial
Relations, supra; Air Manila v. Balatbat, G.R. No. L-29064, April
29,1971, 38 SCRA 489].

WHEREFORE, the petition is hereby GRANTED and the order of

the public respondents REVERSED.

SO ORDERED
G.R. No. 100969 August 14, 1992
CARLO RANARA, petitioner,
vs.
NATIONAL LABOR RELATIONS COMMISSION, ORO
UNION CONSTRUCTION SUPPLY AND/OR JIMMY TING
CHANG, GENERAL MANAGER/OWNER, respondents.
Public Attorney's Office for petitioner.
Eduardo P. Cuenca for private respondents.
CRUZ, J.:
Petitioner Carlos Ranara had been working as a driver with Oro
Union Construction Supply, one of the herein private respondents,
when he was told by Fe Leonar, secretary of the other private
respondent, Jimmy Ting Chang, not to come back the following
day. Thinking that she was only joking, be reported for work as
usual on November 11, 1989, but was surprised to find some other
person handling the vehicle previously assigned to him. It was only
then that Ranara realized that he had really been separated. When he
approached Leonar to ask why his services were being terminated,
she replied crossly:
You are hard-headed. I told you last night when you turned over the
key not to report for work because Mr. Jimmy Ting Chang does not
like your services, yet you, come back.
Three days later, Ranara filed a complaint with the Department of
Labor and Employment for illegal dismissal, reinstatement with full
back wages, underpayment of wages, overtime pay, non-payment of
13th month pay, service incentive leave, separation pay and moral
damages.
The private respondents denied the charges, contending that the
petitioner had not been illegally dismissed. Chang said he was in a
hospital in Manila on November 11, 1989, and that he had not
authorized Leonar, or even his mother who was the officer-in-
charge during his absence, to terminate Ranara's employment. The
truth was that it was Ranara who abandoned his work when he
stopped reporting from November 11, 1989. Chang also introduced
documentary evidence, consisting of payroll and other records, to
refute the petitioner's monetary claims.
On May 2, 1990, the Labor Arbiter held that Ranara had not been
illegally dismissed. 1 The decision stressed that at the hearing of
December 28, 1989, Chang offered to re-employ the petitioner as he
was needed in the store but the latter demurred, saying he was no
longer interested. This attitude, according to the Labor Arbiter,
showed that it was the petitioner who chose to stop working for
Chang and not the latter who terminated his employment.
On the monetary claims, however, the decision ordered the
respondents to pay the complainant P375.00 as wage differentials,
13th month pay for 1989 of P1,110.00 minus his outstanding
obligation to respondents. The rest of the claims were dismissed for
lack of merit. 2
The decision was affirmed on appeal, by the NLRC, 3 prompting the
petitioner to seek relief from this Court.
Required to comment, the Solicitor General disagreed with the
NLRC on the legality of the petitioner's dismissal. He said that the
challenged decision was based on an event subsequent to the illegal
dismissal, to wit, the offer of reinstatement, and that such offer did
not validate the dismissal. He also disputed the contention that the
petitioner had voluntarily abandoned his work, saying this was
unlikely because of the difficulty of the times and the high
unemployment rate.
In view of this stance of the Solicitor General, and at his suggestion,
the Court required the NLRC to file its own comment.
The NLRC argued in its Comment that the offer to re-employ the
petitioner should not be disregarded in assessing the motives of the
parties as it was a genuine effort on the part of the private
respondents to settle the controversy. There was no reason for the
petitioner's refusal to return to work after he had been invited back
to the store. Moreover, the petitioner had not filed a motion for
reconsideration of its decision and should therefore not be allowed
to file his petition for certiorari with this Court. The NLRC also
argued that it was not necessary to require the private respondents to
submit the original copies of their documentary evidence because
their due execution and genuineness had not been denied under oath
and were therefore deemed admitted.
The Court has carefully considered the arguments of the parties and
finds for the petitioner.
We reject as a rank falsity the private respondents' claim that the
petitioner had not been illegally dismissed and in fact abandoned his
work. The secretary would not have presumed to dismiss him if she
had not been authorized to do so, considering the seriousness of this
act. It is worth noting that neither Chang's mother, who was the
officer-in-charge do his absence, nor Chang himself upon his return,
reversed her act and reinstated the petitioner.
The private respondents themselves claim they have a staff of less
than ten persons, and Chang or his mother could not have failed to
notice Ranara's absence after November 1, 1989. Yet they took no
steps to rectify the secretary's act if it was really unauthorized and,
on the contrary, accepted Ranara's replacement without question.
Evidently, that person had been employed earlier, in advance of
Ranara's dismissal.
The charge of abandonment does not square with the recorded fact
that three days after Ranara's alleged dismissal, he filed a complaint
with the labor authorities. The two acts are plainly inconsistent.
Neither can Ranara's rejection of Chang's offer to reinstate him be
legally regarded as an abandonment because the petitioner had been
placed in an untenable situation that left him with no other choice.
Given again the smallness of the private respondents' staff, Ranara
would have found it uncomfortable to continue working under the
hostile eyes of the employer who had been forced to reinstate him.
It was not as if Ranara were only one among many other
complainants ordered reinstated in a big company, for whatever
enmity the employer might harbor against them would be diluted
and less personalized, so to speak. There would be a certain degree
of anonymity, and a resultant immunity from retaliation, in the
number alone of the reinstated personnel. Moreover, it is not
unlikely that there would be a labor union in such a company to
protect and assure the returning workers against possible reprisals
from the employer.
The petitioner in this case was an ordinary driver in the private
respondents' employ. He had no special abilities to make him
indispensable to his employer. He did not belong to a powerful
labor union vigilant of the rights of its members. The employer
thought his services were disposable at will and so arbitrarily
dismissed him. They miscalculated, for the petitioner was not really
that vulnerable. The fact is that. alone though he was, or so it
appeared, he had behind him, even as a lowly worker, the
benevolence of the law and the protection of this Court.

In the petitioner's case, he was only one among ten employees in a
small store, and that made a great deal of difference to him. He had
reason to fear that if he accepted the private respondents' offer, their
watchful eyes would thereafter be focused on him, to detect every
small shortcoming of his as a ground for vindictive disciplinary
action. In our own view, this was a case of strained relations
between the employer and the employee that justified Ranara's
refusal of the private respondents' offer to return him to his former
employment.
WHEREFORE, the challenged decision of the NLRC is
AFFIRMED, with the modification that in addition to the monetary
awards therein specified, the petitioner shall be entitled to
separation pay and three years' back wages in lieu of reinstatement.
No costs.
SO ORDERED.

It is clear that the petitioner was illegally dismissed without even

the politeness of a proper notice. Without cause and without any
investigation, formal or otherwise, Ranara was simply told that he
should not report back for work the following day. When he did so
just the same, thinking she had only spoken in jest, he found that
somebody else had been employed in his place. When he protested
his replacement, he was even scolded for being "hard-headed" and
not accepting his dismissal.

The fact that his employer later made an offer to re-employ him did
not cure the vice of his earlier arbitrary dismissal. The wrong had
been committed and the harm done. Notably, it was only after the
complaint had been filed that it occurred to Chang, in a belated
gesture of good will, to invite Ranara back to work in his store.
Chang's sincerity is suspect. We doubt if his offer would have been
made if Ranara had not complained against him. At any rate, sincere
or not, the offer of reinstatement could not correct the earlier illegal
dismissal of the petitioner. The private respondents incurred liability
under the Labor Code from the moment Ranara was illegally
dismissed, and the liability did not abate as a result of Chang's
repentance.

The failure of the petitioner to file a motion for reconsideration of

the NLRC decision before coming to this Court was not a fatal
omission. In the interest of substantial justice, and especially in
cases involving the rights of workers, the procedural lapse may be
disregarded to enable the Court to examine and resolve the
conflicting rights and responsibilities of the parties. This liberality is
warranted in the case at bar, especially since it has been shown that
the intervention of the Court was necessary for the protection of the
dismissed laborer.

We sustain the findings of fact of the Labor Arbiter regarding the

petitioner's monetary claims on the basis of the documentary
evidence submitted by the private respondents. We also agree that it
was not necessary for the NLRC to require the production of the
originals thereof in the absence of any challenge to their
genuineness and due execution from the petitioner.
G.R. No. L-23467 March 27, 1968
AMALGAMATED LABORERS' ASSOCIATION and/or
FELISBERTO M. JAVIER for himself and as General
President,
ATTY. JOSEUR. CARBONELL, ET AL., petitioners,
vs.
HON. COURT OF INDUSTRIAL RELATIONS AND ATTY.
LEONARDO C. FERNANDEZ, respondents.
Jose Ur. Carbonell for and in his own behalf as petitioner.
Leonardo C. Fernandez for and in his own behalf as respondent.
SANCHEZ, J.:
Controversy over attorneys' fees for legal services rendered in
CIR Case No. 70-ULP-Cebu.
The background facts are as follows:
On May 30, 1956, Florentino Arceo and 47 others together
with their union, Amalgamated Laborers' Association, and/or
Felisberto Javier, general president of said union, lodged a
complaint 1 in the Court of Industrial Relations (CIR), for unfair
labor practices specified in Sec. 4(a) 1, 2, 3 and 4 of the Industrial
Peace Act. Made respondents were their former employer,
Binalbagan Sugar Central Company, Inc. (Biscom), Rafael
Jalandoni, its president and general manager; Gonzalo Guillen, its
chief engineer and general factory superintendent; and Fraternal
Labor Organization and/or Roberto Poli, its president.
Failing in their attempts to dismiss the complaint (motions to
dismiss dated June 30, 1956 and July 6, 1956), 2respondents
Biscom, Jalandoni, and Guillen, on July 9, 1957, answered and
counterclaimed. Respondents Fraternal Labor Union and Poli also
filed their answer dated July 12, 1957.
With the issues joined, the case on the merits was heard
before a trial commissioner.
At the hearings, only ten of the forty-eight complainant
laborers appeared and testified. Two of these ten were permanent
(regular) employees of respondent company; the remaining eight
were seasonal workers. The regular employees were Arsenio Reyes
and Fidel Magtubo. Seasonal workers were Catalino Bangoy, Juan
Fernandez, Jose Garlitos, Dionisio Pido, Santiago Talagtag,
Dominador Tangente, Felimon Villaluna and Brigido Casas.
On November 13, 1962, CIR, thru Associate Judge Arsenio I.
Martinez, rendered judgment, which provides, inter alia, that the
two regular employees (Reyes and Magtubo) be reinstated "to their
former positions, without loss of seniority and other benefits which
should have accrued to them had they not been illegally dismissed,
with full back wages from the time of their said dismissals up to the
time of their actual reinstatements, minus what they have earned
elsewhere in the meantime" and that the eight seasonal workers "be
readmitted to their positions as seasonal workers of respondent
company (Biscom), with back wages as seasonal workers from the
time they were not rehired at the start of the 1955-1956 milling
season on October 1, 1955 up to the time they are actually
reinstated, less the amount earned elsewhere during the period of
their lay-off."
Respondents Biscom, Jalandoni and Guillen appealed direct
to this Court. 3 On March 28, 1963, this Court dismissed the appeal,
without costs. Ground: Petitioners therein did not seek
reconsideration of CIR's decision of November 13, 1962. The
judgment became final.
Upon the ten complainants' motion to name an official
computer to determine the actual money due them, CIR, on June 4,
1963, directed the Chief Examiner of its Examining Division to go
to the premises of Biscom and compute the back wages due the ten
complainants.
On August 9, 1963, the Chief Examiner reported that the total
net back wages due the ten complainants were P79,755.22. Biscom
and the complainants moved for reconsideration: Biscom on August
17, 1963; complainants on September 24, 1963.
In the interim, Atty. Leonardo C. Fernandez (a respondent
herein) filed on July 15, 1963 in the same case — CIR Case No. 70-
ULP-Cebu — a "Notice of Attorney's Lien." He alleged therein that
he had been the attorney of record for the laborers in CIR Case No.
70-ULP-Cebu "since the inception of the preliminary hearings of
said case up to the Supreme Court on appeal, as chief counsel
thereof"; that he "had actually rendered legal services to the laborers
who are subject of this present litigation [CIR Case No. 70-ULP-
Cebu] since the year 1956, more or less"; that the laborers "have
voluntarily agreed to give [him], representing his attorney's fees on
contingent basis such amounts equivalent to 25% thereof which
agreement is evidenced by a Note"; and that the 25% attorney's fee
so contracted is "reasonable and proper taking into consideration the
length of services he rendered and the nature of the work actually
performed by him."
On September 25, 1963, Atty. Fernandez filed an "Amended
Notice of Attorney's Lien," which in part reads:
3. That the laborers, subject of this present litigation, sometime on
February 3, 1956, had initially voluntarily agreed to give
Undersigned Counsel herein, representing his Attorney's fees on
contingent basis, such amounts as equivalent to Thirty Per Cent
(30%) of whatever money claims that may be adjudicated by this
Honorable Court, copy of said Agreement, in the local Visayan
dialect and a translation of the same in the English language are
hereto attached as annexes "A" "A-1" hereof;
4. That subsequently thereafter, when the above-entitled Case was
already decided in their favor, Arsenio Reyes, in behalf of his co-
laborers who are also Complainants in this Case begged from the
Undersigned Counsel herein that he reduce his attorney's fees to
Twenty-Five Per Cent (25%) only for the reason that they have to
share and satisfy also Atty. Jose Ur. Carbonell in the equivalent
amount of Five Per Cent (5%) although the latter's actual services
rendered was so insignificant thereof;
5. That because of the pleadings of said Arsenio Reyes, who is the
President of said Union, the Undersigned Counsel herein finally
agreed and consented that his attorney's fees be reduced to only
Twenty-Five Per Cent (25%) instead of Thirty Per Cent (30%) as
originally agreed upon in 1956.
On October 7, 1963, Atty. Jose Ur. Carbonell (a petitioner
herein) filed in court a document labelled "Discharge" informing
CIR of the discharge, release and dismissal — thru a union board
resolution (attached thereto as Annex A thereof) — of Atty.
Leonardo C. Fernandez as one of the lawyers of the complainants in
CIR Case No. 70-ULP-Cebu, effective February 28, 1963.
On October 14, 1963, Atty. Fernandez replied. He averred
that the grounds for his discharge specified in the board resolution
were "malicious and motivated by greed and ungratefulness" and
that the unjustifiable discharge did not affect the already stipulated
contract for attorneys' fees.
On March 19, 1964, CIR Judge Arsenio I. Martinez resolved
Biscom's and complainants' motions for resonsideration objecting to
the Chief Examiner's Report and also respondent Fernandez'
Amended Notice of Attorney's Lien. Judge Martinez' order reads in
part:
(b) Respondent company is further directed to deposit the
amount representing 25% of P79,755.22 with the Cashier of this
Court, as attorney's fees;
xxx xxx xxx
(d) The amount representing attorney's fees to be deposited by
the respondent company is hereby awarded and granted to Atty.
Leonardo C. Fernandez, and he may collect the same from the
Cashier of the Court upon the finality of this order, subject to
existing auditing procedures; ....
Biscom complied with the order of deposit. 4
On April 10, 1964, Atty. Carbonell moved to reconsider the
March 19, 1964 order with respect to the award of attorneys' fees.
Amongst his grounds are that CIR has no jurisdiction to determine
the matter in question, and that the award of 25% as attorneys' fees
to Atty. Fernandez is excessive, unfair and illegal. This motion was
denied on April 28, 1964 by CIR en banc.
On June 9, 1964, a motion for reconsideration of the April 28,
1964 resolution was filed by Atty. Carbonell. This was amplified by
a similar motion filed on June 11, 1964.
On June 25, 1964, two things happened: First. CIR en
banc denied the motion of June 11, 1964. Second. On Atty.
Fernandez' motion, Judge Martinez authorized the Cashier of the
court to disburse to Fernandez the amount of P19,938.81
representing attorneys' fees and deducting therefrom all legal fees
incident to such deposit.
Petitioners herein, Atty. Carbonell, Amalgamated Laborers'
Association, and the ten employees, appealed from the June 25,
1964 resolution of CIR, direct to this Court.
1. Petitioners press upon this Court the view that CIR is bereft
of authority to adjudicate contractual disputes over attorneys' fees.
Their reasons: (1) a dispute arising from contracts for attorneys' fees
is not a labor dispute and is not one among the cases ruled to be
within CIR's authority; and (2) to consider such a dispute to be a
mere incident to a case over which CIR may validly assume
jurisdiction is to disregard the special and limited nature of said
court's jurisdiction.
These arguments are devoid of merit.
The present controversy over attorneys' fees is but an
epilogue or a tail-end feature of the main case, CIR No. 70-ULP-
Cebu, which undoubtedly is within CIR's jurisdiction. And, it has
been held that "once the Court of Industrial Relations has acquired
jurisdiction over a case under the law of its creation, it retains that
jurisdiction until the case is completely decided, including all the
incidents related thereto." 5 Expressive of the rule on this point is
this —
4. It is well settled that:
A grant of jurisdiction implies the necessary and usual
incidental powers essential to effectuate it, and every regularly
constituted court has power to do all things reasonably necessary for
the administration of justice within the scope of its jurisdiction, and
for the enforcement of its judgments and mandates, even though the
court may thus be called upon to decide matters which would not be
within its cognizance as original causes of action.
While a court may be expressly granted the incidental powers
necessary to effectuate its jurisdiction, a grant of jurisdiction, in the
absence of prohibitive legislation, implies the necessary and usual
incidental powers essential to effectuate it (In re Stinger's Estate,
201 P. 693), and, subject to existing laws and constitutional
provisions, every regularly constituted court has power to do all
things that are reasonably necessary for the administration of justice
within the scope of its jurisdiction, and for the enforcement of its
judgments and mandates. So demands, matters, or questions
ancillary or incidental to, or growing out of, the main action, and
coming within the above principles, may be taken cognizance of by
the court and determined, since such jurisdiction is in aid of its
authority over the principal matter, even though the Court may thus
be, called on to consider and decide matters, which as original
causes of action, would not be within its cognizance (Bartholomew
vs. Shipe, 251 S.W. 1031), (21 C.J.S. pp. 136-138.)
Thus, in Gomez vs. North Camarines Lumber Co., L-11945,
August 18, 1958, and Serrano vs. Serrano, L-19562, May 23, 1964,
we held that the court having jurisdiction over the main cause of
action, may grant the relief incidental thereto, even if they would
otherwise, be outside its competence. 6
To direct that the present dispute be lodged in another court
as petitioners advocate would only result in multiplicity of suits, 7 a
situation abhorred by the rules. Thus it is, that usually the
application to fix the attorneys' fees is made before the court which
renders the judgment. 8 And, it has been observed that "[a]n
approved procedure, where a charging lien has attached to a
judgment or where money has been paid into court, is for the
attorney to file an intervening petition and have the amount and
extent of his lien judicially determined." 9 Appropriately to be
recalled at this point, is the recent ruling in Martinez vs. Union de
Maquinistas, 1967A Phild. 142, 144, January 30, 1967, where,
speaking thru Mr. Justice Arsenio P. Dizon, explicit pronouncement
was made by this Court that: "We are of the opinion that since the
Court of Industrial Relations obviously had jurisdiction over the
main cases, ... it likewise had full jurisdiction to consider and decide
all matters collateral thereto, such as claims for attorney's fees made
by the members of the bar who appeared therein." 10
2. The parties herein join hands in one point - the ten (10)
successful complainants in C.I.R Case No. 70-ULP-Cebu should
pay as attorneys' fees 30% of the amount adjudicated by the court in
the latter's favor (P79,755.22).
They are at odds, however, on how to split the fees.
Respondent Atty. Fernandez claims twenty-five per cent
(25%) of the 30% attorneys' fees. He explains that upon the plea of
Arsenio Reyes, union president and one of the 10 successful
complainants, he had to reduce his fees to 25% since "they have to
share and satisfy also Atty. Jose Ur. Carbonell in the equivalent
amount of Five Per Cent (5%)." Atty. Fernandez exhibited a
contract purportedly dated February 3, 1956 — before the 48
employees have even filed their complaint in CIR. The stipulated
fee is 30% of whatever amount the ten might recover. Strange
enough, this contract was signed only by 8 of the 10 winning
claimants. What happened to the others? Why did not the union
intervene in the signing of this contract? Petitioners dispute said
contract. They say that Atty. Fernandez required the ten to sign the
contract only after the receipt of the decision.
Petitioners, on the other hand, contend that the verbal
agreement entered into by the union and its officers thru its
President Javier and said two lawyers, Atty. Carbonell and Atty.
Fernandez, is that the 30% attorneys' fees, shall be divided equally
("share and share alike") amongst Atty. Carbonell, Atty. Fernandez
and Felisberto Javier, the union president.
After hearing, CIR Associate Judge Arsenio I. Martinez
awarded 25% attorneys' fees to respondent Atty. Fernandez. CIR
noted that "the active conduct and prosecution of the above-entitled
case was done by Atty. Fernandez up to the appeal in the Supreme
Court," and that petitioner Atty. Carbonell manifested that "Atty.
Leonardo C. Fernandez was the counsel mainly responsible for the
conduct of the case." It noted, too, that petitioner Atty. Carbonell
did not file any notice of Attorney's Lien.
3. We strike down the alleged oral agreement that the union
president should share in the attorneys' fees. Canon 34 of Legal
Ethics condemns this arrangement in terms clear and explicit. It
says: "No division of fees for legal services is proper, except with
another lawyer, based upon a division of service or responsibility."
The union president is not the attorney for the laborers. He may
seek compensation only as such president. An agreement whereby a
union president is allowed to share in attorneys' fees is immoral.
Such a contract we emphatically reject. It cannot be justified.
4. A contingent fee contract specifying the percentage of
recovery an attorney is to receive in a suit "should be reasonable
under all the circumstances of the case, including the risk and
uncertainty of the compensation, but should always be subject to the
supervision of a court, as to its reasonableness." 11
Lately, we said: 12
The principle that courts should reduce stipulated attorney's
fees whenever it is found under the circumstances of the case that
the same is unreasonable, is now deeply rooted in this jurisdiction....
xxx xxx xxx
Since then this Court has invariably fixed counsel fees on
a quantum meruit basis whenever the fees stipulated appear
excessive, unconscionable, or unreasonable, because a lawyer is
primarily a court officer charged with the duty of assisting the court
in administering impartial justice between the parties, and hence,
the fees should be subject to judicial control. Nor should it be
ignored that sound public policy demands that courts disregard
stipulations for counsel fees, whenever they appear to be a source of
speculative profit at the expense of the debtor or mortgagor.
See, Gorospe, et al. v. Gochangco, L-12735, October 30, 1959. And
it is not material that the present action is between the debtor and
the creditor, and not between attorney and client. As courts have
power to fix the fee as between attorney and client, it must
necessarily have the right to say whether a stipulation like this,
inserted in a mortgage contract, is valid. Bachrach v. Golingco, 39
Phil. 138.
In the instant case, the stipulated 30% attorneys' fee is
excessive and unconscionable. With the exception of Arsenio Reyes
who receives a monthly salary of P175, the other successful
complainants were mere wage earners paid a daily rate of P4.20 to
P5.00. 13 Considering the long period of time that they were illegally
and arbitrarily deprived of their just pay, these laborers looked up to
the favorable money judgment as a serum to their pitiful economic
malaise. A thirty per cent (30%) slice therefrom immensely dilutes
the palliative ingredient of this judicial antidote.
The ten complainants involved herein are mere laborers. It is
not far-fetched to assume that they have not reached an educational
attainment comparable to that of petitioner Carbonell or respondent
Fernandez who, on the other hand, are lawyers. Because of the
inequality of the situation between laborers and lawyers, courts
should go slow in awarding huge sums by way of attorneys' fees
based solely on contracts. 14 For, as in the present case, the real
objective of the CIR judgment in CIR Case No. 70-ULP-Cebu is to
benefit the complaint laborers who were unjustifiedly dismissed
from the service. While it is true that laborers should not be allowed
to develop that atavistic proclivity to bite the hands that fed them,
still lawyers should not be permitted to get a lion's share of the
benefits due by reason of a worker's labor. What is to be paid to the
laborers is not windfall but a product of the sweat of their brow.
Contracts for legal services between laborer and attorney should
then be zealously scrutinized to the end that a fair share of the
benefits be not denied the former.
5. An examination of the record of the case will readily show
that an award of twenty-five per cent (25%) attorneys' fees
reasonably compensates the whole of the legal services rendered in
CIR Case No. 70-ULP-Cebu. This fee must be shared by petitioner
Atty. Carbonell and respondent Atty. Fernandez. For, after all, they
are the counsel of record of the complainants. Respondent Atty.
Fernandez cannot deny this fact. The pleadings filed even at the
early stages of the proceedings reveal the existence of an association
between said attorneys. The pleadings were filed under the name of
"Fernandez & Carbonell." This imports a common effort of the two.
It cannot be denied though that most of those pleadings up to
judgment were signed for Fernandez & Carbonell by respondent
Fernandez.
whatever is in excess of the amount to which he is entitled in line
with the opinion expressed herein. 15
IN VIEW OF THE FOREGOING, the award of twenty five
per cent (25%) attorneys' fees solely to respondent Atty. Fernandez
contained in CIR's order of March 19, 1964 and affirmed by said
court's en banc resolutions of April 28, 1964 and June 25, 1964, is
hereby set aside; and the case is hereby remanded to the Court of
Industrial Relations with instructions to conduct a hearing on, and
determine, the respective shares of Attorney Leonardo C. Fernandez
and Attorney Jose Ur. Carbonell in the amount of P19,938.81 herein
awarded as attorneys' fees or both. No costs. So ordered.
Reyes, J.B.L., Actg. C.J., Dizon, Makalintal, Bengzon, J.P.,
Zaldivar, Castro, Angeles and Fernando, JJ., concur.
Concepcion, C.J., is on leave.
Footnotes

We note that a break-up in the professional tie-up between

Attorneys Fernandez and Carbonell began when petitioner Atty.
Carbonell, on November 26, 1962, complained to CIR that
respondent Atty. Fernandez "failed to communicate with him nor to
inform him about the incidents of this case." He there requested that
he be furnished "separately copies of the decision of the court and
other pleadings and subsequent orders as well as motions in
connection with the case."

Subsequent pleadings filed in the case unmistakably show the

widening rift in their professional relationship. Thus, on May 23,
1963, a "Motion to Name and Authorize Official Computer" was
filed with CIR. On the same day, a "Motion to Issue Writ of
Execution" was also registered in the same court. Although filed
under the name of "Carbonell & Fernandez," these pleadings were
signed solely by petitioner Atty. Carbonell.

On September 16, 1963, an "Opposition to respondent

Biscom's Motion for Reconsideration" was filed by petitioner Atty.
Carbonell. On September 24, 1963, he filed a "Motion for
Clarification" of the November 13, 1962 judgment of CIR regarding
the basic pay of Arsenio Reyes and Fidel Magtubo. On September
24, 1963, he also filed a "Motion to Reconsider Report of Chief
Examiner." These, and other pleadings that were filed later were
signed solely by petitioner Atty. Carbonell, not in the name of
"Carbonell & Fernandez." While it was correctly observed by CIR
that a good portion of the court battle was fought by respondent
Atty. Fernandez, yet CIR cannot close its eyes to the legal services
also rendered by Atty. Carbonell. For, important and numerous, too,
were his services. And, they are not negligible. The conclusion is
inevitable that petitioner Atty. Carbonell must have a share in the
twenty-five per cent (25%) attorneys' fees awarded herein. As to
how much, this is a function pertaining to CIR.

6. We note that CIR's cashier was authorized on June 25,

1964 to disburse to Atty. Leonardo C. Fernandez the sum of
P19,938.81 which is 25% of the amount recovered. In the event
payment actually was made, he should be required to return
G.R. No. L-33493 August 18, 1988
KAPISANAN NG MANGGAGAWA SA MANILA
RAILROAD CO., petitioner,
vs.
ATTY. GREGORIO FAJARDO & THE COURT OF
INDUSTRIAL RELATIONS, respondents.
J.C. Espinas & Associates for petitioner.
Gregorio E. Fajardo for and in his own behalf and for respondent
Rafael Hernandez.
GRIÑO-AQUINO, J.:
This is a petition for review of the order dated January 4, 1971 of
the Court of Industrial Relations in Case No. 2585-ULP (CIR-
Manila) directing the Kapisanan ng Manggagawa (herein petitioner)
to pay attomey's fees to Attorney Gregorio E. Fajardo, in the sum of
P83,905.82 representing 25% of P335,623.26, the amount which the
Kapisanan ng Manggagawa collected from its members from July
1960 up to December 1962 and which the union was ordered to
refund to them pursuant to the decision of the Supreme Court in
G.R. No. L-19791 dated August 14, 1968. Said award of attorney's
fees was entered upon the records of this case as a lien on the
judgment and/or execution pursuant thereof.
The pertinent part of the aforesaid order reads as follows:
As to the claim of Attorney Gregorio E. Fajardo for his attorney's
fee or lien of P83,905.65 representing twenty-five per centum
(25%) of the total refundable amount of P335,622.61, respondent
Kapisanan Ng Mga Manggagawa sa Manila Railroad Company
claims that said fee or lien is based only upon the amount that may
be due to the four hundred (400) complainants and not upon the
amount that may be due to the entire membership of respondent
Kapisanan which is not represented by Atty. Gregorio E. Fajardo in
the instant case. We find no merit in this pretense.
It cannot be disputed and/or denied that all members of respondent
Kapisanan who were collected and/or assessed in five pesos (P5.00)
monthly for gratuities of retired and deceased members from July,
1960 through 1962 without their consent and in violation of their
constitution and by-laws were benefited by the decision or award
requiring said respondent Kapisanan to refund to its members the
additional fees it had been collecting from them since the increased
dues were made effective until stoppage. Hence, Atty. Gregorio E.
Fajardo who represented the struggling members of respondent
Kapisanan to secure the refund of said additional collection of five
pesos (P5.00) monthly should be paid the corresponding fee by all
members who were favored and/or benefited by the decision or
award secured by said four hundred (400) complainants in the
instant case (see Rufino Martinez, et al. vs. Union de Maquinistas,
Fogoneros y Motormen, et al., G.R. Nos. L-19455-56, January 30,
1967). And considering the efforts exerted by Attorney Gregorio E.
Fajardo in the success of this litigation in securing the
abovementioned decision or award not only in this Court but also in
the Supreme Court, an attorney's fee or lien of twenty-five per
centum (25%) of the total refundable amount to the members of
respondent Kapisanan is, to our mind, fair and reasonable.
The record of the instant case discloses that the total special
collection of five pesos (P5.00) monthly per Kapisanan member for
1960, 1961 and 1962 amounted to P335,623.26 [see respondents'
Motion for New Trial and Opposition to Amend Portion of
Resolution En Banc dated June 30, 1962, Folios 236-238; Statement
of Receipts and Expenditures of the Kapisanan from January I to
December 31, 1962 (Exhibits "C" in 2 pages, "C-l" and "l-A Case
No. 2585- ULP")], which amount, pursuant to the decision or award
of the Supreme Court in Kapisanan Ng Mga Manggagawa sa
Manila Railroad Companv vs. Rafael S. Hernandez, et al., G.R. No.
L- 19791, August 14, 1968, should be refunded to the said
Kapisanan members. As a fair and reasonable attorney's fee or lien,
Attorney Gregorio E. Fajardo is, therefore, entitled to P83,905.82
which represents twenty-five per centum (25%) of P335,623.26."
(Annex C, pp. 32-34, Rollo.)
Respondent Kapisanan Ng Manggagawa filed a Motion for Partial
Reconsideration of the order dated January 4, 1971 on the ground
that Attorney Fajardo is entitled to claim attorney's fees from the
400 complainants only who signed the complaint but not from the
other union members who did not sign the complaint, because there
was no lawyer-client relationship between them and Attorney
Fajardo.
Attorney Fajardo opposed the motion for reconsideration. He
argued that all members of the respondent union who will benefit
from the decision in G.R. No. 19791, regardless of whether they
signed the complaint or not, should pay his attorney's fees. No
distinction should be made between those who signed the petition
and those who did not because under Section 17 of Republic Act
875, a complaint against the union by its members has to be signed
by only 10% of the membership.
There is no gainsaying Attorney Fajardo's right to be paid
reasonable fees by all the members of the union who benefitted
from his services. The rule was enunciated in Union de Empleados
de Trenes vs. Kapisanan Ng Mga Manggagawa sa MRRCO L-
14762, Dec. 20, 1961 that lawyers who represent members of the
Union to secure benefits for all the employees, should be paid
corresponding fees by all those favored or benefitted by the award
secured by them.
However, We hold that the 25% fee fixed by the Court of Industrial
Relations was excessive. Section 11, Rule VIII, Book III of the
Omnibus Rules Implementing the Labor Code fixes the attorney's
fees in judicial and administrative proceedings at 10% of the
amount awarded (Galvadores vs. Trajano, 144 SCRA 138; Halili vs.
CIR, 136 SCRA 112; Pacific Banking Corporation vs. Clave, 128
SCRA 110). This is the same percentage allowed by law to lawyers
prosecuting workmen's compensation cases that reach the appellate
court. Moreover, considering the low economic status of their
clientele, the slice that labor lawyers should take from the avails of
their clients' suit should not be too large as to leave the latter with
only a pittance for themselves.
WHEREFORE, the order dated January 4, 1971, under review, is
modified by ordering the petitioner Kapisanan Ng Manggagawa to
pay out of the sum of P335,623.26, refundable by the union to its
members under the decision of this Court in "Kapisanan Ng
Manggagawa sa Manila Railroad Company vs. Rafael S.
Hernandez, et al.," G.R. No. L-19791, August 14, 1968, Attorney
Fajardo's fees in the sum of P33,562.32 which is equivalent to 10%
of the award. This decision is immediately executory, hence, no
motion for extension of time to file a motion for reconsideration
will be granted.

SO ORDERED.

G.R. No. 77042-43 February 28, 1990
RADIOWEALTH FINANCE CO., INC., et al., petitioners
vs.
INTERNATIONAL CORPORATE BANK AND COURT OF
APPEALS, respondents.
Manuel R. Singson for petitioners.
Quisumbing, Torres & Evangelista for private respondent.
BIDIN, J.:
This is a petition for review on certiorari of the joint
decision * promulgated on December 22, 1986, by the respondent
Court of Appeals in CA-G.R. No. 01063 entitled "International
Corporate Bank, plaintiff-appellee vs. Radiowealth, Inc. and
Domingo M. Guevara, defendants-appellants" and in CA-G.R. No.
01064 entitled "International Corporate Bank, plaintiff-appellee vs.
Radiowealth Finance Company, Inc., Radiowealth, Inc. and
D.M.G., Inc., defendants-appellants," the dispositive portion of
which reads:
WHEREFORE, finding no error in the Order appealed from, the
same is hereby affirmed in toto, with costs against the appellants.
(Rollo, p. 101).
The basic facts appear undisputed and they are as follows:
Sometime in 1978, petitioners Radiowealth, Inc. (RWI) and
Radiowealth Finance Company, Inc. (RFC) applied for and obtained
credit facilities from private respondent International Corporate
Bank (Interbank). Petitioners Domingo Guevara (Guevara, for
short) and D.M.G., Inc., acted as sureties to the obligations
contracted by RWI and RFC. The obligations of petitioners were
accordingly covered and evidenced by promissory notes, trust
receipts and agreements.
A common stipulation in the covering promissory notes, trust
receipts, and continuing surety agreements between the borrowing
petitioners and the lending private respondent provided, to wit:
In the event of the bringing of any action or suit by you or any
default of the undersigned hereunder I/We shall on demand pay you
reasonable attorney's fees and other fees and costs of collection,
which shall in no cases be less than ten percentum (10 %) of the
value of the property and the amount involved by the action or suit.
(Rollo, p. 211).
From 1978 to 1980, petitioners were not able to comply with their
obligations on time with Interbank due to subsequent severe
economic and financial reverses. Petitioners thus asked Interbank
for a restructuring of their outstanding loans, but the parties were
not able to arrive at a mutually acceptable proposition.
On December 28, 1979, Interbank, constrained to seek judicial
remedy, through its counsel Norberto J. Quisumbing and
Associates, lodged before the then Court of First Instance of Manila
its first complaint, docketed thereat as Civil Case No. 128744, for
collection of sum of money with an application for a writ of
preliminary attachment against RWI and Guevara covering the
principal sum of P1,585,933.61 plus penalties, service charges,
interests, attorney's fees, costs and exemplary damages (Rollo, pp.
31-38).
This was followed by another complaint filed on January 9, 1980
before the same trial court against RFC, RWI and D.M.G., Inc., also
with an application for a writ of preliminary attachment, docketed
as Civil Case No. 128897, for the collection of the principal sum of
P2,113,444.58, plus interests, penalties, service charges, attorney's
fees, costs and exemplary damages (Rollo, pp. 39-47).
Petitioners, however, opted to amicably settle their obligations
promptly. They, therefore, did not file any answer nor any
responsive pleading to the complaints, and instead entered into a
compromise agreement with Interbank shortly about four (4)
months later. Said compromise agreement between the parties was
embodied in two Motions for Judgment Based on Compromise
dated March 21, 1980 (Rollo, pp. 48-55) corresponding to the
separate claims in the said two complaints which were accordingly
submitted to the court a quo for approval. These motions did not
however, cover the payment by the petitioners of Interbank's claims
for attorney's fees, costs of collection and expenses of litigation
which were left open by the parties for further negotiations.
In its decision in Civil Case No. 128744, dated March 28, 1980, the
trial court approved the parties' corresponding compromise
agreement thereto, with the reservation that "(T)his decision does
not terminate this case because matters respecting payment of
attorney's fees, costs and collection."
Similarly, the trial court, in its decision in Civil Case No. 128897 of
even date, also approved the parties' corresponding compromise
agreement thereto with the Identical reservation as aforequoted
(Rollo, pp. 60-61).
Thereafter, further proceedings were conducted by the trial court
particularly on the issue of the alleged unreasonableness and
unconscionableness of the attorney's fees. It appears from the
records of the cases, however, that Atty. Norberto J. Quisumbing,
counsel for Interbank, was able to adduce his evidence in support
for the attorney's fees due to his said client, while Attys. Reyes and
Guevara, counsel for petitioners in the trial court, were not given
their request for further hearing against the claimed attorney's fees
despite some supervening events as alleged in their motion for
reconsideration dated January 29, 1981 (Rollo, pp. 82-84) which
was denied in the Order of January 30, 1981 (Rollo, p. 85).
At any rate, the trial court, in its Order dated January 2, 1981, had
already reduced Interbank's claim for attorney's fees, from the
stipulated 10 % to 8 %, pertinent portions thereof are hereunder
quoted, thus:
(T)he 'ten per cent' in the foregoing quoted provisions includes
attorney's fees, other fees and cost of collection. In paragraph No. 2
of the compromise agreement in Civil Case No. 128744 under
which the defendants therein acknowledge their indebtedness of
Pl,585,933.61 as of December 28, 1979, it is provided that in paying
the same there shall be added to it 16 % per annum as interest, 2 %
per annum as service charge, 2 % per month or any fraction thereof
as penalty from January 31, 1980. A similar provision is contained
in paragraph No. 2 of the compromise agreement filed in Civil Case
No.. 128897 under which the defendants therein admitted their
indebtedness of P2,113,444.58, payment of which was to commence
on or before January 31, 1980. The service charge of 2 % should be
deducted from the 10 % already mentioned above, to give the rate
of attorney's fees which is 8% in accordance with the provisions
already aforequoted. Eight percent (8 %) of l,585,833.61, or
P126,824.68 is the attorney's fees in Civil Case No. 128897 — sums
which ... are not excessive and perhaps acceptable to plaintiff which
was willing to have its claim reduced to P73,987.57 had defendants
acceded to its offer to compromise attorney's fees and expenses of
litigation.
PREMISES CONSIDERED, the Court hereby orders the defendants
in Civil Case No. 128744 to pay the plaintiff jointly and severally
P126,824.68 and the defendants in Civil Case No. 128897 to pay the
plaintiff, also jointly and severally, P169,075.56 with interest at 12
% per annum from this date until the same is paid.
SO ORDERED. (Rollo, pp. 80-81).
Not satisfied with said trial court's order, petitioners appealed the
same before the respondent appellate court raising therewith the
following assigned errors:
A. The lower court erred in not giving the defendants the
opportunity to be heard in a hearing set for the purpose of
determining the amount of attorney's fees;
B. The lower court erred in insisting that the amount of attorney's
fees should be governed by the contract signed by the parties;
C. The lower court erred in not substantially reducing the amount of
attorney's fees. (Rollo, pp. 242-243).
The respondent appellate court, however, affirmed in toto the
assailed order of the trial court.
Hence, the instant petition.
Petitioners raise the following issues before this Court:
I. Whether or not the reasonableness of attorney's fees in the case at
bar is a question of law;
II. Whether or not the award of attorney's fees in the case at bar is
reasonable;
III. Whether or not a contracted stipulation regarding attorney's fees
may be disregarded by this Honorable Court;
IV. whether or not attorney's fees require proof (Rollo, p. 243).
Deducible from the contentions of the parties, is the sole issue of
whether or not the amount equivalent to 8 % of the recovery or
sums of money due from the two civil complaints adjudged as
attorney's fees by the trial court and affirmed by the respondent
appellate court, is fair and reasonable under the peculiar facts and
circumstances herein. Corollarily, whether or not the court has
discretion to modify the attorney's fees previously agreed upon by
the parties under a valid contractual stipulation.
Petitioners assert that the sums of P126,824.68 in Civil Case No.
128744 and P169,075.56 in Civil Case No. 128897 or 8 % of the
amount involved in the respective suits, adjudged as attorney's fees
due to Norberto J. Quisumbing and Associates, counsel of record of
the judgment creditor the herein private respondent Interbank, per
the order of the trial court, is unreasonable, exhorbitant and
unconscionable under the premises considering the following
undisputed facts: that said cases were immediately settled with the
execution of a compromise agreement after the complaints with
prayer for preliminary attachment had been filed by the private
respondent against the petitioners in the lower court, and no answer
was filed by petitioners; that pursuant to the Compromise
Agreement between the parties, petitioner Radiowealth, Inc. has
fully paid to Interbank in Civil Case No. 128744 the total amount of
P2,867,802.64, while petitioner Radiowealth Finance Co., Inc.
(RFC) has fully paid to Interbank in Civil Case No. 128897 the total
amount of P3,018,192.52; that of the amounts paid to Interbank,
petitioner Radiowealth, Inc., has fully paid the total sum of
P118,075.84 as service charge and penalties, while petitioner
Radiowealth Finance Co., Inc., had paid the total amount of
P135,526.40 as penalties and service charges, all in addition to the
interests paid by petitioners to Interbank.
Interbank, on the other hand, avers that petitioners have omitted to
state certain facts and circumstances, as follows: that the collection
suits filed against petitioners involve charges of violation of the
trust receipts law for disposing of the goods they had received from
Interbank on trust receipts and failing to surrender the proceeds
thereof; that Atty. Quisumbing had successfully obtained
attachment against their properties; that Atty. Quisumbing
succeeded in forcing petitioners to agree in the joint motions for
judgment based on compromise to such stipulation which made
them fear a default in the payment of the amortizations or
installments of the compromise amount; that the principal amount
collected from petitioners totalled P3,699,378.19, not counting the
interests; that petitioners' obligations to Interbank were not
evidenced by one but many letters of credit and trust receipts; that
the records were destroyed by fire and had to be reconstituted; that
Interbank had already given petitioners very substantial discounts
on penalty charges; and, despite clear contractual stipulations, the
lower court had already reduced the 10 % stipulated attorney's fees
and expenses of litigation to 8 %.
As a basic premise, the contention of petitioners that this Court may
alter, modify or change even an admittedly valid stipulation
between the parties regarding attorney's fees is conceded. The high
standards of the legal profession as prescribed by law and the
Canons of Professional Ethics regulate if not limit the lawyer's
freedom in fixing his professional fees. The moment he takes his
oath, ready to undertake his duties first, as a practitioner in the
exercise of his profession, and second, as an officer of the court in
the administration of justice, the lawyer submits himself to the
authority of the court. It becomes axiomatic therefore, that power to
determine the reasonableness or the unconscionable character of
attorney's fees stipulated by the parties is a matter falling within the
regulatory prerogative of the courts (Panay Electric Co., Inc. vs.
Court of Appeals, 119 SCRA 456 [1982]; De Santos vs. City of
Manila, 45 SCRA 409 [1972]; Rolando vs. Luz, 34 SCRA 337
[1970]; Cruz vs. Court of Industrial Relations, 8 SCRA 826 [1963]).
And this Court has consistently ruled that even with the presence of
an agreement between the parties, the court may nevertheless reduce
attorney's fees though fixed in the contract when the amount thereof
appears to be unconscionable or unreasonable (Borcena vs.
Intermediate Appellate Court, 147 SCRA 111 [1987]; Mutual Paper
Inc. vs. Eastern Scott Paper Co., 110 SCRA 481 [1981]; Gorospe
vs. Gochango, 106 Phil. 425 [1959]; Turner vs. Casabar, 65 Phil.
490 [1938]; F.M. Yap Tico & Co. vs. Alejano, 53 Phil. 986 [1929]).
For the law recognizes the validity of stipulations included in
documents such as negotiable instruments and mortgages with
respect to attorney's fees in the form of penalty provided that they
are not unreasonable or unconscionable (Philippine Engineering Co.
vs. Green, 48 Phil. 466).
There is no mistake, however, that the reasonableness of attorney's
fees, though seemingly a matter of fact which takes into account the
peculiar circumstances of the case, is a question of law where the
facts are not disputed at all. For a question of law does not call for
an examination of the probative value of the evidence presented by
the parties (Air France vs. Carrascoso, 18 SCRA 155 [1966]), and
where the issue is the construction or interpretation to be placed by
the appellate court upon documentary evidence, or when a case is
submitted upon an agreed statement of facts or where all the facts
are stated in the judgment, the question is one of law where the
issue is the correctness of the conclusion drawn therefrom (Cunanan
vs. Lazatin, 74 Phil. 719 [1944]; Ng Young vs. Villa, 93 Phil. 21
[1953]). In the case at bar, the issues do not call for an examination
of the probative value of the evidence because the ultimate facts are
admitted by the parties and all the basic facts are stated in the
judgment.
Nevertheless, a careful review of the records shows that the
modified attorney's fees fixed by the trial court and affirmed by the
respondent appellate court, appears reasonable and fair under the
admitted circumstances of the case. As aptly reasoned out by the
said court:
We find nothing wrong in the aforegoing disquisition of the lower
court.
It is to be remembered that attorney's fees provided in contracts as
recoverable against the other party and damages are not, strictly
speaking, the attorney's fees recoverable as between attorneys and
client spoken of and regulated by the Rules of Court. Rather, the
attorney's fees here are in the nature of liquidated damages and the
stipulations therefor is aptly called a penal clause, So long as such
stipulation does not contravene law, morals, or public order, it is
strictly binding upon the defendant (Polytrade Corporation vs.
Blanco, 30 SCRA 187 [1969]). However:
"Liquidated damages, whether intended as an indemnity or a
penalty, shall be equitably reduced if they are iniquitous or
unconscionable. For this reason, we do not really have to strictly
view the reasonableness of the attorney's fees in the light of such
facts as the amount and character of the service rendered, the nature
and importance of the litigation, and the professional character and
the social standing of the attorney. We do concede, however that
these factors may be an aid in the determination of the inequity or
unconscionableness of attorney's fees as liquidated damages.
(Supra)
May the attorney's fees granted by the court be tagged as iniquitous
or unconscionable? We give the answer in the negative. The high
standing of plaintiffs counsel has not been challenged.
In the motion for judgment based on compromise agreement,
defendants acknowledged and admitted their default or failure to
pay their joint and several obligations or indebtedness arising from
the credit facilities which plaintiff extended to defendants and
availed of by the latter, the punctual payment of which having been
guaranteed and warranted by the other defendants. Having admitted
such default in the payment of their obligations, the filing of the
action in court and, consequently, the legal services of counsel
became imperative and thereby, set into operation the contract
clause on the payment of attorney's fees.
The complaints are not simple actions for collection. They are
accompanied with a prayer for the issuance of a writ of preliminary
attachment, and charge defendants with violation of the trust
receipts law and they involve several letters of credit and trust
receipts. The fact that the compromise agreements were entered into
after the complaints were filed against appellants indubitably proves
that the legal action taken by counsel for the plaintiff against the
defendants contributed in no measure to the early settlement of
defendants' obligation.
Considering further that, apart from the reduction and waiver of
penalty charges due to the plaintiff to the extent of P79, 191.72, the
service charge of 2 % was further deducted by the lower court
thereby, reducing the attorney's fees to 8 % the court is of the
considered opinion and so holds that given the prestige of plaintiff's
counsel, the nature of the action and quality of legal services
rendered, the award of attorney's fees in a sum equivalent to 8 % of
the judgment which is below the stipulated fees of 10 % could
hardly be suggested as iniquitous and unconscionable. On the
contrary, it easily falls within the rule of conscionable and
reasonable. (Rollo, pp. 100-101).
The foregoing disquisition merits our assent.
Moreover, even if the so-called supervening event which ought to
have been heard in the trial court as alleged in petitioners' motion
for reconsideration dated January 29, 1981, i.e., "that supervening
events happened from the time the trust receipt agreements were
signed in which the defendants agreed to pay 10 % of the amount
due as attorney's fees and costs of collection up to the actual filing
of the complaint and these events were the payments of interest in
the amount of P285,341.27, as interest, P41,507.37 as service
charges and P76,568.47 as penalty by Radiowealth, Inc.; that
Radiowealth Finance Co., Inc. has paid the amount of P281,940.12
as interest, P38,721.83 as service charges and P96,804.57 as penalty
(Rollo, pp. 137-138), were to be considered, they would still be
insufficient to justify a further substantial reduction in the adjudged
attorney's fees. At any rate, it would be noted that petitioners have
not even prayed for a specific reduction as to amount or percentage
of the attorney's fees except for their sweeping allegations of
unreasonableness, exhorbitance and unconscionableness.
WHEREFORE, the assailed decision of the respondent appellate
court is Affirmed, with costs de officio.
SO ORDERED.
G.R. No. 81471 April 26, 1989
CHONG GUAN TRADING, petitioner,
vs.
NATIONAL LABOR RELATIONS COMMISSION and JOSE
M. CHUA, respondents.
Neva B. Blancaver and Apolinario N. Lomabao, Jr. for petitioner.
Faustino F. Tugade for private respondent.
The Solicitor General for public respondent.
CORTES, J.:
Assailed in this petition is the decision of the National Labor
Relations Commission (NLRC) in NLRC Case No. 11-4406-83,
entitled "Jose M. Chua v. Chong Guan Trading," whereby the
NLRC held that private respondent Jose M. Chua was illegally
dismissed by petitioner Chong Guan Trading. The Court after a
careful examination of the pleadings filed in this case, i.e., the
Petition and its Annexes, the Comment of public respondent, the
Reply and Supplemental Reply of petitioner, the
Manifestation/Opposition of private respondent, and the Rejoinder
of public respondent, considered the Comment as answer, the issues
joined, and the case submitted for decision.
Jose M. Chua was employed as sales manager of Chong Guan
Trading, a dealer of paper and paper products owned by Mariano,
Pepito and Efren Lim. Private respondent started working with the
petitioner way back in 1960 but it was only in 1972 that his name
was registered by petitioner with the Social Security System.
[Decision of SSC in SSS Case No. 8728, p. 1; Rollo, p. 49.]
In November 1983, private respondent filed a complaint with the
Office of the Labor Arbiter of the National Capital Region charging
petitioner with illegal dismissal and non-payment of overtime pay
and other benefits provided for by law. In his complaint, private
respondent alleged that he was fired by Mariano Lim because of the
incident that occurred on October 28,1983.
It appears from the record that on the morning of October 28, 1983,
a customer, who borrowed the store's telephone directory,
accidentally dropped it on the top-glass of the store's showcase
causing it to break. When Pepito Lim saw the already taped broken
top-glass he asked for an explanation from private respondent. In
order to cover up for the customer, private respondent admitted that
he himself accidentally broke it. Pepito then got angry and hurled
"unprintable words and invectives" at private respondent. [Decision
of NLRC, p. 2; Rollo, p. 14.] What transpired thereafter was
disputed by both parties. Private respondent claimed that he was
dismissed by Mariano Lim when the later ordered him to leave
petitioner's premises. Petitioner, on the other hand, denied having
dismissed private respondent and claimed that it was private
respondent who went home after the incident and failed to report for
work for many days thereafter. Petitioner alleged that, far from
being dismissed, it was private respondent himself who abandoned
his job.
The parties filed their respective position papers and agreed to
submit the case for resolution on the basis of the pleadings.
On April 18,1984, the Labor Arbiter rendered a decision finding
that there was no illegal dismissal since private respondent was
never dismissed by petitioner. The Labor Arbiter held that the
altercation that occurred between private respondent and the Lim
brothers because of the broken top-glass cannot be construed as the
dismissal of the private respondent because it was only a minor
incident. No pronouncement on the issue of the alleged
abandonment by private respondent was made but the Labor Arbiter
ordered the reinstatement of private respondent but without
backwages. The dispositive portion of the decision reads:
WHEREFORE, respondents are hereby ordered to reinstate
complainant to his former position without backwages, to pay him
his proportionate 13th-month pay for the year 1983 and the money
equivalent of fifteen (15) days service incentive leave pay. All his
other claims including the claim for damages are hereby,
DISMISSED.
SO ORDERED. [Decision of Labor Arbiter, p. 7; Rollo, p. 31 .]
Private respondent elevated the decision of the Labor Arbiter to the
NLRC. In a resolution promulgated on June 30, 1987, the NLRC
dismissed the appeal for being filed out of time.
Upon motion of private respondent, the NLRC reconsidered its
Resolution and gave due course to the appeal. On December
29,1987 respondent Commission decided in favor of private
respondent and held that:
xxx xxx xxx
... we are by and large convinced that the appellant was indeed
dismiss without the attendant formalities required by law. On
account of which he should therefore, be reinstated to his former
position with three (3) years backwages without qualification or
deduction.
Should reinstatement, however, be not feasible due to circumstances
or developments not attributable to the appellees, the appellant
should, in addition to the three years backwages, be paid a
separation pay equivalent to one half month pay for every year of
service, a fraction of at least six (6) months being considered as one
whole year.
The rest of the award for other benefits stays.
WHEREFORE, modified as above-indicated, the decision appealed
from is hereby, AFFIRMED.
SO ORDERED. [NLRC Decision, p. 18; Rollo, p. 18.]
From the NLRC decision, petitioner interposed the present petition.
The Court will first address the procedural issue raised by the
petitioner.
Petitioner maintains that respondent NLRC has no jurisdiction to
entertain the appeal flied by private respondent, much less modify
the decision appealed from, the same having become final and
executory after the lapse of ten (10) days from respondent's receipt
thereof.
Article 223 of the Labor Code [Pres. Decree 442, as amended]
provides for a reglementary period of ten (10) days within which to
appeal a decision of the labor arbiter to the NLRC. The ten-day
period has been interpreted by this Court in the case of Vir-jen and
Marine Services, Inc. v. National Labor Relations
Commission [G.R. Nos. 58011-12, July 20, 1987, 115 SCRA 347]
as ten (10) "calendar" days and not ten (10) "working" days.
In the instant case, while the appeal was filed within ten (10)
working days from receipt of the decision, it was filed beyond the
(10) calendar days prescribed by law. Private respondent received a
copy of the decision of Labor Arbiter Martinez on May 3, 1984
while the appeal was filed only on May 15, 1984 or twelve (12)
days from notice of the decision. [Resolution of NLRC, p. 1; Rollo,
p. 32.]
It is true that the perfection of an appeal in the manner and within
the period prescribed by law is not only mandatory but
jurisdictional, and failure to perfect an appeal has the effect of
rendering the judgment final and executory. [Narag v. National
Labor Relations Commission, G.R. No. 69628, October 28,1987,
155 SCRA 199.] However, as correctly pointed out by the Solicitor
General, the NLRC may disregard the procedural lapse where there
is an acceptable reason to excuse tardiness in the taking of an
appeal. [Comment of the Office of the Solicitor General, p. 6; Rollo,
p. 46; See also Firestone Tire and Rubber Company of the
Philippines v. Lariosa, G.R. No. 70479, February 27, 1987, 148
SCRA 187; MAI Philippines, Inc. v. National Labor Relations
Commission, G.R. No. 73662, June 18, 1987, 151 SCRA 196.]
In this case, the appeal was filed out of time because the counsel of
private respondent relied on the footnote of the notice of the
decision of the Labor Arbiter which stated that "the aggrieved party
may appeal ... within ten (10) working days, as per NLRC
Resolution No. 1, series of 1977." [Decision of NLRC, p. 1; Rollo,
p. 13; Emphasis supplied.] In the case of Firestone Tire and Rubber
Co. of the Phil. v. Lariosa, [supra], which has substantially the same
set of facts as this case, the Court accepted the party's reliance on
the erroneous notice in the labor arbiter's decision as a reasonable
ground for excusing non-compliance with the ten (10) calendar day
period for appeal. Explaining the reason for this ruling, the Court
said:
xxx xxx xxx
Mindful of the fact that Lariosa's counsel must have been misled by
the implementing rules of the labor commission and considering
that the shortened period for an appeal is principally intended more
for the employee's benefit, rather than that of the employer, We are
inclined to overlook this particular procedural lapse and to proceed
with the resolution of the instant case, [at p. 191.]
xxx xxx xxx
Thus, private respondent's late filing of the appeal notwithstanding,
the Court finds that public respondent did not commit grave abuse
of discretion in giving due course to the appeal.
Having disposed of the procedural issue, the Court will now deal
with the main issue in this case, which is whether or not NLRC
committed grave abuse of discretion in ordering petitioner to pay
private respondent three years backwages and separation pay (if
reinstatement is no longer possible) for the alleged illegal dismissal
of private respondent.
While petitioner concedes that private respondent must be reinstated
since there was no intentional abandonment on the part of private
respondent, it challenges the order for the payment of backwages
and separation pay. Petitioner contends that there was no illegal
dismissal to speak of since private respondent was never dismissed
in the first place, and that justice dictates that private respondent
must simply be reinstated. [Reply, pp. 1-2; Rollo, pp. 51-52.]
Both the labor arbiter and the NLRC agree that the accidental
breaking of the showcase's top-glass was so minor an incident as to
provoke an employer to dismiss a managerial employee who has
worked with him for more than twenty (20) years. [Decision of
NLRC, Rollo, p. 16.] However, in holding that private respondent
was illegally dismissed by petitioner, the NLRC held that:
We agree that the accidental breaking of the showcase's top-glass
was a minor incident. Ordinarily it could not provoke an employer
(who knew what its repercussions could be) to dismiss an employee
for that matter. But the appellees [petitioner Chong Guan trading
and its owners] who, we perceive, were indeed bent on ousting the
appellant [private respondent Chua] magnified it to such a serious
proportion, as shown by the unprintable words and invectives that
they hurled to the appellant, to ostensibly justify their heretofore
desire to terminate him.
In short, they seized the incident as the most opportune time to
implement their obvious decision to lay-off the appellant. [Decision
of NLRC, p. 4; Rollo, p. 16; Emphasis supplied.]
The import of the above findings of the NLRC is that the breaking
of the top-glass was used by petitioner as an excuse to terminate
respondent Chua in accordance with its scheme or plan to oust him.
The Court cannot sustain the findings of respondent NLRC.
As found by the labor arbiter, no evidence was presented to
establish the existence of the so-called scheme to oust private
respondent [Decision of Labor Arbiter, p. 5; Rollo, p. 29.] It was
based only on private respondent's unsupported claim that there was
an "orchestrated scheme or plan" to oust him and that this plan had
been carefully laid out for a long time. Private respondent's claim is
not borne out by the record which shows that petitioner has been
granting substantial cash advances to private respondent. In fact
barely a month before his alleged illegal dismissal, petitioner
allowed private respondent to make a cash advance of P4,718.00.
[Decision of Labor Arbiter, p. 5; Rollo, p. 29.] If indeed there was a
scheme to oust private respondent, petitioner should have denied
him further cash advances knowing that his services will soon be
terminated and as a result thereof, there may be no way to recover
the cash advances.
Furthermore, the NLRC admitted in its decision that its finding that
the petitioner was "indeed bent on ousting" private respondent was
based only on its "perception" and not on any evidence on record.
[Decision of NLRC, p. 4; Rollo, p. 16.] This Court, however, cannot
rely on NLRC's perception or speculations in the absence of any
credible evidence to support it. [San Miguel Corporation v. National
Labor Relations Commission, G.R. No. 50321, March 13, 1984, 128
SCRA 180.] For while it is well-established that the findings of
facts of the NLRC are entitled to great respect and are generally
binding on this Court [Antipolo Highway Lines, Inc. v. Inciong,
G.R. No. L-38532, June 27, 1975, 64 SCRA 441; Philippine Labor
Alliance Council (PLAC) v. Bureau of Labor Relations, G.R. No.
L-41288, January 31, 1977, 75 SCRA 162; Genconsu Free Workers
Union v. Inciong, G.R. No. L-48687, July 2, 1979, 91 SCRA 311;
Pan-Philippine Life Insurance Corporation v. NLRC, G.R. No.
53721, June 29, 1982, 114 SCRA 866; Pepsi-Cola Labor Union-
BLFUTUPAS Local Chapter No. 896 v. National Labor Relations
Commission, G.R. No. 58341, June 29, 1982, 114 SCRA 930;
Mamerto v. Inciong, G.R. No. 53068, November 15, 1982, 118
SCRA 265; San Miguel Corporation v. National Labor Relations
Commission, G.R. No. 50321, March 13, 1984, 128 SCRA 180] it is
equally well-settled that the Court will not uphold erroneous
conclusions of the NLRC when the Court finds that the latter
committed grave abuse of discretion in reversing the decision of the
labor arbiter or when the findings of facts from which the
conclusions were based were not supported by substantial evidence
[Insular Life Assurance Co., Ltd. Employees Association-NATU v.
Insular Life Assurance Co., Ltd., G.R. No. L- 25291, March 10,
1977, 76 SCRA 50; Kapisanan ng Manggagawa sa Camara Shoes v.
Camara Shoes, G.R. No. 50985, January 30, 1982, 111 SCRA 477.]
The question that must now be addressed by the Court is whether,
absent the alleged scheme or plan to oust private respondent, it can
be inferred from the events that transpired on the morning of
October 28, 1983 that private respondent was illegally dismissed by
petitioner.
Private respondent claims that Mariano Lim dismissed him when
the latter said: "Lumayas ka rito." This is disputed by the petitioner
who claims that it was private respondent who voluntarily left
petitioner's premises.
After a careful examination of the events that gave rise to the
present controversy as shown by the record, the Court is convinced
that private respondent was never dismissed by the petitioner. Even
if it were true that Mariano Lim ordered private respondent to go
and that at that time he intended to dismiss private respondent, the
record is bereft of evidence to show that he carried out this
intention. Private respondent was not even notified that he had been
dismissed. Nor was he prevented from returning to his work after
the October 28 incident. The only thing that is established from the
record, and which is not disputed by the parties, is that private
respondent Chua did not return to his work after his heated
argument with the Lim brothers.
Moreover, petitioner has consistently manifested its willingness to
reinstate private respondent to his former position. This negates any
intention on petitioner's part to dismiss private respondent.
Petitioner first expressed its willingness to reinstate private
respondent during the initial hearing of the case before the Labor
Arbiter. [Decision of Labor Arbiter, p. 6; Rollo, p. 30.] In its
position paper the petitioner also stated that:
xxxxxxxxx
IN PASSING, we gladly reiterate ... that the management is still
waiting and more than willing to accept him [private respondent]
and return to his former position, notwithstanding his long
unauthorized absences and the intentional abandonment from his
job.
WHEREFORE, premises considered, the decision of respondent
NLRC is REVERSED and SET ASIDE. The decision of the Labor
Arbiter is REINSTATED.
SO ORDERED.

xxxxxxxxx

[Annex "B" to the Petition, p. 5; Rollo, p. 24.]

This was again reiterated by the petitioner in its Reply to the

Comment of public respondent filed in connection with the instant
petition. [Reply, pp. 1- 2; Rollo, pp. 51-52.]

Therefore, considering the Court's finding that private respondent

was never dismissed by the petitioner, the award of three years
backwages was not proper. Backwages, in general, are granted on
grounds of equity for earnings which a worker or employee has lost
due to his illegal dismissal from work. [New Manila Candy
Workers Union (NACONWA-PAFLU) v. Court of Industrial
Relations, G.R. No. L-29728, October 30, 1978, 86 SCRA 37;
Durabuilt Recapping Plant and Co. v. National Labor Relations
Commission, G.R. No. 76746, July 27, 1987, 152 SCRA 328.]
Where the employee was not dismissed and his failure to work was
not due to the employer's fault, the burden of economic loss
suffered by the employee should not be shifted to the employer.
[SSS v. SSS Supervisors' Union-CUGCO, G.R. No. L-31832,
October 23, 1982, 117 SCRA 746; Durabuilt Recapping Plant and
Co. v. National Labor Relations Commission, supra.] In this case,
private respondent's failure to work was due to the
misunderstanding between the petitioner's management and private
respondent. As correctly observed by the Labor Arbiter, private
respondent must have construed the October 28 incident as his
dismissal so that he opted not to work for many days thereafter and
instead filed a complaint for illegal dismissal.[Decision of Labor
G.R. No. 72096 January 29, 1988
Arbiter, p. 6; Rollo, p. 30.] On the other hand, petitioner interpreted
private respondent's failure to report for work as an intentional JOHN CLEMENT CONSULTANTS, INC. and EDI
abandonment. [Annex "B "to the Petition, p. 5; Rollo, p. 24.] STAFFBUILDERS INTERNATIONAL, INC., petitioners,
However, there was no intent to dismiss private respondent since vs.
the petitioner is willing to reinstate him. Nor was there an intent to NATIONAL LABOR RELATIONS COMMISSION, and
abandon on the part of private respondent since he immediately NESTOR A. FLORES, respondents.
filed a complaint for illegal dismissal soon after the October 28
incident. It would be illogical for private respondent to abandon his
work and then immediately file an action seeking his reinstatement.
[Judric Canning Corporation v. Inciong, G.R. No. 51494, August NARVASA, J.:
19, 1982, 115 SCRA 887; Flexo Manufacturing Corporation v.
As is well known, no law provides for an appeal from decisions of
National Labor Relations Commission, G.R. No. 55971, February
the National Labor Relations Commission; hence, there can be no
28, 1985, 135 SCRA 145; Remerco Garments Manufacturing v.
review and reversal on appeal by higher authority of its factual or
Ministry of Labor and Employment, G.R. Nos. 56176-77, February
legal conclusions. When, however, it decides a case without or in
28, 1985, 135 SCRA 167.] Under these circumstances, it is but fair
excess of its jurisdiction, or with grave abuse of discretion, the party
that each party must bear his own loss, thus placing the parties on
thereby adversely affected may obtain a review and nullification of
equal footing. [Pan American World Airways, Inc. v. Court of
that decision by this Court through the extraordinary writ
Industrial Relations, et al., G.R. No. L-20434, July 30, 1966, 17
of certiorari. Since, in this case, it appears that the Commission has
SCRA 813; SSS v. SSS Supervisors' Union-CUGCO, supra.]
indeed acted without jurisdiction and with grave abuse of discretion
As to the separation pay, considering that petitioner has expressed in taking cognizance of a belated appeal sought to be taken from a
its willingness to reinstate private respondent to his former position, decision of a Labor Arbiter and thereafter reversing it, the writ of
the order for the payment of separation pay is no longer necessary.
certiorari will issue to undo those acts, and do justice to the
aggrieved party.
Nestor Flores was engaged on April 17, 1978 as Managing
Consultant by the John Clement Consultants, Inc., hereafter, simply
JCCI. He was placed in charge of a division of JCCI, Staffbuilders
International, Inc., hereafter simply SBII. A year or so afterwards,
Flores was promoted to the position of Managing Consultant of
JCCI's International Division.
In November, 1979, Flores was assigned in Bahrain, where he
stayed up to February, 1980. During his tour of duty in that country,
he obtained cash advances amounting to P14,211.30. This liability
he failed to liquidate even after he returned to the Philippines, an
infringement of standing company policy. The JCCI President
directed the Finance Department to liquidate Flores' indebtedness
by deducting the amount thereof from his salary in four (4) equal
monthly installments, effective on the date of his return to this
country. Evidently piqued by such a directive, Flores sent a telex
message on April 21, 1980 to his President, who was then in the
Middle East, advising of his desire to discuss terms of his separation
from employment even by telex. The President's reply was that he
would discuss those terms only when he returned on May 15, 1980.
Forthwith upon the return to the Philippines of the JCCI President,
Flores met with him and reiterated his desire to resign. He was
however advised to first take a two-week vacation leave, to meditate
on his future with the company, which he did. While on leave, he
rendered consultancy services for a rival firm, Sigma Personnel
Services. Then on June 9, 1980, his leave having ended, he again
met with the JCCI President and for the third time expressed his
wish to resign, irrevocably. His resignation was then accepted, and
he was told that a written communication to this effect was expected
and should state that it would be effective immediately,
conformably with the usual practice as regards senior managers
among so- called multinationals. He was also told that they would
be meeting to discuss the terms of his separation from the company.
Unaccountably Flores failed to submit any resignation letter. On
June 11, 1980, the JCCI President issued a memorandum
announcing Flores' resignation and ordering the supervisors
theretofore serving under Flores to report directly to him (the
President), in order to protect the competitive status of the firm.
Flores thereupon ceased to come to the company premises; and he
failed to appear at the meetings scheduled to discuss the terms of the
severance of his ties with the JCCI. He also failed to return the
company car assigned for his use, eventually doing so only on July
23, 1980, after receipt of a series of telegrams demanding such
return.
Three months after his resignation, or on September 25, 1980, more
particularly, Flores filed a complaint for illegal dismissal against
JCCI and EDI with the Ministry of Labor & Employment. Due
proceedings were had on his complaint, inclusive of the submission
of position papers by the parties, and the holding of a hearing on the
issues. While the case was pending, it further appears that Flores
resumed, or continued, rendition of services to JCCI's competitor
firm, Sigma Personnel Services, and even succeeded in "pirating"
(causing transfer of business to Sigma of) one of JCCI's clients,
United Engineering Services, Inc.
The decision on Flores' complaint was rendered by the Labor
Arbiter on November 29, 1982. 1 It dismissed his complaint for lack
of merit. The judgment however declared that there was due to him
the sum of P6,671.24 representing his bonus or share in the profits
for the period from January to June, 1980, which amount JCCI and
its affiliates were ordered to pay within ten (10) days under sanction
of automatic issuance of a writ of execution for failure to do so.
Notice of the Labor Arbiter's decision was received by Flores on
December 29, 1982. Fifteen days later, on January 13, 1983, he
perfected an appeal to the National Labor Relations
Commission. 2 JCCI filed a motion to dismiss the appeal on January
28, 1983, asserting that it had been filed beyond the reglementary
period of ten (10) days from notice. 3 The motion to dismiss was
never resolved. On April 26, 1984, the NLRC, by a majority vote,
promulgated judgment reversing the Labor Arbiter's decision,
ordering the reinstatement of Flores to his former position and the
payment to him of fixed back wages for one (1) year without
qualification or deduction from earnings elsewhere during the
period of his dismissal, and affirming the Arbiter's award of
P6,671.24 representing bonus or share of the profit as well as his
unpaid salary from June 1 to 15, 1980, deducting therefrom his
advances. 4 JCCI's motion for reconsideration filed on May 18, 1984
was denied by Resolution dated August 28, 1985, 5 the NLRC inter
alia holding itself to have jurisdiction over the case.
In the special civil action of certiorari, instituted in this Court by
JCCI and EDI, they contend that —
1) the NLRC had no jurisdiction to take cognizance of Flores'
appeal from the Labor Arbiter's decision: the appeal was perfected
after the lapse of' the reglementary period of ten (10) calendar days
prescribed therefor, comformably with this Court's ruling in Vir-Jen
Shipping and Marine Services, Inc. v. NLRC, 6 promulgated on July
20, 1982; the material dates essential for a determination of the
seasonableness of the appeal had been subject of stipulation by the
parties; no appeal having been timely taken, the labor arbiter's
decision became final and the case was thereby placed beyond the
appellate jurisdiction of the NLRC; hence, the latter's assumption of
jurisdiction over the appeal was an overt defiance of the Vir-
Jen ruling, and
2) even assuming NLRC's competence to take cognizance of the
appeal, its decision was nonetheless tainted by grave abuse of
discretion (a) in overturning the Labor Arbiter's judgment, the latter
verdict being fully supported by the evidence on record, as well as
(b) in decreeing the reinstatement of Flores and payment of back
wages to him. 7
The petitioners' points are well taken. Their petition should be
granted. The writ of certiorari will issue in their favor. As the
Solicitor General correctly points out, Flores' appeal was indeed
filed out of time: and the facts clearly establish that Flores had not
been illegally dismissed but had in truth voluntarily resigned, his
offer to resign being unconditional and irrevocable, and Flores
clearly had acted in bad faith: he deliberately withheld submission
of his written resignation in order to retain employment in JCCI
while "moonlighting" in a rival enterprise, contrary to JCCI
Company policy. 8

In taking cognizance of Flores' appeal, notwithstanding the recorded

actuality that it was filed 15 days after notice of the judgment
sought to be appealed and therefore, beyond the 10-day period of
appeal set by law, the NLRC had acted without jurisdiction, in
deliberate disregard of this Court's holding in the aforecited Vir-
Jen case that the ten-day period of appeal set out in Article 223 of
the Labor Code, as amended, meant calendar and not working days.

This Court is also satisfied, after a thoroughgoing review of the

record, that the findings of fact of the Labor Arbiter are warranted
by the evidence, and the rejection and reversal thereof by the NLRC
was without justification, and was therefore whimsical and
capricious.

WHEREFORE, the decision of the National Labor Relations

Commission dated April 26, 1984, and its Resolution dated August
28, 1985, both subject of the petition, are annulled and set aside, and
the Decision of the Labor Arbiter rendered on November 29, 1982
REINSTATED and AFFIRMED. This decision is immediately
executory and no motion for extension of time to file motion for
reconsideration will be entertained. Costs against private
respondent.

Teehankee, C.J., Cruz, Paras and Gancayco, JJ., concur.

G.R. No. 109166 July 6, 1995

HERNAN R. LOPEZ, JR., petitioner,

vs.
NATIONAL LABOR RELATIONS COMMISSION, FOURTH DIVISION, CEBU CITY, and DOMINADOR
AMANTE, respondents.

PUNO, J.:

Petitioner impugns the Decision of the National Labor Relations Commission (NLRC), Fourth Division, Cebu City, granting the
appeal of private respondent which prayed for reinstatement, backwages, separation pay, and wage differentials.1

The facts in brief.

Starting 1966, private respondent Dominador Amante worked as driver for Hacienda Colisap managed by petitioner Hernan
Lopez, Jr. Sometime in 1987, he transferred to Bea Agricultural Corporation managed by Javier Lopez Tanjanco, a nephew of
petitioner. Tanjanco dismissed him on April 25, 1990 and paid his separation pay. 2 He worked again with Hacienda Colisap. His
work was, however, short-lived. He was also dismissed by petitioner without a valid reason on July 5, 1990. 3

On December 27, 1990, private respondent filed a complaint against petitioner before the Regional Arbitration Branch No. VI,
Cebu City for illegal dismissal, reinstatement with backwages or separation pay, and wage differentials.

Petitioner resisted the complaint. He alleged that it was Bea Agricultural Corporation that terminated the employment of private
respondent. He likewise contended that he was abroad when private respondent was dismissed and could not be responsible
for the same.

In a Decision dated June 23, 1992, the labor arbiter dismissed the complaint for lack of cause of action against the
petitioner.4 Private respondent appealed to the NLRC.

On December 10, 1992, the NLRC reversed the appealed decision and granted private respondent's prayer for reinstatement
and payment of "backwages, separation pay, and wage differentials" all computed at P19,542.50. 5 It found that private
respondent was illegally dismissed, thus:

xxx xxx xxx

All conspicuously absent from the records is any evidence to show that complainant-appellant was dismissed in July
1990 for a just or authorized cause and upon compliance with due process of law. It is thus clear under the above
circumstances that complainant-appellant was illegally dismissed. As a matter of fact the Labor Arbiter had previously
ordered the complainant to return to work and for the respondent to accept him back to work . . . . 6

As broken down, the awards consist of the following:

xxx xxx xxx

I. Backwages — July 5, 1990 to January 4,

1991 (6 mos.)
P89.00/day x 30 days 2,670.00/mos. x 6 = P16,020.00
mos.

II. Separation pay

P89.00/day x 30 days 2,670.00/mos. x 1 = P2,670.00
month

III. Wage Differential — May 10, 1990 to July

4, 1990
(1 mo. & 25 days)
MW — P89.00/day
(2,670.00/mo.)
SR — 73.5
 Diff. 15.50/day x 25 days 387.50
465/mo. x 1 mo. 465.00 852.5
P19,542.50
7

Petitioner's motion for reconsideration was denied for lack of merit, hence, this petition.

Petitioner now contends:

FIRST

THERE IS NO SUBSTANTIAL EVIDENCE THAT WOULD SUPPORT THE FINDING OF THE RESPONDENT
COMMISSION THAT PETITIONER ALLEGEDLY RE-EMPLOYED RESPONDENT AMANTE CONSIDERING
THAT THE PAYROLLS WHERE IT BASED ITS FINDINGS WERE ONLY PRESENTED FOR THE FIRST TIME
ON APPEAL AND THEREFORE NOT SUBSTANTIAL EVIDENCE TO SUPPORT SAID FINDING.

SECOND

THE RESPONDENT COMMISSION ABUSED ITS DISCRETION IN FINDING THAT PETITIONER RE-
EMPLOYED AND DISMISSED RESPONDENT AMANTE WHEN IT HAS BEEN CLEARLY ADMITTED BY
RESPONDENT AMANTE IN ALL HIS PLEADINGS THAT PETITIONER WAS OUT OF THE COUNTRY WHEN
HE WAS ALLEGEDLY DISMISSED AND THEREFORE SAID ADMISSION CANNOT BE CONTRADICTED BY
THE RESPONDENT COMMISSION.

THIRD

THE RESPONDENT COMMISSION ABUSED ITS DISCRETION IN HOLDING THAT RESPONDENT AMANTE
IS ENTITLED TO REINSTATEMENT AND BACKWAGES EQUIVALENT TO SIX (6) MONTHS WHEN IT HAD
ALREADY ESTABLISHED A FINDING THAT THE PERIOD OF EMPLOYMENT OF SAID RESPONDENT WAS
WITHIN THE PROBATIONARY PERIOD AND THEREFORE ITS HOLDING IS CONTRARY TO ITS
ESTABLISHED FACTS AND LAW.

FOURTH

THE RESPONDENT COMMISSION ABUSED ITS DISCRETION IN HOLDING THAT RESPONDENT AMANTE
IS ENTITLED TO BACKWAGES AND SEPARATION PAY WHEN UNDER SEVERAL RULINGS OF THE
SECRETARY OF LABOR THESE AWARDS ARE INCOMPATIBLE WITH EACH OTHER, AND THEREFORE
RESPONDENT COMMISSION CANNOT AWARD BOTH.

FIFTH

THE RESPONDENT COMMISSION ABUSED ITS DISCRETION IN AWARDING BACKWAGES TO

RESPONDENT AMANTE WHEN HE HAD ALREADY WAIVED IT FOR HIS REFUSAL TO COMPLY THE
ORDER DATED MARCH 31, 1992 (ANNEX "E").

SIXTH

THERE IS NO SUBSTANTIAL EVIDENCE THAT WOULD SUPPORT THE FINDING OF THE RESPONDENT
COMMISSION THAT RESPONDENT AMANTE IS ENTITLED TO WAGE DIFFERENTIAL.

There is no merit in the petition.

We sustain the finding that petitioner re-hired but later dismissed private respondent without any just cause and without
following due process. There was nothing wrong when public respondent admitted the May 1990 payrolls of Hacienda
Colisap proving the re-employment of private respondent although they were presented only on appeal. Article 221 of
the Labor Code provides that "in any proceeding before the Commission or any of the Labor Arbiters, the rules of
evidence prevailing in courts of law or equity shall not be controlling." It further mandates the NLRC to use every and all
reasonable means to ascertain the facts in each case speedily and objectively and without regard to technicalities of law
or procedure. Thus, in Bristol Laboratories Employees Association v. NLRC,8 we upheld the NLRC when it considered
additional documentary evidence submitted by the parties on appeal to prove their contentions. Too long settled is the
rule that technicality should not be permitted to stand in the way of equitably and completely resolving the rights and
obligations of the parties.9

We now come to the rights of private respondent as a probationary employee at the time of his illegal dismissal.

Article 281 of the Labor Code provides:

Probationary employment shall not exceed six (6) months from the date the employee started working, unless it
is covered by an apprenticeship agreement stipulating longer period. The services of an employee who has
been engaged on a probationary basis may be terminated for a just cause or when he fails to qualify as a
regular employee in accordance with reasonable standards made known by the employer to the employee at
the time of his engagement. An employee who is allowed to work after a probationary period shall be
considered a regular employee.

It is true that probationary employees do not enjoy permanent status but they can only be removed from their work
during their probationary period for a valid reason. 10 In the case at bench, private respondent was re-employed with
Hacienda Colisap for barely two (2) months when he was dismissed without a just cause and without due process. The
evidence of private respondent proving this fact cannot be overturned by the flimsy contention of petitioner that he did
not cause the former's dismissal as he was abroad at that time.

In Pines City Educational Center v. NLRC, 11 the Court en banc ordered the reinstatement of unlawfully dismissed
probationary employees and payment of their full backwages, viz:

xxx xxx xxx

With respect to private respondents Richard Picart and Lucia Chan, both of whom did not sign any contract
fixing the periods of their employment nor to have knowingly and voluntarily agreed upon fixed periods of
employment, petitioners had the burden of proving that the termination of their services was legal. As
probationary employees, they are likewise protected by the security of tenure provision of the Constitution.
Consequently, they cannot be removed from their positions unless for cause. . . . We concur with these factual
findings, there being no showing that they were resolved arbitrarily. Thus, the order for their reinstatement and
payment of full backwages and other benefits and privileges from the time they were dismissed up to their
actual reinstatement is proper, conformably with Article 279 of the Labor Code, as amended by Section 34 of
Republic Act No. 6715, which took effect on March 21, 1989. It should be noted that private respondents
Roland Picart and Lucia Chan were dismissed illegally on March 31, 1989, or after the effectivity of said
amendatory law. (citations omitted)

In accord with Article 281 of the Labor Code and existing case law, the public respondent correctly ordered the
reinstatement of private respondent and the payment of his backwages and other benefits and privileges due him from
the time of his dismissal up to his actual reinstatement. We take notice that the controversy arose on July 5, 1990 after
the effectivity of R.A. No. 6715, amending section 279 of the Labor Code on March 21, 1989.

We will next resolve whether public respondent erred in additionally granting backwages and separation pay to private
respondent.

Backwages and separation pay are distinct reliefs given to alleviate the economic damage suffered by an illegally
dismissed employee. Payment of backwages is specifically designed to restore an employee's income that was lost
because of his unjust dismissal. 12 On the other hand, payment of separation pay is intended to provide the employee
money during the period in which he will be looking for another employment. 13 Considering the purpose behind the
grant of separation pay, it was grave abuse of discretion on the part of public respondent to order the payment of
separation pay as it is inconsistent with its ruling reinstating the private respondent. Their inherent inconsistency is self-
evident and needs no further elaboration.

Finally, we reject petitioner's submission that there is no substantial evidence to support the public respondent's award
of wage differentials to private respondent. The ruling of the public respondent clearly repudiates petitioner's charge and
we quote:

xxx xxx xxx

 Lastly, on the award of differential pay, We find no merit in the respondent's submission that there is no showing
that the complainant-appellant was underpaid, or that the payrolls show that the complainant was receiving
P183.75 daily.

The complaint clearly alleged that the complainant was only receiving P73.50 a day upon his termination on
July 5, 1989. With respect to payrolls there is nothing therefrom that can clearly convince Us that the amount of
P183.75 was the complainant's daily wage as the period covered for such payroll is not indicated. It merely
states that for the period ended May 10, 1990 and May 17, 1990, it did not reflect the number of days worked by
the complainant-appellant. 14

We are bound by this appraisal of evidence made by the public respondent considering its support by the records of the
case.

IN VIEW HEREOF, the assailed Decision is AFFIRMED with MODIFICATION that the award for separation pay is
deleted. No costs.

SO ORDERED.

Narvasa, C.J., Regalado and Mendoza, JJ., concur.

G.R. No. L-69628 October 28, 1987

PEDRO B. NARAG, petitioner,

vs.
THE NATIONAL LABOR RELATIONS COMMISSION and AIRBORNE SECURITY SERVICES, INC., respondents.

GANCAYCO, J.:

This is a Petition to review on certiorari the decision of December 27, 1987, of the National Labor Relations Commission (NLRC), Third
Division, modifying on appeal the decision of April 17, 1984 1 of the NLRC Case NCR-8-5205-82 2directing reinstatement of petitioner
Narag and for payment of backwages for one (1) year.

The factual and legal background of this case is related most comprehensively in the Comment filed by the Solicitor General as follows:

Private respondent Airborne Security Service, Inc. is a security agency, duly licensed and registered under Rep. Act 5487,
providing unity guards for fee or compensation to its clientele to protect the properties and persons of the officials and
employees of said clientele. Among its officers are Mr. Enrique Peregrin as director of operations, and Mr. Pedro Solis as
president. Its office is located at the Manila Textile Market Building, Room 323, C.M. Recto Avenue, Metro Manila.

Among the employees of the above-named security agency is herein petitioner Pedro B. Narag of San Andres Bukid, Metro
Manila. He was employed in the said security agency thrice: the first in 1973 to 1976; the second in 1977 to 1978; and the
third from November 1980 until he received on July 16, 1982 the Memorandum from his employer, which he considered as
a letter of his dismissal from employment. During his latest period of employment with the respondent security agency, he
was assigned as security-in-charge detailed at the Union Glass and Container Corporation (UGCC). His latest position was
security officer and was paid a monthly compensation of P1,200.00 which included allowances.

On July 14, 1982, respondent security agency received a communication from the personnel manager of its client, the
Union Glass and Container Corporation, asking for the relief of its security-in-charge Narag. The following day, July 15,
1982, Mr. Peregrin of the security agency and Mr. Carlito Galita of the UGCC came to see Narag to confront him about the
incident mentioned in the memorandum of relief sent by the personnel manager of UGCC to the said security agency.

Besides giving to the above-named officials his letter of explanation, Narag narrated the story regarding the incident, thus
—

A. ... A certain visitor by the name of Mrs. Edar visited the company, she was looking for her husband.
Because my guards were busy in their posts, what they did was to call the supervisor of the husband of
Mrs. Edar informing him that Mrs. Edar was waiting at the gate for her husband. After a lapse of about
thirty (30) minutes my guard by the name of Alexander Okol my shift-in charge again called the
supervisor of Mr. Edar in order that Mr. Edar could meet his wife at the gate, then the supervisor
answered my security guard to wait for a few minutes and they will locate for Mr. Edar After about thirty
30 minutes Mr. Edar went to the gate and all of a sudden he shouted and accused the security guards why
they did not call him earlier and because I was there, I explained to him that we informed his supervisor
for no less than two (2) times, but Mr. Edar did not listen to my explanation and what he did was to go to
Mr. Pineda and then after a few minutes Mr. Pineda called me up by phone wanting to talk to me and
when I got hold of the phone, Mr. Pineda shouted at me and was accusing me of not performing my duty
and I told him that we were doing everything in behalf of). the employees there. (pp. 42-43, tsn, March
24, 1983).

Messrs. Peregrin and Galita merely laughed at the story told them by Narag, and instead told him to report the following
day, July 16, 1982, to the central office of the Airborne Security Services, Inc. When asked why, the two officials did not
bother to answer him (p. 44, tsn, Id).

Acting on the request of the personnel manager of the UGCC respondent security agency coursed a Memorandum on July
16, 1982 to Narag, which the latter received at its central office on the same day. The entire text of said Memorandum
reads as follows:

MEMO TO: OIC Pedro Narag

UGCC Security Department

 Bo. Ugong, Pasig, Metro Manila

Our attention has been called to that incident at your place of work whereby you had engaged in an
argumentation with a certain Mr. Edar an employee of UGCC and also with, no less than, Mr. I. Pineda,
UGCC Corporate Personnel Manager. This was so despite your knowledge of the client's instructions
that no member of the security forces should argue/discuss with any UGCC employees, not even to the
lower laborer. This is much more when the person is an official of the company. The role (sic) of the
security personnel is only to pacify in cases of trouble and/or make a report to proper authorities of such
incident. Your allegedly rude and arrogant behavior had peeved UGCC management and had placed the
integrity and reputation of the UGCC at stake.

In view of the above, the client had requested for your immediate relief from that Unit. We are therefore
left with no other recourse but to give in to their request.

In the interest of the service, you are hereby informed that you are relieved immediately and placed under
Headquarters disposition effective upon receipt of this memo.

For information and guidance.

(Sgd.) ENRIQUE G. PEREGRIN

Director SDC

Thereafter, respondent agency assigned a certain Gabriel, to take over temporarily complainant Narag's post at the UGCC
(pp. 26-27, tsn, May 9, 1983).

Pursuant to the said Memo, complainant Narag continued reporting for duty at the central headquarters of the respondent
security agency from July 16, 1982 to July 31, 1982. But he was not given any assignment by his employer (p. 14, tsn, Feb.
1, 1983; pp. 14-15, 26-28, tsn, March 24, 1983).

On July 30, 1982, complainant Narag asked for his salary from the accounting department of the security agency but the
people there informed him that he has no salary to receive because his services were already terminated. Because of this
information, complainant Narag approached Mr. Enrique Peregrin director of operations of the said security agency, and
asked him why he has no salary for the period from July 16 to 31, 1982. He was told by Mr. Peregrin that he has no salary
to receive because he had been already laid off (pp. 14-15, tsn, March 24, 1983; p. 15, tsn, February 1, 1983).

Thus, on August 5, 1985, Narag filed a complaint with the National Labor Relations Commission, National Capital Region,
Manila, against his employer, Airborne Security Services, Inc., for illegal dismissal, non-payment of legal holiday pay,
violations of PD Nos. 525, 851 and 1123, and for reimbursement of cash deposits (see Annex "A", Petition).

On October 10, 1982, respondent security agency through Mr. Jaime N. Sabado, vice-president for administration and
finance, filed its Position paper, claiming that complainant Narag was duly paid of all his benefits and other remuneration
as provided for under existing laws and regulations, and that it is not true that said complainant was illegally dismissed but
that he was merely requested to be relieved and that he has to wait for a vacancy responsive (sic) to his raise (see records).

Likewise, complainant Narag through counsel filed his Position Paper on October 18, 1982, reiterating that he was
effectively dismissed without any cause whatsoever (see records).

Thereafter, hearings on the merits of this case were conducted by Labor Arbiter Raymundo R. Valenzuela, with
complainant Narag testifying for himself, while Messrs. Enrique Peregrin and Jaime Sabado and Cornelio Alpuerto
testified as witnesses for respondent security agency.

On April 17, 1984. Labor Arbiter Valenzuela promulgated the decision in this labor case, the dispositive portion of which
reads as follows:

WHEREFORE, we find that complainant Pedro B. Narag was constructively dismissed without a valid
cause for which respondent Airborne Security Services, Inc., through its responsible officials, should be,
as it is hereby, ordered to reinstate him to his former position, and pay him one (1) year backwages, the
least amount amenable to complainant which he conveyed to respondent's counsel and representative
when undersigned made a last ditch effort to settle the same before promulgation of this Decision. His
complaint for the payment of legal holiday pay, Ecola, 13th month pay are hereby dismissed for being
 devoid of merit. And in case he foregoes his reinstatement, respondent should further reimburse him his
cash deposit of P24,000. (see Annex "B", Petition)

As admitted in its 'Partial Appeal.' filed by Vice-President Sabado, respondent security agency received on April 30, 1984 a
copy of the aforementioned decision of the labor arbiter. And, on May 11, 1984, respondent security agency filed its
aforesaid 'Partial Appeal from the decision of the labor arbiter to the respondent Commission, claiming in the main that
complainant Narag was only placed under headquarter's disposition on July 16, 1982; he was never dismissed from the
service of respondent security agency (see records).

On December 27, 1984, respondent Commission, Third Division, en banc promulgated its decision on the appeal, finding
that complainant Narag was not dismissed nor suspended from his employment but was merely directed to present himself
to the security agency's central office for instruction and/or assignments but he opted not to work during the period from
July 16, to 31, 1982; hence, he should be, as it was so ordered, reinstated to his former position but without any backwages
(see Annex "C", Petition).

Believing that the foregoing decision of respondent Commission virtually set aside the labor arbiter's decision in this labor
case, complainant Narag filed the instant petition for review before this Honorable Court. 3

In said Comment * the Solicitor General prayed that the instant petition be given due course. In the Resolution of July 17, 1985 4 this Court
gave due course to the petition.

Petitioner maintains that respondent NLRC has no jurisdiction to entertain the appeal filed by private respondent Airborne Security Service,
Inc., much less modify the decision appealed from, the same having become final and executory after the lapse of ten (10) days from
respondent's receipt thereof. Private respondent maintains otherwise, alleging that the ten (10) days period of appeal allowed under Art.
223 5 of the New Labor Code contemplates ten (10) working days as per NLRC Resolution No. 1, Series of 1977. Accordingly, counting
from April 30, 1984, the day of the receipt of the decision, to May 11, 1984, the day of filing the appeal, only nine (9) days lapsed.

We sustain the petitioner. It is too late in the day for private respondent to insist that an award, order or decision by the Labor Arbiter may be
appealed to the NLRC within a period of ten (I0) working days from receipt, discounting Saturdays and Sundays. May 10, 1984 is a
Thursday. If it were a Sunday or holiday the filing of the appeal the following day would have been allowable. 6 In the case of Vir-Jen
Shipping and Marine Services vs. NLRC, 7 this Court categorically held that the shortened period of ten (10) days fixed by Art. 223 of the
Labor Code contemplates calendar days and not working days. This Court speaking through Associate Justice Barredo held:

We are persuaded to this conclusion, if only because We believe that it is precisely in the interest of labor that the law has
commanded that labor cases be promptly, if not pretemporarily disposed of. Long periods for any acts to be done by the
contending parties can be taken advantage of more by management than by labor. Most labor claims are decided in their
favor and management is generally the appellant. Delay in most intances, gives the employers more opportunity not only to
prepare even ingenious defenses, what with well-paid talented lawyers they can afford, but even to wear out the efforts and
meager resources of the workers, to the point that not infrequently the latter either give up or compromise for less than
what is due them. 8

Thus, considering that the appeal by private respondent from the decision of the Labor Arbiter was filed on the eleventh day after receipt of
the said decision, it was one (1) day late of the ten-day reglementary period which terminated on May 10, 1984.

Consequently, the decision of the Labor Arbiter had already become final and executory. 9 Perfection of an appeal in the manner and within
the period prescribed by law is not only mandatory but jurisdictional, and failure to perfect an appeal as required by the Rules has the effect
of rendering the judgment final and executory. 10

Moreover, a careful review of the records of the case show that the petitioner was effectively and illegally dismissed from the service by the
private respondent. After he was relieved of his duties allegedly temporarily, he continued to report for duty but he was never given any
assignment. And when on July 30, 1982 he asked for his salary at the accounting department of private respondent he was told that there was
none and that he had already been laid off. No doubt the decision of the labor arbiter which was sought to be appealed is supported by the
evidence and the applicable law.

WHEREFORE, the decision of December 27, 1984 of the Third Division of the National Labor Relations is hereby reversed and set aside
and the decision of Labor Arbiter Raymundo R. Valenzuela, Arbitration Branch, National Capital Region, is hereby AFFIRMED for the
reinstatement of petitioner and payment of one (1) year back wages and should petitioner forego his reinstatement then he should be
reimbursed his cash deposit of P240.00. This decision is immediately executory.

SO ORDERED.
G.R. No. 111905 July 31, 1995
ORIENTAL MINDORO ELECTRIC COOPERATIVE,
INC., petitioner,
vs.
NATIONAL LABOR RELATIONS COMMISSION and
OSCAR NITURAL, respondents.
REGALADO, J.:
Through this special civil action for certiorari, petitioner seeks the
nullification of the May 20, 1993 decision and the July 28, 1993
resolution of respondent National Labor Relations Commission
(NLRC) in NLRC Case No. RB-IV-2-2646-89 for having been
issued with grave abuse of discretion. Said decision ordered
petitioner Oriental Mindoro Electric Cooperative, Inc. (ORMECO),
among others, to reinstate private respondent Oscar Nitural to his
former or equivalent position without loss of seniority rights and
with full back wages not exceeding three years. The resolution of
July 28, 1993 was issued to correct a typographical error in the
amount of the award to private respondent by a nunc pro
tunc amendment thereof and, also, to dismiss ORMECO's appeal to
the Secretary of Labor.
On February 20, 1989, private respondent filed before the
Arbitration Branch, Regional Office No. IV, NLRC, a complaint
against ORMECO for illegal suspension, non-payment of half of his
13th month pay and non-payment of his salary differential
pay.1 After due submission of the position papers and other
pleadings of the parties, the labor arbiter rendered a decision on July
10, 1990 to the effect that —
Considering the strained relationship between the
complainant and the respondents exacerbated by
the instant complaint, Ormeco, Inc. is hereby
directed to pay complainant separation pay
computed at one month pay for every year of
service plus 1/2 of the 13th month pay still
unpaid. Further, 10% of all the amounts due to
complainant is hereby awarded as attorney's fees.2
Both parties appealed said decision to the Third Division of the
NLRC. On May 20, 1993, the NLRC promulgated its decision with
the following disposition:
WHEREFORE, premises considered, the appeal
of respondents is dismissed for failure to file the
required bond, even as it really lacks merit, and
the appeal of the complainant is hereby granted
insofar as his prayer for reinstatement is
concerned. Consequently, respondent is hereby
directed to reinstate complainant to his former or
equivalent position without loss of seniority rights
and with full backwages not to exceed three years,
computed as follows:
From: September 20,
1988 — September 20,
1991
Latest salary:
P1,775.00 per month
P1,775 x 36 months =
P36,900.00
The grant of separation pay is hereby deleted.
Except for the foregoing Modifications the rest of
the Decision appealed from is hereby affirmed.3
On July 28, 1993, a resolution was issued by the NLRC
stating, inter alia, that a typographical error had been committed
when it indicated in the decision that the product of P1,775.00
multiplied by 36 is P36,900.00, and clarifying that it should instead
be P63,900.00.4
Petitioner submits the following allegations: Private respondent
Nitural was an employee of Oriental Mindoro Electrical
Cooperative II, wherein he was subjected to several disciplinary
actions to wit:
April 25, 1985 — Suspended for two
months for non-remittance of collections;
April 22, 1986 — Apprehended for
misuse of cooperative vehicle;
April 4, 1987 — Reported by security
guard as drunk and throwing stones at
the ORMECO building; and
July 20, 1987 — Suspended for
drunkenness at work.5
On May 16, 1988, Ormeco II merged with Ormeco I, resulting in
the existence of herein petitioner ORMECO. Prior to his formal
absorption by ORMECO, Nitural was instructed to report to the
engineering department of the corporation at Calapan, Oriental
Mindoro. He reported for work for several days but after August 7,
1988, he rarely reported for duty until his suspension on September
20, 1993.6
Previous to these dates, on July 22, 1988 to be precise, a complaint
against private respondent was filed by one of ORMECO's
customers for unauthorized solicitation of P250.00 allegedly for the
purchase of service drop wire. Asked to explain by the general
manager of petitioner, Nitural said that the customer himself asked
him to buy the service drop wire. Unconvinced, the general manager
asked him to put his explanation in writing but Nitural failed to do
so.7
After August 7, 1988, Nitural was frequently absent from work
without permission from ORMECO. Petitioner was thus compelled
to temporarily suspend him on September 20, 1988 due to habitual
absenteeism and absence without official leave. On February 4,
1989, Nitural was directed to appear before the Board of Directors
of ORMECO to explain his side but he informed said body that he
would rather see them before the Department of Labor and
Employment. Again, on February 25, 1989, Nitural was asked to
appear before the same body but he failed to show up on said date. 8
On the other hand, Nitural alleges that from September, 1981, he
started working as a service driver in ORMECO II. On September
20, 1988, he received from his employer a letter of indefinite
suspension for alleged absence without leave from August 15 to
September 20, 1988. He maintains that he was sick at that time,
hence his inability to report for work, and he submitted a medical
certificate as evidence thereof. Nitural claims that his indefinite
suspension from work amounted to a constructive dismissal from
work, thus he was denied due process. He further claims that in
1986, labor inspectors who came to the company discovered
instances of underpayment of wages. To cover up such violation,
the employees were required to sign waivers of their right to claim
the salary differentials. As a result of his decision to pursue his
claim for salary differentials before the Regional Office in Quezon
City,9 he was illegally dismissed.10
Private respondent argues that the present petition was filed out of
time because prior to its filing, a writ of execution ordering his
reinstatement was already issued by the labor arbiter on August 11,
1993. On September 14, 1993, the labor arbiter likewise directed the
branch manager of the Philippine National Bank, Calapan Branch,
Oriental Mindoro to release from the time deposit of ORMECO the
amount of P71,266.25 as monetary award to Nitural and the amount
of P800.00 as execution fees in the name of the cashier, NLRC,
Manila.
Citing Philippine Overseas Drilling and Oil Development
Corporation vs. Ministry of Labor, et al.,11 private respondent
further argues that a petition for certiorari is considered to have
been filed belatedly if made after the lower tribunal had already
issued a writ of execution. This is not exactly correct. The petition
may precisely have been filed to question the very issuance of the
writ of execution as well as the decision and/or resolution on which
it was based. Nonetheless, the present petition must fail for the
reasons hereunder stated.
Firstly, petitioner failed to seasonably seek relief from the decision
of the NLRC in the proper forum and within the prescribed period.
The questioned decision was promulgated on May 20, 1993. 12 On
June 6, 1993, Nitural filed a motion for recomputation and to
include his 13th month pay therein.13 On July 3, 1993, petitioner
filed a notice of appeal to the Secretary of Labor14 and, on July 9,
1993, a motion for extension of time to file an appeal
memorandum.15 On July 28, 1993, a resolution was issued by the
NLRC denying the recomputation sought by Nitural for being filed
out of time and likewise denying the notice of appeal with extension
of time filed by ORMECO for being "untenable, as this is not
provided for by our existing law on the matter." 16
Obviously, ORMECO's attempt to appeal the NLRC's decision and
resolution to the Secretary of Labor was erroneous. Parenthetically,
Article 223 of the Labor Code formerly granted an aggrieved party
the remedy of appeal from a decision of the NLRC to the Secretary
of Labor.17 Presidential Decree No. 1391, however, amended said
Article 223 and abolished appeals to the Secretary of Labor "to
insure speedy labor justice."18 Since petitioner's appeal to the
Secretary of Labor was not authorized in law, it did not toll or affect
the period for seeking relief from the decision and resolution of the
NLRC through a petition for certiorari. In fact, petitioner did not
even file a motion for reconsideration with the NLRC for purposes
of such a petition.
Secondly, petitioner even failed to file the requisite appeal bond in
its appeal to the NLRC from the decision of the labor arbiter. The
NLRC decision, dated May 20, 1993, states that "at the outset we
wish to point out that indeed the respondent failed to file the
required appeal bond and this makes its appeal outright
dismiss(i)ble."19 Indeed, Article 223 of the Labor Code provides
that —
In case of a judgment involving a monetary
award, an appeal by the employer may be
perfected only upon the posting of a cash or surety
bond issued by a reputable bonding company duly
accredited by the Commission in the amount
equivalent to the monetary award in the judgment
appealed from.
The intention of the lawmakers to make the bond an indispensable
requisite for the perfection of an appeal by the employer is
underscored by the provision that an appeal by the employer may be
perfected "only upon the posting of a cash or surety bond." The
word "only" makes it perfectly clear, that the lawmakers intended
the posting of a cash or surety bond by the employer to be the
exclusive means by which an employer's appeal may be perfected.
That requirement is intended to discourage employers from using an
appeal to delay, or even evade, their obligation to satisfy their
employees' just and lawful claims.20
Considering, however, that the current policy is not to strictly
follow technical rules but rather to take into account the spirit and
intention of the Labor Code,21 it would be prudent for us to look
into the merits of the case, especially since petitioner disputes the
allegation that private respondent was illegally dismissed. It
contends that Nitural was merely placed under suspension, hence
there was no severance of employer-employee relationship. We
disagree.
A portion of the letter sent to Nitural by ORMECO Administrative
Manager Danilo G. Pesigan reads:
. . . Ang iyong pinuno ay nagmumungkahi
na pansamantala ka munang patigilin sa iyong
trabahohanggat hindi natatapos ang pagsisiyasat
sa iyong bagong kaso.
Sa dahilang may panibago na namang reklamo sa
iyo, ipinasiya ng ating tanggapan ang
pansamantalang pagtigil sa iyong trabaho habang
ikaw ay walang matibay na katibayan na
maipakikita upang matapos ang pagsisiyasat sa
dati at ngayong bagong reklamo sa
iyo.22 (Emphases supplied.)
This clearly shows that Nitural was placed under indefinite
suspension which is tantamount to constructive dismissal. Petitioner
may call it by another name but it is nevertheless constructive
dismissal.
ORMECO points out that, as earlier narrated, Nitural was instructed
by the former on May 16, 1988 to report to the main office in
Calapan, Oriental Mindoro. Although he reported for duty for a few
days, thereafter he seldom reported for work until he was eventually
suspended. Notwithstanding the fact that Nitural sent radio
messages on August 22 and September 16, 1988, informing the
office of his absences, he never bothered to verify whether or not
his absences were approved or granted.23
The inquiry then is whether or not the requirement for the lawful
dismissal of an employee by his employer was followed. Under the
Labor Code, as amended, the requirements for the lawful dismissal
of an employee by his employer are twofold: the substantive and the
procedural. Not only must the dismissal be for a valid or authorized
case24 but the rudimentary requirements of due process — notice
and hearing — must also be observed before an employee may be
dismissed.25 One cannot go without the other for, otherwise, the
termination would, in the eyes of the law, be illegal. 26
Petitioner maintains that Nitural was dismissed due to habitual
absenteeism and absence without leave. The latter, although
admitting that he was absent during the period involved, presented
as proof that he was sick at the time of his absence a medical
certificate issued by Municipal Health Officer Aristeo V. Baldos of
Pinamalayan, Oriental Mindoro stating that Nitural was suffering
from neuro-circulatory asthenia and was advised to rest and take
medication for an least one month. 27
Petitioner did not question the validity of this medical certification,
much less its authenticity. Hence, for purposes of this case, it can be
presumed that Nitural was really sick at that time. It must also be
noted that Nitural sent two notices to his employer regarding his
inability to report for work. Dismissal of an employee due to his
prolonged absence with leave by reason of illness duly established
by the presentation of a medical certificate is not justified. 28
It is also clear that procedural due process was not followed.
Although it is the management's prerogative to transfer, demote,
discipline and even to dismiss an employee to protect its
business,28 Article 278 of the Labor Code requires that the employer
shall furnish the worker whose employment is sought to be
terminated a written notice containing a statement of the causes for
termination. It shall afford the latter ample opportunity to be heard
and to defend himself with the assistance of his representative, if he
so desires, in accordance with company rules and regulations.
Although ORMECO did send a notice of indefinite suspension,
which was tantamount to a termination, Nitural was not afforded the
right to a hearing. From the actuations of ORMECO, it would
appear that the notices sent to Nitural for an audience with the board
of directors was but a token gesture on its part to give its actions a
semblance of regularity and legality. For, while Nitural was
suspended effective September 20, 1988, it was only on February 4,
1989, or after more than four months from the sending of the notice
of indefinite suspension, that ORMECO directed Nitural to appear
before its board of directors.
The Court can well understand the reluctance of ORMECO to
reinstate private respondent. Nitural has not exactly been the model
employee, and had even previously been suspended or warned for
various infractions. In fact, in its petition, ORMECO stated that it
does "not disavow its dislike for the private respondent." It points
out Nitural's "record of being the subject of various disciplinary
actions, and his open and deliberate defiance of petitioner's orders
and directives."30 Both the labor arbiter and the NLRC, however,
noted that the previous infractions were condoned or the
corresponding penalties had been imposed therefor. Furthermore,
the assailed decision and resolution of respondent NLRC had
actually attained finality.
WHEREFORE, the petition for certiorari is DISMISSED, and the
impugned decision and resolution of public respondent National
Labor Relations Commission are hereby AFFIRMED.
SO ORDERED.
G.R. No. 106370 September 8, 1994
PHILIPPINE GEOTHERMAL, INC., petitioner,
vs.
NATIONAL LABOR RELATIONS COMMISSION and
EDILBERTO M. ALVAREZ, respondents.
Romulo, Mabanta, Buenaventura, Sayoc & De Los Angeles for
petitioner.
Fidel Angelito I. Arias for private respondent.
PADILLA, J.:
Petitioner Philippine Geothermal, Incorporated filed the present
petition for certiorari seeking the reversal of the decision of public
respondent National Labor Relation Commision In NLRC CA No.
L-000295-91/RB-IV-1-3583-91 entitled "Edilberto M. Alvarez v.
Philippine Geothermal, Inc. et al."
The relevant facts of this case are as follows:
Private respondent Edilberto M. Alvarez was first employed by
petitioner on 2 July 1979. On 31 May 1989, private respondent, who
was then occupying the position of Steam Test Operator II, injured
his right wrist when a steam-pressured "chicksan swivel joint
assembly" exploded while he was checking a geothermal well
operated by petitioner. As a result, private respondent's right arm
was placed in a plaster cast and he was confined at the San Pablo
Doctor's Hospital from 31 May 1989 to 3 June 1989.
Dr. Oscar M. Brion, the attending physician, diagnosed private
respondent's injuries to be:
1) Complete fracture/dislocation distal radius (r);
2) Complete fracture styloid process and dislocation of the ulna;
3) Right pelvic contusion, which required a recuperation period of
approximately forty-five (45) days.
Petitioner thus gave private respondent a fifty (50) days "work-
connected accident" (WCA) leave with pay until 29 July 1989.
Petitioner also referred private respondent's case to Dr. Liberato
A.C. Leagogo, Jr. of the Philippine Orthopedic Institute, at
petitioner's expense.
On 26 July 1989, Dr. Leagogo certified that private respondent was
fit to return to work with the qualification however, that he could
only perform light work. Thus, on 31 July 1989, when respondent
Alvarez returned to work, he was assigned to "caliberation of barton
recorders", in accordance with the doctor's recommendations.
On 13 November 1989, Alvarez was again examined by Dr.
Leagogo who issued a medical certificate which reads: 1
This is with regards [sic] the work recommendation for Mr. Bert
Alvarez.
At this point in time, 5 months post-injury, he can be given
moderate working activities, pulling, pushing, carrying and turning
a 20 lbs.-25 lbs. weight/force.
On the 6th month, he can go back to his previous job.
Despite this certification, respondent Alvarez continued to absent
himself from work and by the end of 1989 he had used ten (10) days
of vacation leave, eighteen (18) days of sick leave, fifteen (15) days
of WCA leave and four (4) days of emergency leave for the period
starting 31 July 1989.
On 28 December 1989, Dr. Leagogo, after examining Alvarez,
certified that the latter's injury had healed completely and that he
could thus return to his pre-injury work.
On the same day, Alvarez consulted another doctor, Dr. Angela
D.V. Garcia, a private physician, who likewise confirmed that there
were "no contraindications for him (Alvarez) not to attend to his
work."
On 29 December 1989, based on Dr. Leagogo's findings, petitioner
wrote Alvarez stating:
This is to inform you that based on the examination performed on
December 28, 1989 by your attending physician, Dr. Liberato
Antonio C. Leagogo, Jr., your right wrist fracture is completely
healed as stated in the attached medical certificate. Therefore, you
are advised to go back to your regular duty as an Operator II at the
Well Testing Section effective immediately.
xxx xxx xxx
Any absences you may incur in the future will be subject to our
existing policy on leaves and absences. . . . 2
Since Alvarez failed to report for work from 2 to 10 January 1990,
petitioner again wrote him stating:
. . . it is indicated that your therapy has no contraindication for you
not to attend to your work. However, from that date up to now,
January 11, you have not reported for work. . . .
Therefore, as of January 11, 1990, you are considered to be "Absent
Without Official Leave (AWOL) and Without Pay". This letter
serves as a warning letter per our rules and regulations,
Unauthorized absences, rule 3, par. i, page 31.
You are advised to immediately report for work or further
disciplinary action will be taken. 3
After reading the letter. Alvarez wrote a hand-written note on
petitioner's copy of the letter, stating "Please wait for my doctor's
medical certificate from Dr. Relampagos."
On 19 January 1990, Dr. Victoria Pineda, an orthopedic doctor of
the National Orthopedic Hospital whom Alvarez also consulted
issued the following medical certificate:
Patient has reached a plateau in his rehabilitation with limitations of
wrist motion (r) as regular. Fit for work. 4
On 20 January 1990, Alvarez consulted Dr. Francisco, another
orthopedic doctor at the Polymedic General Hospital, who
recommended a set of laboratory tests to be conducted on Alvarez'
right wrist.
On 1 February 1990, Dr. Relampagos of the National Orthopedic
Hospital certified Alvarez to be "Fit for light job." 5
On 6 February 1990, Dr. Francisco, who read and interpreted the
results of the tests undertaken on Alvarez at the St. Luke's Medical
Center, certified that there is no "hindrance for him (Mr. Alvarez) to
do his office work." 6
Notwithstanding the above medical findings, respondent Edilberto
M. Alvarez continued to incur numerous absences. He did not report
for work in the months of January and February 1990.
On 7 February 1990, petitioner addressed its third letter to Alvarez
stating:
The attached medical certificates from Dr. Garcia, Dr. Pineda,
Dr. Relampagos, Dr. Francisco, and Dr. Leagogo all indicate that
you are fit to work. Based on these medical certificates, your
absences from January 11 to February 6 1990 (23 working days)
will be charged to your sick leave credits. Be advised that your sick
leave credits will be exhausted on February 8, 1990 therefore, you
will not be paid for subsequent absences.
In addition, if you fail to report to work and are unable to present a
medical certificate explaining your absences, you will face
disciplinary action. I am enclosing the statement of company policy
on absences for your information and would strongly suggest that
you report to work immediately. 7
Under petitioner's company rules, employees who incur
unauthorized absences of six (6) days or more are subject to
dismissal. Thus, when Alvarez failed to report for work from 8 to 28
February 1990, a total of eighteen (18) working days with three (3)
days off, petitioner wrote Alvarez a fourth time stating in part:
This refers to your continued refusal to report back to work
following your recovery from a work-related accident involving
your right wrist last May 31, 1989. That you have recovered is
based on the certification of four (4) physicians, including the
company-retained orthopedic doctor and three (3) other orthopedic
specialists whom you personally chose and consulted.
xxx xxx xxx
In order not to lose your income, the company has allowed you to
charge all these unwarranted absences against your accumulated
sick leave credits. Our records show that as of February 7, 1990,
you have used up all your remaining sick leaves. We would like to
emphasize that from February 8 to 28, all your absences are
considered unauthorized and without pay. Please be reminded that,
according to company rules, employees who go on unauthorized
absences of six (6) or more days are subject to dismissal.
The company, therefore, believes that it has given all the time, help,
and considerations in your case. We go by the doctor's certifications
that you are already fit to work.
In view of the above, we are giving you a final warning. Should you
fail to report to work on Monday, March 5, 1990 your employment
with the company will be terminated. 8
This fourth warning letter of petitioner was unheeded. Alvarez
failed to report for work; neither did he inform petitioner of the
reason for his continued absences.
As a consequence, petitioner terminated Alvarez, employment on
9 March 1990.
On 19 June 1990, Alvarez filed a complaint for illegal dismissal
against petitioner with the Regional Arbitration Branch, Region IV.
On 19 December 1990, the labor arbiter dismissed the complaint,
without prejudice, for failure of the complainant to submit his
position paper despite repeated orders from the labor arbiter.
On 16 January 1991, private respondent refiled his complaint for
illegal dismissal.
On 6 September 1991 the labor arbiter rendered a decision holding
private respondent's termination from employment as valid and
justified.
On appeal to the public respondent National Labor Relations
Commission (NLRC), the decision was reserved and set aside.
Petitioner was ordered to reinstate Edilberto M. Alvarez to his
former position without loss of seniority rights but without
backwages.
A Motion for Reconsideration was denied on 15 May 1992.
Petitioner then filed the present petition for certiorari, based on two
(2) grounds namely:
RESPONDENT COMMISSION ABUSED ITS DISCRETION
AND ACTED BEYOND ITS JURISDICTION BY
ENTERTAINING AN APPEAL THAT WAS FILED OUT OF
TIME
EVEN ON THE MERITS OF THE CASE, RESPONDENT
COMMISSION ABUSED ITS DISCRETION BY FAILING TO
APPRECIATE OVERWHELMING EVIDENCE UNIFORMLY
SHOWING THAT THE TERMINATION OF MR. ALVAREZ
WAS VALID AND JUSTIFIED. 9
On the issue of whether or not the appeal from the decision of the
labor arbiter to the NLRC was filed within the ten (10) day
reglementary period, it is undisputed that private respondent
received a copy of the labor arbiter's decision on 5 September 1991.
Alvarez thus had up to 15 September 1991 to perfect his appeal.
Since this last mentioned date was a Sunday, private respondent had
to file his appeal on the next business day, 16 September 1991.
Petitioner contends that the appeal was filed only on 20 September
1991. Respondent NLRC however found that private respondent
filed his appeal by registered mail on 16 September 1991, the same
day that petitioner's counsel was furnished copies of said appeal. 10
We will not disturb this factual finding of the NLRC.
The contention that even assuming arguendo that the appeal was
filed on time, the appeal fee was paid four (4) days late (and,
therefore, the appeal to the NLRC should be dismissed) likewise
fails to entirely empress us. In C.W. Tan Manufacturing v.
NLRC, 11 we held that "the broader interest of justice and the desired
objective of deciding the case on the merits demand that the appeal
be given due course."
On the issue of whether or not Edilberto M. Alvarez was validly
dismissed, we rule in the affirmative and consequently the decision
of respondent NLRC is set aside.
Article 282(b) of the Labor Code provides that an employer may
validly dismiss an employee for gross and habitual neglect by the
employee of his duties. In the present case, it is clear that private
respondent was guilty of seriously neglecting his duties.
The records establish that as early as 26 July 1989, Dr. Leagogo
already had certified that Alvarez could perform light work. On 13
November 1989,
Dr. Leagogo certified that Alvarez could perform moderate work
and it was further certified that by December 1989, Alvarez could
return to his pre-injury duties. Notwithstanding these certifications,
Alvarez continued to incur unexplained absences until his dismissal
on 9 March 1990.
A review of Alvarez' record of attendance shows that from August
to December 1989, he reported for work only seventy-seven (77)
times while he incurred forty-seven (47) absences.
An employee who earnestly desires to resume his regular duties
after recovering from an injury undoubtedly will not go through the
trouble of getting opinions from five (5) different of getting
opinions from five (5) different physicians before going back to
work after he has been certified to be fit to return to his regular
duties.
Petitioner has not been shown to be without sympathy or concern
for Alvarez. He was given fifty (50) days work-connected accident
(WCA) leave with pay to allow him to recuperate from his injury
without loss of earnings. He was allowed to use his leave credits
and was actually given an additional fifteen (15) days WCA leave to
allow him to consult his doctors and fully recover from his injuries.
Moreover, petitioner gave Alvarez several warnings to report for
work, otherwise, he would face disciplinary sanctions. In spite of
these warnings, Alvarez was absent without official leave (AWOL)
for eighteen (18) days. Under company policy, of which Alvarez
was made aware, employees who incur without valid reason six (6)
or more absences are subject to dismissal.
Petitioner, in its fourth and last warning letter to Alvarez, was
willing to allow him to resume his work in spite of the eighteen (18)
days he went on AWOL. It was made clear, however, that should
private respondent still fail to report for work on 5 March 1990, his
employment would be terminated.
Private respondent failed to report for work on 5 March 1990.
Petitioner validly dismissed him not only for violation of company
policy but also for violation of Section 282(c) of the Labor Code
aforecited.
While it is true that compassion and human consideration should
guide the disposition of casses involving termination of employment
since it affects one's source or means of livelihood, it should not be
overlooked that the benefits accorded to labor do not include
compelling an employer to retain the services of an employee who
has been shown to be a gross liability to the employer. The law in
protecting the rights of the employees authorizes neither oppression
nor self-destruction of the employer. 12 It should be made clear that
when the law tilts the scale of justice in favor of labor, it is but a
recognition of the inherent economic inequality between labor and
management. The intent is to balance the scale of justice; to put the
two parties on relatively equal positions. There may be cases where
the circumstances warrant favoring labor over the interests of
management but never should the scale be so tilted if the result is an
injustice to the employer. Justitia nemini neganda est (Justice is to
be denied to none).
In Cando v. National Labor Relations Commission 13 the Court
awarded separation pay to an employee who was terminated for
unuathorized absences. We believe that separation pay of one-half
(1/2) month salary for every year of service is adequate in this case.
WHEREFORE, the decision of respondent National Labor
Relations Commision is hereby SET ASIDE and the decision of the
Labor Arbiter is reinstated with the MODIFICATION that
petitioner Philippine Geothermal, Inc. is ordered to pay private
respondent Edilberto M. Alvarez separation pay equivalent to one-
half (1/2) month salary for every year of service starting from 2 July
1979 until his dismissal on 9 March 1990.
SO ORDERED.
G.R. No. 101135 July 14, 1995

TEODORO RANCES, petitioner,

vs.
NATIONAL LABOR RELATIONS COMMISSION and PACIFIC ASIA OVERSEAS CORPORATION, respondents.

QUIASON, J.:

This is a petition to reverse the Resolutions dated November 28, 1990 and July 19, 1991 of the National Labor Relations Commission
(NLRC) denying petitioner's appeal for having been filed out of time and denying his motion for reconsideration respectively.

Petitioner was hired by private respondent in March 1984 as a radio officer of a vessel belonging to its principal, the Gulf-East Ship
Management Limited. Petitioner authorized private respondent to deduct from his monthly salary the amount of US$765.00 and to remit the
same to his wife, Clarita Rances.

It appears that a case filed by petitioner in Dubai was amicably settled, with the payment to petitioner of the sum of US$5,500.00 plus "a
return ticket to [petitioner's] country." The compromise agreement contained a proviso that "the opponent" would pay "to the [petitioner]"
US$1,500.00 "in case the wife of [petitioner] doesn't agree with the amount sent to [her]." (Rollo, p. 99). The decision approving the
compromise agreement did not state the names of the parties therein.

Armed with the Dubai decision, petitioner returned to the Philippines after his tour of duty and on October 10, 1985 filed a complaint with
the Philippine Overseas Employment Administration (POEA) for the enforcement of the Dubai decision against private respondent (POEA
Case No. [M] 85-10-0814). POEA and NLRC ruled in favor of petitioner. However, in a petition for review (G.R. No. 76595), we reversed
the decision of NLRC, holding that the POEA has no jurisdiction to hear and decide a claim for enforcement of a foreign judgment.
However, we ruled that petitioner could initiate another proceeding before the POEA against private respondent on the basis of the contract
of employment between petitioner and private respondent or the latter's foreign principal. (Rollo, p. 54).

On June 6, 1988, petitioner filed with the POEA another complaint (POEA Case No. [M] 88-06-478) against private respondent for non
payment of salary allotments for the months of March, April and May 1984 due to petitioner's wife. In his position paper, petitioner
contended that only the amount of P13,393.45 or the dollar equivalent of US$765.00 was remitted to his wife, thereby leaving a balance of
US$1,530.00.

In answer to petitioner's complaint, private respondent raised, inter alia, the defenses of payment and prescription.

On November 14, 1989, a decision was rendered by POEA dismissing the complaint on the ground of prescription.

Not contented with the POEA decision, petitioner appealed to NLRC on December 15, 1989 by filing a notice of appeal and a motion for
extension of time to file his appeal brief. On January 9, 1990, petitioner filed the appeal brief. In a Resolution dated November 28, 1990, the
appeal was dismissed on the ground that the memorandum of appeal was belatedly filed. Petitioner's motion for reconsideration was likewise
dismissed for lack of merit on July 19, 1991. Hence this petition.

The issues raised by petitioner are: (a) whether the appeal of petitioner was properly dismissed by NLRC on the ground of late filing; and (b)
whether petitioner is entitled to recover his money claim covering the months of March, April and May 1984.

Petitioner contends that NLRC acted with grave abuse of discretion when it dismissed the appeal for failure of petitioner to file his
memorandum on appeal within 10 days from receipt of POEA's decision.

II

Rule V, Book VII of the Rules Governing Overseas Employment provides:

Sec. 5. Requisites for Perfection of Appeal. — The appeal shall be filed within the reglementary period as provided in Section 1 of this Rule;
shall be under oath with proof of payment of the required appeal fee and the posting of a cash or surety bond as provided in Section 6 of this
Rule; shall be accompanied by a memorandum of appeal which shall state the grounds relied upon and the arguments in support thereof; the
relief prayed for; and a statement of the date when the appellant received the appealed decision, and/or proof of service on the other party of
such appeal.
A mere notice appeal without complying with the other requisites aforestated shall not stop the running of the period for perfecting an
appeal. (Emphasis supplied).

Section 7 of the same Rules provides:

No Extension of Period. — No motion or request for extension of the period within which to perfect an appeal shall be allowed.

We have allowed the belated filing of appeals to NLRC in some cases. This liberal practice is done only when it would serve the demands of
substantial justice and in the exercise of the court's equity jurisdiction (Lucero v. NLRC, 203 SCRA 218 [1991]). We are not inclined to
apply this rule to petitioner, his appeal not being meritorious.

We agree with private respondent that petitioner's money claim has already prescribed. Article 291 of the Labor Code provides:

Money claims. — All money claims arising from employer-employee relations accruing during the effectivity of this Code shall be filed
within three (3) years from the time the cause of action accrued; otherwise they shall be forever barred.

A cause of action has three elements, to wit: (1) a right in favor of the plaintiff by whatever means and under whatever law it arises or is
created; (2) an obligation on the part of the named defendant to respect or not to violate such right; and (3) an act or omission on the part of
such defendant violative of the right of the plaintiff or constituting a breach of the obligation of the defendant to the plaintiff (Baliwag
Transit, Inc. v. Ople, 171 SCRA 250 [1989]).

In the case at bench, petitioner is claiming the unpaid allotments during the months of March, April and May 1984. Applying Article 291 of
the Labor Code of the Philippines, it cannot be gainsaid that the cause of action of petitioner accrued on May 1984. Clearly when petitioner
filed his complaint for payment of unpaid allotments for the months of March, April and May 1984 on June 9, 1988 (POEA Case No. [M]
88-06-478), more than three years had elapsed. Hence, prescription has already set in.

Neither do we accept petitioner's contention that his filing of a complaint to enforce the Dubai decision on October 10, 1985 has the effect of
tolling the running of the prescriptive period. The cause of action in said case was for the enforcement of a decision, while the cause of action
in the present case is for the collection of a sum of money, Furthermore, POEA has no jurisdiction to hear and decide a claim for
enforcement of a foreign judgment. Such a claim must be brought before the regular courts. In effect, it is as if no action has been filed which
could have stopped the running of the prescriptive period.

WHEREFORE, the questioned Resolutions dated November 28, 1990 and July 19, 1991 of the National Labor Relations Commission are
AFFIRMED.

SO ORDERED.
G.R. No. 106843 January 20, 1995

POCKETBELL PHILIPPINES, INC., petitioner,

vs.
NATIONAL LABOR RELATIONS COMMISSION and ARTHUR R. ALINAS, respondents.

MENDOZA, J.:

This is a petition for certiorari and mandamus to set aside the decision of the National Labor Relations Commission in NLRC NCR Case No.
00-03-01106-88 finding petitioner Pocketbell Philippines, Inc. guilty of illegal dismissal of the private respondent Arthur R. Alinas and
ordering his reinstatement without loss of seniority rights and the payment to him of backwages for three years.

The facts are as follows:

Pocketbell Phils., Inc. is a corporation wholly owned by Filipinos and organized under Philippine laws. In July 1987, it was placed under
receivership by the securities and Exchange Commission, in view of an intra-corporate dispute between the Braga Family, which controlled
the corporation, and the Telectronics System, Inc. As a result, corporate control was vested in a receivership committee. One of the
committee members, Jose Abejo, was appointed General manager of the corporation.

It appears that during the dispute, private respondent Arthur R. Alinas, who was an Accounting Supervisor, continued to report to the then
Executive Vice President of the corporation, Virgilio Braga, who held office in his house.

Eventually, control over the corporation was given to Telectronics System, Inc. The company staff was reorganized. among those affected
was private respondent Alinas, who was replaced as Accounting Supervisor by Cecilia Agres in August 1987.

On September 2, Alinas was appointed Staff assistant to the Finance Manager without change in salary. He was not however, allowed to hold
the job. On February 22, 1988, he was informed that he would be transferred to Pocketbell Davao City branch as Provincial marketing and
Sales Supervisor. As Alinas refused the assignment he was asked to show cause why no disciplinary action should be taken against him.

On march 10, 1988, Alinas wrote the new EVP, Jose Abejo, giving the following reasons for refusing the transfer:

1. You are fully aware of my background which is that of an accountant. The new appointment for me is that of Provincial Marketing Sales
Supervisor based in Davao City. With the welfare and benefit of the company in mind, I cannot give justice to the position because I have no
experience in marketing work.

2. The new assignment will also cause inconvenience to my two sisters whom I am supporting especially since one of them will be reviewing
for the coming CPA exams.
1
3. The assignment is at Davao City. This would mean that I would not be able to continue my studies here in manila.

On march 11, 1988, Abejo wrote Alinas informing him that his explanation was unsatisfactory. In his letter, Abejo stated:

1. That it is the management's duty to gauge the capacity and qualifications of its supervisors and employees, and it is its conclusion that
among the available supervisors you are the most qualified to reverse the losing streak of Pocketbell, Davao, which has never yet
experienced a single profitable month since its opening 2 years ago.

2. That your assignment in Davao will in no way be a hindrance to the education of your sisters.

3. That the undersigned has explained to you that your assignment is temporary as we know that improvement and reversal of the
performance of Davao can be expected before the start of the school year. By then you may even want to take up law in Ateneo de Davao.2

Abejo gave Alinas until March 15, 1988 to assume his new assignment, otherwise his services would be terminated effective March 16,
1988.

On March 15, 1988, Alinas filed a complaint for unfair labor practice against the company and Jose Abejo, in the latter's official and personal
capacity. The case was assigned to Labor Arbiter Cornelio Linsangan, who, in a decision dated may 30, 1989, found the dismissal valid and
accordingly dismissed the private respondent's complaint. 3

On appeal the NLRC reversed. The dispositive portion of its decision,4 dated November 26, 1991, reads:
WHEREFORE, premises considered, the appealed decision is set aside, and a new judgment is entered; ordering the respondents to reinstate
the complaint without loss of seniority rights and with full backwages but not to exceed three (3) years without qualification and deduction.
In the event reinstatement is not feasible, then respondents are ordered to pay complaint his separation pay equivalent to one (1) month salary
for every year of service, plus backwages from the time of dismissal up to the promulgation of this decision, but limited to three years
without qualification and deduction.

Respondents are likewise ordered to pay complainant the sum equivalent to ten (10) percent of the total monetary award as attorney's
fees. 5

Pocketbell filed a motion for reconsideration, but the NLRC denied its motion for lack merit. Hence this petition.

First. Pocketbell Philippines, Inc. charges that, in grave abuse of its discretion, the NLRC reversed the findings of facts of the Labor Arbiter,
even though such findings were not put in issue on appeal by private respondent.

We find this contention to be without merit. The NLRC considered the same facts found by the Labor Arbiter. Where the NLRC differed was
as to the conclusion to be drawn from those facts. Otherwise, it acted within its appellate power and considered no issue which was not raised
on the appeal, namely, the validity of private respondent's dismissal on March 16, 1988.

Thus the labor Arbiter found the facts to be as follows:

Respondent, Pocketbell Phils., Inc. is a corporation engaged in the paging business. On March 1982, it employed complainant herein as
Accounts Receivable Clerk. Three years thereafter, the latter was promoted to the position of Accounting Supervisor.

Sometime in July 1987, respondent Pocketbell Phils., Inc. was placed under receivership by the Securities and Exchange Commission, SEC
for brevity. herein individual respondent Jose Abejo was appointed as its General Manager.

It appears that the said action of SEC was triggered by the intra-corporate dispute between the Braga Family on one hand, and the
Telectronic system, Inc. on the other hand.

Evidence show that when the latter gained control of the interest of respondent company, a reorganization and reshuffle of key personnel
were undertaken by the new management and among those who were affected was complainant Alinas.

On 2 September 1987 complainant was issued a new assignment as Staff assistant to the Finance Manager with no change in remuneration.
On 22 Feb. 1988, a memorandum was issued by the Executive Vice president of Pocketbell, herein individual respondent Jose Abejo,
advising complainant of his new appointment as Provincial Marketing and Sales Supervisor based in the company's Davao Branch Office. . .
.

It appears that complainant refused to receive the said memorandum, thus another memorandum was issued to him on 8 march 1988
directing him to explain in writing why he should not be subjected to disciplinary action.

xxx xxx xxx

On 10 March 1988 complainant submitted to management his letter of explanation which states:

In connection with your memorandum dated March 7, 1988, directing me to explain why I should not be subjected to disciplinary action for
insubordination, please consider the following:

(1) You are fully aware of my background, which is that of an accountant. The new appointment for me is that of Provincial Marketing and
Sales Supervisor based in Davao City. With the welfare and benefit of the company in mind, I cannot give justice to the position because I
have no experience in marketing work.

(2) The new assignment will also cause inconvenience to my 2 sisters whom I am supporting especially since one of them will be reviewing
for the coming CPA exams.

(3) The assignments is at Davao City. This would mean that I would not be able to accept your new offer of assignment cannot be considered
as an act of insubordination or disrespect to a superior.

In a letter of 11 March 1988, management advised complainant that his aforequoted answer was unsatisfactory. Hence, he was directed to
assume his new assignment not later than 15 March 1988, failing which his services shall be considered terminated.
Complainant maintains that his dismissal on 16 March 1988 was illegal as the same was without just cause. He asserts that right after
Telectronics Systems, Inc. took control of the management of respondent company from the Braga Family a plan to ease him out was already
conceived by individual respondent Jose Abejo. To buttress his contention, complainant cited the following circumstances:

Sometime in August, 1987, about a month after respondent company was placed under a receivership, individual respondent Abejo told him
that Ms. Cecilia Agres will be appointed as Acting Accounting Supervisor (complaint's position) and he will be given the new position of
Budget Officer. The information was given to him in the presence of the new Finance Officer, the Administrative Manager and Ms. Cecilia
Agres herself.

The promised position was never given to him and since then he was on floating status although he continued to report for work and received
his salary without doing anything.

On 2 September 1987 he was issued a new appointment as Staff Assistant to the Finance manager with no change in renumeration but he
nonetheless continued to be floating as he was not given any specific assignment.

On 22 January 1988 he was called and told by respondent Abejo in his office that management does not feel comfortable with him.

On 25 January 1988 respondent Abejo offered him separation pay equivalent to 75% of his basic salary but which offer he turned down.6

Based on these facts the labor Arbiter held that Alina's refusal to go to Davao was unjustified not only because there was a need for his
services there but also because the transfer was "a chance" for him to "redeem the lost confidence of his employer." The reference to the
company's "lost confidence" in Alinas is the Labor Arbiter's finding that by continuing to report to Virgilio T. Braga during the intra-
corporate dispute, Alinas committed an act of disloyalty to the company. The labor Arbiter found:

On cross examination, complainant admitted that even after the company was placed under receivership and Virgilio Braga was ousted he
continued to report to the latter who brought out the operation of the company to his residence. (TSN 26 Aug. 1988, pp. 49-53)

In the light of the foregoing, respondents cannot be faulted for it was the complainant himself who provided them the reasons to doubt his
loyalty, especially considering the fact that the position he was then occupying was a very sensitive one. Moreover, it was reported and
perceived at that time the Braga Family was organizing its own paging company. 7

On the other hand, the NLRC, based on the same facts found by the Labor Arbiter, drew a different conclusion: Alinas was not guilty of
disloyalty. He and other employees merely followed the instructions of Virgilio Braga to report to him in his house, pending resolution of the
controversy in the company, but they immediately reported to the receivership committee after they were directed to do so. His transfer to the
Davao City branch was a mere subterfuge resorted to by the company to mask its real intention to remove him because of what it perceived
was his personal loyalty to the Braga. The NLRC held:

It appears unrebutted that since that takeover by the receivership committee, the new management was bent on removing the complainant as
shown by narration of the circumstances that led to his termination. He was first promised the job as budget office, after his position of
accounting supervisor was given to Ms. Agres. The position of budget officer was not extended to him for unknown reason(s). Instead, he
was made accredit clerk with no definite duties and appointment. Later, he was made staff assistant to the Finance Manager but he was not
made to perform the duties of such position. He was offered separation pay by the general manager, and when complainant refused he was
given a provincial assignment in Davao City which management knew was not acceptable to him. And the reason for all these was that
management was not feeling comfortable with complainant's presence in the company due to his perceived loyalty to the Braga family as
shown by his continued reporting to its house of the executive vice president, Virgilio Braga, during the early days when the receivership
committee took over the management of the company, added to this is the reported plan of the Braga family to organize or set up their own
paging business.

But it was made clear by Virgilio Braga, in his affidavit, that complainant and the other employees were instructed by him to report at his
house to form a temporary office pending clarification and resolution of a legal controversy. But upon receipt of the directive of the
receivership committee, complainant and all other employees, immediately complied therewith. (Record, page 58). It could not then be said
that complainant Alinas preferred to take orders from the ousted executive vice president and that he deliberately refused to submit to the
authority of the receivership committee. Mr. Braga has assumed full responsibility for the employees reporting to his office. 8

There is, therefore, no basis for Pocketbell's contention that the NLRC considered facts which were not put in issue by private respondent in
appealing from the decision of the Labor Arbiter. Indeed, by contending that "the decision of the Labor Arbiter had no sufficient basis,"
private respondent put in issue the correctness of the Labor Arbiter's conclusion that private respondent was guilty of insubordination. Nor
does the substantial evidence rule require a court to shut out from its view evidence in the record which fairly detracts from the decisions of a
lower body.9 This is true of our review of the decisions of the NLRC. It is certainly even more true of the review by the NLRC of the
decisions of the Labor Arbiter.
Second. Petitioner admits that after removing petitioner from the position of Accounting Supervisor, it offered him various other positions,
but did not allow him to occupy those positions. Petitioner justifies its refusal on the ground that "[it] doubts the loyalty of the private
respondent [because] the position of the private respondent is one of trust and confidence. 10

To be sure the question of loyalty was never brought up in the discussion between petitioner and private respondent. By offering petitioner
various positions in the company, i.e., Budget Officer, Staff Assistant to the Finance manager, and then marketing and Sales Supervisor, the
petitioner affirmed its trust and confidence in him, In its memorandum of March 11, 1988 transferring private respondent to Davao City,
petitioner in fact stated that the choice of private respondent was based on its judgment that private respondent was "the most qualified to
reverse the losing streak of Pocketbell, Davao."

It thus appears that the various positions promised (Budget officer and Staff Assistant to the Finance Manager) to private respondent were
never really intended to be given to him. The promises were made only to cover up the new management's real intention to remove him from
his position as Accounting Supervisor. This was because the new management "doubted" his loyalty but could not otherwise prove its doubts
or suspicion. The NLRC was right in finding that the circumstances leading to the termination of his employment clearly showed that "the
management was really bent on removing [him]." In fact private respondent was told that the new management was "uncomfortable" with
him and for this reason it offered to give him separation pay. As he refused separation pay, he was given the Davao City assignment, which
the management knew he would not accept.

We agree that normally it is the prerogative of the employer to transfer and reassign employees according to the requirements of its business.
We said so in Philippine Telegraph and Telephone Co. v. Laplana, 11 invoked by petitioner, which summarized the course of decisions
from Interwood Employees Ass'n. v. International Hardwood & Veneer Co. of the Phil. 12 to Yaco Chemical Industries, Inc. v.
MOLE 13 upholding the employer's right to transfer it s personnel for valid reasons. But we also said in Laplana case:

But like all other rights, there are limits. The managerial prerogative to transfer personnel must be exercised without grave abuse of
discretion and putting to mind the basic elements of justice and fair play. Having the right must be exercised. Thus it cannot be used as a
subterfuge by the employer to rid himself of an undesirable worker. Nor then the real reason is to penalize an employee for his union
activities and thereby defeat his right of self-organization. But the transfer can be upheld when there is no showing that it is unnecessary,
inconvenient and prejudicial to the displaced
employee. 14

In the case at bar, the invocation of the right to transfer employees was a mere pretext or subterfuge resorted to by petitioner to rid itself of an
employee with whom it felt "uncomfortable."

WHEREFORE, the petition for certiorari is DISMISSED for lack of merit.

SO ORDERED.
G.R. Nos. 174941 February 1, 2012

ANTONIO P. SALENGA and NATIONAL LABOR RELATIONS COMMISSION, Petitioners,

vs.
COURT OF APPEALS and CLARK DEVELOPMENT CORPORATION, Respondents.

DECISION

SERENO, J.:

The present Petition for Certiorari under Rule 65 assails the Decision1 of the Court of Appeals (CA) promulgated on 13 September 2005,
dismissing the Complaint for illegal dismissal filed by petitioner Antonio F. Salenga against respondent Clark Development Corporation
(CDC). The dispositive portion of the assailed Decision states:

WHEREFORE, premises considered, the original and supplemental petitions are GRANTED. The assailed resolutions of the National Labor
Relations Commission dated September 10, 2003 and January 21, 2004 are ANNULLED and SET ASIDE. The complaint filed by Antonio
B. Salenga against Clark Development is DISMISSED. Consequently, Antonio B. Salenga is ordered to restitute to Clark Development
Corporation the amount of P3,222,400.00, which was received by him as a consequence of the immediate execution of said resolutions, plus
interest thereon at the rate of 6% per annum from date of

such receipt until finality of this judgment, after which the interest shall be at the rate of 12% per annum until said amount is fully restituted.

SO ORDERED.2

The undisputed facts are as follows:

On 22 September 1998, President/Chief Executive Officer (CEO) Rufo Colayco issued an Order informing petitioner that, pursuant to the
decision of the board of directors of respondent CDC, the position of head executive assistant – the position held by petitioner – was declared
redundant. Petitioner received a copy of the Order on the same day and immediately went to see Colayco. The latter informed him that the
Order had been issued as part of the reorganization scheme approved by the board of directors. Thus, petitioner’s employment was to be
terminated thirty (30) days from notice of the Order.

On 17 September 1999, petitioner filed a Complaint for illegal dismissal with a claim for reinstatement and payment of back wages, benefits,
and moral and exemplary damages against respondent CDC and Colayco. The Complaint was filed with the National Labor Relations
Commission-Regional Arbitration Branch (NLRC-RAB) III in San Fernando, Pampanga. In defense, respondents, represented by the Office
of the Government Corporate Counsel (OGCC), alleged that the NLRC had no jurisdiction to entertain the case on the ground that petitioner
was a corporate officer and, thus, his dismissal was an intra-corporate matter falling properly within the jurisdiction of the Securities and
Exchange Commission (SEC).

On 29 February 2000, labor arbiter (LA) Florentino R. Darlucio issued a Decision3 in favor of petitioner Salenga. First, the LA held that the
NLRC had jurisdiction over the Complaint, considering that petitioner was not a corporate officer but a managerial employee. He held the
position of head executive assistant, categorized as a Job Level 12 position, not subject to election or appointment by the board of directors.

Second, the LA pointed out that respondent CDC and Colayco failed to establish a valid cause for the termination of petitioner’s
employment. The evidence presented by respondent CDC failed to show that the position of petitioner was superfluous as to be classified
"redundant." The LA further pointed out that respondent corporation had not disputed the argument of petitioner Salenga that his position
was that of a regular employee. Moreover, the LA found that petitioner had not been accorded the right to due process. Instead, the latter was
dismissed without the benefit of an explanation of the grounds for his termination, or an opportunity to be heard and to defend himself.

Finally, considering petitioner’s reputation and contribution as a government employee for 40 years, the LA awarded moral damages
amounting to ₱2,000,000 and exemplary damages of ₱500,000. The dispositive portion of the LA’s Decision reads:

WHEREFORE, premises considered, judgment is hereby rendered declaring respondent Clark Development Corporation and Rufo Colayco
guilty of illegal dismissal and for which they are ordered, as follows:

1. To reinstate complainant to his former or equivalent position without loss of seniority rights and privileges;

2. To pay complainant his backwages reckoned from the date of his dismissal on September 22, 1998 until actual reinstatement or merely
reinstatement in the payroll which as of this date is in the amount of P722,400.00;

3. To pay complainant moral damages in the amount of P2,000,000.00; and,

4. To pay complainant exemplary damages in the amount of P500,000.00.

SO ORDERED.4

At the time the above Decision was rendered, respondent CDC was already under the leadership of Sergio T. Naguiat. When he received the
Decision on 10 March 2000, he subsequently instructed Atty. Monina C. Pineda, manager of the Corporate and Legal Services Department
and concurrent corporate board secretary, not to appeal the Decision and to so inform the OGCC. 5

Despite these instructions, two separate appeals were filed before LA Darlucio on 20 March 2000. One appeal 6 was from the OGCC on
behalf of respondent CDC and Rufo Colayco. The OGCC reiterated its allegation that petitioner was a corporate officer, and that the
termination of his employment was an intra-corporate matter. The Memorandum of Appeal was verified and certified by Hilana Timbol-
Roman, the executive vice president of respondent CDC. The Memorandum was accompanied by a UCPB General Insurance Co., Inc.
supersedeas bond covering the amount due to petitioner as adjudged by LA Darlucio. Timbol-Roman and OGCC lawyer Roy Christian
Mallari also executed on 17 March 2000 a Joint Affidavit of Declaration wherein they swore that they were the "respective authorized
representative and counsel" of respondent corporation. However, the Memorandum of Appeal and the Joint Affidavit of Declaration were not
accompanied by a board resolution from respondent’s board of directors authorizing either Timbol-Roman or Atty. Mallari, or both, to
pursue the case or to file the appeal on behalf of respondent.

It is noteworthy that Naguiat, who was president/CEO of respondent CDC from 3 February 2000 to 5 July 2000, executed an Affidavit on 20
March 2002,7 wherein he stated that without his knowledge, consent or approval, Timbol-Roman and Atty. Mallari filed the above-mentioned
appeal. He further alleged that their statements were false.

The second appeal, meanwhile, was filed by former CDC President/CEO Rufo Colayco. Colayco alleged that petitioner was dismissed not on
22 September 1998, but twice on 9 March 1999 and 23 March 1999. The dismissal was allegedly approved by respondent’s CDC board of
directors pursuant to a new organizational structure. Colayco likewise stated that he had posted a supersedeas bond – the same bond taken
out by Timbol-Roman – issued by the UCPB General Insurance Co. dated 17 March 2000 in order to secure the monetary award, exclusive
of moral and exemplary damages.

Petitioner thereafter opposed the two appeals on the grounds that both appellants, respondent CDC – as allegedly represented by Timbol-
Roman and Atty. Mallari – and Rufo Colayco had failed to observe Rule VI, Sections 4 to 6 of the NLRC Rules of Procedure; and that
appellants had not been authorized by respondent’s board of directors to represent the corporation and, thus, they were not the "employer"
whom the Rules referred to. Petitioner also alleged that appellants failed to refute the findings of LA Darlucio in the previous Decision.

In the meantime, while the appeal was pending, on 19 October 2000, respondent’s board chairperson and concurrent President/CEO Rogelio
L. Singson ordered the reinstatement of petitioner to the latter’s former position as head executive assistant, effective 24 October 2000.8

On 28 May 2001, respondent CDC’s new President/CEO Emmanuel Y. Angeles issued a Memorandum, which offered all managers of
respondent corporation an early separation/redundancy program. Those who wished to avail themselves of the program were to be given the
equivalent of their 1.25-month basic salary for every year of service and leave credits computed on the basis of the same 1.25-month
equivalent of their basic salary.9

In August 2001, respondent CDC offered another retirement plan granting higher benefits to the managerial employees. Thus, on 12
September 2001, petitioner filed an application for the early retirement program, which Angeles approved on 3 December 2001.

Meanwhile, in the proceedings of the NLRC, petitioner received on 12 September 2001 its 30 July 2001 Decision 10on the appeal filed by
Timbol-Roman and Colayco. It is worthy to note that the said Decision referred to the reports of reviewer arbiters Cristeta D. Tamayo and
Thelma M. Concepcion, who in turn found that petitioner Salenga was a corporate officer of CDC. Nevertheless, the First Division of the
NLRC upheld LA Darlucio’s ruling that petitioner Salenga was indeed a regular employee. It also found that redundancy, as an authorized
cause for dismissal, has not been sufficiently proven, rendering the dismissal illegal. However, the NLRC held that the award of exemplary
and moral damages were unsubstantiated. Moreover, it also dropped Colayco as a respondent to the case, since LA Darlucio had failed to
provide any ground on which to anchor the former’s solidary liability.

Petitioner Salenga thereafter moved for a partial reconsideration of the above-mentioned Decision. He sought the reinstatement of the award
of exemplary and moral damages. He likewise insisted that the NLRC should not have entertained the appeal on the following grounds: (1)
respondent CDC did not file an appeal and did not post the required cash or surety bond; (2) both Timbol-Roman and Colayco were
admittedly not real parties-in-interest; (3) they were not the employer or the employer’s authorized representative and, thus, had no right to
appeal; and (4) both appeals had not been perfected for failure to post the required cash or surety bond. In other words, petitioner’s theory
revolved on the fact that neither Timbol-Roman nor Colayco was authorized to represent the corporation, so the corporation itself did not
appeal LA Darlucio’s Decision. As a result, that Decision should be considered as final and executory.
For its part, the OGCC also filed a Motion for Reconsideration11 of the NLRC’s 30 July 2001 Decision insofar as the finding of illegal
dismissal was concerned. It no longer questioned the commission’s finding that petitioner was a regular employee, but instead insisted that
he had been dismissed as a consequence of his redundant position. The motion, however, was not verified by the duly authorized
representative of respondent CDC.

On 5 December 2002, the NLRC denied petitioner Salenga’s Motion for Partial Reconsideration and dismissed the Complaint. The
dispositive portion of the Resolution12 reads as follows:

WHEREFORE, complainant’s partial motion for reconsideration is denied. As recommended by Reviewer Arbiters Cristeta D. Tamayo in
her August 2, 2000 report and Thelma M. Concepcion in her November 25, 2002 report, the decision of Labor Arbiter Florentino R. Darlucio
dated 29 February 2000 is set aside.

The complaint below is dismissed for being without merit.

SO ORDERED.13

Meanwhile, pending the Motions for Reconsideration of the NLRC’s 30 July 2001 Decision, another issue arose with regard to the
computation of the retirement benefits of petitioner. Respondent CDC did not immediately give his requested retirement benefits, pending
clarification of the computation of these benefits. He claimed that the computation of his retirement benefits should also include the forty
(40) years he had been in government service in accordance with Republic Act No. (R.A.) 8291, or the GSIS Act, and should not be limited
to the length of his employment with respondent corporation only, as the latter insisted.

In a letter dated 14 March 2003, petitioner Salenga’s counsel wrote to the board of directors of respondent to follow up the payment of the
retirement benefits allegedly due to petitioner.14

Pursuant to the NLRC’s dismissal of the Complaint of petitioner Salenga, Angeles subsequently denied the former’s request for his
retirement benefits, to wit:15

Please be informed that we cannot favorably grant your client’s claim for retirement benefits considering that Clark Development
Corporation's dismissal of Mr. Antonio B. Salenga had been upheld by the National Labor Relations Commission through a Resolution dated
December 5, 2002...

xxx xxx xxx

As it is, the said Resolution dismissed the Complaint filed by Mr. Salenga for being without merit. Consequently, he is not entitled to receive
any retirement pay from the corporation.

Meanwhile, petitioner Salenga filed a second Motion for Reconsideration of the 5 December 2002 Resolution of the NLRC, reiterating his
claim that it should not have entertained the imperfect appeal, absent a proper verification and certification against forum-shopping from the
duly authorized representative of respondent CDC. Without that authority, neither could the OGCC act on behalf of the corporation.

The OGCC, meanwhile, resurrected its old defense that the NLRC had no jurisdiction over the case, because petitioner Salenga was a
corporate officer.

The parties underwent several hearings before the NLRC First Division. During these times, petitioner Salenga demanded from the OGCC to
present a board resolution authorizing it or any other person to represent the corporation in the proceedings. This, the OGCC failed to do.

After giving due course to the Motion for Reconsideration filed by petitioner Salenga, the NLRC issued a Resolution16 on 10 September
2003, partially granting the motion. This time, the First Division of the NLRC held that, absent a board resolution authorizing Timbol-
Roman to file the appeal on behalf of respondent CDC, the appeal was not perfected and was thus a mere scrap of paper. In other words, the
NLRC had no jurisdiction over the appeal filed before it.

The NLRC further held that respondent CDC had failed to show that petitioner Salenga’s dismissal was pursuant to a valid corporate
reorganization or board resolution. It also deemed respondent estopped from claiming that there was indeed a redundancy, considering that
petitioner Salenga had been reinstated to his position as head executive assistant. While it granted the award of moral damages, it
nevertheless denied exemplary damages. Thus, the dispositive portion of its Decision reads:

WHEREFORE, premises considered, the complainant’s Motion for Reconsideration is GRANTED and We set aside our Resolution of
December 5, 2002. The Decision of the Labor Arbiter dated February 29, 2000 is REINSTATED with the MODIFICATION that:
1.) Being a nominal party, respondent Rufo Colayco is declared to be not jointly and severally liable with respondent Clark Development
Corporation;

2.) Respondent Clark Development Corporation is ordered to pay the complainant his full backwages and other monetary claims to which he
is entitled under the decision of the Labor Arbiter;

3.) Respondent CDC is likewise ordered to pay the complainant moral and exemplary damages as provided under the Labor Arbiter’s
Decision; and

4.) All other money claims are DENIED for lack of merit.

In the meantime, respondent CDC is ordered to pay the complainant his retirement benefits without further delay.

SO ORDERED.17

On 3 October 2003, the OGCC filed a Motion for Reconsideration18 despite the absence of a verification and the certification against forum
shopping.

On 21 January 2004, the motion was denied by the NLRC for lack of merit.19

On 5 February 2004, the executive clerk of the NLRC First Division entered the judgment on the foregoing case. Thereafter, on 9 February
2004, the NLRC forwarded the entire records of the case to the NLRC-RAB III Office in San Fernando, Pampanga for appropriate action.

On 4 March 2004, petitioner Salenga filed a Motion for Issuance of Writ of Execution before the NLRC-RAB III, Office of LA Henry D.
Isorena. The OGCC opposed the motion on the ground that it had filed with the CA a Petition for Certiorari seeking the reversal of the
NLRC Decision dated 30 July 2001 and the Resolutions dated 10 September 2003 and 21 January 2004, respectively. It is noteworthy that,
again, there was no board resolution attached to the Petition authorizing its filing.

Despite the pending Petition with the CA, LA Isorena issued a Writ of Execution enforcing the 10 September 2003 Resolution of the NLRC.
On 1 April 2004, the LA issued an Order20 to the manager of the Philippine National Bank, Clark Branch, Angeles City, Pampanga, to
immediately release in the name of NLRC-RAB III the amount of ₱3,222,400 representing partial satisfaction of the judgment award,
including the execution fee of ₱31,720.

Respondent CDC filed with the CA in February 2004 a Petition for Certiorari with a prayer for the issuance of a temporary restraining order
and/or a writ of preliminary injunction. However, the Petition still lacked a board resolution from the board of directors of respondent
corporation authorizing its then President Angeles to verify and certify the Petition on behalf of the board. It was only on 16 March 2004 that
counsel for respondent filed a Manifestation/Motion 21 with an attached Secretary’s Certificate containing the board’s Resolution No. 86,
Series of 2001. The Resolution authorized Angeles to represent respondent corporation in prosecuting, maintaining, or compromising any
lawsuit in connection with its business.

Meanwhile, in the proceedings before LA Isorena, both respondent CDC’s legal department and the OGCC on 6 April 2004 filed their
respective Motions to Quash Writ of Execution.22 They both cited the failure to afford to respondent due process in the issuance of the writ.
They claimed that the pre-conference hearing on the execution of the judgment had not pushed through. They also reiterated that the Petition
for Certiorari dated 11 February 2004 was still pending with the CA.

Both motions were denied by LA Isorena for lack of factual and legal bases.

On 6 May 2004, respondent filed with LA Isorena another Motion to Quash Writ of Execution, again reiterating the pending Petition with the
CA.

This active exchange of pleadings and motions and the delay in the payment of his money claims eventually led petitioner Salenga to file an
Omnibus Motion23 before LA Isorena. In his motion, he recomputed the amount due him representing back wages, other benefits or
allowances, legal interests and attorney’s fees. He also prayed for the computation of his retirement benefits plus interests in accordance with
R.A. 829124 and R.A. 1616.25 He insisted that since respondent CDC was a government-owned and -controlled corporation (GOCC), his
previous government service totalling 40 years must also be credited in the computation of his retirement pay. Thus, he demanded the
payment of the total amount of ₱23,920,772.30, broken down as follows:

a. From the illegal dismissal suit: (In Philippine peso)

a. Recomputed award 3,758,786

 b. Legal interest 5,089,342.58

c. Attorney’s fees 1,196,052.80

d. Litigation expenses 250,000

b. Retirement pay

a. Retirement gratuity 6,987,944

b. Unused vacation and sick leave 1,440,328

c. Legal interest 4,050,544.96

d. Attorney’s fees 1,147,781.90

On 11 May 2004, the CA issued a Resolution 26 ordering petitioner Salenga to comment on the Petition and holding in abeyance the issuance
of a temporary restraining order.

The parties thereafter filed their respective pleadings.

On 19 July 2004, the CA temporarily restrained the NLRC from enforcing the Decision dated 29 February 2000 for a period of 60
days.27 After the lapse of the 60 days, LA Isorena issued a Notice of Hearing/Conference scheduled for 1 October 2004 on petitioner’s
Omnibus Motion dated 7 May 2004.

Meanwhile, on 24 September 2004, the CA issued another Resolution,28 this time denying the application for the issuance of a writ of
preliminary injunction, after finding that the requisites for the issuance of the writ had not been met.

Respondent CDC subsequently filed a Supplemental Petition29 with the CA, challenging the computation petitioner Salenga made in his
Omnibus Motion filed with the NLRC. Respondent alleged that the examiner had erred in including the other years of government service in
the computation of retirement benefits. It claimed that, since respondent corporation was created under the Corporation Code, petitioner
Salenga was not covered by civil service laws. Hence, his retirement benefits should only be limited to the number of years he had been
employed by respondent.

Subsequently, respondent CDC filed an Omnibus Motion30 to admit the Supplemental Petition and to reconsider the CA’s Resolution denying
the issuance of a writ of preliminary injunction. In the motion, respondent alleged that petitioner Salenga had been more than sufficiently
paid the amounts allegedly due him, including the award made by LA Darlucio. On 12 March 2002, respondent CDC had issued a check
amounting to ₱852,916.29, representing petitioner’s retirement pay and terminal pay. Meanwhile, on 2 April 2004, ₱3,254,120 representing
the initial award was debited from the account of respondent CDC.

On 7 February 2005, respondent CDC filed a Motion31 once again asking the CA to issue a writ of preliminary injunction in the light of a
scheduled 14 February 2005 conference called by LA Mariano Bactin, who had taken over the case from LA Isorena.

At the 14 February 2005 hearing, the parties failed to reach an amicable settlement and were thus required to submit their relevant pleadings
and documents in support of their respective cases.

On 16 February 2005, the CA issued a Resolution32 admitting the Supplemental Petition filed by respondent, but denying the prayer for the
issuance of an injunctive writ.

Thereafter, on 8 March 2005, LA Bactin issued an Order 33 resolving the Omnibus Motion filed by petitioner Salenga for the recomputation of
the monetary claims due him. In the Order, LA Bactin denied petitioner’s Motion for the recomputation of the award of back wages, benefits,
allowances and privileges based on the 29 February 2000 Decision of LA Darlucio. LA Bactin held that since the Decision had become final
and executory, he no longer had jurisdiction to amend or to alter the judgment.

Anent the second issue of the computation of retirement benefits, LA Bactin also denied the claim of petitioner Salenga, considering that the
latter’s retirement benefits had already been paid. The LA, however, did not rule on whether petitioner was entitled to retirement benefits,
either under the Government Service Insurance System (GSIS) or under the Social Security System (SSS), and held that this issue was
beyond the expertise and jurisdiction of a LA.

Petitioner Salenga thereafter appealed to the NLRC, which granted the appeal in a Resolution34 dated 22 July 2005. First, it was asked to
resolve the issue of the propriety of having the Laguesma Law Office represent respondent CDC in the proceedings before the LA. The said
law firm entered its appearance as counsel for respondent during the pre-execution conference/hearing on 1 October 2004. On this issue, the
NLRC held that respondent corporation’s legal department, which had previously been representing the corporation, was not validly
substituted by the Laguesma Law Office. In addition, the NLRC held that respondent had failed to comply with Memorandum Circular No.
9, Series of 1998, which strictly prohibits the hiring of lawyers of private law firms by GOCCs without the prior written conformity and
acquiescence of the Office of Solicitor General, as the case may be, and the prior written concurrence of the Commission on Audit (COA).
Thus, the NLRC held that all actions and submissions undertaken by the Laguesma Law Office on behalf of respondent were null and void.

The second issue raised before the NLRC was whether LA Bactin acted without jurisdiction in annulling and setting aside the former’s final
and executory judgment contained in its 10 September 2003 Resolution, wherein it held that the appeal had not been perfected, absent the
necessary board resolution allowing or authorizing Timbol-Roman and Atty. Mallari to file the appeal. On this issue, the NLRC stated:

The final and executory judgment in this case is clearly indicated in the dispositive portion of Our Resolution promulgated on September 10,
2003 GRANTING complainant’s motion for reconsideration, SETTING ASIDE Our Resolution of December 5, 2002, and REINSTATING
the Decision of the Labor Arbiter dated February 29, 2000 with the following modification[s]: (1) declaring respondent Rufo Colayco not
jointly and severally liable with respondent Clark Development Corporation; (2) ordering respondent CDC to pay the complainant his full
backwages and other monetary claims to which he is entitled under the decision of the Labor Arbiter; (3) ordering respondent CDC to pay
complainant moral and exemplary damages as provided under the Labor Arbiter’s Decision; and (4) ordering respondent CDC to pay the
complainant his retirement benefits without further delay. This was entered in the Book of Entry of Judgment as final and executory effective
as of February 2, 2004.

Implementing this final and executory judgment, Arbiter Isorena issued an Order dated May 24, 2004, DENYING respondent’s Motion to
Quash the Writ of Execution dated March 22, 2004, correctly stating thusly:

"Let it be stressed that once a decision has become final and executory, it becomes the ministerial duty of this Office to issue the
corresponding writ of execution. The rationale behind it is based on the fact that the winning party has suffered enough and it is the time for
him to enjoy the fruits of his labor with dispatch. The very purpose of the pre-execution conference is to explore the possibility for the parties
to arrive at an amicable settlement to satisfy the judgment award speedily, not to delay or prolong its implementation."

Thus, when Arbiter Bactin, who took over from Arbiter Isorena upon the latter’s filing for leave of absence due to poor health in January
2005, issued the appealed Order nullifying, instead of implementing, the final and executory judgment of this Commission, the labor arbiter a
quo acted WITHOUT JURISDICTION.35

xxx xxx xxx

WHEREFORE, premises considered, the appeal of herein complainant is hereby GRANTED, and We declare NULL AND VOID the
appealed Order of March 8, 2005 and SET ASIDE said Order; We direct the immediate issuance of the corresponding Alias Writ of
Execution to enforce the final and executory judgment of this Commission as contained in Our September 10, 2003 Resolution.

SO ORDERED.36

Unwilling to accept the above Resolution of the NLRC, the Laguesma Law Office filed a Motion for Reconsideration dated 29 August 2005
with the NLRC. Again, the motion lacked proper verification and certification against non-forum shopping.

In the meantime, the OGCC also filed with the CA a Motion for the Issuance of a Writ of Preliminary Injunction dated 30 August
200537 against the NLRC’s 22 July 2005 Resolution. The OGCC alleged that the issues in the Resolution addressed monetary claims that
were raised by petitioner Salenga only in his Omnibus Motion dated 7 May 2004 or after the issuance of the 10 September 2003 Decision of
LA Darlucio. Thus, the OGCC insisted that the NLRC had no jurisdiction over the issue, for the matter was still pending with the CA.

The OGCC likewise filed another Motion for Reconsideration38 dated 31 August 2005 with the NLRC. The OGCC maintained that it was
only acting in a collaborative manner with the legal department of respondent CDC, for which the former remained the lead counsel. The
OGCC reiterated that, as the statutory counsel of GOCCs, it did not need authorization from them to maintain a case, and thus, LA Bactin
had jurisdiction over that case. Finally, it insisted that petitioner Salenga was not covered by civil service laws on retirement, the CDC
having been created under the Corporation Code.

On 13 September 2005, the CA promulgated the assailed Decision. Relying heavily on the reports of Reviewer Arbiters Cristeta D. Tamayo
and Thelma M. Concepcion, it held that petitioner Salenga was a corporate officer. Thus, the issue before the NLRC was an intra-corporate
dispute, which should have been lodged with the Securities and Exchange Commission (SEC), which had jurisdiction over the case at the
time the issue arose. The CA likewise held that the NLRC committed grave abuse of discretion when it allowed and granted petitioner
Salenga’s second Motion for Reconsideration, which was a prohibited pleading.
Petitioner subsequently filed a Motion for Reconsideration on 7 October 2005, alleging that the CA committed grave abuse of discretion in
reconsidering the findings of fact, which had already been found to be conclusive against respondent; and in taking cognizance of the latter’s
Petition which had not been properly verified.

The CA, finding no merit in petitioner’s allegations, denied the motion in its 17 August 2006 Resolution.

On 4 September 2006, petitioner Salenga filed a Motion for Extension of Time to File a Petition for Review on Certiorari under Rule 45,
praying for an extension of fifteen (15) days within which to file the Petition. The motion was granted through this Court’s Resolution dated
13 September 2006. The case was docketed as G.R. No. 174159.

On 25 September 2006, however, petitioner filed a Manifestation39 withdrawing the motion. He manifested before us that he would instead
file a Petition for Certiorari under Rule 65, which was eventually docketed as G.R. No. 174941. On 7 July 2008, this Court, through a
Resolution, considered the Petition for Review in G.R. No. 174159 closed and terminated.

Petitioner raises the following issues for our resolution:

I.

The Court of Appeals acted without jurisdiction in reviving and re-litigating the factual issues and matters of petitioner’s illegal dismissal
and retirement benefits.

II.

The Court of Appeals had no jurisdiction to entertain the original Petition as a remedy for an appeal that had actually not been filed, absent a
board resolution allowing the appeal.

III.

The Court of Appeals acted with grave abuse of discretion when it did the following:

a. It failed to dismiss the original and supplemental Petitions despite the lack of a board resolution authorizing the filing thereof.

b. It failed to dismiss the Petitions despite the absence of a proper verification and certification against non-forum shopping.

c. It failed to dismiss the Petitions despite respondent’s failure to inform it of the pending proceedings before the NLRC involving the same
issues.

d. It failed to dismiss the Petitions on the ground of forum shopping.

e. It did not dismiss the Petition when respondent failed to attach to it certified true copies of the assailed NLRC 30 July 2001 Decision; 10
September 2003 Resolution; 21 January 2004 Resolution; copies of material portions of the record as are referred to therein; and copies of
pleadings and documents relevant and pertinent thereto.

f. It did not act on respondent’s failure to serve on the Office of the Solicitor General a copy of the pleadings, motions and manifestations the
latter had filed before the Court of Appeals, as well as copies of pertinent court resolutions and decisions, despite the NLRC being a party to
the present case.

g. It disregarded the findings of fact and conclusions of law arrived at by LA Darlucio, subjecting them to a second analysis and evaluation
and supplanting them with its own findings.

h. It granted the Petition despite respondent’s failure to show that the NLRC committed grave abuse of discretion in rendering the latter’s 30
July 2001 Decision, 10 September 2003 Resolution and 21 January 2004 Resolution.

i. It dismissed the complaint for illegal dismissal and ordered the restitution of the P3,222,400 already awarded to petitioner, plus interest
thereon.

In its defense, private respondent insists that the present Petition for Certiorari under Rule 65 is an improper remedy to question the Decision
of the CA, and thus, the case should be dismissed outright. Nevertheless, it reiterates that private petitioner was a corporate officer whose
employment was dependent on board action. As such, private petitioner’s employment was an intra-corporate controversy cognizable by the
SEC, not the NLRC. Private respondent also asserts that it has persistently sought the reversal of LA Darlucio’s Decision by referring to the
letters sent to the OGCC, as well as Verification and Certificate against forum-shopping. However, these documents were signed only during
Angeles’ time as private respondent’s president/CEO, and not of the former presidents. Moreover, private respondent contends that private
petitioner is not covered by civil service laws, thus, his years in government service are not creditable for the purpose of determining the total
amount of retirement benefits due him. In relation to this, private respondent enumerates the amounts already paid to private petitioner.

The Court’s Ruling

The Petition has merit.

This Court deigns it proper to collapse the issues in this Petition to simplify the matters raised in what appears to be a convoluted case. First,
we need to determine whether the NLRC and the CA committed grave abuse of discretion amounting to lack or excess of jurisdiction, when
they entertained respondent’s so-called appeal of the 29 February 2000 Decision rendered by LA Darlucio.

Second, because of the turn of events, a second issue – the computation of retirement benefits – cropped up while the first case for illegal
dismissal was still pending. Although the second issue may be considered as separate and distinct from the illegal dismissal case, the issue of
the proper computation of the retirement benefits was nevertheless considered by the relevant administrative bodies, adding more confusion
to what should have been a simple case to begin with.

The NLRC had no jurisdiction

to entertain the appeal filed by
Timbol-Roman and former
CDC CEO Colayco.

To recall, on 29 February 2000, LA Darlucio rendered a Decision in favor of petitioner, stating as follows:

xxxComplainant cannot be considered as a corporate officer because at the time of his termination, he was holding the position of Head
Executive Assistant which is categorized as a Job Level 12 position that is not subject to the election or appointment by the Board of
Directors. The approval of Board Resolution Nos. 200 and 214 by the Board of Directors in its meeting held on February 11, 1998 and
March 25, 1998 clearly refers to the New CDC Salary Structure where the pay adjustment was based and not to complainant’s relief as Vice-
President, Joint Ventures and Special Projects. While it is true that his previous positions are classified as Job Level 13 which are subject to
board confirmation, the status of his appointment was permanent in nature. In fact, he had undergone a six-month probationary period before
having acquired the permanency of his appointment. However, due to the refusal of the board under then Chairman Victorino Basco to
confirm his appointment, he was demoted to the position of Head Executive Assistant. Thus, complainant correctly postulated that he was
not elected to his position and his tenure is not dependent upon the whim of the boardxxx

xxx xxx xxx

Anent the second issue, this Office finds and so holds that respondents have miserably failed to show or establish the valid cause in
terminating the services of complainant.

xxx xxx xxx

In the case at bar, respondents failed to adduce any evidence showing that the position of Head Executive Assistant is superfluous. In fact,
they never disputed the argument advanced by complainant that the position of Head Executive Assistant was classified as a regular position
in the Position Classification Study which is an essential component of the Organizational Study that had been approved by the CDC board
of directors in 1995 and still remains intact as of the end of 1998. Likewise, studies made since 1994 by various management consultancy
groups have determined the need for the said position in the Office of the President/CEO in relation to the vision, mission, plans, programs
and overall corporate goals and objectives of respondent CDC. There is no evidence on record to show that the position of Head Executive
Assistant was abolished by the Board of Directors in its meeting held in the morning of September 22, 1998. The minutes of the meeting of
the board on said date, as well as its other three meetings held in the month of September 1998 (Annexes "B", "C", "D" and "E",
Complainant’s Reply), clearly reveal that no abolition or reorganization plan was discussed by the board. Hence, the ground of redundancy is
merely a device made by respondent Colayco in order to ease out the complainant from the respondent corporation.

Moreover, the other ground for complainant’s dismissal is unclear and unknown to him as respondent did not specify nor inform the
complainant of the alleged recent developmentsxxx

This Office is also of the view that complainant was not accorded his right to due process prior to his termination. The law requires that the
employer must furnish the worker sought to be dismissed with two (2) written notices before termination may be validly effected: first, a
notice apprising the employee of the particular acts or omissions for which his dismissal is sought and, second, a subsequent notice informing
the employee of the decision to dismiss him. In the case at bar, complainant was not apprised of the grounds of his termination. He was not
given the opportunity to be heard and defend himselfxxx40
The OGCC, representing respondent CDC and former CEO Colayco separately appealed from the above Decision. Both alleged that they had
filed the proper bond to cover the award granted by LA Darlucio.

It is clear from the NLRC Rules of Procedure that appeals must be verified and certified against forum-shopping by the parties-in-interest
themselves. In the case at bar, the parties-in-interest are petitioner Salenga, as the employee, and respondent Clark Development Corporation
as the employer.

A corporation can only exercise its powers and transact its business through its board of directors and through its officers and agents when
authorized by a board resolution or its bylaws. The power of a corporation to sue and be sued is exercised by the board of directors. The
physical acts of the corporation, like the signing of documents, can be performed only by natural persons duly authorized for the purpose by
corporate bylaws or by a specific act of the board. The purpose of verification is to secure an assurance that the allegations in the pleading
are true and correct and have been filed in good faith. 41

Thus, we agree with petitioner that, absent the requisite board resolution, neither Timbol-Roman nor Atty. Mallari, who signed the
Memorandum of Appeal and Joint Affidavit of Declaration allegedly on behalf of respondent corporation, may be considered as the
"appellant" and "employer" referred to by Rule VI, Sections 4 to 6 of the NLRC Rules of Procedure, which state:

SECTION 4. REQUISITES FOR PERFECTION OF APPEAL. - (a) The Appeal shall be filed within the reglementary period as provided in
Section 1 of this Rule; shall be verified by appellant himself in accordance with Section 4, Rule 7 of the Rules of Court, with proof of
payment of the required appeal fee and the posting of a cash or surety bond as provided in Section 6 of this Rule; shall be accompanied by
memorandum of appeal in three (3) legibly typewritten copies which shall state the grounds relied upon and the arguments in support thereof;
the relief prayed for; and a statement of the date when the appellant received the appealed decision, resolution or order and a certificate of
non-forum shopping with proof of service on the other party of such appeal. A mere notice of appeal without complying with the other
requisites aforestated shall not stop the running of the period for perfecting an appeal.

(b) The appellee may file with the Regional Arbitration Branch or Regional Office where the appeal was filed, his answer or reply to
appellant's memorandum of appeal, not later than ten (10) calendar days from receipt thereof. Failure on the part of the appellee who was
properly furnished with a copy of the appeal to file his answer or reply within the said period may be construed as a waiver on his part to file
the same.

(c) Subject to the provisions of Article 218, once the appeal is perfected in accordance with these Rules, the Commission shall limit itself to
reviewing and deciding specific issues that were elevated on appeal.

SECTION 5. APPEAL FEE. -The appellant shall pay an appeal fee of one hundred fifty pesos (P150.00) to the Regional Arbitration Branch
or Regional Office, and the official receipt of such payment shall be attached to the records of the case.

SECTION 6. BOND. - In case the decision of the Labor Arbiter or the Regional Director involves a monetary award, an appeal by the
employer may be perfected only upon the posting of a cash or surety bond. The appeal bond shall either be in cash or surety in an amount
equivalent to the monetary award, exclusive of damages and attorney’s fees.

In case of surety bond, the same shall be issued by a reputable bonding company duly accredited by the Commission or the Supreme Court,
and shall be accompanied by:

(a) a joint declaration under oath by the employer, his counsel, and the bonding company, attesting that the bond posted is genuine, and shall
be in effect until final disposition of the case.

(b) a copy of the indemnity agreement between the employer-appellant and bonding company; and

(c) a copy of security deposit or collateral securing the bond.

A certified true copy of the bond shall be furnished by the appellant to the appellee who shall verify the regularity and genuineness thereof
and immediately report to the Commission any irregularity.

Upon verification by the Commission that the bond is irregular or not genuine, the Commission shall cause the immediate dismissal of the
appeal.

No motion to reduce bond shall be entertained except on meritorious grounds and upon the posting of a bond in a reasonable amount in
relation to the monetary award.

The filing of the motion to reduce bond without compliance with the requisites in the preceding paragraph shall not stop the running of the
period to perfect an appeal. (Emphasis supplied)
The OGCC failed to produce any valid authorization from the board of directors despite petitioner Salenga’s repeated demands. It had been
given more than enough opportunity and time to produce the appropriate board resolution, and yet it failed to do so. In fact, many of its
pleadings, representations, and submissions lacked board authorization.

We cannot agree with the OGCC’s attempt to downplay this procedural flaw by claiming that, as the statutorily assigned counsel for GOCCs,
it does not need such authorization. In Constantino-David v. Pangandaman-Gania,42we exhaustively explained why it was necessary for
government agencies or instrumentalities to execute the verification and the certification against forum-shopping through their duly
authorized representatives. We ruled thereon as follows:

But the rule is different where the OSG is acting as counsel of record for a government agency. For in such a case it becomes necessary to
determine whether the petitioning government body has authorized the filing of the petition and is espousing the same stand propounded by
the OSG. Verily, it is not improbable for government agencies to adopt a stand different from the position of the OSG since they weigh not
just legal considerations but policy repercussions as well. They have their respective mandates for which they are to be held accountable, and
the prerogative to determine whether further resort to a higher court is desirable and indispensable under the circumstances.

The verification of a pleading, if signed by the proper officials of the client agency itself, would fittingly serve the purpose of attesting that
the allegations in the pleading are true and correct and not the product of the imagination or a matter of speculation, and that the pleading is
filed in good faith. Of course, the OSG may opt to file its own petition as a "People's Tribune" but the representation would not be for a client
office but for its own perceived best interest of the State.

The case of Commissioner of Internal Revenue v. S.C. Johnson and Son, Inc., is not also a precedent that may be invoked at all times to allow
the OSG to sign the certificate of non-forum shopping in place of the real party-in-interest. The ruling therein mentions merely that the
certification of non-forum shopping executed by the OSG constitutes substantial compliance with the rule since "the OSG is the only lawyer
for the petitioner, which is a government agency mandated under Section 35, Chapter 12, Title III, Book IV, of the 1987 Administrative
Code (Reiterated under Memorandum Circular No. 152 dated May 17, 1992) to be represented only by the Solicitor General."

By its very nature, "substantial compliance" is actually inadequate observance of the requirements of a rule or regulation which are waived
under equitable circumstances to facilitate the administration of justice there being no damage or injury caused by such flawed compliance.
This concept is expressed in the statement "the rigidity of a previous doctrine was thus subjected to an inroad under the concept of substantial
compliance." In every inquiry on whether to accept "substantial compliance," the focus is always on the presence of equitable conditions to
administer justice effectively and efficiently without damage or injury to the spirit of the legal obligation.

xxx xxx xxx

The fact that the OSG under the 1987 Administrative Code is the only lawyer for a government agency wanting to file a petition, or
complaint for that matter, does not operate per se to vest the OSG with the authority to execute in its name the certificate of non-forum
shopping for a client office. For, in many instances, client agencies of the OSG have legal departments which at times inadvertently take
legal matters requiring court representation into their own hands without the intervention of the OSG. Consequently, the OSG would have no
personal knowledge of the history of a particular case so as to adequately execute the certificate of non-forum shopping; and even if the OSG
does have the relevant information, the courts on the other hand would have no way of ascertaining the accuracy of the OSG's assertion
without precise references in the record of the case. Thus, unless equitable circumstances which are manifest from the record of a case
prevail, it becomes necessary for the concerned government agency or its authorized representatives to certify for non-forum shopping if
only to be sure that no other similar case or incident is pending before any other court.

We recognize the occasions when the OSG has difficulty in securing the attention and signatures of officials in charge of government offices
for the verification and certificate of non-forum shopping of an initiatory pleading. This predicament is especially true where the period for
filing such pleading is non-extendible or can no longer be further extended for reasons of public interest such as in applications for the writ
of habeas corpus, in election cases or where sensitive issues are involved. This quandary is more pronounced where public officials have
stations outside Metro Manila.

But this difficult fact of life within the OSG, equitable as it may seem, does not excuse it from wantonly executing by itself the verification
and certificate of non-forum shopping. If the OSG is compelled by circumstances to verify and certify the pleading in behalf of a client
agency, the OSG should at least endeavor to inform the courts of its reasons for doing so, beyond instinctively citing City Warden of the
Manila City Jail v. Estrella and Commissioner of Internal Revenue v. S.C. Johnson and Son, Inc.

Henceforth, to be able to verify and certify an initiatory pleading for non-forum shopping when acting as counsel of record for a client
agency, the OSG must (a) allege under oath the circumstances that make signatures of the concerned officials impossible to obtain within the
period for filing the initiatory pleading; (b) append to the petition or complaint such authentic document to prove that the party-petitioner or
complainant authorized the filing of the petition or complaint and understood and adopted the allegations set forth therein, and an affirmation
that no action or claim involving the same issues has been filed or commenced in any court, tribunal or quasi-judicial agency; and, (c)
undertake to inform the court promptly and reasonably of any change in the stance of the client agency.

Anent the document that may be annexed to a petition or complaint under letter (b) hereof, the letter-endorsement of the client agency to the
OSG, or other correspondence to prove that the subject-matter of the initiatory pleading had been previously discussed between the OSG and
its client, is satisfactory evidence of the facts under letter (b) above. In this exceptional situation where the OSG signs the verification and
certificate of non-forum shopping, the court reserves the authority to determine the sufficiency of the OSG's action as measured by the
equitable considerations discussed herein. (Emphasis ours, italics provided)

The ruling cited above may have pertained only to the Office of the Solicitor General’s representation of government agencies and
instrumentalities, but we see no reason why this doctrine cannot be applied to the case at bar insofar as the OGCC is concerned.

While in previous decisions we have excused transgressions of these rules, it has always been in the context of upholding justice and fairness
under exceptional circumstances. In this case, though, respondent failed to provide any iota of rhyme or reason to compel us to relax these
requirements. Instead, what is clear to us is that the so-called appeal was done against the instructions of then President/CEO Naguiat not to
file an appeal. Timbol-Roman, who signed the Verification and the Certification against forum-shopping, was not even an authorized
representative of the corporation. The OGCC was equally remiss in its duty. It ought to have advised respondent corporation, the proper
procedure for pursuing an appeal. Instead, it maintained the appeal and failed to present any valid authorization from respondent corporation
even after petitioner had questioned OGCC’s authority all throughout the proceedings. Thus, it is evident that the appeal was made in bad
faith.

The unauthorized and overzealous acts of officials of respondent CDC and the OGCC have led to a waste of the government’s time and
resources. More alarmingly, they have contributed to the injustice done to petitioner Salenga. By taking matters into their own hands, these
officials let the case drag on for years, depriving him of the enjoyment of property rightfully his. What should have been a simple case of
illegal dismissal became an endless stream of motions and pleadings.

Time and again, we have said that the perfection of an appeal within the period prescribed by law is jurisdictional, and the lapse of the appeal
period deprives the courts of jurisdiction to alter the final judgment. 43 Thus, there is no other recourse but to respect the findings and ruling of
the labor arbiter. Clearly, therefore, the CA committed grave abuse of discretion in entertaining the Petition filed before it after the NLRC
had dismissed the case based on lack of jurisdiction. The assailed CA Decision did not even resolve petitioner Salenga’s consistent and
persistent claim that the NLRC should not have taken cognizance of the appeal in the first place, absent a board resolution. Thus, LA
Darlucio’s Decision with respect to the liability of the corporation still stands.

However, we note from that Decision that Rufo Colayco was made solidarily liable with respondent corporation. Colayco thereafter filed his
separate appeal. As to him, the NLRC correctly held in its 30 July 2001 Decision that he may not be held solidarily responsible to petitioner.
As a result, it dropped him as respondent. Notably, in the case at bar, petitioner does not question that ruling.

Based on the foregoing, all other subsequent proceedings regarding the issue of petitioner’s dismissal are null and void for having been
conducted without jurisdiction. Thus, it is no longer incumbent upon us to rule on the other errors assigned in the matter of petitioner
Salenga’s dismissal.

CDC is not under the civil service laws on retirement.

While the case was still persistently being pursued by the OGCC, a new issue arose when petitioner Salenga reached retirement age: whether
his retirement benefits should be computed according to civil service laws.

To recall, the issue of how to compute the retirement benefits of petitioner was raised in his Omnibus Motion dated 7 May 2004 filed before
the NLRC after it had reinstated LA Darlucio’s original Decision. The issue was not covered by petitioner’s Complaint for illegal dismissal,
but was a different issue altogether and should have been properly addressed in a separate Complaint. We cannot fault petitioner, though, for
raising the issue while the case was still pending with the NLRC. If it were not for the "appeal" undertaken by Timbol-Roman and the OGCC
through Atty. Mallari, the issue would have taken its proper course and would have been raised in a more appropriate time and manner. Thus,
we deem it proper to resolve the matter at hand to put it to rest after a decade of litigation.

Petitioner Salenga contends that respondent CDC is covered by the GSIS Law. Thus, he says, the computation of his retirement benefits
should include all the years of actual government service, starting from the original appointment forty (40) years ago up to his retirement.

Respondent CDC owes its existence to Executive Order No. 80 issued by then President Fidel V. Ramos. It was meant to be the
implementing and operating arm of the Bases Conversion and Development Authority (BCDA) tasked to manage the Clark Special
Economic Zone (CSEZ). Expressly, respondent was formed in accordance with Philippine corporation laws and existing rules and
regulations promulgated by the SEC pursuant to Section 16 of Republic Act (R.A.) 7227. 44 CDC, a government-owned or -controlled
corporation without an original charter, was incorporated under the Corporation Code. Pursuant to Article IX-B, Sec. 2(1), the civil service
embraces only those government-owned or -controlled corporations with original charter. As such, respondent CDC and its employees are
covered by the Labor Code and not by the Civil Service Law, consistent with our ruling in NASECO v. NLRC, 45 in which we established this
distinction. Thus, in Gamogamo v. PNOC Shipping and Transport Corp., 46 we held:

Retirement results from a voluntary agreement between the employer and the employee whereby the latter after reaching a certain age agrees
to sever his employment with the former.

Since the retirement pay solely comes from Respondent's funds, it is but natural that Respondent shall disregard petitioner's length of service
in another company for the computation of his retirement benefits.

Petitioner was absorbed by Respondent from LUSTEVECO on 1 August 1979. Ordinarily, his creditable service shall be reckoned from such
date. However, since Respondent took over the shipping business of LUSTEVECO and agreed to assume without interruption all the service
credits of petitioner with LUSTEVECO, petitioner's creditable service must start from 9 November 1977 when he started working with
LUSTEVECO until his day of retirement on 1 April 1995. Thus, petitioner's creditable service is 17.3333 years.

We cannot uphold petitioner's contention that his fourteen years of service with the DOH should be considered because his last two
employers were government-owned and controlled corporations, and fall under the Civil Service Law. Article IX(B), Section 2 paragraph 1
of the 1987 Constitution states —

Sec. 2. (1)The civil service embraces all branches, subdivisions, instrumentalities, and agencies of the Government, including government-
owned or controlled corporations with original charters.

It is not at all disputed that while Respondent and LUSTEVECO are government-owned and controlled corporations, they have no original
charters; hence they are not under the Civil Service Law. In Philippine National Oil Company-Energy Development Corporation v. National
Labor Relations Commission, we ruled:

xxx "Thus under the present state of the law, the test in determining whether a government-owned or controlled corporation is subject to the
Civil Service Law are [sic] the manner of its creation, such that government corporations created by special charter(s) are subject to its
provisions while those incorporated under the General Corporation Law are not within its coverage." (Emphasis supplied)

Hence, petitioner Salenga is entitled to receive only his retirement benefits based only on the number of years he was employed with the
corporation under the conditions provided under its retirement plan, as well as other benefits given to him by existing laws.1âwphi1

WHEREFORE, in view of the foregoing, the Petition in G.R. No. 174941 is partially GRANTED. The Decision of LA Darlucio is
REINSTATED insofar as respondent corporation’s liability is concerned. Considering that petitioner did not maintain the action against Rufo
Colayco, the latter is not solidarily liable with respondent Clark Development Corporation.

The case is REMANDED to the labor arbiter for the computation of petitioner’s retirement benefits in accordance with the Social Security
Act of 1997 otherwise known as Republic Act No. 8282, deducting therefrom the sums already paid by respondent CDC. If any, the
remaining amount shall be subject to the legal interest of 6% per annum from the filing date of petitioner’s Omnibus Motion on 11 May 2004
up to the time this judgment becomes final and executory. Henceforth, the rate of legal interest shall be 12% until the satisfaction of
judgment.

SO ORDERED.
G.R. No. 194031 August 8, 2011

JOBEL ENTERPRISES and/or MR. BENEDICT LIM, Petitioners,

vs.
NATIONAL LABOR RELATIONS COMMISSION (Seventh Division, Quezon City) and ERIC MARTINEZ, SR.,Respondents.

DECISION

BRION, J.:

We resolve the petition for review on certiorari1 before us, seeking the reversal of the resolutions dated June 9, 2010 2 and October 5, 20103 of
the Court of Appeals (CA) in CA-G.R. SP No. 113980.

The Antecedents

The petitioner Jobel Enterprises (the company) hired respondent Eric Martinez, Sr. as driver in 2004. Martinez allegedly performed well
during the first few months of his employment, but later became stubborn, sluggish and often came late to work.

On January 27, 2005, Martinez had a fight with one of his co-employees and nephew, Roderick Briones. The company’s proprietor, Benedict
Lim, pacified the two and instructed Martinez to come early the next day for an important delivery. Martinez allegedly did not report for
work the following day. The company’s efforts to contact Martinez, through Briones, failed.

On March 6, 2006, the company received a notice of hearing from the Department of Labor and Employment in Region IV-A (DOLE-RO-
IV-A) in relation to an illegal dismissal complaint filed by Martinez. The DOLE-RO-IV-A failed to effect an amicable settlement between
the parties; Martinez allegedly asked for ₱300,000.00 as settlement and manifested that he did not want to work anymore. Thereafter,
Martinez formally filed an illegal dismissal complaint, with money claims, against the company and Lim.

The Compulsory Arbitration Rulings

and Related Incidents

On compulsory arbitration, Labor Arbiter Danna M. Castillon ruled that Martinez had been illegally dismissed. 4 She awarded him backwages
and separation pay amounting to ₱479,529.49, and wage differentials and 13th month pay in the combined amount of ₱53,363.44.

On May 16, 2008, the petitioners appealed to the National Labor Relations Commission (NLRC), filing a notice of appeal, a memorandum of
appeal and a motion to reduce bond. They likewise deposited a Rizal Commercial Banking Corporation manager’s check for
₱100,000.00.5 In its order of September 15, 2008,6 the NLRC denied the company’s motion to reduce bond and directed the posting of an
additional cash or surety bond for ₱432,892.93 within ten (10) days.

The company complied by posting a surety bond in the required amount, 7 but Martinez moved for the immediate dismissal of the appeal; he
questioned the effectivity of the surety bond and the legal standing of the surety company. 8 In answer, the company asked for a denial of the
motion and submitted a copy of the joint declaration by the company’s authorized representative and the Executive Vice-President of the
surety company9 that the posted surety bond is genuine and shall be effective until final disposition of the case. It also submitted a copy of a
certificate of authority issued by the Insurance Commission, 10 and a certificate of accreditation and authority issued by this Court. 11

The NLRC dismissed the appeal12 and denied the company’s subsequent motion for reconsideration. 13 The company, thereafter, elevated the
case to the CA through a petition for certiorari under Rule 65 of the Rules of Court.

The CA Decision

The CA issued a resolution dismissing the petition on June 9, 2010 for the petitioners’ failure to attach to the petition a duplicate original or
certified true copy of the assailed NLRC decision;14 the submitted copy was a mere photocopy, in violation of Section 3, Rule 46, in relation
to Section 1, Rule 65 of the Rules of Court. The CA also denied the petitioners’ plea for a liberal interpretation of the rules in their motion for
reconsideration,15 to which the petitioners attached a certified true copy of the assailed NLRC decision.

The Petition

The company now asks the Court to set aside the CA rulings on the ground that the dismissal of the petition was for purely technical reason,
which it rectified when it attached a certified true copy of the assailed NLRC decision to its motion for reconsideration. The company pleads
for understanding, claiming that its failure to initially comply with the rules was unintentional and was due purely to the oversight of its
counsel who was then rushing the preparation of the final print of the petition and its attachments, while also working on other cases.
The Case for Martinez

In his comment dated April 1, 2011,16 Martinez prays for a dismissal of the petition. He submits that the filing of an appeal is a privilege and
not a right; the appealing party must comply with the requirements of the law, specifically the submission of a cash or surety bond to answer
for the monetary award. He points out that the award in the present case is more than ₱500,000.00, but the company posted a cash bond of
only ₱100,000.00. He adds that although the company filed a motion to reduce bond, it must be approved by the NLRC within the same
period to perfect an appeal or ten (10) days from receipt of a copy of the labor arbiter’s decision. He argues that the company already lost the
right to appeal, since the NLRC’s denial of the motion came after the 10-day appeal period. He stresses that the filing of a motion to reduce
bond does not suspend the running of the period to appeal.

Martinez did not comment on the CA resolutions dismissing the petition for certiorari.

The Court’s Ruling

We find merit in the petition.

We note that this case was dismissed on purely technical grounds at both the NLRC and the CA levels, in total disregard of the merits of the
case. The NLRC dismissed the company’s appeal for non-perfection for its failure "to substantially address the issue of failure to post the
required appeal bond pursuant to Section 6, Rule VI of the 2005 Revised Rules of Procedure of the NLRC." 17 In summarily throwing out the
appeal, the NLRC apparently forgot that earlier, or on September 15, 2008, it gave the company "ten (10) unextendible days xxx within
which to file an additional cash or surety bond in the amount of FOUR HUNDRED THIRTY TWO THOUSAND EIGHT HUNDRED
NINETY TWO PESOS and 93/100 (₱432,892.93)" 18 when it denied the company’s motion to reduce bond. The NLRC even warned that
"[t]heir failure to post the required bond shall result in the dismissal of the appeal for non-perfection."19

As earlier mentioned, the company complied with the NLRC directive by posting a surety bond in the required amount20 within the 10-day
period; it received a copy of the NLRC resolution directing it to post an additional cash or surety bond on October 13, 2008 and posted the
bond on October 23, 2008. The company likewise submitted a joint declaration between the company representative and the surety company
on the period of effectivity of the bond,21 and the documents on the legal status of the surety company.22 The NLRC grossly erred, therefore,
in declaring that the company failed to address the issue of its failure to post the required bond. The CA grossly failed to consider this lapse.

We note, too, that the CA’s refusal to consider the petition was the absence of a duplicate original or certified true copy of the assailed NLRC
decision, in violation of Section 3, Rule 46 of the Rules of Court (in relation to Section 1, Rule 65). The company though corrected the
procedural lapse by attaching a certified copy of the NLRC decision to its motion for reconsideration. At this point, the CA should have at
least considered the merits of the petitioners’ case as we did in Gutierrez v. Secretary of the Department of Labor and Employment.23 We
held in that case that while "what [were] submitted were mere photocopies[,] there was substantial compliance with the Rules since petitioner
attached to her Supplemental Motion for Reconsideration certified true copies of the questioned DOLE Orders."24 1avvphi1

Our own examination of the records shows that the company’s case is not, on its face, unmeritorious and should have been considered further
to determine what really transpired between the parties. For instance, the company argued that it did not dismiss Martinez. It claimed that
Martinez refused to return to work and, during conciliation, demanded outright that he be paid ₱300,000.00, manifesting at the same time
that he no longer wanted to work for the company. Before the labor arbiter, the company even manifested its willingness to accept Martinez
back to work as no dismissal actually took place.25 Thus, the concrete issue posed was whether Martinez had been dismissed or had simply
walked out of his job.

Under these circumstances, we find that the CA precipitately denied the petition for certiorari based on an overly rigid application of the
rules of procedure. In effect, it sacrificed substance to form in a situation where the petitioners’ recourse was not patently frivolous or
meritless. This is a matter of substantial justice – in fact, a lack of it – that we should not allow to remain uncorrected.

WHEREFORE, premises considered, the petition is granted. The assailed resolutions of the Court of Appeals are SET ASIDE. The case is
REMANDED to the National Labor Relations Commission for its resolution of the petitioners’ appeal with utmost dispatch. Costs against
respondent Eric Martinez, Sr.

SO ORDERED.
G.R. No. 187188 June 27, 2012

SALVADOR O. MOJAR, EDGAR B. BEGONIA, Heirs of the late JOSE M. CORTEZ, RESTITUTO GADDI, VIRGILIO M.
MONANA, FREDDIE RANCES, and EDSON D. TOMAS, Petitioners,
vs.
AGRO COMMERCIAL SECURITY SERVICE AGENCY, INC., et al., 1 Respondents.

DECISION

SERENO, J.:

This is a Petition for Review on Certiorari under Rule 45 of the Rules of Court, seeking to annul the entire proceedings before the Court of
Appeals (CA) in CA-G.R. SP No. 102201, in which it issued its Decision dated 21 July 2008 and Resolution dated 16 March 2009.2

Statement of Facts and of the Case

Petitioners were employed as security guards by respondent and assigned to the various branches of the Bank of Commerce in Pangasinan,
La Union and Ilocos Sur.

In separate Office Orders dated 23 and 24 May 2002, petitioners were relieved from their respective posts and directed to report to their new
assignments in Metro Manila effective 3 June 2002. They, however, failed to report for duty in their new assignments, prompting respondent
to send them a letter dated 18 June 2002. It required a written explanation why no disciplinary action should be taken against them, but the
letter was not heeded.

On 15 February 2005, petitioners filed a Complaint for illegal dismissal against respondent and the Bank of Commerce, Dagupan Branch,
before the National Labor Relations Commission (NLRC). Petitioners claimed, among others, that their reassignment was a scheme to sever
the employer-employee relationship and was done in retaliation for their pressing their claim for salary differential, which they had earlier
filed against respondent and the Bank of Commerce before the NLRC. They also contended that the transfer to Manila was inconvenient and
prejudicial, since they would incur additional expenses for board and lodging.

On 22 May 2006, the Labor Arbiter (LA) rendered a Decision 3 finding that petitioners were illegally dismissed. The dispositive portion
reads:

WHEREFORE, premises considered, judgment is hereby rendered ordering respondents to reinstate all the complainants to their former
assignment in Pangasinan with full backwages and if reinstatement is no longer possible, to pay separation pay of one month for every year
of service each of the seven complainant security guards. (A detailed computation of the judgment award is attached as Annex
"A.")4 (Italicized in the original)

On appeal, the NLRC affirmed the LA’s ruling, with the modification that the Complaint against the Bank of Commerce was dismissed.5 The
dispositive portion provides:

WHEREFORE, premises considered, the appeal of Agro Commercial Security Service Agency, Inc. is hereby DISMISSED for lack of merit.
The Appeal of Bank of Commerce is GRANTED for being impressed with merit. Accordingly, judgment is hereby rendered MODIFYING
the Decision of the Labor Arbiter dated May 22, 2006 by DISMISSING the complaint against Bank of Commerce-Dagupan. All other
dispositions of the Labor Arbiter not so modified, STAYS.6

On 23 January 2008, respondent filed a Motion for Extension to file a Petition for Certiorari before the CA. In a Resolution dated 20
February 2008, the latter granted the Motion for Extension, allowing respondent until 10 February 2008 within which to file its Petition. On 9
February 2008, respondent filed its Petition for Certiorari before the appellate court.

On 30 June 2008, the CA issued a Resolution noting that no comment on the Petition had been filed, and stating that the case was now
deemed submitted for resolution.

On 21 July 2008, the CA rendered its Decision. Finding merit in the Petition, it found the Orders transferring petitioners to Manila to be a
valid exercise of management prerogative. The records were bereft of any showing that the subject transfer involved a diminution of rank or
salaries. Further, there was no showing of bad faith or ill motive on the part of the employer. Thus, petitioners’ refusal to comply with the
transfer orders constituted willful disobedience of a lawful order of an employer and abandonment, which were just causes for termination
under the Labor Code. However, respondent failed to observe the due process requirements in terminating them. The dispositive portion of
the CA Decision provides:
WHEREFORE, premises considered, the instant petition is GRANTED. The assailed Decision and Resolution of the NLRC dated July 31,
2007 and October 31, 2007[,] respectively, in NLRC NCR CA No. 046036-05 are REVERSED and SET ASIDE. The complaints of private
respondents for illegal dismissal are hereby DISMISSED. However, petitioner is ordered to pay private respondents the sum of ₱ 10,000.00
each for having violated the latter’s right to statutory due process.7

On 1 August 2008, petitioner Mojar filed a Manifestation8 before the CA, stating that he and the other petitioners had not been served a copy
of the CA Petition. He also said that they were not aware whether their counsel before the NLRC, Atty. Jose C. Espinas, was served a copy
thereof, since the latter had already been bedridden since December 2007 until his demise on "25 February 2008." 9 Neither could their new
counsel, Atty. Mario G. Aglipay, enter his appearance before the CA, as petitioners failed to "get [the] folder from the office of Atty.
Espinas, as the folder can no longer be found." 10

Thereafter, petitioners filed a Motion to Annul Proceedings 11 dated 9 September 2008 before the CA. They moved to annul the proceedings
on the ground of lack of jurisdiction. They argued that the NLRC Decision had already attained finality, since the Petition before the CA was
belatedly filed, and the signatory to the Certification of non-forum shopping lacked the proper authority.

In a Resolution dated 16 March 2009, the CA denied the Motion to Annul Proceedings.

Hence, this Petition.

The Petition raised the following arguments: (1) There was no proof of service attached to the Motion for Extension to file a Petition for
Certiorari before the CA; thus, both the Motion and the Petition were mere scraps of paper. (2) Respondent purposely intended to exclude
petitioners from the proceedings before the CA by omitting their actual addresses in the CA Petition, a mandatory requirement under Section
3, Rule 46; in relation to Section 1, Rule 65 of the Rules of Court. Further, respondent failed to prove the valid service of its CA Petition
upon petitioners’ former counsel of record. (3) The CA was grossly ignorant of the law in ignoring jurisprudence, which states that when the
floating status of an employee lasts for more than six months, the latter may be considered to have been constructively dismissed.

On 3 September 2009, respondent filed its Comment on the Petition, pursuant to this Court’s 29 June 2009 Resolution. In its Comment, it
argued that the CA Decision had already become final and executory, inasmuch as the Motion to Annul Proceedings, a procedural approach
not provided for in the Rules, was filed some 44 days after the service of the CA Decision on the counsel for petitioners. Further, Atty.
Aglipay had then no legal standing to appear as counsel, considering that there was still no substitution of counsel at the time he filed the
Motion to Annul Proceedings. In any case, petitioners are bound by the actions of their counsel, Atty. Espinas.

On 1 March 2010, this Court issued a Resolution requiring petitioners to file their reply, which petitioners complied with on 26 April 2010.
In their Reply, petitioners state among others that the records of the CA case showed that there was a deliberate violation of their right to due
process. The CA Petition did not contain the required affidavit of service, which alone should have caused the motu proprio dismissal
thereof. Further, the instant Petition before this Court is an appropriate mode to contest the CA Decision and Resolution, which petitioners
contend are void judgments. They also argue that there is no rule on the client’s substitution in case of the death of counsel. Instead, the
reglementary period to file pleadings in that case must be suspended and made more lenient, considering that the duty of substitution is
transferred to a non-lawyer.

On 30 March 2011, respondent filed a Motion for Early Resolution of the case. Petitioners likewise filed a Motion for Leave (For the
Admission of the Instant Comment on Private Respondent’s Motion for Early Resolution), stating that they were joining respondent in
moving for the early resolution of the case.

This Court will resolve the issues raised in seriatim.

Actual Addresses of Parties

Petitioners contend that the CA should not have taken cognizance of the Petition before it, as their actual addresses were not indicated therein
as required under Section 3, Rule 4612 of the Rules of Court, and pursuant to Cendaña v. Avila.13 In the 2008 case Cendaña, this Court ruled
that the requirement that a petition for certiorari must contain the actual addresses of all the petitioners and the respondents is mandatory. The
failure to comply with that requirement is a sufficient ground for the dismissal of a petition.

This rule, however, is not absolute. In the 2011 case Santos v. Litton Mills Incorporated, 14 this Court ruled that where the petitioner clearly
mentioned that the parties may be served with the court’s notices or processes through their respective counsels, whose addresses have been
clearly specified as in this case, this act would constitute substantial compliance with the requirements of Section 3, Rule 46. The Court
further observed that the notice required by law is notice to counsel if the party has already appeared by counsel, pursuant to Section 2, Rule
13 of the Rules of Court.

In its Petition before the CA, respondent clearly indicated the following:
THE PARTIES

2.0. The petitioner AGRO COMMERCIAL SECURITY SERVICE AGENCY, INC. (hereafter petitioner AGRO), is a corporation existing
under Philippine laws, and may be served with process thru counsel, at his address hereunder indicated; private respondents (1) SALVADOR
O. MOJAR; (2) EDGAR B. BEGONIA; (3) JOSE M. CORTEZ; (4) FREDDIE RANCES; (5) VIRGILIO MONANA; (6) RESTITUTU [sic]
GADDI; and, (7) EDSON D. TOMAS, are all of age, and during the material period, were in the employ of petitioner AGRO as security
guards; said respondents may be served with process thru their common counsel, ATTY. JOSE C. ESPINAS at No. 51 Scout Tuazon,
Quezon City; on the other hand, respondent National Labor Relations Commission, 1st Division, Quezon City, is the agency having
jurisdiction over labor disputes in the Philippines and may be served with process at offices in Quezon City; 15

The foregoing may thus be considered as substantial compliance with Section 3, Rule 46. In any case, and as will be discussed further below,
the CA had sufficient reason to take cognizance of the Petition.

Affidavit of Service

Section 3, Rule 46 provides that the petition for certiorari should be filed together with the proof of service thereof on the respondent. Under
Section 13, Rule 13 of the Rules of Court, if service is made by registered mail, as in this case, proof shall be made by an affidavit of the
person mailing and the registry receipt issued by the mailing office. Section 3, Rule 46 further provides that the failure to comply with any of
the requirements shall be sufficient ground for the dismissal of the petition.

Petitioners allege that no affidavit of service was attached to the CA Petition. Neither is there any in the copy of the CA Petition attached to
the instant Petition. In its Comment, respondent claims that petitioners – through their counsel, Atty. Aglipay – can be charged with
knowledge of the pendency of the CA Petition. It says that on April 2008, Atty. Aglipay filed before the NLRC an Entry of Appearance and
Motion for Execution Pending Appeal.16However, petitioners merely indicated therein that they were "respectfully mov[ing] for the
execution pending appeal of the Labor Arbiter’s decision dated 22 May 2006 affirmed by the NLRC." 17 There was no indication that they
had been served a copy of the CA Petition. No other proof was presented by respondent to show petitioners’ actual receipt of the CA
Petition. In any case, this knowledge, even if presumed, would not – and could not – take the place of actual service and proof of service by
respondent.

In Ferrer v. Villanueva,18 petitioner therein failed to append the proof of service to his Petition for Certiorari. Holding that this failure was a
fatal defect, the Court stated:

There is no question that petitioner herein was remiss in complying with the foregoing Rule. In Cruz v. Court of Appeals, we ruled that with
respect to motions, proof of service is a mandatory requirement. We find no cogent reason why this dictum should not apply and with more
reason to a petition for certiorari, in view of Section 3, Rule 46 which requires that the petition shall be filed "together with proof of service
thereof." We agree with the Court of Appeals that the lack of proof of service is a fatal defect. The utter disregard of the Rule cannot be
justified by harking to substantial justice and the policy of liberal construction of the Rules. Technical rules of procedure are not meant to
frustrate the ends of justice. Rather, they serve to effect the proper and orderly disposition of cases and thus effectively prevent the clogging
of court dockets. (Emphasis in the original)

Indeed, while an affidavit of service is required merely as proof that service has been made on the other party, it is nonetheless essential to
due process and the orderly administration of justice. 19

Be that as it may, it does not escape the attention of this Court that in the CA Resolution dated 16 March 2009, the appellate court stated that
their records revealed that Atty. Espinas, petitioners’ counsel of record at the time, was duly served a copy of the following: CA Resolution
dated 20 February 2008 granting respondent’s Motion for Extension of Time to file the CA Petition; CA Resolution dated 24 April 2008
requiring petitioners to file their Comment on the CA Petition; and CA Resolution dated 30 June 2008, submitting the case for resolution, as
no comment was filed.

Such service to Atty. Espinas, as petitioners’ counsel of record, was valid despite the fact he was already deceased at the time. If a party to a
case has appeared by counsel, service of pleadings and judgments shall be made upon his counsel or one of them, unless service upon the
party is specifically ordered by the court. It is not the duty of the courts to inquire, during the progress of a case, whether the law firm or
partnership representing one of the litigants continues to exist lawfully, whether the partners are still alive, or whether its associates are still
connected with the firm.20

It is the duty of party-litigants to be in contact with their counsel from time to time in order to be informed of the progress of their case. It is
likewise the duty of parties to inform the court of the fact of their counsel’s death. 21 Their failure to do so means that they have been
negligent in the protection of their cause.22 They cannot pass the blame to the court, which is not tasked to monitor the changes in the
circumstances of the parties and their counsel.
Substitution of Counsel

Petitioners claim that Atty. Espinas passed away on 8 February 2008. They further claim that he was already bedridden as early as December
2007, and thus they "failed to get any information whether [he] was served with a copy of the [CA Petition]." 23

Petitioners were negligent in the conduct of their litigation. Having known that Atty. Espinas was already bedridden as early as December
2007, they should have already obtained new counsel who could adequately represent their interests. The excuse that Atty. Aglipay could not
enter his appearance before the CA "because [petitioners] failed to get [their] folder from the office of Atty. Espinas" 24 is flimsy at best.

The requirements for a valid substitution of counsel have been jurisprudentially settled in this wise:

Under Section 26, Rule 138 of the Rules of Court and established jurisprudence, a valid substitution of counsel has the following
requirements: (1) the filing of a written application for substitution; (2) the client's written consent; (3) the consent of the substituted lawyer
if such consent can be obtained; and, in case such written consent cannot be procured, (4) a proof of service of notice of such motion on the
attorney to be substituted in the manner required by the Rules. Where death of the previous attorney is the cause of substitution of the
counsel, a verified proof of the death of such attorney (usually a death certificate) must accompany the notice of appearance of the new
counsel.25

The fact that petitioners were unable to obtain their folder from Atty. Espinas is immaterial. Proof of service upon the lawyer to be
substituted will suffice where the lawyer’s consent cannot be obtained. With respect to the records of the case, these may easily be
reconstituted by obtaining copies thereof from the various courts involved.

Petitioners allegedly went to the CA sometime prior to 31 July 2008, or the date of filing of their Manifestation before the CA, to inquire
about the status of their case. Allegedly, they "always visited the Court of Appeals for [the] development of their case." 26 It is doubtful that a
person who regularly follows up the status of his case before a court would not be told, first, that a petition has been filed against him; and,
second, that the court’s resolutions have been sent to his counsel. It is questionable why, knowing these matters, petitioners did not seek the
replacement of their counsel, if the latter was unable to pursue their case. Further, despite their manifestation that, sometime prior to 31 July
2008, they were already aware that the case had been submitted for resolution, they still waited until 9 September 2008 – or until they
allegedly had knowledge of the CA Decision – before they filed the Motion to Annul Proceedings.

In Ampo v. Court of Appeals,27 this Court explained the vigilance that must be exercised by a party:

We are not persuaded by petitioner’s argument that he was not aware that his counsel had died or that an adverse judgment had already been
rendered until he received the notice of promulgation from the RTC of Butuan City on April 20, 2005. Time and again we have stated that
equity aids the vigilant, not those who slumber on their rights. Petitioner should have taken it upon himself to periodically keep in touch with
his counsel, check with the court, and inquire about the status of the case. Had petitioner been more prudent, he would have found out sooner
about the death of his counsel and would have taken the necessary steps to prevent his present predicament.

xxx xxx xxx

Litigants who are represented by counsel should not expect that all they need to do is sit back, relax and await the outcome of their cases.
Relief will not be granted to a party who seeks avoidance from the effects of the judgment when the loss of the remedy at law was due to his
own negligence. The circumstances of this case plainly show that petitioner only has himself to blame. Neither can he invoke due process.
The essence of due process is simply an opportunity to be heard. Due process is satisfied when the parties are afforded a fair and reasonable
opportunity to explain their respective sides of the controversy. Where a party, such as petitioner, was afforded this opportunity to participate
but failed to do so, he cannot complain of deprivation of due process. If said opportunity is not availed of, it is deemed waived or forfeited
without violating the constitutional guarantee.

In this case, petitioners must bear the fruits of their negligence in the handling of their case. They may not decry the denial of due process,
when they were indeed afforded the right to be heard in the first place.

Substantive Issue: Illegal Dismissal

Petitioners argue that they were illegally dismissed, based on the 1989 case Agro Commercial Security Services Agency, Inc. v.
NLRC.,28 which holds that when the floating status of employees lasts for more than six (6) months, they may be considered to have been
illegally dismissed from the service.

Unfortunately, the above-mentioned case is not applicable here. In Agro, the service contracts of the security agency therein with various
corporations and government agencies – to which the security guards were previously assigned – were terminated, generally due to the
sequestration of the said offices. Accordingly, many of the security guards were placed on floating status. "Floating status" means an
indefinite period of time when one does not receive any salary or financial benefit provided by law. 29 In this case, petitioners were actually
reassigned to new posts, albeit in a different location from where they resided. Thus, there can be no floating status or indefinite period to
speak of. Instead, petitioners were the ones who refused to report for work in their new assignment.

In cases involving security guards, a relief and transfer order in itself does not sever the employment relationship between the security guards
and their agency. Employees have the right to security of tenure, but this does not give them such a vested right to their positions as would
deprive the company of its prerogative to change their assignment or transfer them where their services, as security guards, will be most
beneficial to the client.30

An employer has the right to transfer or assign its employees from one office or area of operation to another in pursuit of its legitimate
business interest, provided there is no demotion in rank or diminution of salary, benefits, and other privileges; and the transfer is not
motivated by discrimination or bad faith, or effected as a form of punishment or demotion without sufficient cause. 31

While petitioners may claim that their transfer to Manila will cause added expenses and inconvenience, we agree with the CA that, absent
any showing of bad faith or ill motive on the part of the employer, the transfer remains valid.

WHEREFORE, the Petition is DENIED. The Court of Appeals Decision dated 21 July 2008 and Resolution dated 16 March 2009 in CA-
G.R. SP No. 102201 are hereby AFFIRMED.

SO ORDERED.