THIRD DIVISION [G.R. No. 85985. August 13, 1993.

]
PHILIPPINE AIRLINES, INC. (PAL), Petitioner, v. NATIONAL
LABOR RELATIONS COMMISSION, LABOR ARBITER ISABEL
P. ORTIGUERRA, and PHILIPPINE AIRLINES EMPLOYEES
ASSOCIATION (PALEA), Respondents.
MELO, J.:

In the instant petition for certiorari, the Court is presented the

issue of whether or not the formulation of a Code of Discipline
among employees is a shared responsibility of the employer
and the employees.
On March 15, 1985, the Philippine Airlines, Inc. (PAL) completely
revised its 1966 Code of Discipline. The Code was circulated
among the employees and was immediately implemented, and
some employees were forthwith subjected to the disciplinary
measures embodied therein.
Thus, on August 20, 1985, the Philippine Airlines Employees
Association (PALEA) filed a complaint before the National Labor
Relations Commission (NLRC) for unfair labor practice (Case No.
NCR-7-2051-85) with the following remarks: "ULP with arbitrary
implementation of PALs Code of Discipline without notice and
prior discussion with Union by Management" (Rollo, p. 41). In its
position paper, PALEA contended that PAL, by its unilateral
implementation of the Code, was guilty of unfair labor practice,
specifically Paragraphs E and G of Article 249 and Article 253 of
the Labor Code. PALEA alleged that copies of the Code had been
circulated in limited numbers; that being penal in nature the
Code must conform with the requirements of sufficient
publication, and that the Code was arbitrary, oppressive, and
prejudicial to the rights of the employees. It prayed that
implementation of the Code be held in abeyance; that PAL
should discuss the substance of the Code with PALEA; that
employees dismissed under the Code be reinstated and their
cases subjected to further hearing; and that PAL be declared
guilty of unfair labor practice and be ordered to pay damages
(pp. 7-14, Record.).
PAL filed a motion to dismiss the complaint, asserting its
prerogative as an employer to prescribe rules and regulations
regarding employees conduct in carrying out their duties and
functions, and alleging that by implementing the Code, it had
not violated the collective bargaining agreement (CBA) or any
provision of the Labor Code. Assailing the complaint as
unsupported by evidence, PAL maintained that Article 253 of
the Labor Code cited by PALEA referred to the requirements for
negotiating a CBA which was inapplicable as indeed the current
CBA had been negotiated.chanrobles.com:cralaw:red
In its reply to PALs position paper, PALEA maintained that
Article 249 (E) of the Labor Code was violated when PAL
unilaterally implemented the Code, and cited provisions of
Articles IV and I of Chapter II of the Code as defective for,
respectively, running counter to the construction of penal laws
and making punishable any offense within PALs contemplation.
These provisions are the following:chanrob1es virtual 1aw
library
Section 2. Non-exclusivity. This Code does not contain the
entirety of the rules and regulations of the company. Every
employee is bound to comply with all applicable rules,
regulations, policies, procedures and standards, including
standards of quality, productivity, and behaviour, as issued and
promulgated by the company through its duly authorized
officials. Any violations thereof shall be punishable with a
penalty to be determined by the gravity and/or frequency of the
offense.
Section 7. Cumulative Record. An employees record of
offenses shall be cumulative. The penalty for an offense shall be
determined on the basis of his past record of offenses of any
nature or the absence thereof. The more habitual an offender

has been, the greater shall be the penalty for the latest offense.
Thus, an employee may be dismissed if the number of his past
offenses warrants such penalty in the judgment of management
even if each offense considered separately may not warrant
dismissal. Habitual offenders or recidivists have no place in PAL.
On the other hand, due regard shall be given to the length of
time between commission of individual offenses to determine
whether the employees conduct may indicate occasional lapses
(which may nevertheless require sterner disciplinary action) or
a pattern of incorrigibility.
Labor Arbiter Isabel P. Ortiguerra handling the case called the
parties to a conference but they failed to appear at the
scheduled date. Interpreting such failure as a waiver of the
parties right to present evidence, the labor arbiter considered
the case submitted for decision. On November 7, 1986, a
decision was rendered finding no bad faith on the part of PAL in
adopting the Code and ruling that no unfair labor practice had
been committed. However, the arbiter held that PAL was "not
totally fault free" considering that while the issuance of rules
and regulations governing the conduct of employees is a
"legitimate management prerogative" such rules and
regulations must meet the test of "reasonableness, propriety
and fairness." She found Section 1 of the Code aforequoted as
"an all embracing and all encompassing provision that makes
punishable any offense one can think of in the company" ; while
Section 7, likewise quoted above, is "objectionable for it violates
the rule against double jeopardy thereby ushering in two or
more punishment for the same misdemeanor." (pp. 38-39,
Rollo.)
The labor arbiter also found that PAL "failed to prove that the
new Code was amply circulated." Noting that PALs assertion
that it had furnished all its employees copies of the Code is
unsupported by documentary evidence, she stated that such
"failure" on the part of PAL resulted in the imposition of
penalties on employees who thought all the while that the 1966
Code was still being followed. Thus, the arbiter concluded that"
(t)he phrase ignorance of the law excuses no one from
compliance . . . finds application only after it has been
conclusively shown that the law was circulated to all the parties
concerned and efforts to disseminate information regarding the
new law have been exerted." (p. 39, Rollo.) She thereupon
disposed:chanrob1es virtual 1aw library
WHEREFORE, premises considered, respondent PAL is hereby
ordered as follows:chanrob1es virtual 1aw library
1. Furnish all employees with the new Code of Discipline;
2. Reconsider the cases of employees meted with penalties
under the New Code of Discipline and remand the same for
further hearing; and
3. Discuss with PALEA the objectionable provisions specifically
tackled in the body of the decision.
All other claims of the complainant union (is) [are] hereby
dismissed for lack of merit.chanrobles.com:cralaw:red
SO ORDERED. (p. 40, Rollo.)
PAL appealed to the NLRC. On August 19, 1988, the NLRC
through Commissioner Encarnacion, with Presiding
Commissioner Bonto-Perez and Commissioner Maglaya
concurring, found no evidence of unfair labor practice
committed by PAL and affirmed the dismissal of PALEAs charge.
Nonetheless, the NLRC made the following
observations:chanrob1es virtual 1aw library
Indeed, failure of management to discuss the provisions of a
contemplated code of discipline which shall govern the conduct
of its employees would result in the erosion and deterioration of
an otherwise harmonious and smooth relationship between
them as did happen in the instant case. There is no dispute that
adoption of rules of conduct or discipline is a prerogative of
management and is imperative and essential if an industry has

to survive in a competitive world. But labor climate has

progressed, too. In the Philippine scene, at no time in our
contemporary history is the need for a cooperative, supportive
and smooth relationship between labor and management more
keenly felt if we are to survive economically. Management can
no longer exclude labor in the deliberation and adoption of rules
and regulations that will affect them.
The complainant union in this case has the right to feel isolated
in the adoption of the New Code of Discipline. The Code of
Discipline involves security of tenure and loss of employment
a property right! It is time that management realizes that to
attain effectiveness in its conduct rules, there should be
candidness and openness by Management and participation by
the union, representing its members. In fact, our Constitution
has recognized the principle of "shared responsibility" between
employers and workers and has likewise recognized the right of
workers to participate in "policy and decision-making process
affecting their rights . . ." The latter provision was interpreted
by the Constitutional Commissioners to mean participation in
"management" (Record of the Constitutional Commission, Vol.
II).
In a sense, participation by the union in the adoption of the
code of conduct could have accelerated and enhanced their
feelings of belonging and would have resulted in cooperation
rather than resistance to the Code. In fact, labor-management
cooperation is now "the thing." (pp. 3-4, NLRC Decision ff. p.
149, Original Record.)
Respondent Commission thereupon disposed:chanrob1es virtual
1aw library
WHEREFORE, premises considered, we modify the appealed
decision in the sense that the New Code of Discipline should be
reviewed and discussed with complainant union, particularly the
disputed provisions [.] [T]hereafter, respondent is directed to
furnish each employee with a copy of the appealed Code of
Discipline. The pending cases adverted to in the appealed
decision if still in the arbitral level, should be reconsidered by
the respondent Philippine Air Lines. Other dispositions of the
Labor Arbiter are sustained.
SO ORDERED. (p. 5, NLRC Decision.)
PAL then filed the instant petition for certiorari charging public
respondents with grave abuse of discretion in: (a) directing PAL
"to share its management prerogative of formulating a Code of
Discipline" ; (b) engaging in quasi-judicial legislation in ordering
PAL to share said prerogative with the union; (c) deciding
beyond the issue of unfair labor practice, and (d) requiring PAL
to reconsider pending cases still in the arbitral level (p. 7,
Petition; p. 8, Rollo.)
As stated above, the principal issue submitted for resolution in
the instant petition is whether management may be compelled
to share with the union or its employees its prerogative of
formulating a code of discipline.
PAL asserts that when it revised its Code on March 15, 1985,
there was no law which mandated the sharing of responsibility
therefor between employer and employee.chanrobles virtual
lawlibrary
Indeed, it was only on March 2, 1989, with the approval of
Republic Act No. 6715, amending Article 211 of the Labor Code,
that the law explicitly considered it a State policy" (t)o ensure
the participation of workers in decision and policy-making
processes affecting their rights, duties and welfare." However,
even in the absence of said clear provision of law, the exercise
of management prerogatives was never considered boundless.
Thus, in Cruz v. Medina (177 SCRA 565 [1989]), it was held that
managements prerogatives must be without abuse of
discretion.
In San Miguel Brewery Sales Force Union (PTGWO) v. Ople (170
SCRA 25 [1989], we upheld the companys right to implement a

new system of distributing its products, but gave the following

caveat:chanrob1es virtual 1aw library
So long as a companys management prerogatives are
exercised in good faith for the advancement of the employers
interest and not for the purpose of defeating or circumventing
the rights of the employees under special laws or under valid
agreements, this Court will uphold them. (at p. 28.)
All this points to the conclusion that the exercise of managerial
prerogatives is not unlimited. It is circumscribed by limitations
found in law, a collective bargaining agreement, or the general
principles of fair play and justice (University of Sto. Tomas v.
NLRC, 190 SCRA 758 [1990]). Moreover, as enunciated in Abbott
Laboratories (Phil.), Inc. v. NLRC (154 SCRA 713 [1987]), it must
be duly established that the prerogative being invoked is clearly
a managerial one.
A close scrutiny of the objectionable provisions of the Code
reveals that they are not purely business-oriented nor do they
concern the management aspect of the business of the
company as in the San Miguel case. The provisions of the Code
clearly have repercusions on the employees right to security of
tenure. The implementation of the provisions may result in the
deprivation of an employees means of livelihood which, as
correctly pointed out by the NLRC, is a property right (Callanta
v. Carnation Philippines, Inc., 145 SCRA 268 [1986]). In view of
these aspects of the case which border on infringement of
constitutional rights, we must uphold the constitutional
requirements for the protection of labor and the promotion of
social justice, for these factors, according to Justice Isagani
Cruz, tilt "the scales of justice when there is doubt, in favor of
the worker" (Employees association of the Philippine American
Life Insurance Company v. NLRC, 199 SCRA 628 [1991] 635).
Verily, a line must be drawn between management prerogatives
regarding business operations per se and those which affect the
rights of the employees. In treating the latter, management
should see to it that its employees are at least properly
informed of its decisions or modes of action. PAL asserts that all
its employees have been furnished copies of the Code. Public
respondents found to the contrary, which finding, to say the
least is entitled to great respect.
PAL posits the view that by signing the 1989-1991 collective
bargaining agreement, on June 27, 1990, PALEA in effect
recognized PALs "exclusive right to make and enforce company
rules and regulations to carry out the functions of management
without having to discuss the same with PALEA and must less,
obtain the conformity thereto" (pp. 11-12, Petitioners
Memorandum; pp. 180-181, Rollo.) Petitioners view is based on
the following provision of the agreement:chanrob1es virtual
1aw library
The Association recognizes the right of the Company to
determine matters of management policy and Company
operations and to direct its manpower. Management of the
Company includes the right to organize, plan, direct and control
operations, to hire, assign employees to work, transfer
employees from one department to another, to promote
demote, discipline, suspend or discharge employees for just
cause; to lay-off employees for valid and legal causes, to
introduce new or improved methods or facilities or to change
existing methods or facilities and the right to make and enforce
Company rules and regulations to carry out the functions of
management.
The exercise by management of its prerogative shall be done in
a just, reasonable, humane and/or lawful
manner.chanrobles.com.ph : virtual law library
Such provision in the collective bargaining agreement may not
be interpreted as cession of employees rights to participate in
the deliberation of matters which may affect their rights and the
formulation of policies relative thereto. And one such matter is
the formulation of a code of discipline.

Indeed, industrial peace cannot be achieved if the employees

are denied their just participation in the discussion of matters
affecting their rights. Thus, even before Article 211 of the Labor
Code (P.D. 442) was amended by Republic Act No. 6715, it was
already declared a policy of the State:" (d) To promote the
enlightenment of workers concerning their rights and
obligations . . .as employees." This was, of course, amplified by
Republic Act No. 6715 when it decreed the "participation of
workers in decision and policy making processes affecting their
rights, duties and welfare." PALs position that it cannot be
saddled with the "obligation" of sharing management
prerogatives as during the formulation of the Code, Republic Act
No. 6715 had not yet been enacted (Petitioners Memorandum,
p. 44; Rollo, p. 212), cannot thus be sustained. While such
"obligation" was not yet founded in law when the Code was
formulated, the attainment of a harmonious labor-management
relationship and the then already existing state policy of
enlightening workers concerning their rights as employees
demand no less than the observance of transparency in
managerial moves affecting employees rights.

private respondent voluntarily helped the mother of Amelita in

Petitioners assertion that it needed the implementation of a

new Code of Discipline considering the nature of its business
cannot be overemphasized. In fact, its being a local monopoly in
the business demands the most stringent of measures to attain
safe travel for its patrons. Nonetheless, whatever disciplinary
measures are adopted cannot be properly implemented in the
absence of full cooperation of the employees. Such cooperation
cannot be attained if the employees are restive on account of
their being left out in the determination of cardinal and
fundamental matters affecting their employment.

Based on the position papers of the parties, the labor arbiter

WHEREFORE, the petition is DISMISSED and the questioned

decision AFFIRMED. No special pronouncement is made as to
costs.
EN BANC G.R. No. 130866 September 16, 1998
ST. MARTIN FUNERAL HOME, petitioner, vs. NATIONAL
LABOR RELATIONS COMMISSION and BIENVENIDO
ARICAYOS, respondents.

In January 1996, the mother of Amelita passed away, so the

latter then took over the management of the business. She then
discovered that there were arrears in the payment of taxes and
other government fees, although the records purported to show
that the same were already paid. Amelita then made some
changes in the business operation and private respondent and
his wife were no longer allowed to participate in the
management thereof. As a consequence, the latter filed a
complaint charging that petitioner had illegally terminated his
employment. 2

rendered a decision in favor of petitioner on October 25, 1996

declaring that no employer-employee relationship existed
between the parties and, therefore, his office had no jurisdiction
over the case.

Not satisfied with the said decision, private respondent

appealed to the NLRC contending that the labor arbiter erred (1)
in not giving credence to the evidence submitted by him; (2) in
holding that he worked as a "volunteer" and not as an employee
of St. Martin Funeral Home from February 6, 1995 to January 23,
1996, or a period of about one year; and (3) in ruling that there
was no employer-employee relationship between him and
petitioner. 4
On June 13, 1997, the NLRC rendered a resolution setting aside
the questioned decision and remanding the case to the labor

REGALADO, J.:

arbiter for immediate appropriate proceedings. 5 Petitioner then

The present petition for certiorari stemmed from a complaint for

illegal dismissal filed by herein private respondent before the
National Labor Relations Commission (NLRC), Regional
Arbitration Branch No. III, in San Fernando, Pampanga. Private
respondent alleges that he started working as Operations
Manager of petitioner St. Martin Funeral Home on February 6,
1995. However, there was no contract of employment executed
between him and petitioner nor was his name included in the
semi-monthly payroll. On January 22, 1996, he was dismissed
from his employment for allegedly misappropriating P38,000.00
which was intended for payment by petitioner of its value
added tax (VAT) to the Bureau of Internal Revenue (BIR).

overseeing the business.

Petitioner on the other hand claims that private respondent was

not its employee but only the uncle of Amelita Malabed, the
owner of petitioner St. Martin's Funeral Home. Sometime in
1995, private respondent, who was formerly working as an
overseas contract worker, asked for financial assistance from
the mother of Amelita. Since then, as an indication of gratitude,

filed a motion for reconsideration which was denied by the NLRC

in its resolution dated August 18, 1997 for lack of merit, 6 hence
the present petition alleging that the NLRC committed grave
abuse of discretion. 7
Before proceeding further into the merits of the case at bar, the
Court feels that it is now exigent and opportune to reexamine
the functional validity and systemic practicability of the mode of
judicial review it has long adopted and still follows with respect
to decisions of the NLRC. The increasing number of labor
disputes that find their way to this Court and the legislative
changes introduced over the years into the provisions of
Presidential Decree (P.D.) No. 442 (The Labor Code of the
Philippines and Batas Pambansa Blg. (B.P. No.) 129 (The
Judiciary Reorganization Act of 1980) now stridently call for and
warrant a reassessment of that procedural aspect.
We prefatorily delve into the legal history of the NLRC. It was
first established in the Department of Labor by P.D. No. 21 on

October 14, 1972, and its decisions were expressly declared to

Turning now to the matter of judicial review of NLRC decisions,

be appealable to the Secretary of Labor and, ultimately, to the

B.P. No. 129 originally provided as follows:

President of the Philippines.

Sec. 9. Jurisdiction. The Intermediate
On May 1, 1974, P.D. No. 442 enacted the Labor Code of the

Appellate Court shall exercise:

Philippines, the same to take effect six months after its

promulgation.

Created and regulated therein is the present

(1) Original jurisdiction to issue writs

NLRC which was attached to the Department of Labor and

of mandamus, prohibition, certiorari, habeas

Employment for program and policy coordination only. 9 Initially,

corpus, and quo warranto, and auxiliary writs

Article 302 (now, Article 223) thereof also granted an aggrieved

or processes, whether or not in aid of its

party the remedy of appeal from the decision of the NLRC to the

appellate jurisdiction;

Secretary of Labor, but P.D. No. 1391 subsequently amended

said provision and abolished such appeals. No appellate review

(2) Exclusive original jurisdiction over actions

has since then been provided for.

for annulment of judgments of Regional Trial

Courts; and

Thus, to repeat, under the present state of the law, there is no

provision for appeals from the decision of the NLRC.

10

The

(3) Exclusive appellate jurisdiction over all

present Section 223, as last amended by Section 12 of R.A. No.

final judgments, decisions, resolutions, orders,

6715, instead merely provides that the Commission shall decide

or awards of Regional Trial Courts and quasi-

all cases within twenty days from receipt of the answer of the

judicial agencies, instrumentalities, boards, or

appellee, and that such decision shall be final and executory

commissions, except those falling within the

after ten calendar days from receipt thereof by the parties.

appellate jurisdiction of the Supreme Court in

accordance with the Constitution, the

When the issue was raised in an early case on the argument

provisions of this Act, and of subparagraph (1)

that this Court has no jurisdiction to review the decisions of the

of the third paragraph and subparagraph (4)

NLRC, and formerly of the Secretary of Labor, since there is no

of the fourth paragraph of Section 17 of the

legal provision for appellate review thereof, the Court

Judiciary Act of 1948.

nevertheless rejected that thesis. It held that there is an

underlying power of the courts to scrutinize the acts of such

The Intermediate Appellate Court shall have

agencies on questions of law and jurisdiction even though no

the power to try cases and conduct hearings,

right of review is given by statute; that the purpose of judicial

receive evidence and perform any and all acts

review is to keep the administrative agency within its

necessary to resolve factual issues raised in

jurisdiction and protect the substantial rights of the parties; and

cases falling within its original and appellate

that it is that part of the checks and balances which restricts

jurisdiction, including the power to grant and

the separation of powers and forestalls arbitrary and unjust

conduct new trials or further proceedings.

adjudications.

11

These provisions shall not apply to decisions

Pursuant to such ruling, and as sanctioned by subsequent

and interlocutory orders issued under the

decisions of this Court, the remedy of the aggrieved party is to

Labor Code of the Philippines and by the

timely file a motion for reconsideration as a precondition for any

Central Board of Assessment Appeals.

further or subsequent remedy,

12

15

and then seasonably avail of

the special civil action of certiorari under Rule 65,

13

for which

said Rule has now fixed the reglementary period of sixty days

Subsequently, and as it presently reads, this provision was

amended by R.A. No. 7902 effective March 18, 1995, to wit:

from notice of the decision. Curiously, although the 10-day

period for finality of the decision of the NLRC may already have

Sec. 9. Jurisdiction. The Court of Appeals shall

lapsed as contemplated in Section 223 of the Labor Code, it has

exercise:

been held that this Court may still take cognizance of the
petition for certiorari on jurisdictional and due process

(1) Original jurisdiction to issue writs

considerations if filed within the reglementary period under Rule

of mandamus, prohibition, certiorari, habeas

65.

14

corpus, and quo warranto, and auxiliary writs or

processes, whether or not in aid of its appellate

Philippines under Presidential Decree No. 442, as amended, the

jurisdiction;

provisions of this Act, and of subparagraph (1) of the third

paragraph and subparagraph (4) of the fourth paragraph of

(2) Exclusive original jurisdiction over actions for

Section 17 of the Judiciary Act of 1948." (Emphasis supplied).

annulment of judgments of Regional Trial Courts;

and

3. Contrarily, however, specifically added to and included

among the quasi-judicial agencies over which the Court of

(3) Exclusive appellate jurisdiction over all final

Appeals shall have exclusive appellate jurisdiction are the

judgments, decisions, resolutions, orders or

Securities and Exchange Commission, the Social Security

awards of Regional Trial Courts and quasi-judicial

Commission, the Employees Compensation Commission and the

agencies, instrumentalities, boards or

Civil Service Commission.

commissions, including the Securities and

Exchange Commission, the Social Security

This, then, brings us to a somewhat perplexing impass, both in

Commission, the Employees Compensation

point of purpose and terminology. As earlier explained, our

Commission and the Civil Service Commission,

mode of judicial review over decisions of the NLRC has for some

except those falling within the appellate

time now been understood to be by a petition

jurisdiction of the Supreme Court in accordance

for certiorari under Rule 65 of the Rules of Court. This is, of

with the Constitution, the Labor Code of the

course, a special original action limited to the resolution of

Philippines under Presidential Decree No. 442, as

jurisdictional issues, that is, lack or excess of jurisdiction and, in

amended, the provisions of this Act, and of

almost all cases that have been brought to us, grave abuse of

subparagraph (1) of the third paragraph and

discretion amounting to lack of jurisdiction.

subparagraph (4) of the fourth paragraph of

Section 17 of the Judiciary Act of 1948.

It will, however, be noted that paragraph (3), Section 9 of B.P.

No. 129 now grants exclusive appellate jurisdiction to the Court

The Court of Appeals shall have the power to try

of Appeals over all final adjudications of the Regional Trial

cases and conduct hearings, receive evidence

Courts and the quasi-judicial agencies generally or specifically

and perform any and all acts necessary to resolve

referred to therein except, among others, "those falling within

factual issues raised in cases falling within its

the appellate jurisdiction of the Supreme Court in accordance

original and appellate jurisdiction, including the

with . . . the Labor Code of the Philippines under Presidential

power to grant and conduct new trials or further

Decree No. 442, as amended, . . . ." This would necessarily

proceedings. Trials or hearings in the Court of

contradict what has been ruled and said all along that appeal

Appeals must be continuous and must be

does not lie from decisions of the NLRC.

completed within, three (3) months, unless

excepting clause literally construed, the appeal from the NLRC

extended by the Chief Justice.

cannot be brought to the Court of Appeals, but to this Court by

17

Yet, under such

necessary implication.
It will readily be observed that, aside from the change in the
name of the lower appellate court,

16

the following amendments

The same exceptive clause further confuses the situation by

of the original provisions of Section 9 of B.P. No. 129 were

declaring that the Court of Appeals has no appellate jurisdiction

effected by R.A. No. 7902, viz.:

over decisions falling within the appellate jurisdiction of the

Supreme Court in accordance with the Constitution, the

1. The last paragraph which excluded its application to

provisions of B.P. No. 129, and those specified cases in Section

the Labor Code of the Philippines and the Central Board of

17 of the Judiciary Act of 1948. These cases can, of course, be

Assessment Appeals was deleted and replaced by a new

properly excluded from the exclusive appellate jurisdiction of

paragraph granting the Court of Appeals limited powers to

the Court of Appeals. However, because of the aforementioned

conduct trials and hearings in cases within its jurisdiction.

amendment by transposition, also supposedly excluded are

cases falling within the appellate jurisdiction of the Supreme

2. The reference to the Labor Code in that last paragraph was

Court in accordance with the Labor Code. This is illogical and

transposed to paragraph (3) of the section, such that the

impracticable, and Congress could not have intended that

original exclusionary clause therein now provides "except those

procedural gaffe, since there are no cases in the Labor Code the

falling within the appellate jurisdiction of the Supreme Court in

decisions, resolutions, orders or awards wherein are within

accordance with the Constitution, the Labor Code of the

the appellate jurisdiction of the Supreme Court or of any other

review of the Court of Appeals in the decision(s) of

court for that matter.

the Securities and Exchange Commission, the

Social Security Commission, and the Employees

A review of the legislative records on the antecedents of R.A.

Compensation Commission to reduce the number of

No. 7902 persuades us that there may have been an oversight

cases elevated to the Supreme Court. (Emphases

in the course of the deliberations on the said Act or an

and corrections ours)

imprecision in the terminology used therein. In fine, Congress

did intend to provide for judicial review of the adjudications of

xxx xxx xxx

the NLRC in labor cases by the Supreme Court, but there was an
inaccuracy in the term used for the intended mode of review.

Senate Bill No. 1495 authored by our distinguished

This conclusion which we have reluctantly but prudently arrived

Colleague from Laguna provides the ideal situation

at has been drawn from the considerations extant in the records

of drastically reducing the workload of the Supreme

of Congress, more particularly on Senate Bill No. 1495 and the

Court without depriving the litigants of the privilege

Reference Committee Report on S. No. 1495/H. No. 10452.

18

In sponsoring Senate Bill No. 1495, Senator Raul S. Roco

delivered his sponsorship speech

19

from which we reproduce

the following excerpts:

of review by an appellate tribunal.

In closing, allow me to quote the observations of
former Chief Justice Teehankee in 1986 in the
Annual Report of the Supreme Court:

The Judiciary Reorganization Act, Mr. President,

. . . Amendatory legislation is

Batas Pambansa Blg. 129, reorganized the Court of

suggested so as to relieve the

Appeals and at the same time expanded its

Supreme Court of the burden of

jurisdiction and powers. Among others, its appellate

reviewing these cases which

jurisdiction was expanded to cover not only final

present no important issues

judgment of Regional Trial Courts, but also all final

involved beyond the particular fact

judgment(s), decisions, resolutions, orders or

and the parties involved, so that

awards of quasi-judicial agencies, instrumentalities,

the Supreme Court may wholly

boards and commissions, except those falling

devote its time to cases of public

within the appellate jurisdiction of the Supreme

interest in the discharge of its

Court in accordance with the Constitution, the

mandated task as the guardian of

provisions of BP Blg. 129 and of subparagraph 1 of

the Constitution and the guarantor

the third paragraph and subparagraph 4 of Section

of the people's basic rights and

17 of the Judiciary Act of 1948.

additional task expressly vested on

it now "to determine whether or

Mr. President, the purpose of the law is to ease the

not there has been a grave abuse

workload of the Supreme Court by the transfer of

of discretion amounting to lack of

some of its burden of review of factual issues to the

jurisdiction on the part of any

Court of Appeals. However, whatever benefits that

branch or instrumentality of the

can be derived from the expansion of the appellate

Government.

jurisdiction of the Court of Appeals was cut short by

the last paragraph of Section 9 of Batas Pambansa

We used to have 500,000 cases pending all over

Blg. 129 which excludes from its coverage the

the land, Mr. President. It has been cut down to

"decisions and interlocutory orders issued under

300,000 cases some five years ago. I understand

the Labor Code of the Philippines and by the

we are now back to 400,000 cases. Unless we

Central Board of Assessment Appeals.

distribute the work of the appellate courts, we shall

continue to mount and add to the number of cases

Among the highest number of cases that are

pending.

brought up to the Supreme Court are labor cases.

Hence, Senate Bill No. 1495 seeks to eliminate the

In view of the foregoing, Mr. President, and by

exceptions enumerated in Section 9 and,

virtue of all the reasons we have submitted, the

additionally, extends the coverage of appellate

Committee on Justice and Human Rights requests

The Court is, therefore, of the considered opinion that ever

the support and collegial approval of our Chamber.

since appeals from the NLRC to the Supreme Court were

eliminated, the legislative intendment was that the special civil

xxx xxx xxx

action of certiorari was and still is the proper vehicle for judicial
review of decisions of the NLRC. The use of the word "appeal" in

Surprisingly, however, in a subsequent session, the following

relation thereto and in the instances we have noted could have

Committee Amendment was introduced by the said sponsor and

been a lapsus plumae because appeals by certiorari and the

the following proceedings transpired:

20

original action for certiorari are both modes of judicial review

addressed to the appellate courts. The important distinction

Senator Roco. On page 2, line 5, after the line

between them, however, and with which the Court is

"Supreme Court in accordance with the

particularly concerned here is that the special civil action

Constitution," add the phrase "THE LABOR CODE

ofcertiorari is within the concurrent original jurisdiction of this

OF THE PHILIPPINES UNDER P.D. 442, AS

Court and the Court of Appeals;

AMENDED." So that it becomes clear, Mr.

assumption that appeals by certiorari to the Supreme Court are

President, that issues arising from the Labor Code

allowed would not subserve, but would subvert, the intention of

will still be appealable to the Supreme Court.

Congress as expressed in the sponsorship speech on Senate Bill

23

whereas to indulge in the

No. 1495.
The President. Is there any objection? (Silence)
Hearing none, the amendment is approved.

Incidentally, it was noted by the sponsor therein that some

quarters were of the opinion that recourse from the NLRC to the

Senator Roco. On the same page, we move that

Court of Appeals as an initial step in the process of judicial

lines 25 to 30 be deleted. This was also discussed

review would be circuitous and would prolong the proceedings.

with our Colleagues in the House of

On the contrary, as he commendably and realistically

Representatives and as we understand it, as

emphasized, that procedure would be advantageous to the

approved in the House, this was also deleted, Mr.

aggrieved party on this reasoning:

President.
On the other hand, Mr. President, to allow
The President. Is there any objection? (Silence)

these cases to be appealed to the Court of

Hearing none, the amendment is approved.

Appeals would give litigants the advantage to

have all the evidence on record be

Senator Roco. There are no further Committee

reexamined and reweighed after which the

amendments, Mr. President.

findings of facts and conclusions of said

bodies are correspondingly affirmed, modified

Senator Romulo. Mr. President, I move that we

or reversed.

close the period of Committee amendments.

Under such guarantee, the Supreme Court
The President. Is there any objection? (Silence)

can then apply strictly the axiom that factual

Hearing none, the amendment is approved.

findings of the Court of Appeals are final and

(Emphasis supplied).

may not be reversed on appeal to the

Supreme Court. A perusal of the records will
xxx xxx xxx

reveal appeals which are factual in nature and

may, therefore, be dismissed outright by

Thereafter, since there were no individual amendments, Senate

minute resolutions.

24

Bill No. 1495 was passed on second reading and being a

certified bill, its unanimous approval on third reading
followed.

21

The Conference Committee Report on Senate Bill

While we do not wish to intrude into the Congressional sphere

on the matter of the wisdom of a law, on this score we add the

No. 1495 and House Bill No. 10452, having theretofore been

further observations that there is a growing number of labor

approved by the House of Representatives, the same was

cases being elevated to this Court which, not being a trier of

likewise approved by the Senate on February 20,

fact, has at times been constrained to remand the case to the

1995,

22

inclusive of the dubious formulation on appeals to the

Supreme Court earlier discussed.

NLRC for resolution of unclear or ambiguous factual findings;

that the Court of Appeals is procedurally equipped for that

purpose, aside from the increased number of its component

appropriate action and disposition consistent with the views and

divisions; and that there is undeniably an imperative need for

ruling herein set forth, without pronouncement as to costs.

expeditious action on labor cases as a major aspect of

constitutional protection to labor.

FIRST DIVISION G.R. No. 118088 November 23, 1995

Therefore, all references in the amended Section 9 of B.P. No.

MAINLAND CONSTRUCTION, CO., INC., and/or LUCITA LU

129 to supposed appeals from the NLRC to the Supreme Court

CARABUENA, ROBERT L. CARABUENA, ELLEN LU

are interpreted and hereby declared to mean and refer to

CARABUENA, and MARTIN LU, petitioners, vs. MILA

petitions for certiorari under Rule 65. Consequently, all such

MOVILLA, ERNESTO MOVILLA, JR., MILA JUDITH C.

petitions should hence forth be initially filed in the Court of

MOVILLA, JUDE BRIX C. MOVILLA, JONARD ELLERY C.

Appeals in strict observance of the doctrine on the hierarchy of

MOVILLA, AND MAILA JONAH M. QUIMBO, surviving heirs

courts as the appropriate forum for the relief desired.

of ERNESTO MOVILLA, and THE HONORABLE

COMMISSIONER of the NATIONAL LABOR RELATIONS

Apropos to this directive that resort to the higher courts should

COMMISSION-5TH DIVISION,respondents.

be made in accordance with their hierarchical order, this

pronouncement in Santiago vs. Vasquez, et al.

25

should be

HERMOSISIMA, JR., J.:

taken into account:

Petitioners urge this Court to set aside the Decision of the
One final observation. We discern in the

National Labor Relations Commission (NLRC), dated May 30,

proceedings in this case a propensity on the

1994, in NLRC-CA No.

part of petitioner, and, for that matter, the

M-000949-92 for having been rendered with grave abuse of

same may be said of a number of litigants

discretion amounting to lack of jurisdiction. This reversed the

who initiate recourses before us, to disregard

decision of the Labor Arbiter in case No. RAB-11-10-99883-91.

the hierarchy of courts in our judicial system

Petitioners' motion for reconsideration of the NLRC decision was

by seeking relief directly from this Court

denied in a Resolution, dated August 31, 1994.

despite the fact that the same is available in

the lower courts in the exercise of their

Mainland Construction Co., Inc. is a domestic corporation, duly

original or concurrent jurisdiction, or is even

organized and existing under Philippine laws, having been

mandated by law to be sought therein. This

issued a certificate of registration by the Securities and

practice must be stopped, not only because of

Exchange Commission (SEC) on July 26, 1977, under Registry

the imposition upon the precious time of this

Number 74691. Its principal line of business is the general

Court but also because of the inevitable and

construction of roads and bridges and the operation of a service

resultant delay, intended or otherwise, in the

shop for the maintenance of equipment. Respondents on the

adjudication of the case which often has to be

other hand, are the surviving heirs of complainant, Ernesto

remanded or referred to the lower court as

Movilla, who died during the pendency of the action with the

the proper forum under the rules of

Labor Arbiter.

procedure, or as better equipped to resolve

the issues since this Court is not a trier of

Records show that Ernesto Movilla, who was a Certified Public

facts. We, therefore, reiterate the judicial

Accountant during his lifetime, was hired as such by Mainland in

policy that this Court will not entertain direct

1977. Thereafter, he was promoted to the position of

resort to it unless the redress desired cannot

Administrative Officer with a monthly salary of P4,700.00. 1

be obtained in the appropriate courts or

where exceptional and compelling

Ernesto Movilla, recorded as receiving a fixed salary of

circumstances justify availment of a remedy

P4,700.00 a month, was registered with the Social Security

within and calling for the exercise of our

System (SSS) as an employee of petitioner Corporation. His

primary jurisdiction.

contributions to the SSS, Medicare and Employees

Compensation Commission (ECC) were deducted from his

WHEREFORE, under the foregoing premises, the instant petition

monthly earnings by his said employer. 2

for certiorari is hereby REMANDED, and all pertinent records

thereof ordered to be FORWARDED, to the Court of Appeals for

On April 12, 1987, during petitioner corporation's annual

meeting of stockholders, the following were elected members of

the Board of Directors, viz.: Robert L. Carabuena, Ellen L.

It is clear that in the case at bar, the

Carabuena, Lucita Lu Carabuena, Martin G. Lu and Ernesto L.

controversy presented by complainant is

Movilla.

intra-corporate in nature and is within the

jurisdiction of the Securities and Exchange

On the same day, an organizational meeting was held and the

Commission, pursuant to P.D. 902-A (Phil.

Board of Directors elected Ernesto Movilla as Administrative

School of Business Administration, et al. v.

Manager. 3 He occupied the said position up to the time of his

Leano, G.R. No. L-58468, February 24, 1984;

death.

Dy et al. v. NLRC, et al., G.R. No. L-68544,

October 27, 1986). What Movilla is claiming

On April 2, 1991, the Department of Labor and Employment

against respondents are his alleged unpaid

(DOLE) conducted a routine inspection on petitioner corporation

salaries and separation pay as Administrative

and found that it committed such irregularities in the conduct of

Manager of the corporation for which position

its business as:

he was appointed by the Board of Directors.

His claims therefore fall under the jurisdiction
1. Underpayment of wages under R.A. 6727

of the Securities and Exchange Commission

and RTWPB-XI-01;

because this is not a simple labor problem;

but a matter that comes within the area of

2. Non-implementation of Wage Order No.

corporate affairs and management, and is in

RTWPB-XI-02;

fact a corporate controversy in contemplation

of the Corporation Code. (Fortune Cement

3. Unpaid wages for 1989 and 1990;

Corporation v. NLRC, et al., G.R. No. 79762,

January 24, 1991). 5

4. Non-payment of holiday pay and service

incentive leave pay; and

Aggrieved by this decision, respondents appealed to the

National Labor Relations Commission (NLRC). The NLRC ruled

5. Unpaid 13th month pay (remaining balance

that the issue in the case was one which involved a labor

for 1990). 4

dispute between an employee and petitioner corporation and,

thus, the NLRC had jurisdiction to resolve the case. The

On the basis of this finding, petitioner corporation was ordered

dispositive portion of the NLRC decision reads:

by DOLE to pay to its thirteen employees, which included

Movilla, the total amount of P309,435.89, representing their

WHEREFORE, the assailed decision

salaries, holiday pay, service incentive leave pay differentials,

is Reversed and Set Aside. Respondents are

unpaid wages and 13th month pay.

ordered to pay the heirs of complainant the

following:

All the employees listed in the DOLE's order were paid by

petitioner corporation, except Ernesto Movilla.

1. Unpaid salaries from January 1989 to

September 1991 in the sum of P155,100.00;

On October 8, 1991, Ernesto Movilla filed a case against

petitioner corporation and/or Lucita, Robert, and Ellen, all

2. Separation pay in the sum of P65,800.00;

surnamed Carabuena, for unpaid wages, separation pay and

attorney's fees, with the Department of Labor and Employment,

3. Moral damages in the sum of P10,000.00;

Regional Arbitration, Branch XI, Davao City.

4. Indemnity in the sum of P3,000.00; and,
On February 29, 1992, Ernesto Movilla died while the case was
being tried by the Labor Arbiter and was promptly substituted

5. Attorney's fees equivalent to 10% of the

by his heirs, private respondents herein, with the consent of the

total award. 6

Labor Arbiter.
The pivotal issue in this case is which of the two agencies of the
The Labor Arbiter rendered judgment on June 26, 1992,

government the NLRC or the SEC has jurisdiction over the

dismissing the complaint on the ground of lack of jurisdiction.

controversy.

Specifically, the Labor Arbiter made the following ratiocination:

As we stated earlier, it is of course the contention of petitioners

submitted a joint affidavit executed by Juanito S. Malubay and

that the NLRC committed grave abuse of discretion when it

Delia S. Luciano, Project Engineer and Personnel-In-Charge,

nullified the decision of the Labor Arbiter which dismissed the

respectively, of petitioner corporation, attesting that they

complaint of Movilla for unpaid wages, separation pay and

personally knew Movilla and that he was employed in the

attorney's fees on the ground of lack of jurisdiction. Petitioners

company. A Premium Certification issued by an authorized

take the position that, since Ernesto Movilla was a corporate

representative of petitioners was also presented to show his

officer, the controversy as to his compensation is within the

actual monthly earnings as well as his monthly contributions to

jurisdiction of the SEC as mandated by P.D. 902-A and not with

the SSS, Medicare and ECC. 10 Movilla's registration in the SSS

the NLRC.

by petitioner corporation added strength to the conclusion that

he was petitioner corporation's employee as coverage by the

We find for the respondents, it appearing that petitioners'

said law is predicated on the existence of an employer-

contention is bereft of merit.

employee relationship.

11

Furthermore, petitioner corporation

failed to present evidence which showed that, after his election

In order that the SEC can take cognizance of a case, the

as Administrative Manager, he was excluded from the coverage

controversy must pertain to any of the following relationships:

of the SSS, Medicare and ECC.

a) between the corporation, partnership or association and the

public; b) between the corporation, partnership or association

He also presented, appearing to be relevant to the issue, the

and its stockholders, partners, members or officers;

result of the investigation conducted by DOLE which found that

c) between the corporation, partnership or association and the

petitioner corporation has transgressed several labor standard

State as far as its franchise, permit or license to operate is

laws against its employees.

concerned; and d) among the stockholders, partners or

associates themselves. 7 The fact that the parties involved in

As correctly ruled by the NLRC:

the controversy are all stockholders or that the parties involved

are the stockholders and the corporation does not necessarily

The claims for unpaid salaries/monetary

place the dispute within the ambit of the jurisdiction of SEC. The

benefits and separation pay, are not a

better policy to be followed in determining jurisdiction over a

corporate conflict as respondents presented

case should be to consider concurrent factors such as the status

them to be. If complainant is not an

or relationship of the parties or the nature of the question that

employee, respondent should have contested

is the subject of their controversy. 8 In the absence of any one of

the DOLE inspection report, What they did

these factors, the SEC will not have jurisdiction. Furthermore, it

was to exclude complainant from the order of

does not necessarily follow that every conflict between the

payment . . . and worse, he was not both

corporation and its stockholders would involve such corporate

given responsibilities and paid his salaries for

matters as only the SEC can resolve in the exercise of its

the succeeding months . . . . This is a clear

adjudicatory or quasi-judicial powers.

case of constructive dismissal without due

process . . . 12

In the case at bench, the claim for unpaid wages and separation
pay filed by the complainant against petitioner corporation

The existence of an employer-employee relationship is a factual

involves a labor dispute. It does not involve an intra-corporate

question and public respondent's findings are accorded great

matter, even when it is between a stockholder and a

weight and respect as the same are supported by substantial

corporation. It relates to an employer-employee relationship

evidence. 13 Hence, we uphold the conclusion of public

which is distinct from the corporate relationship of one with the

respondent that Ernesto Movilla was an employee of petitioner

other. Moreover, there was no showing of any change in the

corporation.

duties being performed by complainant as an Administrative

Officer and as an Administrative Manager after his election by

It is pertinent to note that petitioner corporation is not

the Board of Directors. What comes to the fore is whether there

prohibited from hiring its corporate officers to perform services

was a change in the nature of his functions and not merely the

under a circumstance which will make him an

nomenclature or title given to his job.

employee. 14 Moreover, although a director of a corporation is

not, merely by virtue of his position, its employee, said director

Indeed, Ernesto Movilla worked as an administrative officer of

may act as an employee or accept duties that make him also an

the company for several years and was given a fixed salary

employee. 15

every month. To further sustain this assertion Movilla also

Since Ernesto Movilla's complaint involves a labor dispute, it is

on April 30, 1993, the Board of Trustees passed a resolution

the NLRC, under Article 217 of the Labor Code of the

relieving her of her position as Medical Director and Hospital

Philippines, which has jurisdiction over the case at bench.

Administrator, and appointing the latter and Dr. Benjamin

Donasco as

acting Medical Director

and acting

WHEREFORE, the petition is DISMISSED for lack of showing of

Administrator,

respectively. Petitioner

averred

any grave abuse of discretion on the part of public respondent

thereafter received a copy of said board resolution.

Hospital

that

she

NLRC. The assailed decision of public respondent is thus

AFFIRMED.

On June 6, 1993, petitioner filed a complaint for illegal

dismissal and non-payment of wages, allowances and 13th

SECOND DIVISION [G.R. No. 121143. January 21, 1997]

PURIFICACION

G.

TABANG, petitioner,

month pay before the labor arbiter.

vs. NATIONAL

Respondent corporation moved for the dismissal of the

LABOR RELATIONS COMMISSION and PAMANA

complaint on the ground of lack of jurisdiction over the subject

GOLDEN CARE MEDICAL CENTER FOUNDATION,

matter. It argued that petitioners position as Medical Director

INC., respondents.

and Hospital Administrator was interlinked with her position as

member of the Board of Trustees, hence, her dismissal is an

DECISION

intra-corporate controversy which falls within the exclusive

jurisdiction of the Securities and Exchange Commission (SEC).

REGALADO, J.:
Petitioner opposed the motion to dismiss, contending that
This is a petition for certiorari which seeks to annul the

her position as Medical Director and Hospital Administrator was

resolution of the National Labor Relations Commission (NLRC),

separate and distinct from her position as member of the Board

dated June 26, 1995, affirming in toto the order of the labor

of Trustees. She claimed that there is no intra-corporate

arbiter, dated April 26, 1994, which dismissed petitioners

controversy involved since she filed the complaint in her

complaint for illegal dismissal with money claims for lack of

capacity as Medical Director and Hospital Administrator, or as

jurisdiction.

an employee of private respondent.

The records show that petitioner Purificacion Tabang was a

On April 26, 1994, the labor arbiter issued an order

founding member, a member of the Board of Trustees, and the

dismissing the complaint for lack of jurisdiction. He ruled that

corporate secretary of private respondent Pamana Golden Care

the case falls within the jurisdiction of the SEC, pursuant to

Medical Center Foundation, Inc., a non-stock corporation

Section 5 of Presidential Decree No. 902-A.

[1]

engaged in extending medical and surgical services.

Petitioners motion for reconsideration was treated as an
On October 30, 1990, the Board of Trustees issued a

appeal by the labor arbiter who consequently ordered the

memorandum appointing petitioner as Medical Director and

elevation of the entire records of the case to public respondent

Hospital Administrator of private respondents Pamana Golden

NLRC for appellate review.

[2]

Care Medical Center in Calamba, Laguna.

On appeal, respondent NLRC affirmed the dismissal of the
Although the memorandum was silent as to the amount of

case on the additional ground that the position of a Medical

remuneration for the position, petitioner claims that she

Director and Hospital Administrator is akin to that of an

received a monthly retainer fee of five thousand pesos

executive position in a corporate ladder structure, hence,

(P5,000.00) from private respondent, but the payment thereof

petitioners removal from the said position was an intra-

was allegedly stopped in November, 1991.

corporate

controversy

jurisdiction of the SEC.

within

the

original

and

exclusive

[3]

As medical director and hospital administrator, petitioner

was tasked to run the affairs of the aforesaid medical center
and perform all acts of administration relative to its daily

Aggrieved by the decision, petitioner filed the instant

petition which we find, however, to be without merit.

operations.
We agree with the findings of the NLRC that it is the SEC
On May 1, 1993, petitioner was allegedly informed

which has jurisdiction over the case at bar. The charges against

personally by Dr. Ernesto Naval that in a special meeting held

herein private respondent partake of the nature of an intra-

corporate controversy. Similarly, the determination of the rights

A corporate officers dismissal is always a corporate act, or

of petitioner and the concomitant liability of private respondent

an intra-corporate controversy, and the nature is not altered by

arising from her ouster as a medical director and/or hospital

the reason or wisdom with which the Board of Directors may

administrator, which are corporate offices, is an intra-corporate

have

controversy subject to the jurisdiction of the SEC.

controversy is one which arises between a stockholder and the

in

taking

such

action.[11] Also,

an

intra-corporate

corporation. There is no distinction, qualification, nor any

Contrary to the contention of petitioner, a medical director

exemption whatsoever. The provision is broad and covers all

and a hospital administrator are considered as corporate

kinds

officers under the by-laws of respondent corporation. Section

corporations.

of

controversies

between

stockholders

and

[12]

2(i), Article I thereof states that one of the powers of the Board
of

Trustees

Director,

With regard to the amount of P5,000.00 formerly received

Comptroller/Administrator, Chiefs of Services and such other

by herein petitioner every month, the same cannot be

officers as it may deem necessary and prescribe their powers

considered as compensation for her services rendered as

and duties.

is

(t)o

appoint

Medical

[4]

Medical

Director

and

Hospital

Administrator. The

vouchers[13] submitted by petitioner show that the said amount

The president, vice-president, secretary and treasurer are

was paid to her by PAMANA, Inc., a stock corporation which is

commonly regarded as the principal or executive officers of a

separate and distinct from herein private respondent. Although

corporation, and modern corporation statutes usually designate

the payments were considered advances to Pamana Golden

them as the officers of the corporation. [5] However, other offices

Care, Calamba branch, there is no evidence to show that the

are sometimes created by the charter or by-laws of a

Pamana Golden Care stated in the vouchers refers to herein

corporation, or the board of directors may be empowered under

respondent Pamana Golden Care Medical Center Foundation,

the by-laws of a corporation to create additional offices as may

Inc.

be necessary.[6]
Pamana Golden Care is a division of Pamana, Inc., while
It has been held that an office is created by the charter

respondent Pamana Golden Care Medical Center Foundation,

of the corporation and the officer is elected by the directors or

Inc. is a non-stock, non-profit corporation. It is stated in the

stockholders.[7] On the other hand, an employee usually

memorandum of petitioner that Pamana, Inc. is a stock and

occupies no office and generally is employed not by action of

profit corporation selling pre-need plan for education, pension

the directors or stockholders but by the managing officer of the

and health care. The health care plan is called Pamana Golden

corporation who also determines the compensation to be paid

Care Plan and the holders are called Pamana Golden Care Card

to such employee.[8]

Holders or, simply, Pamana Members.

[14]

In the case at bar, considering that herein petitioner,

It is an admitted fact that herein petitioner is a retained

unlike an ordinary employee, was appointed by respondent

physician of Pamana, Inc., whose patients are holders of the

corporations Board of Trustees in its memorandum of October

Pamana Golden Care Card. In fact, in her complaint[15] filed

[9]

30,

the

before the Regional Trial Court of Calamba, herein petitioner is

corporation. Perforce, Section 5(c) of Presidential Decree No.

1990, she

asking, among others, for professional fees and/or retainer fees

902-A,

earned for her treatment of Pamana Golden Care card holders.

which

is

provides

deemed
that

an

the

SEC

officer
exercises

of

exclusive

jurisdiction over controversies in the election or appointment of

[16]

directors,

of payment of retainer fees made by Pamana, Inc. to herein

trustees, officers

partnerships

or

or

associations,

managers
applies

of corporations,
in

the

present

Thus, at most, said vouchers can only be considered as proof

petitioner as a retained physician of Pamana Golden Care.

dispute. Accordingly, jurisdiction over the same is vested in the

SEC, and not in the Labor Arbiter or the NLRC.

Moreover, even assuming that the monthly payment

of P5,000.00 was a valid claim against respondent corporation,

Moreover, the allegation of petitioner that her being a

this would not operate to effectively remove this case from the

member of the Board of Trustees was not one of the

jurisdiction of the SEC. In the case of Cagayan de Oro Coliseum,

considerations for her appointment is belied by the tenor of the

Inc. vs. Office of the Minister of Labor and Employment, etc., et

memorandum itself. It states: We hope that you will uphold and

al.,[17] we ruled that (a)lthough the reliefs sought by Chavez

promote the mission of our foundation,[10] and this cannot be

appear to fall under the jurisdiction of the labor arbiter as they

construed other than in reference to her position or capacity as

are claims for unpaid salaries and other remunerations for

a corporate trustee.

services rendered, a close scrutiny thereof shows that said

claims are actually part of the perquisites of his position in, and

branches of the National Labor Relations

therefore interlinked with, his relations with the corporation. In

Commission (NLRC) having jurisdiction over the

Dy, et al., vs. NLRC, et al., the Court said: (t)he question of

workplace.

remuneration involving as it does, a person who is not a mere

employee but a stockholder and officer, an integral part, it

It shall be mandatory for the NLRC to conduct

might be said, of the corporation, is not a simple labor problem

continuous hearings and decide any dispute arising

but a matter that comes within the area of corporate affairs and

under this Section within twenty (20) calendar days

management and is in fact a corporate controversy in

from the time said dispute is formally submitted to

contemplation of the Corporation Code.

it for arbitration. The pendency of a dispute arising

from a wage distortion shall not in any way delay

WHEREFORE, the questioned resolution of the NLRC is

hereby AFFIRMED, without prejudice to petitioners taking

the applicability of the increase in the wage rates

prescribed under this Section.

recourse to and seeking relief through the appropriate remedy

in the proper forum.

But the Union claims that "demand was ignored:

The . . . COMPANY ignored said demand by

FIRST DIVISION G.R. No. 91980 June 27, 1991

offering a measly across-the-board wage

increase of P7.00 per day, per employee, as

ILAW AT BUKLOD NG MANGGAGAWA (IBM), petitioner, vs.

against the proposal of the UNION of P25.00

NATIONAL LABOR RELATIONS COMMISSION (First

per day, per employee. Later, the UNION

Division), HON. CARMEN TALUSAN and SAN MIGUEL

reduced its proposal to P15.00 per day, per

CORPORATION, respondents.

employee by way of amicable settlement.

NARVASA, J.:p

When the . . . COMPANY rejected the reduced

proposal of the UNION the members thereof,

The controversy at bar had its origin in the "wage distortions"

on their own accord, refused to render

affecting the employees of respondent San Miguel Corporation

overtime services, most especially at the Beer

allegedly caused by Republic Act No. 6727, otherwise known as

Bottling Plants at Polo, starting October 16,

the Wage Rationalization Act.

1989.

Upon the effectivity of the Act on June 5, 1989, the union known

In this connection, the workers involved issues a joint notice

as "Ilaw at Buklod Ng Manggagawa (IBM)" said to represent

reading as follows:

4,500 employees of San Miguel Corporation, more or less,

"working at the various plants, offices, and warehouses located

SAMA-SAMANG PAHAYAG: KAMING ARAWANG

at the National Capital Region" presented to the company a

MANGGAGAWA NG POLO BREWERY PAWANG

"demand" for correction of the "significant distortion in . . . (the

KASAPI NG ILAW AT BUKLOD NG

workers') wages." In that "demand," the Union explicitly invoked

MANGGAGAWA (IBM) AY NAGKAISANG

Section 4 (d) of RA 6727 which reads as follows:

NAGPASYA NA IPATUPAD MUNA ANG EIGHT

HOURS WORK SHIFT PANSAMANTALA HABANG

xxx xxx xxx

HINDI IPINATUTUPAD NG SMC MANAGEMENT

ANG TAMANG WAGE DISTORTION.

(d) . . .
The Union's position (set out in the petition subsequently filed in
Where the application of the increases in the wage

this Court, infra) was that the workers' refuse "to work beyond

rates under this Section results in distortions as

eight (8) hours everyday starting October 16, 1989" as a

defined under existing laws in the wage structure

legitimate means of compelling SMC to correct "the distortion in

within an establishment and gives rise to a dispute

their wages brought about by the implementation of the said

therein, such dispute shall first be settled

laws (R.A. 6640 and R.A. 6727) to newly-hired employees.

voluntarily between the parties and in the event of

decision to observe the "eight hours work shift" was

a deadlock, the same shall be finally resolved

implemented on October 16, 1989 by "some 800 daily-paid

through compulsory arbitration by the regional

workers at the Polo Plant's production line (of San Miguel

That

Corporation [hereafter, simply SMC]) joined by others at

days . . upon . . a cash or surety bond in the

statistical quality control and warehouse, all members of . . .

amount of P50,000.00 . . . DIRECTING the

IBM . . . "

There ensued thereby a change in the work schedule

respondents to CEASE and DESIST from

which had been observed by daily-paid workers at the Polo Plant

further committing the acts complained about

for the past five (5) years, i.e., "ten (10) hours for the first shift

particularly their not complying with the work

and ten (10) to fourteen (14) hours for the second shift, from

schedule established and implemented by the

Mondays to Fridays . . ; (and on) Saturdays, . . eight (8) hours

company through the years or at the least

for both shifts" a work schedule which, SMC says, the workers

since 1984, which schedule appears to have

had "welcomed, and encouraged" because the automatic

been adhered to by the respondents until

overtime built into the schedule "gave them a steady source of

October 16, 1989 . . .;

extra-income," and pursuant to which it (SMC) "planned its

production targets and budgets.

2) set the incident on injunction for hearing

before Labor Arbiter Carmen Talusan on 27

This abandonment of the long-standing schedule of work and

December 1989 . . .

the reversion to the eight-hour shift apparently caused

substantial losses to SMC. Its claim is that there ensued "from

The Labor Arbiter accordingly scheduled the incident for hearing

16 October 1989 to 30 November 1989 alone . . work disruption

on various dates: December 27 and 29,1989, January 8, 11, 16,

and lower efficiency . . (resulting in turn, in) lost production of

and 19, 1990. The first two settings were cancelled on account

2,004,105 cases of beer . . ; that (i)n "money terms, SMC lost

of the unavailability of the Union's counsel. The hearing on

P174,657,598 in sales and P48,904,311 in revenues . . (and the)

January 8, 1990 was postponed also at the instance of said

Government lost excise tax revenue of P42 million, computed at

counsel who declared that the Union refused to recognize the

the rate of P21 per case collectible at the plant.

These losses

NLRC's jurisdiction. The hearings set on January 11, 16 and 19,

occurred despite such measures taken by SMC as organizing "a

1990 were taken up with the cross-examination of SMC's

third shift composed of regular employees and some

witness on the basis of his affidavit and supplemental affidavits.

contractuals," and appeals "to the Union members, through

The Union thereafter asked the Hearing Officer to schedule

letters and memoranda and dialogues with their plant delegates

other hearings. SMC objected. The Hearing Officer announced

and shop stewards," to adhere to the existing work schedule.

she would submit a report to the Commission relative to the

extension of the temporary restraining order of December 9,

Thereafter, on October 18, 1989, SMC filed with the Arbitration

1989, supra, prayed for by SMC. Here the matter rested until

Branch of the National Labor Relations Commission a complaint

February 14, 1990, when the Union filed the petition which

against the Union and its members "to declare the strike or

commenced the special civil action of certiorari and prohibition

slowdown illegal" and to terminate the employment of the union

at bar.

officers and shop stewards. The complaint was docketed as

NLRC-NCR Case No. 00-10-04917.

In its petition, the Union asserted that:

Then on December 8, 1989, on the claim that its action in the

1) the "central issue . . is the application of

Arbitration Branch had as yet "yielded no relief," SMC filed

the Eight-Hour Labor Law . . . (i.e.) (m)ay an

another complaint against the Union and members thereof, this

employer force an employee to work

time directly with the National labor Relations Commission, "to

everyday beyond eight hours a day?

enjoin and restrain illegal slowdown and for damages, with

prayer for the issuance of a cease-and-desist and temporary
restraining order.

Before acting on the application for

2) although the work schedule adopted by

SMC with built-in automatic
10

restraining order, the NLRC's First Division first directed SMC to

overtime,

"tremendously increased its

present evidence in support of the application before a

production of beer at lesser cost," SMC had

commissioner, Labor Arbiter Carmen Talusan. On December 19,

been paying its workers "wages far below the

1989, said First Division promulgated a Resolution on the basis

productivity per employee," and turning a

of "the allegations of the petitioner (SMC) and the evidence

deaf ear to the Union's demands for wage

adduced ex parte in support of their petition." The Resolution

increases;

1) authorized the issuance of "a Temporary

3) the NLRC had issued the temporary

Restraining Order for a period of twenty (20)

restraining order of December 19, 1989 "with

indecent haste, based on ex parte evidence of

3) indeed, the NLRC has "the positive legal

SMC and such an order had the effect of

duty and statutory obligation to enjoin the

"forcing the workers to work beyond eight (8)

slowdown complained of and to compel the

hours a day, everyday!!

parties to arbitrate . ., (and) to effectuate the

important national policy of peaceful

4) the members of the NLRC had no authority

settlement of labor disputes through

to act as Commissioners because their

arbitration;" accordingly, said NLRC "had no

appointments had not been confirmed by the

legal choice but to issue injunction to enforce

Commission on Appointment; and

the reciprocal no lockout-no slowdown and

mandatory arbitration agreement of the

5) even assuming the contrary, the NLRC, as

parties;" and

an essentially appellate body, had no

jurisdiction to act on the plea for injunction in

4) the NLRC "gravely abused its discretion

the first instance.

when it refused to decide the application for

injunction within the twenty day period of its

The petition thus prayed:

temporary restraining order, in violation of its

own rules and the repeated decisions of

1) for judgment (a) annulling the Resolution of

this . . . Court.

December 19, 1990; (b) declaring mandatory

the confirmation by the Commission on

It is SMC's submittal that the coordinated reduction by the

Appointments of the appointments of National

Union's members of the work time theretofore willingly and

Labor Relations Commissioners; and (c)

consistently observed by them, thereby causing financial losses

ordering the removal "from the 201 files of

to the employer in order to compel it to yield to the demand for

employees any and all memoranda or

correction of "wage distortions," is an illegal and "unprotected"

disciplinary action issued/imposed to the

activity. It is, SMC argues, contrary to the law and to the

latter by reason of their refusal to render

collective bargaining agreement between it and the Union. The

overtime work;" and

argument is correct and will be sustained.

2) pending such judgment restraining(a) the

Among the rights guaranteed to employees by the Labor Code

NLR Commissioners "from discharging their

is that of engaging in concerted activities in order to attain their

power and authority under R.A. 6715 prior to

legitimate objectives. Article 263 of the Labor Code, as

their re-appointment and/or confirmation;" as

amended, declares that in line with "the policy of the State to

well as (b) Arbiter Talusan and the

encourage free trade unionism and free collective bargaining, . .

Commission from acting on the matter or

(w)orkers shall have the right to engage in concerted activities

rendering a decision or issuing a permanent

for purposes of collective bargaining or for their mutual benefit

injunction therein, or otherwise implementing

and protection." A similar right to engage in concerted activities

said Resolution of December 19, 1989.

for mutual benefit and protection is tacitly and traditionally

recognized in respect of employers.

In traverse of the petition, SMC filed a pleading entitled

"Comment with Motion to Admit Comment as Counter-Petition,"

The more common of these concerted activities as far as

in which it contended that:

employees are concerned are: strikes the temporary

stoppage of work as a result of an industrial or labor dispute;

1) the workers' abandonment of the regular

picketing the marching to and fro at the employer's premises,

work schedule and their deliberate and wilful

usually accompanied by the display of placards and other signs

reduction of the Polo plant's production

making known the facts involved in a labor dispute; and

efficiency is a slowdown, which is an illegal

boycotts the concerted refusal to patronize an employer's

and unprotected concerted activity;

goods or services and to persuade others to a like refusal. On

the other hand, the counterpart activity that management may

2) against such a slowdown, the NLRC has

licitly undertake is the lockout the temporary refusal to

jurisdiction to issue injunctive relief in the first

furnish work on account of a labor dispute, In this connection,

instance;

the same Article 263 provides that the "right of legitimate labor

organizations to strike and picket and of employer to lockout,

The pendency of a dispute arising from a

consistent with the national interest, shall continue to be

wage distortion shall not in any way delay the

recognized and respected." The legality of these activities is

applicability of any increase in prescribed

usually dependent on the legality of the purposes sought to be

wage rates pursuant to the provisions of law

attained and the means employed therefor.

or Wage Order.

It goes without saying that these joint or coordinated activities

xxx xxx xxx

may be forbidden or restricted by law or contract. In the

particular instance of "distortions of the wage structure within

The legislative intent that solution of the problem of wage

an establishment" resulting from "the application of any

distortions shall be sought by voluntary negotiation or

prescribed wage increase by virtue of a law or wage order,"

abitration, and not by strikes, lockouts, or other concerted

Section 3 of Republic Act No. 6727 prescribes a specific,

activities of the employees or management, is made clear in

detailed and comprehensive procedure for the correction

the rules implementing RA 6727 issued by the Secretary of

thereof, thereby implicitly excluding strikes or lockouts or other

Labor and Employment

concerted activities as modes of settlement of the issue. The

Section 13 of the Act.

provision

11

states that

13

12

pursuant to the authority granted by

Section 16, Chapter I of these

implementing rules, after reiterating the policy that wage

distortions be first settled voluntarily by the parties and

. . . the employer and the union shall

eventually by compulsory arbitration, declares that, "Any issue

negotiate to correct the distort-ions. Any

involving wage distortion shall not be a ground for a

dispute arising from wage distortions shall be

strike/lockout."

resolved through the grievance procedure

under their collective bargaining

Moreover, the collective bargaining agreement between the

agreement and, if it remains unresolved,

SMC and the Union, relevant provisions of which are quoted by

through voluntary arbitration. Unless

the former without the latter's demurring to the accuracy of the

otherwise agreed by the parties in writing,

quotation,

such dispute shall be decided by the

other similar or related concerted activities as a mode of

voluntary arbitrator or panel of voluntary

resolving disputes or controversies, generally, said agreement

arbitrators within ten (10) calendar days from

clearly stating that settlement of "all disputes, disagreements or

the time said dispute was referred to

controversies of any kind" should be achieved by the stipulated

voluntary arbitration.

grievance procedure and ultimately by arbitration. The

14

also prescribes a similar eschewal of strikes or

provisions are as follows:

In cases where there are no collective
agreements or recognized labor unions, the

Section 1. Any and all disputes,

employers and workers shall endeavor to

disagreements and controversies of any kind

correct such distortions. Any dispute arising

between the COMPANY and the UNION and/or

therefrom shall be settled through the

the workers involving or relating to wages,

National Conciliation and Mediation

hours of work, conditions of employment

Board and, if it remains unresolved after ten

and/or employer-employee relations arising

(10) calendar days of conciliation, shall

during the effectivity of this Agreement or any

be referred to the appropriate branch of the

renewal thereof, shall be settled by arbitration

National Labor Relations Commission (NLRC).

in accordance with the procedure set out in

It shall be mandatory for the NLRC to conduct

this Article. No dispute, disagreement or

continuous hearings and decide the dispute

controversy which may be submitted to the

within twenty (20) calendar days from the

grievance procedure in Article IX shall be

time said dispute is submitted for compulsory

presented for arbitration unless all the steps

arbitration.

of the grievance procedure are exhausted

(Article V Arbitration).
Section 1. The UNION agrees that there shall
be no strikes, walkouts, stoppage or slowdown
of work, boycotts, secondary boycotts, refusal

to handle any merchandise, picketing, sit-

management of the wage distortion (IPATUPAD MUNA ANG

down strikes of any kind, sympathetic or

EIGHT HOURS WORK SHIFT PANSAMANTALA HABANG HINDI

general strikes, or any other interference with

IPINATUTUPAD NG SMC MANAGEMENT ANG TAMANG WAGE

any of the operations of the COMPANY during

DISTORTION).

the terms of this agreement (Article VI).

In the second place, even if there were no such legal
The Union was thus prohibited to declare and hold a strike or

prohibition, and even assuming the controversy really did not

otherwise engage in non-peaceful concerted activities for the

involve the wage distortions caused by RA 6727, the concerted

settlement of its controversy with SMC in respect of wage

activity in question would still be illicit because contrary to the

distortions, or for that matter; any other issue "involving or

workers' explicit contractual commitment "that there shall be no

relating to wages, hours of work, conditions of employment

strikes, walkouts, stoppage or slowdown of work, boycotts,

and/or employer-employee relations." The partial strike or

secondary boycotts, refusal to handle any merchandise,

concerted refusal by the Union members to follow the five-year-

picketing, sit-down strikes of any kind, sympathetic or general

old work schedule which they had therefore been observing,

strikes, or any other interference with any of the operations of

resorted to as a means of coercing correction of "wage

the COMPANY during the term of . . . (their collective

distortions," was therefore forbidden by law and contract and,

bargaining) agreement.

16

on this account, illegal.

What has just been said makes unnecessary resolution of SMC's
Awareness by the Union of the proscribed character of its

argument that the workers' concerted refusal to adhere to the

members' collective activities, is clearly connoted by its attempt

work schedule in force for the last several years, is

to justify those activities as a means of protesting and obtaining

a slowdown, an inherently illegal activity essentially illegal even

redress against said members working overtime every day from

in the absence of a no-strike clause in a collective bargaining

Monday to Friday (on an average of 12 hours), and every

contract, or statute or rule. The Court is in substantial

Saturday (on 8 hour shifts),

15

rather than as a measure to bring

agreement with the petitioner's concept of a slowdown as a

about rectification of the wage distortions caused by RA 6727

"strike on the installment plan;" as a wilfull reduction in the rate

which was the real cause of its differences with SMC. By

of work by concerted action of workers for the purpose of

concealing the real cause of their dispute with management

restricting the output of the employer, in relation to a labor

(alleged failure of correction of wage distortion), and trying to

dispute; as an activity by which workers, without a complete

make it appear that the controversy involved application of the

stoppage of work, retard production or their performance of

eight-hour labor law, they obviously hoped to remove their case

duties and functions to compel management to grant their

from the operation of the rules implementing RA 6727 that "Any

demands.

issue involving wage distortion shall not be a ground for a

generally condemned as inherently illicit and unjustifiable,

strike/lockout." The stratagem cannot succeed.

because while the employees "continue to work and remain at

17

The Court also agrees that such a slowdown is

their positions and accept the wages paid to them," they at the
In the first place, that it was indeed the wage distortion issue

same time "select what part of their allotted tasks they care to

that principally motivated the Union's partial or limited strike is

perform of their own volition or refuse openly or secretly, to the

clear from the facts, The work schedule (with "built-in

employer's damage, to do other work;" in other words, they

overtime") had not been forced upon the workers; it had been

"work on their own terms.

agreed upon between SMC and its workers at the Polo Plant and

activity in question their concerted adoption of a different

indeed, had been religiously followed with mutually beneficial

work schedule than that prescribed by management and

results for the past five (5) years. Hence, it could not be

adhered to for several years constitutes a slowdown need

considered a matter of such great prejudice to the workers as to

not, as already stated, be gone into. Suffice it to say that

give rise to a controversy between them and management.

activity is contrary to the law, RA 6727, and the parties'

Furthermore, the workers never asked, nor were there ever any

collective bargaining agreement.

18

But whether or not the workers'

negotiations at their instance, for a change in that work

schedule prior to the strike. What really bothered them, and

The Union's claim that the restraining order is void because

was in fact the subject of talks between their representatives

issued by Commissioners whose appointments had not been

and management, was the "wage distortion" question, a fact

duly confirmed by the Commission on Appointments should be

made even more apparent by the joint notice circulated by

as it is hereby given short shift, for, as the Solicitor General

them prior to the strike, i.e., that they would adopt the eight-

points out, it is an admitted fact that the members of the

hour work shift in the meantime pending correction by

respondent Commission were actually appointed by the

President of the Philippines on November 18, 1989; there is no

complaint made under oath," as well as

evidence whatever in support of the Union's bare allegation that

"testimony in opposition thereto, if

the appointments of said members had not been confirmed;

offered . . .;

and the familiar presumption of regularity in appointment and

in performance of official duty exists in their favor.

19

c) a finding of fact by the Commission, to the

effect:

Also untenable is the Union's other argument that the

respondent NLRC Division had no jurisdiction to issue the

(1) That prohibited or unlawful acts

temporary restraining order or otherwise grant the preliminary

have been threatened and will be

injunction prayed for by SMC and that, even assuming the

committed and will be continued

contrary, the restraining order had been improperly issued. The

unless restrained, but no injunction

Court finds that the respondent Commission had acted entirely

or temporary restraining order shall

in accord with applicable provisions of the Labor Code.

be issued on account of any threat,

prohibited or unlawful act, except

Article 254 of the Code provides that "No temporary or

against the person or persons,

permanent injunction or restraining order in any case involving

association or organization making

or growing out of labor disputes shall be issued by any court or

the threat or committing the

other entity, except as otherwise provided in Articles 218 and

prohibited or unlawful act or actually

264 . . ." Article 264 lists down specific "prohibited activities"

authorizing or ratifying the same

which may be forbidden or stopped by a restraining order or

after actual knowledge thereof;

injunction. Article 218 inter alia enumerates the powers of the

National Labor Relations Commission and lays down the

(2) That substantial and irreparable

conditions under which a restraining order or preliminary

injury to complainant's property will

injunction may issue, and the procedure to be followed in

follow;

issuing the same.

(3) That as to each item of relief to
Among the powers expressly conferred on the Commission by

be granted, greater injury will be

Article 218 is the power to "enjoin or restrain any actual or

inflicted upon complainant by the

threatened commission of any or all prohibited or unlawful acts

denial of relief than will be inflicted

or to require the performance of a particular act in any labor

upon defendants by the granting of

dispute which, if not restrained or performed forthwith, may

relief;

cause grave or irreparable damage to any party or render

ineffectual any decision in favor of such party . . ."

(4) That complainant has no

adequate remedy at law; and

As a rule such restraining orders or injunctions do not issue ex

parte, but only after compliance with the following requisites, to

(5) That the public officers charged

wit:

with the duty to protect

complainant's property are unable or
a) a hearing held "after due and personal

unwilling to furnish adequate

notice thereof has been served, in such

protection.

manner as the Commission shall direct, to all

known persons against whom relief is sought,

However, a temporary restraining order may be issued ex

and also to the Chief Executive and other

parte under the following conditions:

public officials of the province or city within

which the unlawful acts have been threatened

a) the complainant "shall also allege that,

or committed charged with the duty to protect

unless a temporary restraining order shall be

complainant's property;"

issued without notice, a substantial and

irreparable injury to complainant's property

b) reception at the hearing of "testimony of

witnesses, with opportunity for crossexamination, in support of the allegations of a

will be unavoidable;

b) there is "testimony under oath, sufficient, if

In view of the foregoing factual and legal considerations, all

sustained, to justify the Commission in issuing

irresistibly leading to the basic conclusion that the concerted

a temporary injunction upon hearing after

acts of the members of petitioner Union in question are

notice;"

violative of the law and their formal agreement with the

employer, the latter's submittal, in its counter-petition that

c) the "complainant shall first file an

there was, in the premises, a "legal duty and obligation" on the

undertaking with adequate security in an

part of the respondent Commission "to enjoin the unlawful and

amount to be fixed by the Commission

prohibited acts and omissions of petitioner IBM and the workers

sufficient to recompense those enjoined for

complained of,

any loss, expense or damage caused by the

the Office of the Solicitor General concurs, asserting that the

improvident or erroneous issuance of such

"failure of the respondent commission to resolve the application

order or injunction, including all reasonable

for a writ of injunction is an abuse of discretion especially in the

costs, together with a reasonable attorney's

light of the fact that the restraining order it earlier issued had

fee, and expense of defense against the order

already expired"

20

a proposition with which, it must be said,

21

must perforce be conceded.

or against the granting of any injunctive relief

sought in the same proceeding and

WHEREFORE, the petition is DENIED, the counter-petition is

subsequently denied by the Commission;" and

GRANTED, and the case is REMANDED to the respondent

Commission (First Division) with instructions to immediately

d) the "temporary restraining order shall be

take such action thereon as is indicated by and is otherwise in

effective for no longer than twenty (20) days

accord with, the findings and conclusions herein set forth. Costs

and shall become void at the expiration of

against petitioner.

said twenty (20) days.

EN BANC G.R. No. L-58011 & L-58012 November 18, 1983
The reception of evidence "for the application of a writ of
injunction may be delegated by the Commission to any of its

VIR-JEN SHIPPING AND MARINE SERVICES,

Labor Arbiters who shall conduct such hearings in such places

INC., petitioner,

as he may determine to be accessible to the parties and their

vs. NATIONAL LABOR RELATIONS COMMISSION, ROGELIO

witnesses and shall submit thereafter his recommendation to

BISULA RUBEN ARROZA JUAN GACUTNO LEONILO ATOK,

the Commission."

NILO CRUZ, ALVARO ANDRADA, NEMESIO ADUG

SIMPLICIO BAUTISTA, ROMEO ACOSTA, and JOSE

The record reveals that the Commission exercised the power

ENCABO respondents.

directly and plainly granted to it by sub-paragraph (e) Article

217 in relation to Article 254 of the Code, and that it faithfully

RESOLUTION

observed the procedure and complied with the conditions for

the exercise of that power prescribed in said sub-paragraph (e)

GUTIERREZ, JR., J.:+.wph!1

It acted on SMC's application for immediate issuance of a

temporary restraining order ex parte on the ground that

Before the Court en banc is a motion to reconsider the decision

substantial and irreparable injury to its property would transpire

promulgated on July 20, 1982 which set aside the decision of

before the matter could be heard on notice; it, however, first

respondent National Labor Relations Commission and reinstated

direct SMC Labor Arbiter Carmen Talusan to receive SMC's

the decision of the National Seamen Board.

testimonial evidence in support of the application and

thereafter submit her recommendation thereon; it found SMC's

To better understand the issues raised in the motion for

evidence adequate and issued the temporary restraining order

reconsideration, we reiterate the background facts of the case,

upon bond. No irregularity may thus be imputed to the

Taken from the decision of the National Labor Relations

respondent Commission in the issuance of that order.

Commission: t.hqw

In any event, the temporary restraining order had a lifetime of

It appears that on different dates in

only twenty (20) days and became void ipso facto at the

December, 1978 and January, 1979, the

expired ration of that period.

Seamen entered into separate contracts of

employment with the Company, engaging
them to work on board M/T' Jannu for a period

of twelve (12) months. After verification and

volume of works, type of ship with hazardous

approval of their contracts by the NSB, the

cargo and registered in a world wide trade':

Seamen boarded their vessel in Japan.

that the 'officers and crew (were) not

interested in ITF membership if not actually

On 10 January 1919, the master of the vessel

paid with ITF rate that their 'demand is only

complainant Rogelio H. Bisula, received a

50% increase based on present basic salary

cable from the Company advising him of the

and that the proposed wage increase is the

possibility that the vessel might be directed to

'best and only solution to solve ITF problem'

call at ITF-controlled ports said at the same

since the Company's salary rates 'especially

time informing him of the procedure to be

in tankers (are) very far in comparison with

followed in the computation of the special or

other shipping agencies in Manila ...

additional compensation of crew members

while in said ports. ITF is the acronym for the

In reply, the Company proposed a 25%

International Transport Workers Federation, a

increase in the basic pay of the complainant

militant international labor organization with

crew members, although it claimed, that it

affiliates in different ports of the world, which

would "suffer and absorb considerable

reputedly can tie down a vessel in a port by

amount of losses." The proposal was accepted

preventing its loading or unloading, This is a

by the Seamen with certain conditions which

sanction resorted to by ITF to enforce the

were accepted by the Company. Conformably

payment of its wages rates for seafarers the

with the agreement of the parties which was

so-called ITF rates, if the wages of the crew

effected through the cables abovementioned,

members of a vessel who have affiliated with

the Seamen were paid their new salary rates.

it are below its prescribed rates.) In the same

cable of the Company, the expressed its

Subsequently, the Company sought authority

regrets for hot clarifying earlier the procedure

from the NSB to cancel the contracts of

in computing the special compensation as it

employment of the Seamen, claiming that its

thought that the vessel would 'trade in

principals had terminated their manning

Caribbean ports only.

agreement because of the actuations of the

Seamen. The request was granted by the NSB

On 22 March 1979, the Company sent another

Executive Director in a letter dated 10 April

cable to complainant Bisula, this time

1979. Soon thereafter, the Company cabled

informing him of the respective amounts each

the Seamen informing them that their

of the officers and crew members would

contracts would be terminated upon the

receive as special compensation when the

vessel's arrival in Japan. On 19 April 1979

vessel called at the port of Kwinana Australia,

they Arere asked to disembark from the

an ITF-controlled port. This was followed by

vessel, their contracts were terminated, and

another cable on 23 March 1979, informing

they were repatriated to Manila. There is no

him that the officers and crew members had

showing that the Seamen were given the

been enrolled as members of the ITF in

opportunity to at least comment on the

Sidney, Australia, and that the membership

Company's request for the cancellation of

fee for the 28 personnel complement of the

their contracts, although they had served only

vessel had already been paid.

three (3) out of the twelve (12) months'

duration of their contracts.

In answer to the Company's cable last

mentioned, complainant Bisula, in

The private respondents filed a complaint for illegal dismissal

representation of the other officers and crew

and non-payment of earned wages with the National Seamen

members, sent on 24 March 1979 a cable

Board. The Vir-jen Shipping and Marine Services Inc. in turn filed

informing the Company that the officers and

a complaint for breach of contract and recovery of excess

crew members were not agreeable to its

salaries and overtime pay against the private respondents. On

'suggestion'; that they were not contented

July 2, 1980, the NSB rendered a decision declaring that the

with their present salaries 'based on the

seamen breached their employment contracts when they

demanded and received from Vir-jen Shipping wages over and

F. THIS HONORABLE COURT INADVERTENTLY

above their contracted rates. The dismissal of the seamen was

DISCRIMINATED AGAINST PRIVATE

declared legal and the seamen were ordered suspended.

RESPONDENTS.

The seamen appealed the decision to the NLRC which reversed

At the outset, we are faced with the question whether or not the

the decision of the NSB and required the petitioner to pay the

Court en banc should give due course to the motion for

wages and other monetary benefits corresponding to the

reconsideration inspite of its having been denied twice by the

unexpired portion of the manning contract on the ground that

Court's Second Division. The case was referred to and accepted

the termination of the contract by the petitioner was without

by the Court en banc because of the movants' contention that

valid cause. Vir-jen Shipping filed the present petition.

the decision in this case by the Second Division deviated

from Wallem Phil. Shipping Inc. v. Minister of Labor (L-50734-37,

The private respondents submit the following issues in their

February 20, 1981), a First Division case with the same facts

motion for reconsideration: t.hqw

and issues. We are constrained to answer the initial question in

the affirmative.

A. THIS HONORABLE COURT DID VIOLENCE TO

LAW AND JURISPRUDENCE WHEN IT HELD

A fundamental postulate of Philippine Constitutional Law is the

THAT THE FINDING OF FACT OF THE NATIONAL

fact, that there is only one Supreme Court from whose decisions

SEAMEN BOARD THAT THE SEAMEN VIOLATED

all other courts are required to take their bearings. (Albert v.

THEIR CONTRACTS IS MORE CREDIBLE THAN

Court of First Instance, 23 SCRA 948; Barrera v. Barrera, 34

THE FINDING OF FACT OF THE NATIONAL

SCRA 98; Tugade v. Court of Appeals, 85 SCRA 226). The

LABOR RELATIONS COMMISSION THAT THE

majority of the Court's work is now performed by its two

SEAMEN DID NOT VIOLATE THEIR CONTRACT.

Divisions, but the Court remains one court, single, unitary,

complete, and supreme. Flowing from this nature of the

B. THIS HONORABLE COURT ERRED IN

Supreme Court is the fact that, while ' individual Justices may

FINDING THAT VIR-JEN'S HAVING AGREED TO

dissent or partially concur with one another, when the Court

A 25% INCREASE OF THE SEAMEN'S BASIC

states what the law is, it speaks with only one voice. And that

WAGE WAS NOT VOLUNTARY BUT WAS DUE TO

voice being authoritative should be a clear as possible.

THREATS.
Any doctrine or principle of law laid down by the Court, whether
C. THIS HONORABLE COURT ERRED WHEN IT

en banc or in Division, may be modified or reversed only by the

TOOK COGNIZANCE OF THE ADDENDUM

Court en banc. (Section 2(3), Article X, Constitution.) In the rare

AGREEMENT; ASSUMING THAT THE

instances when one Division disagrees in its views with the

ADDENDUM AGREEMENT COULD BE TAKEN

other Division, or the necessary votes on an issue cannot be

COGNIZANCE OF, THIS HONORABLE COURT

had in a Division, the case is brought to the Court en banc to

ERRED WHEN' IT FOUND THAT PRIVATE

reconcile any seeming conflict, to reverse or modify an earlier

RESPONDENTS HAD VIOLATED THE SAME.

decision, and to declare the Court's doctrine. This is what has

happened in this case.

D, THIS HONORABLE COURT ERRED WHEN IT

DID NOT FIND PETITIONER VIRJEN LIABLE FOR

The decision sought to be reconsidered appears to be a

HAVING TERMINATED BEFORE EXPIRY DATE

deviation from the Court's decision, speaking through the First

THE EMPLOYMENT CONTRACTS OF PRIVATE

Division, in Wallem Shipping, Inc. v. Hon. Minister of Labor (102

RESPONDENTS, THERE BEING NO LEGAL AND

SCRA 835). Faced with two seemingly conflicting resolutions of

JUSTIFIABLE GROUND FOR SUCH

basically the same issue by its two Divisions, the Court.

TERMINATION.

therefore, resolved to transfer the case to the Court en banc.

Parenthetically, the petitioner's comment on the third motion

E. THIS HONORABLE COURT ERRED IN

for reconsideration states that the resolution of the motion

FINDING THAT THE PREPARATION BY

might be the needed vehicle to make the ruling in the Wallem

PETITIONER OF THE TWO PAYROLLS AND THE

case clearer and more in time with the underlying principles of

EXECUTION OF THE SIDE CONTRACT WERE

the Labor Code. We agree with the petitioner.

NOT MADE IN BAD FAITH.

After an exhaustive, painstaking, and perspicacious

that a right which cannot, in any, event, be

consideration of the motions for reconsideration and the

advantageous to the employee, and which

comments, replies, and other pleadings related thereto, the

must always be hurtful to the employer, exists

Court en banc is constrained to grant the motions. To grant the

in law. In my opinion this indictment

motion is to keep faith with the constitutional mandate to afford

sufficiently shows that the force of the

protection to labor and to assure the rights of workers to self-

confederates was brought to bear upon their

organization and to just and humane conditions of work. We

employer for the purpose of oppression and

sustain the decision of the respondent National labor Relations

mischief and that this amounts to a

Commission.

conspiracy, (State v. Donaldson, 32 NJL 151,

1867. Cited in Chamberlain, Sourcebook on

There are various arguments raised by the petitioners but the

Labor, p. 13. Emphasis supplied)

common thread running through all of them is the contention, if

not the dismal prophecy, that if the respondent seamen are

The same arguments have greeted every major advance in the

sustained by this Court, we would in effect "kill the en that lays

rights of the workingman. And they have invariably been

the golden egg." In other words, Filipino seamen, admittedly

proved unfounded and false.

among the best in the world, should remain satisfied with

relatively lower if not the lowest, international rates of

Unionism, employers' liability acts, minimum wages, workmen's

compensation, should not agitate for higher wages while their

compensation, social security and collective bargaining to name

contracts of employment are subsisting, should accept as

a few were all initially opposed by employers and even well

sacred, iron clad, and immutable the side contracts which

meaning leaders of government and society as "killing the hen

require them to falsely pretend to be members of international

or goose which lays the golden eggs." The claims of

labor federations, pretend to receive higher salaries at certain

workingmen were described as outrageously injurious not only

foreign ports only to return the increased pay once the ship

to the employer but more so to the employees themselves

leaves that port, should stifle not only their right to ask for

before these claims or demands were established by law and

improved terms of employment but their freedom of speech and

jurisprudence as "rights" and before these were proved

expression, and should suffer instant termination of

beneficial to management, labor, and the nation as a whole

employment at the slightest sign of dissatisfaction with no

beyond reasonable doubt.

protection from their Government and their courts. Otherwise,

the petitioners contend that Filipinos would no longer be

The case before us does not represent any major advance in the

accepted as seamen, those employed would lose their jobs, and

rights of labor and the workingmen. The private respondents

the still unemployed would be left hopeless.

merely sought rights already established. No matter how much

the petitioner-employer tries to present itself as speaking for

This is not the first time and it will not be the last where the

the entire industry, there is no evidence that it is typical of

threat of unemployment and loss of jobs would be used to

employers hiring Filipino seamen or that it can speak for them.

argue against the interests of labor; where efforts by

workingmen to better their terms of employment would be

The contention that manning industries in the Philippines would

characterized as prejudicing the interests of labor as a whole.

not survive if the instant case is not decided in favor of the

petitioner is not supported by evidence. The Wallem case was

In 1867 or one hundred sixteen years ago. Chief Justice Beasley

decided on February 20, 1981. There have been no severe

of the Supreme Court of New Jersey was ponente of the court's

repercussions, no drying up of employment opportunities for

opinion declaring as a conspiracy the threat of workingmen to

seamen, and none of the dire consequences repeatedly

strike in connection with their efforts to promote unionism, t.

emphasized by the petitioner. Why should Vir-jen be all

hqw

exception?
It is difficult to believe that a right exists in

The wages of seamen engaged in international shipping are

law which we can scarcely conceive can

shouldered by the foreign principal. The local manning office is

produce, in any posture of affairs, other than

an agent whose primary function is recruitment and who

injuriois results. It is simply the right of

.usually gets a lump sum from the shipowner to defray the

workmen, by concert of action, and by taking

salaries of the crew. The hiring of seamen and the

advantage of their position, to control the

determination of their compensation is subject to the interplay

business of another, I am unwilling to hold

of various market factors and one key factor is how much in

terms of profits the local manning office and the foreign

workers. At the very least, such as sensitive matter involving no

shipowner may realize after the costs of the voyage are met.

less than our dignity as a people and the welfare of our

And costs include salaries of officers and crew members.

workingmen must proceed from the Batasang Pambansa in the

form of policy legislation, not from administrative rule making

Filipino seamen are admittedly as competent and reliable as

or adjudication

seamen from any other country in the world. Otherwise, there

would not be so many of them in the vessels sailing in every

Another issue raised by the movants is whether or not the

ocean and sea on this globe. It is competence and reliability,

seamen violated their contracts of employment.

not cheap labor that makes our seamen so greatly in demand.

Filipino seamen have never demanded the same high salaries

The form contracts approved by the National Seamen Board are

as seamen from the United States, the United Kingdom, Japan

designed to protect Filipino seamen not foreign shipowners who

and other developed nations. But certainly they are entitled to

can take care of themselves. The standard forms embody' the

government protection when they ask for fair and decent

basic minimums which must be incorporated as parts of the

treatment by their employer.-, and when they exercise the right

employment contract. (Section 15, Rule V, Rules and

to petition for improved terms of employment, especially when

Regulations Implementing the Labor Code.) They are not

they feel that these are sub-standard or are capable of

collective bargaining agreements or immutable contracts which

improvement according to internationally accepted rules. In the

the parties cannot improve upon or modify in the course of the

domestic scene, there are marginal employers who prepare two

agreed period of time. To state, therefore, that the affected

sets of payrolls for their employees one in keeping with

seamen cannot petition their employer for higher salaries

minimum wages and the other recording the sub-standard

during the 12 months duration of the contract runs counter to

wages that the employees really receive, The reliable

established principles of labor legislation. The National Labor

employers, however, not only meet the minimums required by

Relations Commission, as the appellate tribunal from decisions

fair labor standards legislation but even go way above the

of the National Seamen Board, correctly ruled that the seamen

minimums while earning reasonable profits and prospering. The

did not violate their contracts to warrant their dismissal.

same is true of international employment. There is no reason

why this Court and the Ministry of Labor and. Employment or its

The respondent Commission ruled: t.hqw

agencies and commissions should come out with

pronouncements based on the standards and practices of

In the light of all the foregoing facts, we find

unscrupulous or inefficient shipowners, who claim they cannot

that the cable of the seamen proposing an

survive without resorting to tricky and deceptive schemes,

increase in their wage rates was not and

instead of Government maintaining labor law and jurisprudence

could not have been intended as a threat to

according to the practices of honorable, competent, and law-

comp el the Company to accede to their

abiding employers, domestic or foreign.

proposals. But even assuming, if only for the

sake of argument, that the demand or

If any minor advantages given to Filipino seamen may somehow

proposal for a wage increase was

cut into the profits of local manning agencies and foreign

accompanied by a threat that they would

shipowners, that is not sufficient reason why the NSB or the

report to ITF if the Company did not accede to

ILRC should not stand by the former instead of listening to

the contract revision - although there really

unsubstantiated fears that they would be killing the hen which

was no such threat as pointed out earlier

lays the golden eggs.

the Seamen should not be held at fault for

asking such a demand. In the same case cited

Prescinding from the above, we now hold that neither the

above, the Supreme Court held: t.hqw

National Seamen Board nor the National Labor Relations

Commission should, as a matter of official policy, legitimize and

Petitioner claims that the

enforce cubious arrangements where shipowners and seamen

dismissal of private

enter into fictitious contracts similar to the addendum

respondents was justified

agreements or side contracts in this case whose purpose is to

because the latter

deceive. The Republic of the Philippines and its ministries and

threatened the ship

agencies should present a more honorable and proper posture

authorities in acceding to

in official acts to the whole world, notwithstanding our desire to

their demands, and this

have as many job openings both here and abroad for our

constitutes serious

misconduct as

not paid ITF rates and that their only demand was a 50 percent

contemplated by the Labor

increase based on their then salaries. Bisula also pointed out

Code. This contention is not

that Vir-jen rates were "very far in comparison with other

well-taken. But even if there

shipping agencies in Manila."

had been such a threat,

respondents' behavior

In reply, Vir-jen counter proposed a 25 percent increase. Only

should not be censured

after Kyoei Tanker Co., Ltd., declined to increase the lumps sum

because it is but natural for

amount given monthly to Vir-jen was the decision to terminate

them to employ some

the respondents' employment formulated.

means of pressing their

demands for petitioner, the

The facts show that Virjen Initiated the discussions which led to

refusal to abide with the

the demand for increased . The seamen made a proposal and

terms of the Special

the petitioner organized with a counter-proposal. The ship had

Agreement, to honor and

not vet gone to Australia or any ITF controlled port. There was

respect the same, They

absolutely no mention of any strike. much less a threat to strike.

were only acting in the

The seamen had done in act which under Philippine law or any

exercise of their rights, and

other civilized law would be termed illegal, oppressive, or

to deprive them of their

malicious. Whatever pressure existed, it was mild compared to

freedom of expression is

accepted valid modes of labor activity.

contrary to law and public

policy. There is no serious

We reiterate our ruling in Wallem. t.hqw

misconduct to speak of in
the case at bar which would

Petitioner claims that the

justify respondents'

dismissal of private

dismissal just because of

respondents was justified

their firmness in their

because the latter

demand for the fulfillment

threatened the ship

by petitioner of its

authorities in acceding to

obligation it entered into

their demands, and this

without any coercion,

constitutes serious

specially on the part of

misconduct as

private respondents.

contemplated by the Labor

(Emphasis supplied).

Code. This contention is not

well-taken. The records fail

The above citation is from Wallem.

to establish clearly the

commission of any threat,

The facts show that when the respondents boarded the M/T

But even if there had been

Jannu there was no intention to send their ship to Australia. On

such a threat, respondents'

January 10, 1979, the petitioner sent a cable to respondent

behavior should not be

shipmaster Bisula informing him of the procedure to be followed

censured because it is but

in the computation of special compensation of crewmembers

natural for them to employ

while in ITF controlled ports and expressed regrets for not

some means of pressing

having earlier clarified the procedure as it thought that the

their demands for

vessel would trade in Carribean ports only.

petitioner, who refused to

abide with the terms of the

On March 22, 1979, the petitioner sent another cable informing

Special Agreement, to honor

Bisula of the special compensation when the ship would call at

and respect the same, They

Kwinana Australia.

were only acting in the

exercise of their rights, and

The following day, shipmaster Bisula cabled Vir-jen stating that

to deprive them of their

the officers and crews were not interested in ITF membership if

form of expression is

contrary to law and public

cause, which under the Labor Code or any current applicable

policy. ...

law, would warrant the termination of the respondents' services

before the expiration of their contracts. The Constitution

Our dismissing the petition is premised on the assumption that

guarantees State assurance of the rights of workers to security

the Ministry of Labor and Employment and all its agencies exist

of tenure. (Sec. 9, Article II, Constitution). Presumptions and

primarily for the workinginan's interests and, of course, the

provisions of law, the evidence on record, and fundamental

nation as a whole. The points raised by the Solicitor-General in

State policy all dictate that the motions for reconsideration

his comments refer to the issue of allowing what the petitioner

should be granted.

importunes under the argument of "killing the hen which lays

the golden eggs." This is one of policy which should perhaps be

WHEREFORE, the motions for reconsideration are hereby

directed to the Batasang Pambansa and to our country's other

GRANTED. The petition is DISMISSED for lack of merit. The

policy makers for more specific legislation on the matter,

decision of the National Labor Relations Commission is

subject to the constitutional provisions protecting labor,

AFFIRMED. No costs.

promoting social justice, and guaranteeing non-abridgement of

the freedom of speech, press, peaceable assembly and petition.
We agree with the movants that there is no showing of any