THIRD DIVISION

[G.R. No. 148279. May 27, 2004]

CORPORATE INN HOTEL, ANNIE DEL ROSARIO AND JULIE PALINSAD, petitioners, vs.
JENNEVIE H. LIZO, respondent.
DECISION
SANDOVAL-GUTIERREZ, J.:

At the heart of the controversy is the issue of whether petitioners, by the simple expedient of
arguing substantial justice and miscarriage of justice, may be allowed to disregard the
mandatory 10-day period of perfecting an appeal from the decision of the Labor Arbiter. A
reverberating negative ruling was rendered by both the Court of Appeals and the National
Labor Relations Commission (NLRC).

Before us is a petition for review on certiorari under Rule 45 of the 1997 Rules of Civil
Procedure, as amended, assailing the Decision[1] dated March 30, 2001 and the
Resolution[2] dated May 23, 2001 rendered by the Court of Appeals in CA-G.R. SP No.
59037, entitled Corporate Inn Hotel, Annie Del Rosario and Julie Palinsad vs. Jennevie H.
Lizo.

The undisputed facts of the case are as follows:

On January 25, 1999, Corporate Inn Hotel, petitioner, engaged the services of Jennevie
Lizo, respondent, as a probationary account executive. In such capacity, she was tasked to
deal with clients, entertain customers, and promote patronage of the hotel. However, just a
few weeks after her employment, petitioner received complaints from its clients against her
for undesirable conduct. They also called petitioners attention to her inefficiency in
discharging her duties.

Prompted by such reports, petitioner, on February 8, 1999, evaluated respondents

performance. The evaluation disclosed her inability to deal with hotel guests. Thus, she was
recommended to undergo an additional training under maximum supervision. But barely
twenty-one (21) days after her employment, petitioner terminated her services effective
February 15, 1999.

Aggrieved, respondent filed with the Labor Arbiter a complaint for illegal dismissal and other
monetary claims against petitioner and its officers, Annie Del Rosario and Julie Palinsad,
docketed as NLRC NCR Case No. 00-03-02577-99.
On September 30, 1999, the Labor Arbiter rendered a Decision holding that respondent was
illegally dismissed, thus:

All told, it is the finding of this Arbitration Branch that the imputation against the complainant
are but the product of afterthoughts, if not surmises, and guessworks. The inevitable
conclusion is that complainant was dismissed without just and valid cause and absent due
process. Accordingly, she is entitled to her backwages from February 15, 1999 up to the date
of this decision and to separation pay equivalent to one (1) month salary, hereunder
computed as follows:

Backwages: P6,000.00/mo. x 7.5 mos = P 45,000.00

Separation Pay: at one (1) month pay = P 6,000.00

---------------
TOTAL P51,000.00
On the matter of the complainants claim for moral and exemplary damages, this is not
substantiated by the complainant. Mere allegation of illegal dismissal is not enough as it is
required that complainant must prove that bad faith on the part of the respondents attended
her dismissal from employment.

WHEREFORE, all the foregoing premises being considered, judgment is hereby rendered
ordering the respondents to pay complainant the sum of P51,000.00.

SO ORDERED.

Upon appeal, the National Labor Relations Commission (NLRC), in a Resolution dated
March 31, 2000, dismissed the same for being late.

Petitioners filed a motion for reconsideration but was denied by the NLRC in a Resolution
dated April 28, 2000.

Consequently, petitioners filed with the Court of Appeals a petition for certiorari.

In a Decision promulgated on March 30, 2001, the Appellate Court affirmed in toto the NLRC
Resolution, ratiocinating thus:
We dismiss the petition.

First. The perfection of an appeal within the reglementary period and in the manner
prescribed by law is jurisdictional. Non-compliance therewith is fatal and it renders the
judgment final and executory. Non-compliance with the required procedure deprives the
appellate court of jurisdiction to alter the final judgment, much less, to entertain the appeal.
The requirements for the perfection of an appeal are intended to discourage employers from
using the appeal to delay or evade their obligations to their employees. It also assures
employees that the money judgment in their favor will be satisfied.

The reglementary period for perfecting an appeal is provided for in Art. 223 of the Labor
Code, to wit:

ART. 223. Appeal. Decisions, awards, or orders of the Labor Arbiter are final and executory
unless appealed to the Commission by any or both parties within ten (10) calendar days
from receipt of such decisions, awards, or orders. Such appeal may be entertained only on
any of the following grounds: x x x

Whereas, the manner for perfecting an appeal is outlined in Section 3(a), Rule VI of the
NLRC New Rules of Procedure, to wit:

SECTION 3. REQUISITES FOR PERFECTION OF APPEAL. a) The Appeal shall be filed

within the reglementary period as provided in Section 1 of this Rule shall be under oath with
proof of payment of the required appeal fee and the posting of a cash or surety bond as
provided in Section 6 of this Rule; shall be accompanied by memorandum of appeal which
shall state the grounds relied upon and the arguments in support thereof; the relief prayed
for and a statement of the date when the appellant received the appealed decision, order or
award and proof of service on the other party of such appeal.

A mere notice of appeal without complying with the other requisites aforestated shall not stop
the running of the period for perfecting an appeal. (underscoring ours)

In addition, Art. 223 of the Labor Code, 2nd paragraph, provides that:

In case of a judgment involving a monetary award, an appeal by the employer may be

perfected only upon the posting of a cash or surety bond issued by a reputable bonding
company duly accredited by the Commission in the amount equivalent to the monetary
award in the judgment appealed from.
Therefore, an appeal is perfected by simultaneously filing a notice of appeal and a
memorandum of appeal and by posting an appeal bond, all within the period of ten (10) days
from receipt of the questioned decision.

In the instant case, petitioner Corporate Inns appeal to the NLRC was filed out of time and
petitioner realized this lapse from start but it pleaded for leniency with the NLRC, as it does
now before Us, x x x:

xxx

Unfortunately, none of these circumstances sways Us to relax the rules in favor of petitioner.
xxx

xxx

Third. So far, petitioner has taken great pains to plead for a relaxation of the reglementary
period for filing an appeal. But while doing so, it failed to establish the other requisite for the
perfection of an appeal - the posting of an appeal bond. Understandably, the NLRC no
longer saw it fit to discuss this requisite due to its conclusion that the appeal was filed out of
time. However, it was incumbent upon petitioner to allege compliance with the required
appeal bond in its petition to add more depth to the theory that it has perfected its appeal,
but it did not. This lapse compounds petitioners clearly untenable position on its tardy appeal
and leaves no doubt in Our minds that indeed petitioners failed in all aspects to perfect its
appeal.

WHEREFORE, the instant petition is hereby DISMISSED and the resolutions of the NLRC,
dated 31 March 2000 and 28 April 2000 are SUSTAINED in toto. Costs against petitioners.

SO ORDERED.

From the said Decision, petitioners filed a motion for reconsideration, but was denied by the
Court of Appeals in a Resolution dated May 23, 2001.

Hence, this petition for review on certiorari.

The issue before us is not novel.

At the outset, it bears stressing that the right to appeal is a statutory right and one who seeks
to avail of the right must comply with the statute or rules. The rules, particularly the
requirements for perfecting an appeal within the reglementary period specified in the law,
must be strictly followed as they are considered indispensable interdictions against needless
delays and for orderly discharge of judicial business.[3]

The NLRC Rules, akin to the Rules of Court, promulgated by authority of law, have the force
and effect of law; and such NLRC rules prescribing the time within which certain acts must
be done, or certain proceedings taken, are considered absolutely indispensable to the
prevention of needless delays and to the orderly and speedy discharge of judicial business.
[4]

Thus, petitioners are mandated to perfect their appeal in the manner and within the period
permitted by law and failure to do so renders the judgment of the Labor Arbiter final and
executory.

In Veterans Philippine Scout Security Agency vs. National Labor Relations Commission and
Roberto De Los Santos,[5] we held:

Under Article 223 of the Labor Code, a decision of a Labor Arbiter is final and executory
unless appealed to the National Labor Relations Commission by any or both of the parties
within ten (10) days from notice of the said Decision. Thus, the perfection of an appeal within
the reglementary period for the same is jurisdictional in character.

Similarly, in Peftok Integrated Services, Inc. vs. NLRC,[6] we considered the appeal of
petitioner therein as flawed for being late, its appeal having been interposed seven (7) days
beyond the 10-day reglementary period.

While we may have sidestepped the rule on the statutory or reglementary period for filing an
appeal, yet, we emphasized this caveat: we cannot respond with alacrity to every clamor of
injustice and bend the rules to placate a vociferous protestor crying and claiming to be a
victim of a wrong. It is only in highly meritorious cases that this Court opts not to strictly apply
the rules and thus prevent a grave injustice from being done.[7] However this exception does
not obtain here.

We thus find no compelling reason to reverse the Decision and Resolution of the Court of
Appeals.

WHEREFORE, the petition is DENIED. The Decision dated March 30, 2001 and Resolution
dated May 23, 2001 of the Court of Appeals in CA-G.R. SP No. 59037 are hereby
AFFIRMED.
SO ORDERED.

THIRD DIVISION

ANDREW JAMES MCBURNIE, G.R. Nos. 178034 & 178117;

Petitioner, G.R. Nos. 186984-85
Present:
Ynares-Santiago, J. (Chairperson),
- versus - Chico-Nazario,
Velasco, Jr.,
Nachura, and
Peralta, JJ.
EULALIO GANZON, EGI-MANAGERS,
INC. and E. GANZON, INC., Promulgated:
Respondents.
September 18, 2009
x ---------------------------------------------------------------------------------------- x

DECISION

YNARES-SANTIAGO, J.:

Assailed in this petition for review on certiorari under Rule 45 of the Rules of Court is the
October 27, 2008 Decision[1] of the Court of Appeals in CA-G.R. SP Nos. 90845 and 95916,
granting respondents Motion to Reduce Appeal Bond; directing them to post a bond of P10
Million; and ordering the National Labor Relations Commission (NLRC), to give due course
to their appeal and to conduct further proceedings. Also assailed is the Resolution[2] dated
March 3, 2009 denying the motion for reconsideration.
On May 11, 1999, petitioner Andrew James McBurnie, an Australian national, signed a five-
year employment contract as Executive Vice-President of respondent EGI Managers, Inc.
(EGI), through its President respondent Eulalio Ganzon.[3] McBurnies responsibilities were
to oversee the general management of the companys hotels and resorts within the
Philippines, supervise the present and future constructions of its hotel and resort properties;
review the operational performance of the hotels and resorts; and make recommendations to
improve profitability, efficiency and reputation, and to engage other hotel management
groups, if necessary.[4]

On June 7, 1999, McBurnie furnished Manjo Martinez, EGIs Vice President, a concept paper
regarding the management philosophy and structure of Leisure Experts International, with its
staffing budget, timeline and office layout.[5] On September 8, 1999, he submitted to
respondent Ganzon his ten-year financial projection with debt servicing for the Coronado
Beach - Cebu.[6] He also completed the audit of the EGI Maribago Resort - Cebu and
requested that he be given access to the general ledgers to verify the findings.[7] Lastly, on
September 29, 1999, he furnished respondent Ganzon the Monthly Profit and Loss
Statement of EGI for the year 2000; he also expressed his concern on the failure of EGI to
release funds for the proper operation of the business; and likewise informed respondents
that he had already used his personal money to finance the operation.[8]

On November 1, 1999, petitioner featured in an accident that fractured his skull and
necessitated his confinement at the Makati Medical Center.[9] While recuperating from his
injuries in Australia, petitioner was informed by respondent Ganzon that his services were no
longer needed since the project had been permanently discontinued.[10]

Thus, on October 4, 2002, petitioner filed a complaint for illegal dismissal with prayer for the
payment of his salary and benefits for the unexpired term of the contract, damages and
attorneys fees.[11]

In their Position Paper, respondents contended that there never existed an employer-
employee relationship between them and petitioner; that petitioner was employed at Pan
Pacific Hotel when he proposed to respondent Ganzon to jointly put up and invest in a
company that will professionally manage hotels; that they agreed in principle with no
assurance as to its funding; that after petitioner left Pan Pacific Hotel, he requested
respondent Ganzon to be his sponsor for his alien work permit; that the Employment
Contract was executed with the understanding that the same shall be used only for alien
work permit and visa applications; and considering that no permit was issued to petitioner,
he left for Australia for medical treatment and never returned.[12]

On September 30, 2004, Labor Arbiter Salithmar Nambi rendered a decision declaring
petitioners dismissal illegal and ordering respondents to pay US$985,162.00 as salary and
benefits for the unexpired term of the contract, P2,000,000.00 as moral and exemplary
damages, and attorneys fees equivalent to 10% of the total monetary award.[13]

On November 5, 2004, or 10 days after receipt of the Labor Arbiters decision, respondents
filed before the NLRC a Memorandum of Appeal[14] and Motion to Reduce Bond,[15] and
posted as bond the amount of P100,000.00. They argued that the awards of the Labor
Arbiter were null and excessive, with the premeditated intention to render the employer
incapable of posting an appeal bond and consequently deprive him of the right to appeal.[16]

In an Order[17] dated March 31, 2005, the NLRC denied the motion to reduce bond and
ordered respondents to post an additional bond of P54,083,910.00 together with the other
requirements under Section 6, Rule VI of the NLRC Rules of Procedure within a non-
extendible period of 10 days from receipt thereof, otherwise the appeal shall be dismissed.
Respondents moved for reconsideration but it was denied in an Order[18] dated July 15,
2005; respondents were again ordered to post the additional appeal bond within another
non-extendible period of 10 days from receipt thereof.

Instead of complying with the order of the NLRC, respondents filed on August 12, 2005, a
petition for certiorari and prohibition with the Court of Appeals with prayer for issuance of a
preliminary injunction and/or temporary restraining order, (TRO)[19] which was docketed as
CA-G.R. SP No. 90845.[20]

On September 8, 2005, a TRO effective for 60 days was issued enjoining the NLRC from
enforcing its March 31, 2005 and July 15, 2005 Orders.[21]

Meanwhile, on March 8, 2006, after the TRO expired and respondents still failed to post
additional bond, the NLRC dismissed their appeal, thus:
WHEREFORE, in view of the foregoing, respondents appeal is hereby DISMISSED for
failure to post additional bond as directed by the Commission and as mandated by law.
Complainants Ex-Parte Motion for Entry of Judgment and to Remand the Records to the
Labor Arbitration Branch of origin is DENIED for being premature.

SO ORDERED.[22]

Following the denial by the NLRC of their motion for reconsideration,[23] respondents filed
with the Court of Appeals a petition for certiorari with prayer for issuance of TRO and/or writ
of preliminary injunction, which was docketed as CA-G.R. SP No. 95916 and was ordered
consolidated with CA-G.R. SP No. 90845.[24]

On December 8, 2006, the Court of Appeals issued a TRO enjoining the NLRC from
enforcing its March 8, 2006 Resolution dismissing respondents appeal, and its June 30,
2006 Resolution denying the motion for reconsideration thereof.[25] On May 29, 2007, it
issued a Writ of Preliminary Injunction after respondents posted an injunction bond of
P10,000,000.00.[26]
Petitioner assailed the issuance of the writ before the Supreme Court, which was docketed
as G.R. Nos. 178034 & 178117. However, it was dismissed for submitting an affidavit of
service which failed to show a competent evidence of affiants identity.[27]
Meanwhile, on October 27, 2008, the Court of Appeals rendered the assailed Decision
granting respondents Motion to Reduce Appeal Bond and directing them to post an appeal
bond of P10,000,000.00 with the NLRC, which was likewise ordered to give due course to
the appeal and to conduct further proceedings, thus:

WHEREFORE, in view of the foregoing, the petition for certiorari and prohibition docketed as
CA GR SP No. 90845 and the petition for certiorari docketed as CA GR SP No. 95916 are
GRANTED. Petitioners Motion to Reduce Appeal Bond is GRANTED. Petitioners are hereby
DIRECTED to post appeal bond in the amount of P10,000,000.00. The NLRC is hereby
DIRECTED to give due course to petitioners appeal in CA GR SP No. 95916 which is
ordered REMANDED to the NLRC for further proceedings.

SO ORDERED.[28]

Petitioners motion for reconsideration was denied in a Resolution[29] dated March 3, 2009.

Hence, this petition for review on certiorari raising the sole issue of:

WHETHER OR NOT THE HONORABLE COURT OF APPEALS COMMITTED

REVERSIBLE ERROR IN FINDING THAT THE NLRC COMMITTED GRAVE ABUSE OF
DISCRETION WHEN IN FACT IT MERELY FOLLOWED AND IMPLEMENTED THE VALID,
CLEAR AND UNQUESTIONED PROVISION OF THE LABOR CODE, SPECIFICALLY
ARTILE 223 AND SEC. 6, RULE VI OF THE NLRC RULES OF PROCEDURE WHICH
IMPLEMENTATION IS IN ACCORD WITH THE JURISPRUDENCE SET BY THE SUPREME
COURT IN THE PERFECTION OF APPEALS IN LABOR CASES.[30]

Petitioner contends a) that the Court of Appeals erred in holding that the NLRC committed
grave abuse of discretion when it outrightly dismissed the motion to reduce appeal bond
without fixing a reasonable amount therefor, thus depriving the respondents their right to
appeal the Labor Arbiters decision; b) that the rules on perfection of appeals must be strictly
applied; c) that the period for posting the bond cannot be made to depend on the discretion
of the party; d) that respondents not only refused to post appeal bond within the prescribed
period but the ground relied upon for the reduction thereof, to wit: the awards were patent
nullity and excessive, was not meritorious.

The petition is impressed with merit.

Article 223 of the Labor Code provides:

Article 223. Appeal. Decisions, awards, or orders of the Labor Arbiter are final and executory
unless appealed to the Commission by any or both parties within ten (10) calendar days
from receipt of such decisions, awards, or orders. x x x

xxxx

In case of a judgment involving a monetary award, an appeal by the employer may be

perfected only upon the posting of a cash or surety bond issued by a reputable bonding
company duly accredited by the Commission in the amount equivalent to the monetary
award in the judgment appealed from. (Emphasis supplied)

The posting of a bond is indispensable to the perfection of an appeal in cases involving

monetary awards from the decision of the Labor Arbiter. The lawmakers clearly intended to
make the bond a mandatory requisite for the perfection of an appeal by the employer as
inferred from the provision that an appeal by the employer may be perfected only upon the
posting of a cash or surety bond. The word only makes it clear that the posting of a cash or
surety bond by the employer is the essential and exclusive means by which an employers
appeal may be perfected. On the other hand, the word may refers to the perfection of an
appeal as optional on the part of the defeated party, but not to the compulsory posting of an
appeal bond, if he desires to appeal. The meaning and the intention of the legislature in
enacting a statute must be determined from the language employed; and where there is no
ambiguity in the words used, then there is no room for construction.[31]

Moreover, the filing of the bond is not only mandatory but a jurisdictional requirement as well,
that must be complied with in order to confer jurisdiction upon the NLRC. Non-compliance
therewith renders the decision of the Labor Arbiter final and executory. This requirement is
intended to assure the workers that if they prevail in the case, they will receive the money
judgment in their favor upon the dismissal of the employers appeal. It is intended to
discourage employers from using an appeal to delay or evade their obligation to satisfy their
employees' just and lawful claims.[32]

The jurisdictional principle and the mandatory nature of the appeal bond posted within the
10-day reglementary period are reaffirmed by the New Rules of Procedure of the NLRC.[33]
The pertinent provisions state:

RULE VI
APPEALS

SECTION 1. PERIODS OF APPEAL. Decisions, resolutions or orders of the Labor Arbiter

shall be final and executory unless appealed to the Commission by any or both parties within
ten (10) calendar days from receipt of such decisions, resolutions or orders of the Labor
Arbiter and in case of a decision of the Regional Director within five (5) calendar days from
receipt of such decisions, resolutions, or orders. If the 10th or 5th day, as the case may be,
falls on a Saturday, Sunday or a holiday, the last day to perfect the appeal shall be the next
working day.

xxxx

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

xxxx

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

The filing of the motion to reduce bond without compliance with the requisites in the
preceding paragraph shall not stop the running of the period to perfect an appeal. (Emphasis
supplied)

Thus, it behooves the Court to give utmost regard to the legislative and administrative intent
to strictly require the employer to post a cash or surety bond securing the full amount of the
monetary award within the 10 day reglementary period. Nothing in the Labor Code or the
NLRC Rules of Procedure authorizes the posting of a bond that is less than the monetary
award in the judgment, or would deem such insufficient posting as sufficient to perfect the
appeal.[34]

While the bond may be reduced upon motion by the employer, this is subject to the
conditions that (1) the motion to reduce the bond shall be based on meritorious grounds; and
(2) a reasonable amount in relation to the monetary award is posted by the appellant,
otherwise the filing of the motion to reduce bond shall not stop the running of the period to
perfect an appeal.[35] The qualification effectively requires that unless the NLRC grants the
reduction of the cash bond within the 10 day reglementary period, the employer is still
expected to post the cash or surety bond securing the full amount within the said 10-day
period. If the NLRC does eventually grant the motion for reduction after the reglementary
period has elapsed, the correct relief would be to reduce the cash or surety bond already
posted by the employer within the 10-day period.[36]

Records show that respondents filed their Memorandum of Appeal and Motion to Reduce
Appeal Bond on the 10th or last day of the reglementary period. Although they posted an
initial appeal bond of P100,000.00, the same was grossly inadequate compared to the
monetary awards of US$985,162.00 representing salaries and benefits for the unexpired
portion of the contract, P2,000,000 as moral and exemplary damages and attorneys fees
equivalent to the total monetary award. Further, there is no basis in respondents contention
that the awards of the Labor Arbiter were null and excessive, and with premeditated intention
to render respondents incapable of posting an appeal bond and deprive them of the right to
appeal.

In Computer Innovations Center v. National Labor Relations Commission,[37] the Court held,
thus:

The grounds cited for reduction of the appeal bond were the great possibility of the reversal
of the [Labor Arbiters] decision in the light of the serious errors in the findings of fact and in
the application of the law, and that the monetary award was too harsh and unfounded. Just
about any aggrieved employer can invoke such grounds. Indeed, the mere allegation of the
decision as purportedly erroneous in fact or in law cannot serve to mitigate the appeal bond
requirement. Neither could the allegation that the monetary award was too harsh or
unfounded unsettle the appeal bond requirement absent concrete proof, especially if, as in
this case, the alleged harshness of the award is not self-evident.[38]

It was further held therein that:

Admittedly, these rules as embodied in the Labor Code and the NLRC Rules of Procedure
impose a burden on the employer intending to appeal the decision of the labor arbiter. Within
the ten (10)-day reglementary period, the employer has to prepare a memorandum of appeal
and to secure a cash or surety bond equivalent to the monetary award in the judgment
appealed from. The facility in obtaining the bond is highly dependent on circumstances
particular to the employer. Yet it is highly probable that should the employer take the effort to
secure the cash or surety bond immediately upon receipt of the decision of the Labor Arbiter,
such bond would be available within the ten (10)-day reglementary period.

It also does not escape judicial notice that the cash/surety bond requirement does not
necessitate the employer to physically surrender the entire amount of the monetary
judgment. The usual procedure is for the employer to obtain the services of a bonding
company, which will then require the employer to pay a percentage of the award in exchange
for a bond securing the full amount. This observation undercuts the notion of financial
hardship as a justification for the inability to timely post the required bond.

At the same time, the Court understands that especially in cases wherein the monetary
award is significant in relation to the employers assets, it might be difficult to immediately
obtain the required bond pending ascertainment by the bonding company that the employer
holds sufficient security in case the bond is subsequently executed. It is under these
premises that petitioners arguments should bear scrutiny.[39] (Emphasis supplied)
The failure of the respondents to comply with the requirement of posting a bond equivalent in
amount to the monetary award is fatal to their appeal. For filing their motion only on the final
day within which to perfect an appeal, respondents cannot be allowed to seek refuge in a
liberal application of the rules. Under such circumstance, there is neither way for the NLRC
to exercise its discretion to grant or deny the motion, nor for the respondents to post the full
amount of the bond, without risk of summary dismissal for non-perfection of appeal.

While in certain instances, we allow a relaxation in the application of the rules, we never
intend to forge a weapon for erring litigants to violate the rules with impunity. The liberal
interpretation and application of rules apply only in proper cases of demonstrable merit and
under justifiable causes and circumstances,[40] but none obtains in this case. The NLRC
had, therefore, the full discretion to grant or deny their motion to reduce the amount of the
appeal bond. The finding of the labor tribunal that respondents did not present sufficient
justification for the reduction thereof cannot be said to have been done with grave abuse of
discretion.

The records show that after the motion to reduce appeal bond was denied, the NLRC still
allowed respondents a new period of 10 days from receipt of the order of denial within which
to post the additional bond. Nonetheless, respondents failed to post the additional bond and
instead moved for reconsideration. On this score alone, their appeal should have been
dismissed outright for not having been perfected on time. The NLRC even bent backwards
by entertaining the motion for reconsideration and even granted respondents another 10
days within which to post the appeal bond. However, respondents did not take advantage of
this liberality when they persistently failed and refused to post the additional bond despite
the extensions given them.

Time and again, it has been held that the right to appeal is not a constitutional right, but a
mere statutory privilege. Hence, parties who seek to avail themselves of it must comply with
the statutes or rules allowing it.[41] To reiterate, perfection of an appeal in the manner and
within the period permitted by law is mandatory and jurisdictional. The requirements for
perfecting an appeal must, as a rule, be strictly followed. Such requirements are considered
indispensable interdictions against needless delays and are necessary for the orderly
discharge of the judicial business. Failure to perfect the appeal renders the judgment of the
court final and executory.[42] Just as a losing party has the privilege to file an appeal within
the prescribed period, so does the winner also have the correlative right to enjoy the finality
of the decision.[43] Thus, the propriety of the monetary awards of the Labor Arbiter is
already binding upon this Court, much more with the Court of Appeals.

WHEREFORE, the petition is GRANTED. The Decision of the Court of Appeals in CA-G.R.
SP Nos. 90845 and 95916 dated October 27, 2008 granting respondents Motion to Reduce
Appeal Bond and ordering the National Labor Relations Commission to give due course to
respondents appeal, and its March 3, 2009 Resolution denying petitioners motion for
reconsideration, are REVERSED and SET ASIDE. The March 8, 2006 and June 30, 2006
Resolutions of the National Labor Relations Commission in NLRC NCR CA NO. 042913-05
dismissing respondents appeal for failure to perfect an appeal and denying their motion for
reconsideration, respectively, are REINSTATED and AFFIRMED.
SO ORDERED.

SECOND DIVISION

G.R. No. 191906 June 2, 2014

JOSELITO MA. P. JACINTO (Formerly President of F. Jacinto Group, Inc.), Petitioner,

vs.
EDGARDO* GUMARU, JR., Respondent.

DECISION

DEL CASTILLO, J.:

"When a judgment has been satisfied, it passes beyond review",1 and "there are no more
proceedings to speak of inasmuch as these were terminated by the satisfaction of the
judgment."2

This Petition for Review on Certiorari3 seeks to set aside the November 5, 2009 Resolution4
of the Court of Appeals (CA) in CA-G.R. SP No. 111098, entitled "Joselito Ma. P. Jacinto
(Former President of F Jacinto Group, Inc.), Petitioner, versus Edgardo Gumaru, Jr. and the
National Labor Relations Commission, Respondents," as well as its March 24, 2010
Resolution5 denying the petitioner's Motion for Reconsideration.

Factual Antecedents

On December 6, 2004, a Decision6 was rendered in favor of respondent Eduardo Gumaru,

Jr. and against petitioner Joselito Ma. P. Jacinto and F. Jacinto Group, Inc. in NLRC-NCR
Case No. 00-06-07542-037 (the labor case), the dispositive portion of which reads:

WHEREFORE, premises considered, respondents are hereby jointly and severally liable to
pay complainant the following:
1. Separation pay based on two months per year of service.

P50,000.00 x 2 x 10 years = P1,000,000.00

2. Other monetary claims.

A. 3 mos. unpaid wages & allowance = P133,101.00

B. SL/VL for 2000 = 34,969.00

C. 13th month pay for 2000 = 24,944.00

3. Moral Damages in the sum of P100,000.00

4. Exemplary Damages in the sum of P500,000.00

5. 10% of all sums accruing shall be adjudged as attorneys fees.

It is understood that the withholding of the separation benefits plus other monetary claims
shall earn legal interest of 12% per annum from the time [they were] unlawfully withheld on
September 01, 2000.

SO ORDERED.8

Petitioner and F. Jacinto Group, Inc. filed an appeal with the National Labor Relations
Commission (NLRC). However, the appeal was not perfected for failure to post the proper
cash or surety bond; this was the finding of the NLRC in its Resolution dated September 30,
2005.9

Thus, the December 6, 2004 Decision became final and executory. Entry of judgment was
issued by the NLRC on November 23, 2005.10

On February 6, 2006, a Writ of Execution11 was issued in the labor case. A Second Alias
Writ of Execution was issued and returned when the first one expired. By virtue of such alias
writ, real property belonging to petitioner located in Baguio City and covered by Original
Certificate of Title No. P-2010 was levied upon, and was scheduled to be sold at auction
on June 27, 2008 or July 4, 2008.

On June 20, 2008, petitioner filed an Extremely Urgent Motion to Lift and Annul Levy on
Execution12 praying, among others, that the scheduled June 27, 2008 auction sale be
restrained, and that the execution process covered by the Second Alias Writ of Execution be
invalidated.

On June 26, 2008, the Labor Arbiter issued an Order13 denying petitioners Extremely
Urgent Motion to Lift and Annul Levy on Execution, thus:

On June 20, 2008, respondents filed a Motion to Lift and Annul levy on execution on the
ground that the writ of execution served had already elapsed. Finding that the writ of
execution was issued on September 07, 2007 and pursuant to the Supreme Courts
declaration in the case of Merlinda Dagooc vs. Roberto Endina, 453 SCRA 423 quoting
section 14 of the Revised Rules of Court, that the writ has a life of five years, the instant
Motion is hereby DENIED.

WHEREFORE, premises considered, the NLRC Sheriff is hereby ORDERED to proceed

with the auction sale set on June 27, 2008 at 10:00 AM before the Register of Deeds of
Baguio City.

SO ORDERED.14

The Subject Resolutions of the National Labor Relations Commission

Petitioner appealed the Labor Arbiters June 26,2008 Order to the NLRC, which, in a
November 28, 2008 Resolution,15set aside the same. The decretal portion of the Resolution
states:

WHEREFORE, premises considered, the Order appealed from is hereby SET ASIDE and
respondents-appellants Motion to Lift and Annul Levy is GRANTED. The Labor Arbiter is
also hereby ordered to oversee the proper implementation and execution of the judgment
award in this case.

Let the records be remanded to the Labor Arbiter of origin for further execution proceedings.

SO ORDERED.16
Petitioner moved for partial reconsideration, but in a July 27, 2009 Resolution,17 the NLRC
stood its ground.

The Assailed Resolutions of the Court of Appeals

Petitioner went up to the CA on certiorari, assailing the November 28, 2008 and July 27,
2009 Resolutions of the NLRC. The Petition18 in CA-G.R. SP No. 111098 contained a
verification and certification of non-forum shopping that was executed and signed not by
petitioner, but by his counsel Atty. Ronald Mark S. Daos.

On November 5, 2009, the CA issued the first assailed Resolution, which held thus:

The Verification and Certification of Non-Forum Shopping, which accompanied the petition at
bar, was executed and signed by petitioners counsel Atty. Ronald Mark S. Daos, in violation
of Section 5,Rule 7 of the Revised Rules of Court.

Pursuant to Supreme Court Revised Circular No. 28-91, the duty to certify under oath is
strictly addressed to petitioner which in this case is herein petitioner Joselito P. Jacinto and
not his counsel to [sic] Atty. Ronald Mark S. Daos. Thus, to allow the delegation of said duty
to anyone would render Supreme Court Revised Circular No. 28-91 inutile.

Accordingly, the petition is DENIED DUE COURSE and DISMISSED.

SO ORDERED.19

Petitioner filed his Motion for Reconsideration,20 arguing that a verification signed by
counsel constitutes adequate and substantial compliance under Sections 4 and 5, Rule 7 of
the 1997 Rules of Civil Procedure;21 verification is merely a formal, and not jurisdictional,
requisite such that an improper verification or certification against forum-shopping is not a
fatal defect.22 Petitioner attached a copy of an Affidavit23 acknowledged before the Hon.
Paul Raymond Cortes, Consul, Philippine Consulate General, Honolulu, Hawaii, U.S.A.
attesting that he caused the preparation of the CA Petition, and that he read the contents of
the CA Petition and affirm that they are true and correct and undisputed based on his own
personal knowledge and on authentic records. In said Affidavit, petitioner further certified that
he has not commenced any other action or proceeding, or filed any claims involving the
same issues in the Supreme Court, Court of Appeals, or any Division thereof, or in any other
court, tribunal or agency; to the best of his knowledge, no such other action, proceeding, or
claim is pending before the Supreme Court, Court of Appeals, or any division thereof, or in
any court, tribunal or agency; if there is any other action or proceeding which is either
pending or may have been terminated, he will state the status thereof; if he should thereafter
learn that a similar action, proceeding or claim has been filed or is pending before the
Supreme Court, Court of Appeals, or any division thereof, or in any court, tribunal or agency,
he undertakes to promptly report the fact within five days from notice thereof. Petitioner
explained further that he was out of the country, and could not return on account of his
physical condition, which thus constrained him to resort to the execution of a sworn
statement in lieu of his actual verification and certification as required under the Rules.
Petitioner likewise ratified Atty. Daoss acts done on his behalf relative to the labor case and
the filing of the CA Petition, and implored the appellate court to reconsider its November 5,
2009 Resolution and excuse his procedural oversight in respect of the improper verification
and certification in his CA Petition.

On March 24, 2010, the CA issued the second assailed Resolution denying petitioners
Motion for Reconsideration, stating that a writ of certiorari is merely a "prerogative writ, never
demandable as a matter of right, never issued except in the exercise of judicial discretion.
Hence, he who seeks a writ of certiorari must apply for it only in the manner and strictly in
accordance with the provisions of the law and the Rules."24

Thus, the present Petition was instituted.

Issues

Petitioner raises the following issues:

4.1. THE COURT OF APPEALS SHOULD NOT HAVE DISMISSED THE SUBJECT
PETITION.

A PARTY UNABLE TO SIGN THE CERTIFICATION AGAINST FORUM SHOPPING CAN

AUTHORIZE HIS COUNSEL TO SIGN THE CERTIFICATION. IN HIS AFFIDAVIT AND
SPECIAL POWER OF ATTORNEY, PETITIONER EFFECTIVELY EMPOWERED HIS
COUNSEL TO EXECUTE THE REQUIRED VERIFICATION AND CERTIFICATION.
MOREOVER, PETITIONER, BEING ABROAD AND PHYSICALLY UNABLE TO TRAVEL TO
THE NEAREST CONSULAR OFFICE, MERITED THE RELAXATION OF THE TECHNICAL
RULES ONVERIFICATION AND CERTIFICATION. IN ANY EVENT, PETITIONER
SUBSEQUENTLY SUBMITTED THE NECESSARY DOCUMENT, IN SUBSTANTIAL
COMPLIANCE WITH THE REQUIREMENT OF VERIFICATION AND CERTIFICATION.
VERIFICATION BY COUNSEL IS LIKEWISE ADEQUATE AND SUBSTANTIALLY
COMPLIANT.THE REQUIREMENT OF VERIFICATION IS ALSO DEEMED
SUBSTANTIALLY COMPLIED WITH WHEN THE AFFIANT ACTED IN GOOD FAITH AND X
X X [POSSESSES] X X X SUFFICIENT KNOWLEDGE TO TRUTHFULLY ATTEST THAT
THE ALLEGATIONS ARE TRUE AND CORRECT, AS IN THE CASE AT BAR. IN ANY CASE,
VERIFICATION IS A FORMAL, NOT A JURISDICTIONAL,REQUISITE. IT AFFECTS ONLY
THE FORM OF PLEADINGBUT DOES NOT RENDER THE PLEADING FATALLY
DEFECTIVE.
4.2. THE COURT OF APPEALS SHOULD HAVE GIVEN DUE COURSE TO THE SUBJECT
PETITION.

THE MERITS, SPECIAL CIRCUMSTANCES AND COMPELLING REASONS FOR THE

ALLOWANCE OF THE SUBJECT PETITION, SPECIFICALLY, THAT IN THE ABSENCE OF
A PRIOR VALID SERVICE ON PETITIONER OF THE RESOLUTION SUPPOSEDLY
DISPOSING OF HIS APPEAL OF THE DECEMBER 6, 2004 DECISION, THE SAID
DECISION CANNOT BE IMPLEMENTED AND EXECUTED BECAUSE IT HAS NOT
ATTAINED FINALITY AND JURIDICAL EXISTENCE, IS APPARENT. IF NOT CORRECTED,
IT WOULD CAUSE GREAT AND IRREPARABLE DAMAGE AND INJURY, NOT TO
MENTION GRAVE INJUSTICE, TO PETITIONER, WHO WILL BECOMPELLED TOSATISFY
A JUDGMENT THAT OBVIOUSLY HAS NOT ATTAINED FINALITY AND JURIDICAL
EXISTENCE.25

Petitioners Arguments

Essentially, petitioner in his Petition and Reply26 argues that if, for reasonable or justifiable
reasons, a party is unable to sign the verification and certification against forum-shopping,
he could execute a special power of attorney authorizing his lawyer to execute the
verification and sign the certification on his behalf. Which is exactly what petitioner did: he
executed a special power of attorney in favor of his counsel, Atty. Daos, authorizing the latter
to file the Petition in CA-G.R. SP No. 111098 and thus sign the verification and certification
against forum-shopping contained therein. Petitioner asserts that, going by the dispositions
of the Court in past controversies,27 the said procedure is allowed.

Petitioner next argues that there are compelling reasons to grant his Petition for Certiorari.
He asserts that the NLRC committed grave abuse of discretion in issuing its assailed
November 28, 2008 and July 27, 2009 Resolutions remanding the case to the Labor Arbiter
for further proceedings on execution, claiming that the December 6, 2004 Decision of the
Labor Arbiter had not attained finality since the NLRC failed to furnish him with a copy of its
September 30, 2005 Resolution which dismissed his appeal for failure to post the required
bond and thus perfect the appeal. Since the Labor Arbiters Decision has not attained finality,
execution proceedings could not commence; the NLRC may not direct the Labor Arbiter to
conduct execution proceedings below.

Petitioner therefore prays that the Court annul and set aside the assailed Resolutions of the
CA and order the reinstatement of his Petition for Certiorari in the appellate court.

Respondents Arguments

In his Comment,28 respondent contends that with the dismissal of petitioners certiorari
petition by the CA, it is for all intents and purposes deemed to have never been filed, and
thus may not be corrected by resorting to a Petition for Review under Rule 45. Respondent
reiterates the view taken by the CA that certiorari under Rule 65 is a prerogative writ that is
not demandable as a matter of right.

Respondent notes further that the Verification and Certification against forum-shopping
accompanying the instant Petition was not signed by petitioner, but by his counsel, in
consistent violation of the Courts Circular No. 28-91 and Rule 7 of the 1997 Rules of Civil
Procedure.1wphi1

Respondent cites that he is already 71 years old, yet petitioner continues to undermine
execution of the judgment rendered in the labor case through the instant Petition, which he
prays the Court to deny.

Our Ruling

The Court finds that the Petition has become moot and academic.

It is true, as petitioner asserts, that if for reasonable or justifiable reasons he is unable to

sign the verification and certification against forum shopping in his CA Petition, he may
execute a special power of attorney designating his counsel of record to sign the Petition on
his behalf. In Altres v. Empleo,29 this view was taken:

For the guidance of the bench and bar, the Court restates in capsule form the jurisprudential
pronouncements already reflected above respecting noncompliance with the requirements
on, or submission of defective, verification and certification against forum shopping:

1) A distinction must be made between non-compliance with the requirement on or

submission of defective verification, and non-compliance with the requirement on or
submission of defective certification against forum shopping.

2) As to verification, non-compliance therewith or a defect therein does not necessarily

render the pleading fatally defective. The court may order its submission or correction or act
on the pleading if the attending circumstances are such that strict compliance with the Rule
may be dispensed with in order that the ends of justice may be served thereby.

3) Verification is deemed substantially complied with when one who has ample knowledge to
swear to the truth of the allegations in the complaint or petition signs the verification, and
when matters alleged in the petition have been made in good faith or are true and correct.
4) As to certification against forum shopping, non-compliance therewith or a defect therein,
unlike in verification, is generally not curable by its subsequent submission or correction
thereof, unless there is a need to relax the Rule on the ground of "substantial compliance" or
presence of "special circumstances or compelling reasons."

5) The certification against forum shopping must be signed by all the plaintiffs or petitioners
in a case; otherwise, those who did not sign will be dropped as parties to the case. Under
reasonable or justifiable circumstances, however, as when all the plaintiffs or petitioners
share a common interest and invoke a common cause of action or defense, the signature of
only one of them in the certification against forum shopping substantially complies with the
Rule.

6) Finally, the certification against forum shopping must be executed by the party-pleader,
not by his counsel. H, however, for reasonable or justifiable reasons, the party-pleader is
unable to sign, he must execute a Special Power of Attorney designating his counsel of
record to sign on his behalf.30 (Emphasis supplied)

However, while the Court takes the petitioner's side with regard to the procedural issue
dealing with verification and the certification against forum shopping, it nonetheless appears
that the Petition has been overtaken by events. In a May 24, 2011 Manifestation,31
respondent informed this Court that the judgment award has been satisfied in full. The
petitioner does not dispute this claim, in which case, the labor case is now deemed ended.
"It is axiomatic that after a judgment has been fully satisfied, the case is deemed terminated
once and for all."32 And "when a judgment has been satisfied, it passes beyond review,
satisfaction being the last act and the end of the proceedings, and payment or satisfaction of
the obligation thereby established produces permanent and irrevocable discharge; hence, a
judgment debtor who acquiesces to and voluntarily complies with the judgment is estopped
from taking an appeal therefrom."33

With the above development in the case, the instant Petition is rendered moot and
academic. The satisfaction of the judgment in full has placed the case beyond the Court's
review. "Indeed, there are no more proceedings to speak of inasmuch as these were
terminated by the satisfaction of the judgment."34

WHEREFORE, the Petition is DENIED for being moot and academic.

SO ORDERED.

FIRST DIVISION
G.R. No. 183952 September 9, 2013

CZARINA T. MALVAR, Petitioner,

vs.
KRAFT FOOD PHILS., INC. and/or BIENVENIDO BAUTISTA, KRAFT FOODS
INTERNATIONAL, Respondents.

DECISION

BERSAMIN, J.:

Although the practice of law is not a business, an attorney is entitled to be properly

compensated for the professional services rendered for the client, who is bound by her
express agreement to duly compensate the attorney. The client may not deny her attorney
such just compensation.

The Case

The case initially concerned the execution of a final decision of the Court of Appeals (CA) in
a labor litigation, but has mutated into a dispute over attorney's fees between the winning
employee and her attorney after she entered into a compromise agreement with her
employer under circumstances that the attorney has bewailed as designed to prevent the
recovery of just professional fees.

Antecedents

On August 1, 1988, Kraft Foods (Phils.), Inc. (KFPI) hired Czarina Malvar (Malvar) as its
Corporate Planning Manager. From then on, she gradually rose from the ranks, becoming in
1996 the Vice President for Finance in the Southeast Asia Region of Kraft Foods
International (KFI),KFPIs mother company. On November 29, 1999, respondent Bienvenido
S. Bautista, as Chairman of the Board of KFPI and concurrently the Vice President and Area
Director for Southeast Asia of KFI, sent Malvar a memo directing her to explain why no
administrative sanctions should be imposed on her for possible breach of trust and
confidence and for willful violation of company rules and regulations. Following the
submission of her written explanation, an investigating body was formed. In due time, she
was placed under preventive suspension with pay. Ultimately, on March 16, 2000, she was
served a notice of termination.
Obviously aggrieved, Malvar filed a complaint for illegal suspension and illegal dismissal
against KFPI and Bautista in the National Labor Relations Commission (NLRC). In a
decision dated April 30, 2001,1 the Labor Arbiter found and declared her suspension and
dismissal illegal, and ordered her reinstatement, and the payment of her full backwages,
inclusive of allowances and other benefits, plus attorneys fees.

On October 22, 2001, the NLRC affirmed the decision of the Labor Arbiter but additionally
ruled that Malvar was entitled to "any and all stock options and bonuses she was entitled to
or would have been entitled to had she not been illegally dismissed from her employment,"
as well as to moral and exemplary damages.2

KFPI and Bautista sought the reconsideration of the NLRCs decision, but the NLRC denied
their motion to that effect.3

Undaunted, KFPI and Bautista assailed the adverse outcome before the CA on certiorari
(CA-G.R. SP No. 69660), contending that the NLRC thereby committed grave abuse of
discretion. However, the petition for certiorari was dismissed by the CA on December 22,
2004, but with the CA reversing the order of reinstatement and instead directing the payment
of separation pay to Malvar, and also reducing the amounts awarded as moral and
exemplary damages.4

After the judgment in her favor became final and executory on March14, 2006, Malvar
moved for the issuance of a writ of execution.5 The Executive Labor Arbiter then referred the
case to the Research and Computation Unit (RCU) of the NLRC for the computation of the
monetary awards under the judgment. The RCUs computation ultimately arrived at the total
sum of P41,627,593.75.6

On November 9, 2006, however, Labor Arbiter Jaime M. Reyno issued an order,7 finding that
the RCUs computation lacked legal basis for including the salary increases that the decision
promulgated in CA-G.R. SP No. 69660 did not include. Hence, Labor Arbiter Reyno reduced
Malvars total monetary award to P27,786,378.11, viz:

WHEREFORE, premises considered, in so far as the computation of complainants other

benefits and allowances are concerned, the same are in order. However, insofar as the
computation of her backwages and other monetary benefits (separation pay, unpaid salary
for January 1 to 26, 2005,holiday pay, sick leave pay, vacation leave pay, 13th month pay),
the same are hereby recomputed as follows:

1. Separation Pay
8/1/88-1/26/05 = 16 yrs
P344,575.83 x 16 = 5,513,213.28
2. Unpaid Salary
1/1-26/05 = 87 mos.
P344,575.83 x 87 = 299,780.97
3. Holiday Pay
4/1/00-1/26/05 = 55 holidays
P4,134,910/12 mos/20.83 days x 55 days 909,825.77
4. Unpaid 13th month pay for Dec 2000344,575.83
5. Sick Leave Pay
Year 1999 to 2004 = 6 yrs
P344,575.88/20.83 x 15 days x 6 = 1,488,805.79
Year 2005
P344,575.83/20.83 x 15/12 x 1 20,677.86 1,509,483.65
6. Vacation Leave Pay
Year 1999 to 2004 = 6 years
P344,575.88/20.83 x 22 days x 6 = 2,183,581.83
Year 2005
P344,575.83/20.83 x 22/12 x 1 30,327.55 2,213,909.36

10,790,788.86
Backwages (from 3/7/00-4/30/01, award in LA Sytians Decision 4,651,773.75
Allowances & Other Benefits:
Management Incentive Plan 7,355,166.58
Cash Dividend on Philip Morris Shares 2,711,646.00
Car Maintenance 381,702.92
Gas Allowance 198,000.00
Entitlement to a Company Driver 438,650.00
Rice Subsidy 58,650.00
Moral Damages 500,000.00
Exemplary Damages 200,000.00
Attorneys Fees 500,000.00
Entitlement to Philip Sch G Subject to
"Share Option Grant" Market Price
27,786,378.11
SO ORDERED.

Both parties appealed the computation to the NLRC, which, on April19, 2007, rendered its
decision setting aside Labor Arbiter Reynos November 9, 2006 order, and adopting the
computation by the RCU.8

In its resolution dated May 31, 2007,9 the NLRC denied the respondents motion for
reconsideration.

Malvar filed a second motion for the issuance of a writ of execution to enforce the decision of
the NLRC rendered on April 19, 2007. After the writ of execution was issued, a partial
enforcement as effected by garnishing the respondents funds deposited with Citibank worth
37,391,696.06.10

On July 27, 2007, the respondents went to the CA on certiorari (with prayer for the issuance
of a temporary restraining order (TRO) or writ of preliminary injunction), assailing the NLRCs
setting aside of the computation by Labor Arbiter Reyno (CA-G.R. SP No. 99865). The
petition mainly argued that the NLRC had gravely abused its discretion in ruling that: (a) the
inclusion of the salary increases and other monetary benefits in the award to Malvar was
final and executory; and (b) the finality of the ruling in CA-G.R. SP No. 69660 precluded the
respondents from challenging the inclusion of the salary increases and other monetary
benefits. The CA issued a TRO, enjoining the NLRC and Malvar from implementing the
NLRCs decision.11

On April 17, 2008, the CA rendered its decision in CA-G.R. SP No. 99865,12 disposing
thusly:

WHEREFORE, premises considered, the herein Petition is GRANTED and the 19 April 2007
Decision of the NLRC and the 31May 2007 Resolution in NLRC NCR 30-07-02316-00 are
hereby REVERSED and SET ASIDE.

The matter of computation of monetary awards for private respondent is hereby

REMANDED to the Labor Arbiter and he is DIRECTED to recompute the monetary award
due to private respondent based on her salary at the time of her termination, without
including projected salary increases. In computing the said benefits, the Labor Arbiter is
further directed to DISREGARD monetary awards arising from: (a) the management
incentive plan and (b) the share option grant, including cash dividends arising therefrom
without prejudice to the filing of the appropriate remedy by the private respondent in the
proper forum. Private respondents allowances for car maintenance and gasoline are
likewise DELETED unless private respondent proves, by appropriate receipts, her
entitlement thereto.

With respect to the Motion to Exclude the Undisputed Amount of P14,252,192.12 from the
coverage of the Writ of Preliminary Injunction and to order its immediate release, the same is
hereby GRANTED for reasons stated therefor, which amount shall be deducted from the
amount to be given to private respondent after proper computation.

As regards the Motions for Reconsideration of the Resolution denying the Motion for
Voluntary Inhibition and the Omnibus Motion dated 30 October 2007, both motions are
hereby DENIED for lack of merit.

SO ORDERED.13

Malvar sought reconsideration, but the CA denied her motion on July30, 2008.14

Aggrieved, Malvar appealed to the Court, assailing the CAs decision.

On December 9, 2010, while her appeal was pending in this Court, Malvar and the
respondents entered into a compromise agreement, the pertinent dispositive portion of
which is quoted as follows:

NOW, THEREFORE, for and in consideration of the covenants and understanding between
the parties herein, the parties hereto have entered into this Agreement on the following terms
and conditions:

1. Simultaneously upon execution of this Agreement in the presence of Ms. Malvars

attorney, KFPI shall pay Ms. Malvar the amount of Philippine Pesos Forty Million (Php
40,000,000.00), which is in addition to the Philippine Pesos Fourteen Million Two Hundred
Fifty-Two Thousand One Hundred Ninety-Two and Twelve Centavos (Php14,252,192.12)
already paid to and received by Ms. Malvar from KFPI in August2008 (both amounts
constituting the "Compromise Payment").

The Compromise Payment includes full and complete payment and settlement of Ms.
Malvars salaries and wages up to the last day of her employment, allowances, 13th and
14th month pay, cash conversion of her accrued vacation, sick and emergency leaves,
separation pay, retirement pay and such other benefits, entitlements, claims for stock, stock
options or other forms of equity compensation whether vested or otherwise and claims of
any and all kinds against KFPI and KFI and Altria Group, Inc., their predecessors-in-interest,
their stockholders, officers, directors, agents or successors-in-interest, affiliates and
subsidiaries, up to the last day of the aforesaid cessation of her employment.
2. In consideration of the Compromise Payment, Ms. Malvar hereby freely and voluntarily
releases and forever discharges KFPI and KFI and Altria Group, Inc., their predecessors or
successors-in-interest, stockholders, officers, including Mr. Bautista who was impleaded in
the Labor Case as a party respondent, directors, agents or successors-in-interest, affiliates
and subsidiaries from any and all manner of action, cause of action, sum of money,
damages, claims and demands whatsoever in law or in equity which Ms. Malvar or her heirs,
successors and assigns had, or now have against KFPI and/or KFI and/or Altria Group, Inc.,
including but not limited to, unpaid wages, salaries, separation pay, retirement pay, holiday
pay, allowances, 13th and 14th month pay, claims for stock, stock options or other forms of
equity compensation whether vested or otherwise whether arising from her employment
contract, company grant, present and future contractual commitments, company policies or
practices, or otherwise, in connection with Ms. Malvars employment with KFPI.15

xxxx

Thereafter, Malvar filed an undated Motion to Dismiss/Withdraw Case,16 praying that the
appeal be immediately dismissed/withdrawn in view of the compromise agreement, and that
the case be considered closed and terminated.

Intervention

Before the Court could act on Malvars Motion to Dismiss/Withdraw Case, the Court received
on February 15, 2011 a so-called Motion for Intervention to Protect Attorneys Rights17 from
The Law Firm of Dasal, Llasos and Associates, through its Of Counsel Retired Supreme
Court Associate Justice Josue N. Bellosillo18 (Intervenor), whereby the Intervenor sought,
among others, that both Malvar and KFPI be held and ordered to pay jointly and severally
the Intervenors contingent fees.

The Motion for Intervention relevantly averred:

xxxx

Lawyers, oftentimes, are caricatured as alligators or some other specie of voracious

carnivore; perceived also as leeches sucking dry the blood of their adversaries, and even
their own clients they are sworn to serve and protect! As we lay down the facts in this case,
this popular, rather unpopular, perception will be shown wrong. This case is a reversal of this
perception.

xxxx
Here, it is the lawyer who is eaten up alive by the warring but conspiring litigants who finally
settled their differences without the knowledge, much less, participation, of Petitioners
counsel that labored hard and did everything to champion her cause.

xxxx

This Motion for Intervention will illustrate an aberration from the norm where the lawyer ends
up seeking protection from his clients and Respondents indecent and cunning
maneuverings. x x x.

xxxx

On 18 March 2008 Petitioner engaged the professional services of Intervenor x x x on a

contingency basis whereby the former agreed in writing to pay the latter contingency fees
amounting to almost P19,600,000.00 (10% of her total claim of almost P196,000,000.00 in
connection with her labor case against Respondents. x x x.

xxxx

According to their agreement (Annex "A"), Petitioner bound herself to pay Intervenor
contingency fees as follows (a) 10% of P14,252, 192.12 upon its collection; (b) 10% of the
remaining balance of P41,627,593.75; and (c)10% of the value of the stock options
Petitioner claims to be entitled to, or roughly P154,000,000.00 as of April 2008.

xxxx

Intervenors efforts resulted in the award and partial release of Petitioners claim amounting
to P14,252,192.12 out of which Petitioner paid Intervenor 10% or P1,425,219.21 as
contingency fees pursuant to their engagement agreement (Annex "A"). Copy of the check
payment of Petitioner payable to Intervenors Of Counsel is attached as Annex "C".

xxxx

On 12 September 2008 Intervenor filed an exhaustive Petition for Review with the Supreme
Court containing 70 pages, including its Annexes "A" to "R", or a total of 419 pages against
Respondents to collect on the balance of Petitioners claims amounting to at least
P27,000,000.00 and P154,000,000.00 the latter representing the estimated value of
Petitioners stock options as of April 2008.
xxxx

On 15 January 2009 Respondents filed their Comment to the Petition for Review.

xxxx

On 13 April 2009 Intervenor, in behalf of Petitioner, filed its Reply to the Comment.

xxxx

All the pleadings in this Petition have already been submitted on time with nothing more to
be done except to await the Resolution of this Honorable Court which, should the petition be
decided in her favor, Petitioner would stand to gain P182,000,000.00, more or less, which
victory would be largely through the efforts of Intervenor.19 (Bold emphasis supplied).

xxxx

It appears that in July 2009, to the Intervenors surprise, Malvar unceremoniously and
without any justifiable reason terminated its legal service and required it to withdraw from the
case.20 Hence, on October 5,2009, the Intervenor reluctantly filed a Manifestation (With
Motion to Withdraw as Counsel for Petitioner),21 in which it spelled out: (a) the terms of and
conditions of the Intervenors engagement as counsel; (b) the type of legal services already
rendered by the Intervenor for Malvar; (c) the absence of any legitimate reason for the
termination of their attorney-client relationship; (d) the reluctance of the Intervenor to
withdraw as Malvars counsel; and (e) the desire of the Intervenor to assert and claim its
contingent fee notwithstanding its withdrawal as counsel. The Intervenor prayed that the
Court furnish it with copies of resolutions, decisions and other legal papers issued or to be
issued after its withdrawal as counsel of Malvar in the interest of protecting its interest as her
attorney.

The Intervenor indicated that Malvars precipitate action had baffled, shocked and even
embarrassed the Intervenor, because it had done everything legally possible to serve and
protect her interest. It added that it could not recall any instance of conflict or
misunderstanding with her, for, on the contrary, she had even commended it for its
dedication and devotion to her case through her following letter to Justice Bellosillo, to wit:

July 16, 2008

Justice Josue Belocillo (sic)

Dear Justice,

It is almost morning of July 17 as I write this letter to you. Let me first thank you for your
continued and unrelenting lead, help and support in the case. You have been our "rock" as
far as this case is concerned. Jun and I are forever grateful to you for all your help. I just
thought Id express to you what is in the innermost of my heart as we proceed in the case. It
has been around four months now since we met mid-March early this year.

The most important and immediate aspect of the case at this time for me is the collection of
the undisputed amount of Pesos 14million which the Court has clearly directed and ordered
the NLRC to execute. The only impending constraint for NLRC to execute and collect this
amount from the already garnished amount of Pesos 41 million at Citibank is the MR of Kraft
on the Order of the Court (CA) to execute collection. We need to get a denial of this motion
for NLRC to execute immediately. We already obtained commitment from NLRC that all it
needed to execute collection is the denial of the MR. Jun and I applaud your initiative and
efforts to mediate with Romulo on potential settlement. However, as I expressed to you in
several instances, I have serious reservations on the willingness of Romulo to settle within
reasonable amounts specifically as it relates to the stock options. Let us continue to pursue
this route vigorously while not setting aside our efforts to influence the CA to DENY their
Motion on the Undisputed amount of Pesos 14million.

At this point, I cannot overemphasize to you our need for funds. We have made financial
commitments that require us to raise some amount. But we can barely meet our day to day
business and personal requirements given our current situation right now.

Thank you po for your understanding and support.22

According to the Intervenor, it was certain that the compromise agreement was authored by
the respondents to evade a possible loss of P182,000,000.00 or more as a result of the
labor litigation, but considering the Intervenors interest in the case as well as its resolve in
pursuing Malvars interest, they saw the Intervenor as a major stumbling block to the
compromise agreement that it was then brewing with her. Obviously, the only way to remove
the Intervenor was to have her terminate its services as her legal counsel. This prompted the
Intervenor to bring the matter to the attention of the Court to enable it to recover in full its
compensation based on its written agreement with her, averring thus:

xxxx

28. Upon execution of the Compromise Agreement and pursuant thereto, Petitioner
immediately received (supposedly) from RespondentsP40,000,000.00. But despite the
settlement between the parties, Petitioner did not pay Intervenor its just compensation as set
forth in their engagement agreement; instead, she immediately moved to Dismiss/Withdraw
the Present Petition.

29. To parties minds, with the dismissal by Petitioner of Intervenor as her counsel, both
Petitioner and Respondents probably thought they would be able to settle the case without
any cost to them, with Petitioner saving on Intervenors contingent fees while Respondents
able to take advantage of the absence of Intervenor in determining the settlement price.

30. The parties cannot be any more mistaken. Pursuant to the Second Paragraph of Section
26, Rule 138, of the Revised Rules of Court quoted in paragraph 3 hereof, Intervenor is still
entitled to recover from Petitioner the full compensation it deserves as stipulated in its
contract.

31. All the elements for the full recovery of Intervenors compensation are present. First, the
contract between the Intervenor and Petitioner is reduced into writing. Second, Intervenor is
dismissed without justifiable cause and at the stage of proceedings where there is nothing
more to be done but to await the Decision or Resolution of the Present Petition.23

xxxx

In support of the Motion for Intervention, the Intervenor cites the rulings in Aro v. Naawa24
and Law Firm of Raymundo A. Armovit v. Court of Appeals,25 particularly the following
passage:

x x x. While We here reaffirm the rule that "the client has an undoubted right to compromise
a suit without the intervention of his lawyer," We hold that when such compromise is entered
into in fraud of the lawyer, with intent to deprive him of the fees justly due him, the
compromise must be subject to the said fees and that when it is evident that the said fraud is
committed in confabulation with the adverse party who had knowledge of the lawyers
contingent interest or such interest appears of record and who would benefit under such
compromise, the better practice is to settle the matter of the attorneys fees in the same
proceeding, after hearing all the affected parties and without prejudice to the finality of the
compromise agreement in so far as it does not adversely affect the right of the lawyer.26 x x
x.

The Intervenor prays for the following reliefs:

a) Granting the Motion for Intervention to Protect Attorneys Rights in favor of the Intervenor;

b) Directing both Petitioner and Respondents jointly and severally to pay Intervenor its
contingent fees;
c) Granting a lien upon all judgments for the payment of money and executions issued in
pursuance of such judgments; and

d) Holding in Abeyance in the meantime the Resolution of the Motion to Dismiss/Withdraw

Case filed by Petitioner and granting the Motion only after Intervenor has been fully paid its
just compensation; and

e) Other reliefs just and equitable.27

Opposing the Motion for Intervention,28 Malvar stresses that there was no truth to the
Intervenors claim to defraud it of its professional fees; that the Intervenor lacked the legal
capacity to intervene because it had ceased to exist after Atty. Marwil N. Llasos resigned
from the Intervenor and Atty. Richard B. Dasal became barred from private practice upon his
appointment as head of the Legal Department of the Small Business Guarantee and
Finance Corporation, a government subsidiary; and that Atty. Llasos and Atty. Dasal had
personally handled her case.

Malvar adds that even assuming, arguendo, that the Intervenor still existed as a law firm, it
was still not entitled to intervene for the following reasons, namely: firstly, it failed to attend to
her multiple pleas and inquiries regarding the case, as when communications to the
Intervenor through text messages were left unanswered; secondly, maintaining that this was
a justifiable cause to dismiss its services, the Intervenor only heeded her repeated demands
to withdraw from the case when Atty. Dasal was confronted about his appointment to the
government subsidiary; thirdly, it was misleading and grossly erroneous for the Intervenor to
claim that it had rendered to her full and satisfactory services when the truth was that its
participation was strictly limited to the preparation, finalization and submission of the petition
for review with the Supreme Court; and finally, while the Intervenor withdrew its services on
October 5, 2009, the compromise agreement was executed with the respondents on
December 9,2010 and notarized on December 14, 2010, after more than a year and two
months, dispelling any badge of bad faith on their end.

On June 21, 2011, the respondents filed their comment to the Intervenors Motion for
Intervention.

On November 18, 2011, the Intervenor submitted its position on the respondents comment
dated June 21, 2011,29 and thereafter the respondents sent in their reply.30

Issues
The issues for our consideration and determination are two fold, namely: (a) whether or not
Malvars motion to dismiss the petition on the ground of the execution of the compromise
agreement was proper; and (b) whether or not the Motion for Intervention to protect
attorneys rights can prosper, and, if so, how much could it recover as attorneys fees.

Ruling of the Court

We shall decide the issues accordingly.

1.

Clients right to settle litigation

by compromise agreement, and
to terminate counsel; limitations

A compromise agreement is a contract, whereby the parties undertake reciprocal obligations

to avoid litigation, or put an end to one already commenced.31 The client may enter into a
compromise agreement with the adverse party to terminate the litigation before a judgment
is rendered therein.32 If the compromise agreement is found to be in order and not contrary
to law, morals, good customs and public policy, its judicial approval is in order.33 A
compromise agreement, once approved by final order of the court, has the force of res
judicata between the parties and will not be disturbed except for vices of consent or
forgery.34

A client has an undoubted right to settle her litigation without the intervention of the attorney,
for the former is generally conceded to have exclusive control over the subject matter of the
litigation and may at anytime, if acting in good faith, settle and adjust the cause of action out
of court before judgment, even without the attorneys intervention.35 It is important for the
client to show, however, that the compromise agreement does not adversely affect third
persons who are not parties to the agreement.36

By the same token, a client has the absolute right to terminate the attorney-client
relationship at any time with or without cause.37 But this right of the client is not unlimited
because good faith is required in terminating the relationship. The limitation is based on
Article 19 of the Civil Code, which mandates that "every person must, in the exercise of his
rights and in the performance of his duties, act with justice, give everyone his due, and
observe honesty and good faith." The right is also subject to the right of the attorney to be
compensated. This is clear from Section 26, Rule 138 of the Rules of Court, which provides:

Section 26. Change of attorneys. - An attorney may retire at anytime from any action or
special proceeding, by the written consent of his client filed in court. He may also retire at
any time from an action or special proceeding, without the consent of his client, should the
court, on notice to the client and attorney, and on hearing, determine that he ought to be
allowed to retire. In case of substitution, the name of the attorney newly employed shall be
entered on the docket of the court in place of the former one, and written notice of the
change shall be given to the adverse party.

A client may at any time dismiss his attorney or substitute another in his place, but if the
contract between client and attorney has been reduced to writing and the dismissal of the
attorney was without justifiable cause, he shall be entitled to recover from the client the full
compensation stipulated in the contract. However, the attorney may, in the discretion of the
court, intervene in the case to protect his rights. For the payment of his compensation the
attorney shall have a lien upon all judgments for the payment of money, and executions
issued in pursuance of such judgment, rendered in the case wherein his services had been
retained by the client. (Bold emphasis supplied)

In fine, it is basic that an attorney is entitled to have and to receive a just and reasonable
compensation for services performed at the special instance and request of his client. The
attorney who has acted in good faith and honesty in representing and serving the interests of
the client should be reasonably compensated for his service.38

2.

Compromise agreement is to be approved

despite favorable action on the
Intervenors Motion for Intervention

On considerations of equity and fairness, the Court disapproves of the tendencies of clients
compromising their cases behind the backs of their attorneys for the purpose of
unreasonably reducing or completely setting to naught the stipulated contingent fees.39
Thus, the Court grants the Intervenors Motion for Intervention to Protect Attorneys Rights as
a measure of protecting the Intervenors right to its stipulated professional fees that would be
denied under the compromise agreement. The Court does so in the interest of protecting the
rights of the practicing Bar rendering professional services on contingent fee basis.

Nonetheless, the claim for attorneys fees does not void or nullify the compromise agreement
between Malvar and the respondents. There being no obstacles to its approval, the Court
approves the compromise agreement. The Court adds, however, that the Intervenor is not
left without a remedy, for the payment of its adequate and reasonable compensation could
not be annulled by the settlement of the litigation without its participation and conformity. It
remains entitled to the compensation, and its right is safeguarded by the Court because its
members are officers of the Court who are as entitled to judicial protection against injustice
or imposition of fraud committed by the client as much as the client is against their abuses
as her counsel. In other words, the duty of the Court is not only to ensure that the attorney
acts in a proper and lawful manner, but also to see to it that the attorney is paid his just fees.
Even if the compensation of the attorney is dependent only on winning the litigation, the
subsequent withdrawal of the case upon the clients initiative would not deprive the attorney
of the legitimate compensation for professional services rendered.40

The basis of the intervention is the written agreement on contingent fees contained in the
engagement executed on March 19, 2008 between Malvar and the Intervenor,41 the
pertinent portion of which stipulated that the Intervenor would "collect ten percent (10%) of
the amount of PhP14,252,192.12 upon its collection and another ten percent (10%) of the
remaining balance of PhP41,627,593.75 upon collection thereof, and also ten percent (10%)
of whatever is the value of the stock option you are entitled to under the Decision." There is
no question that such arrangement was a contingent fee agreement that was valid in this
jurisdiction, provided the fees therein fixed were reasonable.42

We hold that the contingent fee of 10% of P41,627,593.75 and 10% of the value of the stock
option was reasonable. The P41,627,593.75 was already awarded to Malvar by the NLRC
but the award became the subject of the appeal in this Court because the CA reversed the
NLRC. Be that as it may, her subsequent change of mind on the amount sought from the
respondents as reflected in the compromise agreement should not negate or bar the
Intervenors recovery of the agreed attorneys fees.

Considering that in the event of a dispute between the attorney and the client as to the
amount of fees, and the intervention of the courts is sought, the determination requires that
there be evidence to prove the amount of fees and the extent and value of the services
rendered, taking into account the facts determinative thereof,43 the history of the
Intervenors legal representation of Malvar can provide a helpful predicate for resolving the
dispute between her and the Intervenor.

The records reveal that on March 18, 2008, Malvar engaged the professional services of the
Intervenor to represent her in the case of illegal dismissal. At that time, the case was
pending in the CA at the respondents instance after the NLRC had set aside the RCUs
computation of Malvars backwages and monetary benefits, and had upheld the computation
arrived at by the NLRC Computation Unit. On April 17, 2008, the CA set aside the assailed
resolution of the NLRC, and remanded the case to the Labor Arbiter for the computation of
her monetary awards. It was at this juncture that the Intervenor commenced its legal service,
which included the following incidents, namely:

a) Upon the assumption of its professional duties as Malvars counsel, a Motion for
Reconsideration of the Decision of the Court of Appeals dated April 17, 2008 consisting of
thirty-eight pages was filed before the Court of Appeals on May 6, 2008.

b) On June 2, 2009, Intervenors filed a Comment to Respondents Motion for Partial

Reconsideration, said Comment consisted 8 pages.
c) In the execution proceedings before Labor Arbiter Jaime Reyno, Intervenor prepared and
filed on Malvars behalf an "Ex-Parte Motion to Release to Complainant the Undisputed
amount of P14,252,192.12" in NLRC NCR Case No. 30-07-02716-00.

d) On July 29, 2000, Intervenor prepared and filed before theLabor Arbiter a Comment to
Respondents Opposition to the "Ex-Parte Motion to Release" and a "Motion Reiterating
Immediate Implementation of the Writ of Execution"

e) On August 6, 2008, Intervenor prepared and filed before the Labor Arbiter Malvars Motion
Reiterating Motion to Release the Amount of P14,252,192.12.44

The decision promulgated on April 17, 200845 and the resolution promulgated on July 30,
200846 by the CA prompted Malvar to appeal on August 15, 2008 to this Court with the
assistance of the Intervenor. All the subsequent pleadings, including the reply of April 13,
2009,47 were prepared and filed in Malvars behalf by the Intervenor.

Malvar should accept that the practice of law was not limited to the conduct of cases or
litigations in court but embraced also the preparation of pleadings and other papers
incidental to the cases or litigations as well as the management of such actions and
proceedings on behalf of the clients.48 Consequently, fairness and justice demand that the
Intervenor be accorded full recognition as her counsel who discharged its responsibility for
Malvars cause to its successful end.

But, as earlier pointed out, although a client may dismiss her lawyer at any time, the
dismissal must be for a justifiable cause if a written contract between the lawyer and the
client exists.49

Considering the undisputed existence of the written agreement on contingent fees, the
question begging to be answered is: Was the Intervenor dismissed for a justifiable cause?

We do not think so.

In the absence of the lawyers fault, consent or waiver, a client cannot deprive the lawyer of
his just fees already earned in the guise of a justifiable reason. Here, Malvar not only
downplayed the worth of the Intervenors legal service to her but also attempted to
camouflage her intent to defraud her lawyer by offering excuses that were not only
inconsistent with her actions but, most importantly, fell short of being justifiable.

The letter Malvar addressed to Retired Justice Bellosillo, who represented the Intervenor,
debunked her allegations of unsatisfactory legal service because she thereby lavishly lauded
the Intervenor for its dedication and devotion to the prosecution of her case and to the
protection of her interests. Also significant was that the attorney-client relationship between
her and the Intervenor was not severed upon Atty. Dasals appointment to public office and
Atty. Llasos resignation from the law firm. In other words, the Intervenor remained as her
counsel of record, for, as we held in Rilloraza, Africa, De Ocampo and Africa v. Eastern
Telecommunication Philippines, Inc.,50 a client who employs a law firm engages the entire
law firm; hence, the resignation, retirement or separation from the law firm of the handling
lawyer does not terminate the relationship, because the law firm is bound to provide a
replacement.

The stipulations of the written agreement between Malvar and the Intervenors, not being
contrary to law, morals, public policy, public order or good customs, were valid and binding
on her. They expressly gave rise to the right of the Intervenor to demand compensation. In a
word, she could not simply walk away from her contractual obligations towards the
Intervenor, for Article 1159 of the Civil Code provides that obligations arising from contracts
have the force of law between the parties and should be complied with in good faith.

To be sure, the Intervenors withdrawal from the case neither cancelled nor terminated the
written agreement on the contingent attorneys fees. Nor did the withdrawal constitute a
waiver of the agreement. On the contrary, the agreement continued between them because
the Intervenors Manifestation (with Motion to Withdraw as Counsel for Petitioner)explicitly
called upon the Court to safeguard its rights under the written agreement, to wit:

WHEREFORE, premises considered, undersigned counsel respectfully pray that instant

Motion to Withdraw as Counsel for Petitioner be granted and their attorneys lien pursuant to
the written agreement be reflected in the judgment or decision that may be rendered
hereafter conformably with par. 2, Sec. 26, Rule 138 of the Rules of Court.

Undersigned counsel further requests that they be furnished copy of the decision,
resolutions and other legal processes of this Honorable Court to enable them to protect their
interests.51

Were the respondents also liable?

The respondents would be liable if they were shown to have connived with Malvar in the
execution of the compromise agreement, with the intention of depriving the Intervenor of its
attorneys fees. Thereby, they would be solidarily liable with her for the attorneys fees as
stipulated in the written agreement under the theory that they unfairly and unjustly interfered
with the Intervenors professional relationship with Malvar.

The respondents insist that they were not bound by the written agreement, and should not
be held liable under it.1wphi1
We disagree with the respondents insistence. The respondents were complicit in Malvars
move to deprive the Intervenor of its duly earned contingent fees.

First of all, the unusual timing of Malvars letter terminating the Intervenors legal
representation of her, of her Motion to Dismiss/Withdraw Case, and of the execution of
compromise agreement manifested her desire to evade her legal obligation to pay to the
Intervenor its attorneys fees for the legal services rendered. The objective of her withdrawal
of the case was to release the respondents from all her claims and causes of action in
consideration of the settlement in the stated amount of P40,000.000.00, a sum that was
measly compared to what she was legally entitled to, which, to begin with, already included
the P41,627,593.75 and the value of the stock option already awarded to her. In other words,
she thereby waived more than what she was lawfully expected to receive from the
respondents.

Secondly, the respondents suddenly turned around from their strong stance of berating her
demand as offensive to all precepts of justice and fair play and as a form of unjust
enrichment for her to a surprisingly generous surrender to her demand, allowing to her
through their compromise agreement the additional amount of P40,000,000.00 on top of
theP14,252,192.12 already received by her in August 2008. The softening unavoidably gives
the impression that they were now categorically conceding that Malvar deserved much more.
Under those circumstances, it is plausible to conclude that her termination of the Intervenors
services was instigated by their prodding in order to remove the Intervenor from the picture
for being a solid obstruction to the settlement for a much lower liability, and thereby save for
themselves and for her some more amount.

Thirdly, the compromise agreement was silent on the Intervenors contingent fee, indicating
that the objective of the compromise agreement was to secure a huge discount from its
liability towards Malvar.

Finally, contrary to the stipulation in the compromise agreement, only Malvar, minus the
respondents, filed the Motion to Dismiss/Withdraw Case.

At this juncture, the Court notes that the compromise agreement would have Malvar waive
even the substantial stock options already awarded by the NLRCs decision,52 which
ordered the respondents to pay to her, among others, the value of the stock options and all
other bonuses she was entitled to or would have been entitled to had she not been illegally
dismissed from her employment. This ruling was affirmed by the CA.53 But the waiver could
not negate the Intervenors right to 10% of the value of the stock options she was legally
entitled to under the decisions of the NLRC and the CA, for that right was expressly stated in
the written agreement between her and the Intervenor. Thus, the Intervenor should be
declared entitled to recover full compensation in accordance with the written agreement
because it did not assent to the waiver of the stock options, and did not waive its right to that
part of its compensation.
These circumstances show that Malvar and the respondents needed an escape from greater
liability towards the Intervenor, and from the possible obstacle to their plan to settle to pay. It
cannot be simply assumed that only Malvar would be liable towards the Intervenor at that
point, considering that the Intervenor, had it joined the negotiations as her lawyer, would
have tenaciously fought all the way for her to receive literally everything that she was entitled
to, especially the benefits from the stock option. Her rush to settle because of her financial
concerns could have led her to accept the respondents offer, which offer could be further
reduced by the Intervenors expected demand for compensation. Thereby, she and the
respondents became joint tort-feasors who acted adversely against the interests of the
Intervenor. Joint tort-feasors are those who command, instigate, promote, encourage,
advise, countenance, cooperate in, aid or abet the commission of a tort, or who approve of it
after it is done, if done for their benefit.54

They are also referred to as those who act together in committing wrong or whose acts, if
independent of each other, unite in causing a single injury.55 Under Article 2194 of the Civil
Code, joint tort-feasors are solidarily liable for the resulting damage. As regards the extent of
their respective liabilities, the Court said in Far Eastern Shipping Company v. Court of
Appeals:56

x x x. Where several causes producing an injury are concurrent and each is an efficient
cause without which the injury would not have happened, the injury may be attributed to all
or any of the causes and recovery may be had against any or all of the responsible persons
although under the circumstances of the case, it may appear that one of them was more
culpable, and that the duty owed by them to the injured person was not same. No actors
negligence ceases to be a proximate cause merely because it does not exceed the
negligence of other acts. Each wrongdoer is responsible for the entire result and is liable as
though his acts were the sole cause of the injury.

There is no contribution between joint tort-feasors whose liability is solidary since both of
them are liable for the total damage. Where the concurrent or successive negligent acts or
omissions of two or more persons, although acting independently, are in combination the
direct and proximate cause of a single injury to a third person, it is impossible to determine in
what proportion each contributed to the injury and either of them is responsible for the whole
injury. x x x

Joint tort-feasors are each liable as principals, to the same extent and in the same manner
as if they had performed the wrongful act themselves. It is likewise not an excuse for any of
the joint tort-feasors that individual participation in the tort was insignificant as compared to
that of the other.57 To stress, joint tort-feasors are not liable pro rata. The damages cannot
be apportioned among them, except by themselves. They cannot insist upon an
apportionment, for the purpose of each paying an aliquot part. They are jointly and severally
liable for the whole amount.58 Thus, as joint tort-feasors, Malvar and the respondents
should be held solidarily liable to the Intervenor. There is no way of appreciating these
circumstances except in this light.
That the value of the stock options that Malvar waived under the compromise agreement has
not been fixed as yet is no hindrance to the implementation of this decision in favor of the
Intervenor. The valuation could be reliably made at a subsequent time from the finality of this
adjudication. It is enough for the Court to hold the respondents and Malvar solidarily liable
for the 10% of that value of the stock options.

As a final word, it is necessary to state that no court can shirk from enforcing the contractual
stipulations in the manner they have agreed upon and written. As a rule, the courts, whether
trial or appellate, have no power to make or modify contracts between the parties. Nor can
the courts save the parties from disadvantageous provisions.59 The same precepts hold
sway when it comes to enforcing fee arrangements entered into in writing between clients
and attorneys. In the exercise of their supervisory authority over attorneys as officers of the
Court, the courts are bound to respect and protect the attorneys lien as a necessary means
to preserve the decorum and respectability of the Law Profession.60 Hence, the Court must
thwart any and every effort of clients already served by their attorneys worthy services to
deprive them of their hard-earned compensation. Truly, the duty of the courts is not only to
see to it that attorneys act in a proper and lawful manner, but also to see to it that attorneys
are paid their just and lawful fees.61

WHEREFORE, the Court APPROVES the compromise agreement; GRANTS the Motion for
Intervention to Protect Attorney's Rights; and ORDERS Czarina T. Malvar and respondents
Kraft Food Philippines Inc. and Kraft Foods International to jointly and severally pay to
Intervenor Law Firm, represented by Retired Associate Justice Josue N. Bellosillo, its
stipulated contingent fees of 10% of P41,627,593.75, and the further sum equivalent to 10%
of the value of the stock option. No pronouncement on costs of suit.

SO ORDERED.

FIRST DIVISION

G.R. No. 174564 February 12, 2014

ATTY. EMMANUEL D. AGUSTIN, JOSEPHINE SOLANO, ADELAIDA FERNANDEZ,

ALEJANDRO YUAN, JOCELYN LAV ARES, MARY JANE OLASO, MELANIE BRIONES,
ROWENA PATRON, MA. LUISA CRUZ, SUSAN TAPALES, RUSTY BAUTISTA, and JANET
YUAN, Petitioners,
vs.
ALEJANDRO CRUZ-HERRERA, Respondent.
DECISION

REYES, J.:

This is a petition for review on certiorari1 assailing the Resolution2 dated September 30,
2005 of the Court of Appeals (CA) in CA-G.R. SP No. 85556 which approved the joint
compromise agreement executed by respondent Alejandro Cruz-Herrera (Herrera) and the
former employees of Podden International Philippines, Inc. (Podden), namely: Josephine
Solano, Adelaida Fernandez, Alejandro Yuan, Jocelyn Lavares, Mary Jane Olaso, Melanie
Briones, Rowena Patron, Ma. Luisa Cruz, Susan Tapales, Rusty Bautista, and Janet Yuan
(complainants).

The Antecedents

Respondent Herrera was the President of Podden while complainants were assemblers
and/or line leader assigned at the production department.3 In 1993, the complainants were
terminated from employment due to financial reverses. Upon verification, however, with the
Department of Labor and Employment, no such report of financial reverses or even
retrenchment was filed. This prompted the complainants to file a complaint for illegal
dismissal, monetary claims and damages against Podden and Herrera.4 They engaged the
services of Atty. Emmanuel D. Agustin (Atty. Agustin) to handle the case5 upon the verbal
agreement that he will be paid on a contingency basis at the rate of ten percent (10%) of the
final monetary award or such amount of attorneys fees that will be finally determined.

Proceedings before the Labor Arbiter

The complainants, thru Atty. Agustin, obtained a favorable ruling before the Labor Arbiter
(LA) who disposed as follows in its Decision6 dated September 27, 1998, to wit:

WHEREFORE, premises considered, [Podden and Herrera] are hereby directed/ordered to

immediately reinstate the complainants to their former positions without loss of seniority
rights and other privileges with full backwages from date of dismissal up to actual date of
reinstatement which as of this month is more or less in the amount as follows:

COMPLAINANT AMOUNT
[P]238,680.00=([P]135.00/day x 26 days
= [P]3,510/mo. x 68 mos.)
1. JOSEPHINE SOLANO [P]238,680.00
2. ADELAIDA FERNANDEZ [P]238,680.00
3. ALEJANDRO YUAN [P]238,680.00
4. JOCELYN LAVARES [P]238,680.00
5. MARY JANE OLASO [P]238,680.00
6. MELANIE BRIONES [P]238,680.00
7. ROWENA PATRON [P]238,680.00
8. MA. LUISA CRUZ [P]238,680.00
9. SUSAN TAPALES [P]238,680.00
10. RUSTY BAUTISTA [P]238,680.00
11. JANET YUAN [P]238,680.00
TOTAL [P]2,625,480.00
[Podden and Herrera] are further ordered to pay complainants their money claims
representing their underpayment of wages, 13th month pay, premium pay for holidays and
rest days and service incentive leave pay to be computed by the Fiscal Examiner of the
Research, Information and Computation Unit of the Commission in due time.

[Podden and Herrera] are furthermore ordered to pay each complainant the amount of
[P]40,000.00 as moral and exemplary damages, as well as ten (10%) of the total awards as
attorneys fee.

SO ORDERED.7

No appeal was taken from the foregoing judgment hence, on February 2, 1999, a motion for
execution was filed. The motion was set for a hearing on February 10, 1999 but was reset
twice upon the parties request for the purpose of exploring the possibility of settlement.8

On March 20, 1999, Herrera filed a Manifestation and Motion to deny issuance of the writ
stating, among others, that Podden ceased operations on December 1, 1994 or almost four
years before judgment was rendered by the LA on the illegal dismissal complaint and that
nine of the eleven employees have executed Waivers and Quitclaims rendering any
execution of the judgment inequitable.9

On July 20, 1999, the Computation and Examination Unit of the National Labor Relations
Commission (NLRC) released the computation of the total monetary award granted by the
LA amounting to P3,358,441.84.10

Atty. Agustin opposed Herreras motion and argued that the issuance of a writ of execution is
ministerial because the LA decision has long been final and executory there being no appeal
taken therefrom. He further claimed that the alleged Waivers and Quitclaims were part of a
scheme adopted by Podden to evade its liability and defraud the complainants.11

Resolving the conflict, the LA issued its Order12 dated May 15, 2000 denying the motion for
the issuance of a writ of execution. The LA sustained as valid the Waivers and Quitclaims
signed by all and not just nine of the complainants, based on the following findings:

A cursory examination of the records reveal[s] that complainants, all eleven (11) of them, had
indeed executed their respective waiver and quitclaim thru an instrument entitled "Pagtalikod
sa Karapatang Maghabol" absolving [Podden and Herrera] from any and all liabilities that
may arise against the latter to these cases. The instruments were signed by the
complainants and sworn to before Notary Public Amparo G. Ocampo. Considering the fact
that the complainants, through their common counsel, received a copy of the Decision in
these cases on December 28, 1998, it could only be supposed that as of that date they
signed the instrument of waiver and quitclaim on March 2, 1999, April 8, 1999 and March 31,
2000, they were already properly apprised about the decision having been issued in their
favor, more particularly the contents thereof, by their esteemed counsel. The fact that
complainants would execute such waiver and quitclaim, notwithstanding, only shows the
spontaneity and voluntariness of their deed.

Moreover, and as the instrument of waiver and quitclaim would show, the letter was written in
the vernacular of Filipino language. Complainants who are all presumed to be
knowledgeable about the national language could not have been misled with respect to the
real meaning and plain import of the words used in the instrument. That complainants meant
and understood what they signed in the instrument is best shown by the fact that in the
subsequent hearings scheduled to take up the motion for writ of execution and the
opposition thereto (considering the relative importance of the matters raised and substantial
awards to the complainants)[,] complainants have failed to show up in any of them.13

Accordingly, the quitclaims were held to have superseded the matter of issuing a writ of
execution. Anent Atty. Agustins fees, the LA held that he is entitled to ten percent (10%) of
the total monetary award obtained by the complainants from the compromise agreement.
The order disposed thus:

WHEREFORE, premises considered, the motion for writ of execution is denied on [the]
ground that complainants have already settled their cases with [Podden and Herrera].

On account of the settlement, however, [Podden and Herrera] are hereby ordered to pay
complainants counsel ten (10%) percent of the amount received by complainants as
attorneys fees.

SO ORDERED.14
Ruling of the NLRC

On appeal, the NLRC reversed the LA Order dated May 15, 2000 for the reason that it
unlawfully amended, altered and modified the final and executory LA Decision dated
September 27, 1998. The quitclaims were also held invalid based on the unconscionably low
amount received by each of the complainants thereunder which ranged between
P10,000.000 and P20,000.00 as against the judgment award of P238,680.00 for each
individual complainant. This factor was found by the NLRC to be a clear proof that the
quitclaims were indeed wangled from the unsuspecting complainants. The NLRC
Resolution15 dated May 7, 2003 thus held:

WHEREFORE, the appeal is GRANTED. The Order a quo of May 15, 2000 is hereby
reversed and set aside and a new one entered ordering the Labor Arbiter a quo to
immediately issue the corresponding writ of execution for the enforcement of the decision
rendered in this case.

The quitclaims executed by the complainants are hereby nullified. However, any amount
received by the complainants under the quitclaims shall be deducted from the award due
each of them.

SO ORDERED.16

The NLRC reiterated the foregoing judgment in the Order17 dated May 31, 2004 which
denied Podden and Herreras motion for reconsideration. On August 13, 2004, the NLRC
issued an Entry of Judgment declaring that its Order dated May 31, 2004 has become final
and executory on June 20, 2004.18

Ruling of the CA

On August 6, 2004, Herrera filed a petition for certiorari before the CA assailing the
issuances of the NLRC. During the pendency of the petition or on August 30, 2005, a joint
compromise agreement was submitted to the CA narrating as follows:

WHEREAS, the parties have discussed their differences; claims, counterclaims and other
issues in the above-entitled cases and have decided to amicably and mutually settle the
same;
WHEREAS, the parties have agreed that [Herrera] shall pay each of the [complainants]
immediately upon the signing of the Joint Compromise Agreement the amount of Php
35,000.00 to each;

WHEREAS, the parties have agreed that [Herrera] shall pay the costs of the suit and
attorneys fees of [the complainants] equivalent to 10% (ten percent) of the total settlement
agreement;

WHEREAS, the parties, their heirs, and assigns, agree to have the present case dismissed
WITH PREJUDICE, immediately; x x x.19

In its assailed Resolution20 dated September 30, 2005, the CA found the joint compromise
agreement consistent with law, public order and public policy, and consequently stamped its
approval thereon and entered judgment in accordance therewith, viz:

Finding the above terms and conditions not contrary to law, public order and public policy,
the parties prayer that the foregoing joint compromise agreement be approved and the
extant case be dismissed with prejudice is GRANTED and the agreement ADMITTED.
Judgment is hereby entered in accordance thereto.

Parties are enjoined to strictly comply with this judgment on compromise.

SO ORDERED.21

Atty. Agustin moved for the reconsideration of the foregoing resolution but his motion was
denied in the CA Resolution22 dated September 8, 2006.

Displeased, Atty. Agustin, with the complainants named as his co-petitioners, interposed the
present recourse contending that the resolutions of the CA violated the principle of res
judicata because they amended and altered the final and executory LA Decision dated

September 27, 1998 and NLRC Resolution dated May 7, 2003 on the basis of an
unconscionable compromise agreement that was executed without his knowledge and
consent. Atty. Agustin prays that the joint compromise agreement be set aside, the LA
Decision dated September 27, 1998 executed and Herrera ordered to pay him P335,844.18
as attorneys fees pursuant to the final and executory monetary award originally obtained by
the complainants before the LA.

Our Ruling
We deny the petition.

The petition is dismissible outright for being accompanied by a defective certification of non-
forum shopping having been signed by Atty. Agustin instead of the complainants as the
principal parties.

It has been repeatedly emphasized that in the case of natural persons, the certification
against forum shopping must be signed by the principal parties themselves and not by the
attorney.23 The purpose of the rule rests mainly on practical sensibility. As explained in
Clavecilla v. Quitain:24

x x x [T]he certification (against forum shopping) must be signed by the plaintiff or any of the
principal parties and not by the attorney. For such certification is a peculiar personal
representation on the part of the principal party, an assurance given to the court or other
tribunal that there are no other pending cases involving basically the same parties, issues
and causes of action.

x x x Obviously it is the petitioner, and not always the counsel whose professional services
have been retained for a particular case, who is in the best position to know whether he or it
actually filed or caused the filing of a petition in that case. Hence, a certification against
forum shopping by counsel is a defective certification.25

The Court has espoused leniency and overlooked such procedural misstep in cases bearing
substantial merit complemented by the written authority or general power of attorney granted
by the parties to the actual signatory.26 However, no analogous justifiable reasons exist in
the case at bar neither do the claims of Atty. Agustin merit substantial consideration to justify
a relaxation of the rule.

It is apparent that the complainants did not seek the instant review because they have
already settled their dispute with Herrera before the CA. It is Atty. Agustins personal resolve
to pursue this recourse premised on his unwavering stance that the joint compromise
agreement signed by the complainants was inequitable and devious as they were denied the
bigger monetary award adjudged by a final and executory judgment.

Atty. Agustin ought to be reminded that his professional relation with his clients is one of
agency under the rules thereof "[t]he acts of an agent are deemed the acts of the principal
only if the agent acts within the scope of his authority."27 It is clear that under the
circumstances of this case, Atty. Agustin is acting beyond the scope of his authority in
questioning the compromise agreement between the complainants, Podden and Herrera.
It is settled that parties may enter into a compromise agreement without the intervention of
their lawyer.28 This precedes from the equally settled rule that a client has an undoubted
right to settle a suit without the intervention of his lawyer for he is generally conceded to
have the exclusive control over the subject-matter of the litigation and may, at any time
before judgment, if acting in good faith, compromise, settle, and adjust his cause of action
out of court without his attorneys intervention, knowledge, or consent, even though he has
agreed with his attorney not to do so. Hence, the absence of a counsels knowledge or
consent does not invalidate a compromise agreement.29

Neither can a final judgment preclude a client from entering into a compromise. Rights may
be waived through a compromise agreement, notwithstanding a final judgment that has
already settled the rights of the contracting parties provided the compromise is shown to
have been voluntarily, freely and intelligently executed by the parties, who had full
knowledge of the judgment. Additionally, it must not be contrary to law, morals, good
customs and public policy.30

In the present case, the allegations of vitiated consent proffered by Atty. Agustin are all
presumptions and suppositions that have no bearing as evidence. There is no proof that the
complainants were forced, intimidated or defrauded into executing the quitclaims. On the
contrary, the LA correctly observed that, based on the following facts, the complainants
voluntarily entered into and fully understood the contents and effect of the quitclaims, to wit:
(1) they have already received a copy and hence aware of the LA Decision dated September
27, 1998 when they signed the quitclaims on March 2, 1999, April 8, 1999 and March 31,
2000; (2) the quitclaims were written in Filipino language which is known to and understood
by the complainants; (3) none of the complainants attended the hearings on the motion for
execution of the LA Decision dated September 27, 1998; (4) they were consistent in their
manifestations before the NLRC and the CA that they have already settled their claims
against Podden and Herrera hence, their request for the termination of the appeals filed by
Atty. Agustin before the said tribunals.

Furthermore, it is the complainants themselves who can impugn the consideration of the
compromise as being unconscionable31 but no such repudiation was manifested before the
Court or the courts a quo.

The ruling in Unicane Workers Union-CLUP v. NLRC32 cited by Atty. Agustin is not
applicable to the facts at hand. The circumstances which led the Court to annul the quitclaim
in Unicane are not attendant in the present case. In Unicane, the attorney-in-fact who signed
the quitclaim in behalf of the employees exceeded the scope of his authority thus prejudicing
the latter. Consequently, it was ruled that the quitclaim did not bind the employees. No akin
situation exists in the case at bar.

Further, Atty. Agustins claim for his unpaid attorneys fees cannot nullify the subject joint
compromise agreement.33
A compromise agreement is binding only between its privies and could not affect the rights of
third persons who were not parties to the agreement. One such third party is the lawyer who
should not be totally deprived of his compensation because of the compromise subscribed
by the client. Otherwise, the terms of the compromise agreement will be set aside, and the
client shall be bound to pay the fees agreed upon with his lawyer. If the adverse party settled
the suit in bad faith, he will be made solidarily liable with the client for the payment of such
fees. The following discussions in Gubat v. National Power Corporation34 elaborate on this
matter, viz:

As the validity of a compromise agreement cannot be prejudiced, so should not be the

payment of a lawyers adequate and reasonable compensation for his services should the
suit end by reason of the settlement. The terms of the compromise subscribed to by the
client should not be such that will amount to an entire deprivation of his lawyers fees,
especially when the contract is on a contingent fee basis. In this sense, the compromise
settlement cannot bind the lawyer as a third party. A lawyer is as much entitled to judicial
protection against injustice or imposition of fraud on the part of his client as the client is
against abuse on the part of his counsel. The duty of the court is not only to ensure that a
lawyer acts in a proper and lawful manner, but also to see to it that a lawyer is paid his just
fees.

Even if the compensation of a counsel is dependent only upon winning a case he himself
secured for his client, the subsequent withdrawal of the case on the clients own volition
should never completely deprive counsel of any legitimate compensation for his professional
services. In all cases, a client is bound to pay his lawyer for his services. The determination
of bad faith only becomes significant and relevant if the adverse party will likewise be held
liable in shouldering the attorneys fees.35 (Citations omitted)

There is truth to Atty. Agustins argument that the compromise agreement did not include or
affect his attorneys fees granted in the final and executory LA Decision dated September 27,
1998. Attorneys fees become vested right when the order awarding those fees becomes
final and executory and any compromise agreement removing that right must include the
lawyers participation if it is to be valid against him.36

However, equity dictates that an exception to such rule be made in this case with the end in
view that the fair share of litigants to the benefits of a suit be not displaced by a contract for
legal services.

It must be noted that the complainants were laborers who desired to contest their dismissal
for being illegal.1wphi1 With no clear means to pay for costly legal services, they hired Atty.
Agustin whose remuneration was subject to the success of the illegal dismissal suit. Before a
judgment was rendered in their favor, however, the company closed down and settlement of
the suit for an amount lesser than their monetary claims, instead of execution of the
favorable judgment, guaranteed the atonement for their illegal termination. To make the
complainants liable for the P335,844.18 attorneys fees adjudged in the LA Decision of
September 27, 1998 would be allowing Atty. Agustin to get a lions share of the
P385,000.0037 received by the former from the compromise agreement that terminated the
suit; to allow that to happen will contravene the raison d'tre for contingent fee
arrangements.

Contingent fee arrangements "are permitted because they redound to the benefit of the poor
client and the lawyer especially in cases where the client has meritorious cause of action,
but no means with which to pay for legal services unless he can, with the sanction of law,
make a contract for a contingent fee to be paid out of the proceeds of the litigation.
Oftentimes, the contingent fee arrangement is the only means by which the poor and
helpless can seek redress for injuries sustained and have their rights vindicated."38

Further, a lawyer is not merely the defender of his clients cause. He is also, first and
foremost, an officer of the court and participates in the fundamental function of administering
justice in society. It follows that a lawyers compensation for professional services rendered
is subject to the supervision of the court in order to maintain the dignity and integrity of the
legal profession to which he belongs.39 "[L]awyering is not a moneymaking venture and
lawyers are not merchants. Law advocacy, it has been stressed, is not capital that yields
profits. The returns it births are simple rewards for a job done or service rendered."40

More importantly, Atty. Agustin was not totally deprived of his fees. Under the joint settlement
agreement, he is entitled to receive ten percent (10%) of the total settlement. We find the
said amount reasonable considering that the nature of the case did not involve complicated
legal issues requiring much time, skill and effort.

It cannot be said that Herrera negotiated for the compromise agreement in bad faith. It
remains undisputed that Podden has ceased operations on December 1, 1994 or almost
four years before the LA Decision dated September 27, 1998 was rendered.41 In view
thereof, the implementation of the award became unfeasible and a compromise settlement
was more beneficial to the complainants as it assured them of reparation, albeit at a reduced
amount. This was the same situation prevailing at the time when Herrera manifested and
reiterated before the CA that a concession has been reached by the parties. Thus, the
motivating force behind the settlement was not to deprive or prejudice Atty. Agustin of his
fees, but rather the inability of a dissolved corporation to fully abide by its adjudged liabilities
and the certainty of payment on the part of the complainants.

Also, collusion between complainants and Herrera cannot be inferred from the fact that Atty.
Agustin obtained lesser attorneys fees under the compromise agreement as against that
which he could have gained if the LA Decision dated September 27, 1998 was executed.
Unless there is a showing that the complainants actually received an amount higher than
that stated in the settlement agreement, it cannot be said that Atty. Agustin was unlawfully
prejudiced. There is no proof submitted supporting such inference.

Under the above circumstances, Herrera cannot be made solidarily liable for Atty. Agustins
fees which, as a rule, are the personal obligation of his clients, the complainants. However,
pursuant to his undertaking in the joint compromise agreement, Herrera is solely bound to
compensate Atty. Agustin at the rate of ten percent (10%) of the total settlement
agreement.42

Since the entire provisions of the joint compromise agreement are not available in the
records and only the relevant portions thereof were quoted in the CA Resolution dated
September 30, 2005, the Court deems it reasonable to impose a period of ten (10) days
within which Herrera should fulfill his obligation to Atty. Agustin.

WHEREFORE, premises considered, the petition is hereby DENIED. The Resolution dated
September 30, 2005 of the Court of Appeals in CA-G.R. SP No. 85556 is AFFIRMED.

Pursuant to his undertaking in the joint compromise agreement, respondent Alejandro Cruz-
Herrera is ORDERED to pay, give, deliver to Atty. Emmanuel D. Agustin ten percent (10%) of
the total settlement agreement within a period of ten (10) days from notice hereof. Both of
them are hereby REQUIRED to report compliance with the foregoing order within a period of
five days thereafter.

SO ORDERED.

SECOND DIVISION

WESTMONT PHARMACEUTICALS, INC., UNITED LABORATORIES, INC., and/or JOSE

YAO CAMPOS, CARLOS EJERCITO, ERNESTO SALAZAR, ELIEZER SALAZAR, JOSE
SOLIDUM, JR.,
Petitioners,

- versus -

RICARDO C. SAMANIEGO,
Respondent.
x ------------------------------------------ x
RICARDO C. SAMANIEGO,
Petitioner,
- versus -

WESTMONT PHARMACEUTICALS, INC. and UNITED LABORATORIES, INC.,

Respondents.

G.R. Nos. 146653-54

Present:

PUNO, J., Chairperson,

SANDOVAL-GUTIERREZ,
*CORONA,
AZCUNA, and
GARCIA, JJ.

G.R. Nos. 147407-08

Promulgated:

February 20, 2006

x ---------------------------------------------------------------------------------------x

DECISION
SANDOVAL-GUTIERREZ, J.:

Before us are consolidated petitions for review on certiorari under Rule 45 of the 1997 Rules
of Civil Procedure, as amended, filed by both contending parties assailing the Decision[1]
dated January 8, 2001 and the Resolution[2] dated March 9, 2001 rendered by the Court of
Appeals in CA-G.R. SP No. 60400.

The factual antecedents as borne by the records are:

On May 5, 1998, Ricardo C. Samaniego filed with the Office of the Labor Arbiter, Regional
Arbitration Branch (RAB) No. II, Tuguegarao City, Cagayan, a complaint for illegal dismissal
and damages against Westmont Pharmaceuticals, Inc. (Westmont) and United Laboratories,
Inc. (Unilab), herein respondents. Also impleaded as respondents are Unilabs officers, Jose
Yao Campos, Carlos Ejercito, Ernesto Salazar, Eliezer Salazar, and Jose Solidum, Jr.

The complaint alleges that Unilab initially hired Samaniego as Professional Service
Representative of its marketing arm, Westmont. Later, Unilab promoted him as Senior
Business Development Associate and assigned him in Isabela as Acting District Manager of
Westmont and Chairman of Unilab Special Projects. In August 1995, he was transferred to
Metro Manila pending investigation of his subordinate and physicians of Region II involved in
a sales discount and Rx trade-off controversy. He was then placed under floating status and
assigned to perform duties not connected with his position, like fetching at the airport
physicians coming from the provinces; making deposits in banks; fetching field men and
doing messengerial works. His transfer to Metro Manila resulted in the diminution of his
salary as his per diem was reduced from P13,194.00 to P2,299.00 only.

On June 26, 1998, Westmont and Unilab filed a motion to dismiss Samaniegos complaint on
the ground of improper venue and lack of cause of action. They argued that the complaint
should have been filed with the National Labor Relations Commission (NLRC) in Manila, not
with the Office of the Labor Arbiter in Tuguegarao City, Cagayan; and that the action should
only be against Westmont, Samaniegos employer.

Samaniego filed an Opposition to the motion to which Westmont and Unilab filed a Reply.

On August 13, 1998, the Labor Arbiter denied the motion to dismiss, citing Section 1, Rule IV
of the NLRC New Rules of Procedure. This provision allows the Labor Arbiter to order a
change of venue in meritorious cases.

The Labor Arbiter then set the case for preliminary conference during which Westmont and
Unilab expressly reserved their right to contest the order denying their motion to dismiss.
On September 3, 1998, Westmont and Unilab filed with the NLRC an Urgent Petition to
Change or Transfer Venue. On the same date, they filed with the Office of the Labor Arbiter
in Cagayan a Motion to Suspend Proceedings in view of the pendency of their petition for
change or transfer of venue in the NLRC.

On September 8, 1998, the Labor Arbiter issued an Order directing the parties to submit
their respective position papers and supporting documents within twenty (20) days from
notice, after which the case shall be deemed submitted for decision.
On September 22, 1998, the NLRC, acting on the petition to change venue, directed the
Labor Arbiter to forward to the NLRC the records of the case. The Labor Arbiter retained the
complete duplicate original copies of the records and set the case for hearing. Westmont
and Unilab repeatedly filed motions for cancellation of the scheduled dates of hearing on the
ground that their petition for change of venue has remained unresolved. They did not file
their position papers nor did they attend the hearing. Thus, the Labor Arbiter considered the
case submitted for Decision based on the records and the evidence submitted by
Samaniego.

On December 16, 1998, the Labor Arbiter rendered a Decision finding that Samaniego was
illegally and unjustly dismissed constructively and ordering his reinstatement to his former
position without loss of seniority rights and privileges; and payment of his full backwages
from the date of his dismissal from the service up to the date of his actual reinstatement, as
well as per diem differential, profit share, and actual, moral and exemplary damages, plus
10% attorneys fees.

On January 21, 1999, Westmont and Unilab interposed an appeal to the NLRC. In its
Resolution dated August 31, 1999, the NLRC dismissed the petition for change of venue,
holding that when the cause of action arose, Samaniegos workplace was in Isabela over
which the Labor Arbiter in Cagayan has jurisdiction; and that the Labor Arbiters Decision is
not appealable.

In the same Resolution, the NLRC declared the Labor Arbiters Decision null and void, finding
that:

x x x the Executive Labor Arbiter below only allowed the transmittal of the official records of
the instant case to the Commission. Throwing caution into the wind, he retained complete
duplicate original copies of the same, conducted further proceedings and rendered his now
contested Decision despite the pendency of the appeal-treated Urgent Petition for Change of
Venue.

As a consequence, respondents-appellants were deprived of their opportunity to be heard

and defend themselves on the issues raised in the instant case. They were therefore denied
of their right to due process of law in violation of Section 1, Article III of the Constitution
which provides: No person shall be deprived of his....property without due process of law.

The dispositive portion of the NLRC Resolution reads:

WHEREFORE, premises considered, the main Appeal and Motion to Quash are hereby
PARTIALLY GRANTED and the appeal-treated Petition for Change of Venue DISMISSED for
lack of jurisdiction and/or merit. Accordingly, the Decision appealed from is declared NULL
and VOID and the Order appealed from SUSTAINED insofar as the denial of the Motion to
Dismiss is concerned. The entire records of the instant case are DIRECTED to be
immediately remanded to the Executive Labor Arbiter of origin for immediate conduct of
further proceeding. The respondents-appellants are DIRECTED to pay complainant-appellee
the amount of Two Hundred Thirty Thousand Seven Hundred Twenty Pesos and Thirty
Centavos (P230,720.30) representing his salary from January 1, 1999 to August 31, 1999,
the date of issuance of this Resolution less any salary collected by him by way of execution
pending appeal.

SO ORDERED.

The parties separately filed their motions for reconsideration but were both denied by the
NLRC in its Resolution dated June 27, 2000.

On January 8, 2001, the Court of Appeals, acting on the parties petitions for certiorari,
rendered its Decision setting aside the NLRC Resolutions and affirming with modification the
Labor Arbiters Decision in the sense that the award of moral damages was reduced from
P5,000,000.00 to P500,000.00; and the exemplary damages from P1,000,000.00 to
P300,000.00, thus:

xxx

While this Court concurs with the ruling of the Executive Labor Arbiter that there was
constructive dismissal committed against Ricardo Samaniego, this Court finds the award on
moral and exemplary damages unconscionable.

xxx
WHEREFORE, the NLRCs resolutions dated August 31, 1999 and June 27, 2000 are hereby
SET ASIDE. The decision of the Executive Labor Arbiter dated December 16, 1998 is
REINSTATED and AFFIRMED in all respect except with the following modification: the moral
and exemplary damages are reduced to P500,000.00 and P300,000.00, respectively.

SO ORDERED.

Hence, these consolidated petitions for review on certiorari filed by the opposing parties.

In their petition, Westmont and Unilab allege that the Court of Appeals erred in denying their
motion to dismiss by reason of improper venue and in sustaining the Labor Arbiters Decision
declaring that Samaniego was constructively dismissed; and that they were denied due
process.

For his part, Samaniego maintains that the Court of Appeals did not err in its ruling.
However, he claims that the Appellate Court should not have reduced the Labor Arbiters
award for moral and exemplary damages.

The petition to change or transfer venue filed by Westmont and Unilab with the NLRC is not
the proper remedy to assail the Labor Arbiters Order denying their motion to dismiss. Such
Order is merely interlocutory, hence, not appealable. Section 3, Rule V of the Rules of
Procedure of the NLRC, as amended, provides:

SECTION 3. Motion to Dismiss. On or before the date set for the conference, the respondent
may file a motion to dismiss. Any motion to dismiss on the ground of lack of jurisdiction,
improper venue, or that the cause of action is barred by prior judgment, prescription or forum
shopping, shall be immediately resolved by the Labor Arbiter by a written order. An order
denying the motion to dismiss or suspending its resolution until the final determination of the
case is not appealable.

In Indiana Aerospace University v. Commission on Higher Education,[3] we held:

An order denying a motion to dismiss is interlocutory, and so the proper remedy in such a
case is to appeal after a decision has been rendered.

Assuming that the petition to change or transfer venue is the proper remedy, still we find that
the Court of Appeals did not err in sustaining the Labor Arbiters Order denying the motion to
dismiss.
Section 1(a), Rule IV of the NLRC Rules of Procedure, as amended, provides:

SECTION 1. Venue. (a) All cases which Labor Arbiters have authority to hear and decide
may be filed in the Regional Arbitration Branch having jurisdiction over the workplace of the
complainant/petitioner.

For purposes of venue, workplace shall be understood as the place or locality where the
employee is regularly assigned when the cause of action arose. It shall include the place
where the employee is supposed to report back after a temporary detail, assignment or
travel. In the case of field employees, as well as ambulant or itinerant workers, their
workplace is where they are regularly assigned, or where they are supposed to regularly
receive their salaries/wages or work instructions from and report the results of their
assignment to, their employers.

In Sulpicio Lines, Inc. v. NLRC,[4] we held:

The question of venue essentially relates to the trial and touches more upon the
convenience of the parties, rather than upon the substance and merits of the case. Our
permissive rules underlying provisions on venue are intended to assure convenience for the
plaintiff and his witnesses and to promote the ends of justice. This axiom all the more finds
applicability in cases involving labor and management because of the principle, paramount
in our jurisdiction, that the State shall afford full protection to labor.

xxx

This provision is obviously permissive, for the said section uses the word "may," allowing a
different venue when the interests of substantial justice demand a different one. In any case,
as stated earlier, the Constitutional protection accorded to labor is a paramount and
compelling factor, provided the venue chosen is not altogether oppressive to the employer.

Here, it is undisputed that Samaniegos regular place of assignment was in Isabela when he
was transferred to Metro Manila or when the cause of action arose. Clearly, the Appellate
Court was correct in affirming the Labor Arbiters finding that the proper venue is in the RAB
No. II at Tuguegarao City, Cagayan.
On the contention of Westmont and Unilab that they were denied due process, well settled is
the rule that the essence of due process is simply an opportunity to be heard or, as applied
to administrative proceedings, an opportunity to explain ones side or an opportunity to seek
a reconsideration of the action or ruling complained of. The requirement of due process in
labor cases before a Labor Arbiter is satisfied when the parties are given the opportunity to
submit their position papers to which they are supposed to attach all the supporting
documents or documentary evidence that would prove their respective claims, in the event
the Labor Arbiter determines that no formal hearing would be conducted or that such hearing
was not necessary.[5]

As shown by the records, the Labor Arbiter gave Westmont and Unilab, not only once, but
thrice, the opportunity to submit their position papers and supporting affidavits and
documents. But they were obstinate. Clearly, they were not denied their right to due process.

The ultimate issue for our resolution is whether the Court of Appeals erred in holding that
Samaniego was constructively dismissed by Westmont and Unilab.

To recapitulate, Samaniego claims that upon his reassignment and/or transfer to Metro
Manila, he was placed on floating status and directed to perform functions not related to his
position. For their part, Westmont and Unilab explain that his transfer is based on a sound
business judgment, a management prerogative.

In constructive dismissal, the employer has the burden of proving that the transfer of an
employee is for just and valid grounds, such as genuine business necessity. The employer
must be able to show that the transfer is not unreasonable, inconvenient, or prejudicial to the
employee. It must not involve a demotion in rank or a diminution of salary and other benefits.
If the employer cannot overcome this burden of proof, the employees transfer shall be
tantamount to unlawful constructive dismissal.[6]

Westmont and Unilab failed to discharge this burden. Samaniego was unceremoniously
transferred from Isabela to Metro Manila. We hold that such transfer is economically and
emotionally burdensome on his part. He was constrained to maintain two residences one for
himself in Metro Manila, and the other for his family in Tuguegarao City, Cagayan. Worse,
immediately after his transfer to Metro Manila, he was placed on floating status and was
demoted in rank, performing functions no longer supervisory in nature.

There may also be constructive dismissal if an act of clear insensibility or disdain by an

employer becomes so unbearable on the part of the employee that it could foreclose any
choice by him except to forego his continued employment.[7] This was what happened to
Samaniego. Thus, he is entitled to reinstatement without loss of seniority rights, full
backwages, inclusive of allowances, and other benefits or their monetary equivalent,
computed from the time his compensation was withheld from him up to the time of his actual
reinstatement.[8]
However, the circumstances obtaining in this case do not warrant the reinstatement of
Samaniego. Antagonism caused a severe strain in the relationship between him and his
employer. A more equitable disposition would be an award of separation pay equivalent to at
least one month pay, or one month pay for every year of service, whichever is higher (with a
fraction of at least six [6] months being considered as one [1] whole year),[9] in addition to
his full backwages, allowances and other benefits.[10]

Records show that Samaniego was employed from October 1982 to May 27, 1998,[11] or for
sixteen (16) years and seven (7) months, with a monthly salary of P25,000.00. Hence, he is
entitled to a separation pay of P425,000.00.
WHEREFORE, the assailed Decision and Resolution of the Court of Appeals in CA-G.R. SP
No. 60400 and CA-G.R. SP No. 60478 are AFFIRMED, with MODIFICATION in the sense
that Westmont and Unilab are ordered to pay Samaniego his separation pay equivalent to
P425,000.00, plus his full backwages, and other privileges and benefits, or their monetary
equivalent, from the time of his dismissal up to his supposed actual reinstatement. The
award for moral and exemplary damages is deleted.

Costs against Westmont and Unilab.

SO ORDERED.

SECOND DIVISION
[G.R. No. 124013. June 5, 1998]

ROSARIO MANEJA, petitioner, vs. NATIONAL LABOR RELATIONS COMMISSION and

MANILA MIDTOWN HOTEL, respondents.
DECISION
MARTINEZ, J.:

Assailed in this petition for certiorari under Rule 65 of the Revised Rules of Court are the
Resolution[1] dated June 3, 1994 of the respondent National Labor Relations Commission in
NLRC NCR-00-10-05297-90, entitled "Rosario Maneja, Complainant, vs. Manila Midtown
Hotel, Respondent," which dismissed the illegal dismissal case filed by petitioner against
private respondent company for lack of jurisdiction of the Labor Arbiter over the case; and its
Resolution[2] dated October 20, 1995 denying petitioner's motion for reconsideration.
Petitioner Rosario Maneja worked with private respondent Manila Midtown Hotel beginning
January, 1985 as a telephone operator. She was a member of the National Union of Workers
in Hotels, Restaurants and Allied Industries (NUWHRAIN) with an existing Collective
Bargaining Agreement (CBA) with private respondent.

In the afternoon of February 13, 1990, a fellow telephone operator, Rowena Loleng received
a Request for Long Distance Call (RLDC) form and a deposit of P500.00 from a page boy of
the hotel for a call by a Japanese guest named Hirota Ieda. The call was unanswered. The
P500.00 deposit was forwarded to the cashier. In the evening, Ieda again made an RLDC
and the page boy collected another P500.00 which was also given to the operator Loleng.
The second call was also unanswered. Loleng passed on the RLDC to petitioner for follow-
up. Petitioner monitored the call.

On February 15, 1990, a hotel cashier inquired about the P1,000.00 deposit made by Ieda.
After a search, Loleng found the first deposit of P500.00 inserted in the guest folio while the
second deposit was eventually discovered inside the folder for cancelled calls with deposit
and official receipts.

When petitioner saw that the second RLDC form was not time-stamped, she immediately
placed it inside the machine which stamped the date February 15, 1990. Realizing that the
RLDC was filed 2 days earlier, she wrote and changed the date to February 13, 1990.
Loleng then delivered the RLDC and the money to the cashier. The second deposit of
P500.00 by Ieda was later returned to him.

On March 7, 1990, the chief telephone operator issued a memorandum[3] to petitioner and
Loleng directing the two to explain the February 15 incident. Petitioner and Loleng thereafter
submitted their written explanation.[4]

On March 20, 1990, a written report[5] was submitted by the chief telephone operator, with
the recommendation that the offenses committed by the operators concerned covered
violations of the Offenses Subject to Disciplinary Actions (OSDA): (1) OSDA 2.01: forging,
falsifying official document(s), and (2) OSDA 1.11: culpable carelessness - negligence or
failure to follow specific instruction(s) or established procedure(s).

On March 23, 1990, petitioner was served a notice of dismissal[6] effective April 1, 1990.
Petitioner refused to sign the notice and wrote therein "under protest."

Meanwhile, a criminal case[7] for Falsification of Private Documents and Qualified Theft was
filed before the Office of the City Prosecutor of Manila by private respondent against Loleng
and petitioner. However, the resolution recommending the filing of a case for estafa was
reversed by 2nd Asst. City Prosecutor Virgilio M. Patag.
On October 2, 1990, petitioner filed a complaint for illegal dismissal against private
respondent before the Labor Arbiter. The complaint was later amended to include a claim for
unpaid wages, unpaid vacation leave conversion and moral damages.

Position papers were filed by the parties. Thereafter, the motion to set the case for hearing
filed by private respondent was granted by the Labor Arbiter and trial on the merits ensued.

In his decision[8] dated May 29, 1992, Labor Arbiter Oswald Lorenzo found that the
petitioner was illegally dismissed. However, in the decision, the Labor Arbiter stated that:

Preliminarily, we hereby state that on the face of the instant complaint, it is one that revolves
on the matter of the implementation and interpretation of existing company policies, which
per the last par. of Art. 217 of the Labor Code, as amended, is one within the jurisdictional
ambit of the grievance procedure under the CBA and thereafter, if unresolved, one proper for
voluntary arbitration. This observation is re-entrenched by the fact, that complainant claims
she is a member of NUWHRAIN with an existing CBA with respondent hotel.

On this score alone, this case should have been dismissed outright.[9]

Despite the aforequoted preliminary statement, the Labor Arbiter still assumed jurisdiction
since Labor Arbiters under Article 217 of the same Labor Code, are conferred original and
exclusive jurisdiction of all termination case(sic.). The dispositive portion of the decision
states that:

"WHEREFORE, premises considered, judgment is hereby rendered as follows:

Declaring complainant's dismissal by respondent hotel as illegally effected;

Ordering respondent to immediately reinstate complainant to her previous position without

loss of seniority rights;

Ordering further respondent to pay complainant the full backwages due her, which is
computed as follows:

3/23/90 - 10/31/90 = 7.26/mos.

P2,540 x 7.26/mos. P18,440.40

11/1/90 - 1/7/91 = 2.23/mos.

P3,224.16 x 2.23/mos. 7,189.87

1/8/91 - 4/29/92 = 15.7/mos.

P3,589.16 x 15.7/mos. 56,349.89

P81,980.08

Moreover, respondent is ordered to pay the 13th month pay due the complainant in the
amount of P6,831.67 including moral and exemplary damages of P15,000.00 and
P10,000.00 respectively, as well as attorney's fees equivalent to ten (10) percent of the total
award herein in the amount of P11,381.17;

Finally, all other claims are hereby dismissed for lack of merit.

"SO ORDERED."

Private respondent appealed the decision to the respondent commission on the ground inter
alia that the Labor Arbiter erred in assuming jurisdiction over the illegal dismissal case after
finding that the case falls within the jurisdictional ambit of the grievance procedure under the
CBA, and if unresolved, proper for voluntary arbitration.[10] An Opposition[11] was filed by
petitioner.

In the assailed Resolution[12] dated June 3, 1994, respondent NLRC dismissed the illegal
dismissal case for lack of jurisdiction of the Labor Arbiter because the same should have
instead been subjected to voluntary arbitration.

Petitioners motion for reconsideration[13] was denied by respondent NLRC for lack of merit.

In this petition for certiorari, petitioner ascribes to respondent NLRC grave abuse of
discretion in -

Ruling that the Labor Arbiter was without jurisdiction over the illegal dismissal case;
Not ruling that private respondent is estopped by laches from questioning the jurisdiction of
the Labor Arbiter over the illegal dismissal case;

Reversing the decision of the Labor Arbiter based on a technicality notwithstanding the
merits of the case.

Petitioner contends that Article 217(a)(2) and (c) relied upon by respondent NLRC in
divesting the labor arbiter of jurisdiction over the illegal dismissal case, should be read in
conjunction with Article 261[14] of the Labor Code. It is the view of petitioner that termination
cases arising from the interpretation or enforcement of company personnel policies
pertaining to violations of Offenses Subject to Disciplinary Actions (OSDA), are under the
jurisdiction of the voluntary arbitrator only if these are unresolved in the plant-level grievance
machinery. Petitioner insists that her termination is not an unresolved grievance as there has
been no grievance meeting between the NUWHRAIN union and the management. The
reason for this, petitioner adds, is that it has been a company practice that termination cases
are not anymore referred to the grievance machinery but directly to the labor arbiter.

In its comment, private respondent argues that the Labor Arbiter should have dismissed the
illegal dismissal case outright after finding that it is within the jurisdictional ambit of the
grievance procedure. Moreover, private respondent states that the issue of jurisdiction may
be raised at any time and at any stage of the proceedings even on appeal, and is not in
estoppel by laches as contended by the petitioner.

For its part, public respondent, through the Office of the Solicitor General, cited the ruling of
this Court in Sanyo Philippines Workers Union-PSSLU vs. Caizares[15] in dismissing the
case for lack of jurisdiction of the Labor Arbiter.

The legal issue in this case is whether or not the Labor Arbiter has jurisdiction over the illegal
dismissal case.

The respondent Commission, in holding that the Labor Arbiter lacks jurisdiction to hear the
illegal dismissal case, cited as basis therefor Article 217 of the Labor Code, as amended by
Republic Act No. 6715. It said:

While it is conceded that under Article 217(a), Labor Arbiters shall have original and
exclusive jurisdiction over cases involving termination disputes, the Supreme Court, in a
fairly recent case ruled:

The procedure introduced in RA 6715 of referring certain grievances originally and

exclusively to the grievance machinery, and when not settled at this level, to a panel of
voluntary arbitrators outlined in CBAs does not only include grievances arising from the
interpretation or implementation of the CBA but applies as well to those arising from the
implementation of company personnel policies. No other body shall take cognizance of
these cases. x x x. (Sanyo vs. Caizares, 211 SCRA 361, 372)[16]

We find that the respondent Commission has erroneously interpreted the aforequoted
portion of our ruling in the case of Sanyo, as divesting the Labor Arbiter of jurisdiction in a
termination dispute.

Article 217 of the Labor Code gives us the clue as to the jurisdiction of the Labor Arbiter, to
wit:

Article 217. Jurisdiction of Labor Arbiters and the Commission. a) Except as otherwise
provided under this Code the Labor Arbiters shall have original and exclusive jurisdiction to
hear and decide within thirty (30) calendar days after the submission of the case by the
parties for decision without extension even in the absence of stenographic notes, the
following cases involving all workers, whether agricultural or non-agricultural:

1.Unfair labor practice cases;

2. Termination disputes;

3. If accompanied with a claim for reinstatement, those cases that workers may file involving
wages, rates of pay, hours of work and other terms and conditions of employment;

4. Claims for actual, moral, exemplary and other forms of damages arising from the
employer-employee relations;

5. Cases arising from any violation of Article 264 of this Code, including questions involving
the legality of strikes and lockouts;

6. Except claims for Employees Compensation, Social Security, Medicare and maternity
benefits, all other claims, arising from employer-employee relations, including those of
persons in domestic or household service, involving an amount exceeding five thousand
pesos (P5,000.00) regardless of whether accompanied with a claim for reinstatement.

b) The Commission shall have exclusive appellate jurisdiction over all cases decided by
Labor Arbiters.
c) Cases arising from the interpretation or implementation of collective bargaining
agreements and those arising from the interpretation or enforcement of company personnel
policies shall be disposed of by the Labor Arbiter by referring the same to the grievance
machinery and voluntary arbitration as may be provided in said agreements.

As can be seen from the aforequoted Article, termination cases fall under the original and
exclusive jurisdiction of the Labor Arbiter. It should be noted, however, that in the opening
paragraph there appears the phrase: Except as otherwise provided under this Code x x x. It
is paragraph (c) of the same Article which respondent Commission has erroneously
interpreted as giving the voluntary arbitrator jurisdiction over the illegal dismissal case.

However, Article 217 (c) should be read in conjunction with Article 261 of the Labor Code
which grants to voluntary arbitrators original and exclusive jurisdiction to hear and decide all
unresolved grievances arising from the interpretation or implementation of the collective
bargaining agreement and those arising from the interpretation or enforcement of company
personnel policies. Note the phrase unresolved grievances. In the case at bar, the
termination of petitioner is not an unresolved grievance.

The stance of the Solicitor General in the Sanyo case is totally the reverse of its posture in
the case at bar. In Sanyo, the Solicitor General was of the view that a distinction should be
made between a case involving interpretation or implementation of Collective Bargaining
Agreement or interpretation or enforcement of company personnel policies, on the one hand
and a case involving termination, on the other hand. It argued that the dismissal of the
private respondents does not involve an interpretation or implementation of a Collective
Bargaining Agreement or interpretation or enforcement of company personnel policies but
involves termination. The Solicitor General further said that where the dispute is just in the
interpretation, implementation or enforcement stage, it may be referred to the grievance
machinery set up in the Collective Bargaining Agreement or by voluntary arbitration. Where
there was already actual termination, i.e., violation of rights, it is already cognizable by the
Labor Arbiter.[17] We fully agree with the theory of the Solicitor General in the Sanyo case,
which is radically apposite to its position in this case.

Moreover, the dismissal of petitioner does not fall within the phrase grievances arising from
the interpretation or implementation of collective bargaining agreement and those arising
from the interpretation or enforcement of company personnel policies, the jurisdiction of
which pertains to the grievance machinery or thereafter, to a voluntary arbitrator or panel of
voluntary arbitrators. It is to be stressed that under Article 260 of the Labor Code, which
explains the function of the grievance machinery and voluntary arbitrator, (T)he parties to a
Collective Bargaining Agreement shall include therein provisions that will ensure the mutual
observance of its terms and conditions. They shall establish a machinery for the adjustment
and resolution of grievances arising from the interpretation or implementation of their
Collective Bargaining Agreement and those arising from the interpretation or enforcement of
company personnel policies. Article 260 further provides that the parties to a CBA shall name
or designate their respective representative to the grievance machinery and if the grievance
is unsettled in that level, it shall automatically be referred to the voluntary arbitrators
designated in advance by the parties to a CBA of the union and the company. It can thus be
deduced that only disputes involving the union and the company shall be referred to the
grievance machinery or voluntary arbitrators.[18]

In the case at bar, the union does not come into the picture, not having objected or voiced
any dissent to the dismissal of the herein petitioner. The reason for this, according to
petitioner is that the practice in said Hotel in cases of termination is that the latter cases are
not referred anymore to the grievance committee; and that the terminated employee who
wishes to question the legality of his termination usually goes to the Labor Arbiter for
arbitration, whether the termination arose from the interpretation or enforcement of the
company personnel policies or otherwise.[19]

As we ruled in Sanyo, Since there has been an actual termination, the matter falls within the
jurisdiction of the Labor Arbiter. The aforequoted doctrine is applicable foursquare in
petitioners case. The dismissal of the petitioner does not call for the interpretation or
enforcement of company personnel policies but is a termination dispute which comes under
the jurisdiction of the Labor Arbiter.

It should be explained that company personnel policies are guiding principles stated in
broad, long-range terms that express the philosophy or beliefs of an organizations top
authority regarding personnel matters. They deal with matters affecting efficiency and well-
being of employees and include, among others, the procedure in the administration of
wages, benefits, promotions, transfer and other personnel movements which are usually not
spelled out in the collective agreement. The usual source of grievances, however, are the
rules and regulations governing disciplinary actions.[20]

The case of Pantranco North Express, Inc. vs. NLRC[21] sheds further light on the issue of
jurisdiction where the Court cited the Sanyo case and quoted the decision of therein Labor
Arbiter Olairez in this manner:

In our honest opinion we have jurisdiction over the complaint on the following grounds:

First, this is a complaint of illegal dismissal of which original and exclusive jurisdiction under
Article 217 has been conferred to the Labor Arbiters. The interpretation of the CBA or
enforcement of the company policy is only corollary to the complaint of illegal dismissal.
Otherwise, an employee who was on AWOL, or who committed offenses contrary to the
personnel policies(sic) can no longer file a case of illegal dismissal because the discharge is
premised on the interpretation or enforcement of the company policies(sic).

Second. Respondent voluntarily submitted the case to the jurisdiction of this labor tribunal. It
adduced arguments to the legality of its act, whether such act may be retirement and/or
dismissal, and prayed for reliefs on the merits of the case. A litigant cannot pray for reliefs on
the merits and at the same time attacks(sic) the jurisdiction of the tribunal. A person cannot
have ones cake and eat it too. x x x.
As to the second ground, petitioner correctly points out that respondent NLRC should have
ruled that private respondent is estopped by laches in questioning the jurisdiction of the
Labor Arbiter.

Clearly, estoppel lies. The issue of jurisdiction was mooted by herein private respondents
active participation in the proceedings below. In Marquez vs. Secretary of Labor,[22] the
Court said:

x x x. The active participation of the party against whom the action was brought, coupled
with his failure to object to the jurisdiction of the court or quasi-judicial body where the action
is pending, is tantamount to an invocation of that jurisdiction and a willingness to abide by
the resolution of the case and will bar said party from later on impugning the court or bodys
jurisdiction.

In the assailed Resolution,[23] respondent NLRC cited La Naval Drug Corporation vs. Court
of Appeals[24] in holding that private respondent is not in estoppel. Thus,

The operation of the principle of estoppel on the question of jurisdiction seemingly depends
upon whether the lower court actually had jurisdiction or not. If it had no jurisdiction, but the
case was tried and decided upon the theory that it had jurisdiction, the parties are not
barred, on appeal, from assailing such jurisdiction, for the same must exist as a matter of
law, and may not be conferred by consent of the parties or by estoppel (5 C.J.S., 861-863).
However, if the lower court had jurisdiction, and the case was heard and decided upon a
given theory, such, for instance, as that the court had no jurisdiction, the party who induced it
to adopt such theory will not be permitted, on appeal, to assume an inconsistent position that
the lower court had jurisdiction. Here, the principle of estoppel applies. The rule that
jurisdiction is conferred by law, and does not depend upon the will of the parties, has no
bearing thereon. (Underscoring ours)

Again, the respondent NLRC has erroneously interpreted our ruling in the La Naval case.
Under the said ruling, estoppel lies in this case. Private respondent is estopped from
questioning the jurisdiction of the Labor Arbiter before the respondent NLRC having actively
participated in the proceedings before the former. At no time before or during the trial on the
merits did private respondent assail the jurisdiction of the Labor Arbiter. Private respondent
took the cue only from the preliminary statement in the decision of the Labor Arbiter, which
was a mere obiter, and raised the issue of jurisdiction before the Commission. It was then
too late. Estoppel had set in.

Turning now to the merits of the case, We uphold the ruling of the Labor Arbiter that
petitioner was illegally dismissed.
The requisites of a valid dismissal are (1) the dismissal must be for any of the causes
expressed in Article 282 of the Labor Code,[25] and (2) the employee must be given an
opportunity to be heard and to defend himself.[26] The substantive and procedural laws
must be strictly complied with before a worker can be dismissed from his employment
because what is at stake is not only the employees position but his livelihood.[27]

Petitioners dismissal was grounded on culpable carelessness, negligence and failure to

follow specific instruction(s) or established procedure(s) under OSDA 1.11; and, having
forged or falsified official document(s) under OSDA 2.01.

Private respondent blames petitioner for failure to follow established procedure in the hotel
on a guests request for long distance calls. Petitioner, however, explained that the usual or
established procedures are not followed by the operators and hotel employees when
circumstances warrant. For instance, the RLDC forms and the deposits are brought by the
page boy directly to the operators instead of the cashiers if the latter are busy and cannot
attend to the same. Furthermore, she avers that the telephone operators are not conscious
of the serial numbers in the RLDCs and at times, the used RLDCs are recycled. Even the
page boys do not actually check the serial numbers of all RLDCs in one batch, except for the
first and the last.

On the charge of taking of the money by petitioner, it is to be noted that the second P500.00
deposit made by the Japanese guest Ieda was later discovered to be inserted in the folder
for cancelled calls with deposit and official receipts. Thus, there exists no basis for personal
appropriation by the petitioner of the money involved. Another reason is the alleged
tampering of RLDC No. 862406.[28] While petitioner and her co-operator Loleng admitted
that they indeed altered the date appearing therein from February 15, 1990 to February 13,
the same was purposely made to reflect the true date of the transaction without any malice
whatsoever on their part.

As pointed out by Labor Arbiter Oswald B. Lorenzo, thus:

The specifics of the grounds relied by respondent hotels dismissal of complainant are those
stated in Annex F of the latters POSITION PAPER, which is the Notice of Dismissal, notably:

OSDA 2.01 - Forging, falsifying official document(s)

OSDA 1.11 - Culpable negligence or failure to follow specific instruction(s) or established

procedure(s)

On this score, we are persuaded by the complainants arguments that under OSDA 1.11,
infractions of this sort is not without qualifications, which is, that the alleged culpable
carelessness, negligence or failure to follow instruction(s) or established procedure(s),
RESULTING IN LOSS OR DAMAGE TO COMPANY PROPERTY. From the facts obtaining
in this case, there is no quantum of proof whatsoever, except the general allegations in
respondents POSITION PAPER and other pleadings that loss or damage to company
property resulted from the charged infraction. To our mind, this is where labor tribunals
should come in and help correct interpretation of company policies which in the enforcement
thereof wreaks havoc to the constitutional guarantee of security of tenure. Apparently, the
exercise of little flexibility by complainant and co-employees which is predicated on good
faith should not be taken against them and more particularly against the complainant herein.
In this case, to sustain the generalized charge of respondent hotel under OSDA 1.11 would
unduly be sanctioning the imposition of too harsh a penalty - which is dismissal.

In the same tenor, the respondents charge under OSDA 1.11 on the alleged falsification of
private document is also with a qualification, in that the alleged act of falsification must have
been done IN SUCH A WAY AS TO MISLEAD THE USER(S) THEREOF. Again, based on
the facts of the complained act, there appeared no one to have been misled on the change
of date from RLDC #862406 FROM 15 TO 13 February 1990.

As a matter of fact, we are in agreement with the jurisprudence cited by VIRGILIO M.

PATAG, the 2nd Asst. City Prosecutor of the City of Manila, who exculpated complainant
MANEJA from the charges of falsification of private documents and qualified theft under IS
No. 90-11083 and marked Annex H of complainants POSITION PAPER, when he ruled that
an altercation which makes the document speak the truth cannot be the foundation of a
criminal action. As to the charge of qualified theft, we too are of the finding, like the city
prosecutor above-mentioned that there was no evidence on the part of MANEJA to have
unlawfully taken the P500.00 either from the hotel or from guest IEDA on 13 February 1990
and moreover, we too, find no evidence that complainant MANEJA had the intention to profit
thereby nor had misappropriated the P500.00 in question.[29]

Given the factual circumstances of the case, we cannot deduce dishonesty from the act and
omission of petitioner. Our norms of social justice demand that we credit employees with the
presumption of good faith in the performance of their duties,[30] especially petitioner who
has served private respondent since 1985 up to 1990 without any tinge of dishonesty and
was even named Model Employee for the month of April, 1989.[31]

Petitioner has been charged with a very serious offense - dishonesty. This can irreparably
wreck her life as an employee for no employer will take to its bosom a dishonest employee.
Dismissal is the supreme penalty that can be meted to an employee and its imposition
cannot be justified where the evidence is ambivalent.[32] It must, therefore, be based on a
clear and not on an ambiguous or ambivalent ground. Any ambiguity or ambivalence on the
ground relied upon by an employer in terminating the services of an employee denies the
latter his full right to contest its legality. Fairness cannot countenance such ambiguity or
ambivalence.[33]

An employer can terminate the services of an employee only for valid and just causes which
must be supported by clear and convincing evidence. The employer has the burden of
proving that the dismissal was indeed for a valid and just cause.[34] Failure to do so results
in a finding that the dismissal was unjustified.[35]

Finding that there was no just cause for dismissal of petitioner, we now determine if the
rudiments of due process have been duly accorded to her.

Well-settled is the dictum that the twin requirements of notice and hearing constitute the
essential elements of due process in the dismissal of employees. It is a cardinal rule in our
jurisdiction that the employer must furnish the employee with two written notices before the
termination of employment can be effected: (a) the first apprises the employee of the
particular acts or omissions for which his dismissal is sought; and, (b) the second informs the
employee of the employers decision to dismiss him. The requirement of a hearing, on the
other hand, is complied with as long as there was an opportunity to be heard, and not
necessarily that an actual hearing was conducted.[36]

In the case at bar, petitioner and her co-operator Loleng were issued a memorandum on
March 7, 1990. On March 11, 1990, they submitted their written explanation thereto. On
March 20, 1990, a written report was made with a recommendation that the offenses
committed by them were covered by OSDA 1.11 and 2.01. Thereafter, on March 23, 1990,
petitioner was served with a notice of dismissal for said violations effective April 1, 1990.

An examination of the record reveals that no hearing was ever conducted by private
respondent before petitioner was dismissed. While it may be true that petitioner submitted a
written explanation, no hearing was actually conducted before her employment was
terminated. She was not accorded the opportunity to fully defend herself.

Consultations or conferences may not be a substitute for the actual holding of a hearing.
Every opportunity and assistance must be accorded to the employee by the management to
enable him to prepare adequately for his defense, including legal representation.[37]
Considering that petitioner denied having allegedly taken the second P500.00 deposit of the
Japanese guest which was eventually found; and, having made the alteration of the date on
the second RLDC merely to reflect the true date of the transaction, these circumstances
should have at least warranted a separate hearing to enable petitioner to fully ventilate her
side. Absent such hearing, petitioners right to due process was clearly violated.[38]

It bears stressing that a workers employment is property in the constitutional sense. He

cannot be deprived of his work without due process of law. Substantive due process
mandates that an employee can only be dismissed based on just or authorized causes.
Procedural due process requires further that he can only be dismissed after he has been
given an opportunity to be heard. The import of due process necessitates the compliance of
these two aspects.
Accordingly, we hold that the labor arbiter did not err in awarding full backwages in view of
his finding that petitioner was dismissed without just cause and without due process.

We ruled in the case of Bustamante vs. NLRC[39] that the amount of backwages to be
awarded to an illegally dismissed employee must be computed from the time he was
dismissed to the time he is actually reinstated, without deducting the earnings he derived
elsewhere pending the resolution of the case.

Petitioner is likewise entitled to the thirteenth-month pay. Presidential Decree No. 851, as
amended by Memorandum Order No. 28, provides that employees are entitled to the
thirteenth-month pay benefit regardless of their designation and irrespective of the method
by which their wages are paid.[40]

The award of moral and exemplary damages to petitioner is also warranted where there is
lack of due process in effecting the dismissal.

Where the termination of the services of an employee is attended by fraud or bad faith on
the part of the employer, as when the latter knowingly made false allegations of a supposed
valid cause when none existed, moral and exemplary damages may be awarded in favor of
the former.[41]

The anti-social and oppressive abuse of its right to investigate and dismiss its employees
constitute a violation of Article 1701 of the New Civil Code which prohibits acts of oppression
by either capital or labor against the other, and Article 21 on human relations. The grant of
moral damages to the employees by reason of such conduct on the part of the company is
sanctioned by Article 2219, No. 10 of the Civil Code, which allows recovery of such damages
in actions referred to in Article 21.[42]

The award of attorneys fees amounting to ten percent (10%) of the total award by the labor
arbiter is justified under Article 111 of the Labor Code.

WHEREFORE, premises considered, the petition is GRANTED and the assailed resolutions
of the respondent National Labor Relations Commission dated June 3, 1994 and October
20, 1995 are hereby REVERSED AND SET ASIDE. The decision dated May 29, 1992 of the
Labor Arbiter is therefore REINSTATED.

SO ORDERED.

THIRD DIVISION
ESTATE OF NELSON R. DULAY, represented by his wife MERRIDY JANE P. DULAY,
Petitioner,

- versus

ABOITIZ JEBSEN MARITIME, INC. and GENERAL CHARTERERS, INC.,

Respondents.
G.R. No. 172642

Present:

PERALTA, J., Acting Chairperson,*

ABAD,
VILLARAMA, JR.,**
MENDOZA, and
PERLAS-BERNABE, JJ.

Promulgated:

June 13, 2012

x-----------------------------------------------------------------------------------------x

DECISION

PERALTA, J.:
Before the Court is a petition for review on certiorari under Rule 45 of the Rules of Court
seeking to reverse and set aside the Decision[1] and Resolution[2] dated July 11, 2005 and
April 18, 2006 of the Court of Appeals (CA) in CA-G.R. SP No. 76489.

The factual and procedural antecedents of the case, as summarized by the CA, are as
follows:
Nelson R. Dulay (Nelson, for brevity) was employed by [herein respondent] General
Charterers Inc. (GCI), a subsidiary of co-petitioner [herein co-respondent] Aboitiz Jebsen
Maritime Inc. since 1986. He initially worked as an ordinary seaman and later as bosun on a
contractual basis. From September 3, 1999 up to July 19, 2000, Nelson was detailed in
petitioners vessel, the MV Kickapoo Belle.

On August 13, 2000, or 25 days after the completion of his employment contract, Nelson
died due to acute renal failure secondary to septicemia. At the time of his death, Nelson was
a bona fide member of the Associated Marine Officers and Seamans Union of the
Philippines (AMOSUP), GCIs collective bargaining agent. Nelsons widow, Merridy Jane,
thereafter claimed for death benefits through the grievance procedure of the Collective
Bargaining Agreement (CBA) between AMOSUP and GCI. However, on January 29, 2001,
the grievance procedure was declared deadlocked as petitioners refused to grant the
benefits sought by the widow.

On March 5, 2001, Merridy Jane filed a complaint with the NLRC Sub-Regional Arbitration
Board in General Santos City against GCI for death and medical benefits and damages.

On March 8, 2001, Joven Mar, Nelsons brother, received P20,000.00 from [respondents]
pursuant to article 20(A)2 of the CBA and signed a Certification acknowledging receipt of the
amount and releasing AMOSUP from further liability. Merridy Jane contended that she is
entitled to the aggregate sum of Ninety Thousand Dollars ($90,000.00) pursuant to [A]rticle
20 (A)1 of the CBA x x x

xxxx

Merridy Jane averred that the P20,000.00 already received by Joven Mar should be
considered advance payment of the total claim of US$90,000.[00].

[Herein respondents], on the other hand, asserted that the NLRC had no jurisdiction over the
action on account of the absence of employer-employee relationship between GCI and
Nelson at the time of the latters death. Nelson also had no claims against petitioners for sick
leave allowance/medical benefit by reason of the completion of his contract with GCI. They
further alleged that private respondent is not entitled to death benefits because petitioners
are only liable for such in case of death of the seafarer during the term of his contract
pursuant to the POEA contract and the cause of his death is not work-related. Petitioners
admitted liability only with respect to article 20(A)2 [of the CBA]. x x x

xxxx

However, as petitioners stressed, the same was already discharged.

The Labor Arbiter ruled in favor of private respondent. It took cognizance of the case by
virtue of Article 217 (a), paragraph 6 of the Labor Code and the existence of a reasonable
causal connection between the employer-employee relationship and the claim asserted. It
ordered the petitioner to pay P4,621,300.00, the equivalent of US$90,000.00 less
P20,000.00, at the time of judgment x x x

xxxx

The Labor Arbiter also ruled that the proximate cause of Nelsons death was not work-
related.

On appeal, [the NLRC] affirmed the Labor Arbiters decision as to the grant of death benefits
under the CBA but reversed the latters ruling as to the proximate cause of Nelsons death.[3]

Herein respondents then filed a special civil action for certiorari with the CA contending that
the NLRC committed grave abuse of discretion in affirming the jurisdiction of the NLRC over
the case; in ruling that a different provision of the CBA covers the death claim; in reversing
the findings of the Labor Arbiter that the cause of death is not work-related; and, in setting
aside the release and quitclaim executed by the attorney-in-fact and not considering the
P20,000.00 already received by Merridy Jane through her attorney-in-fact.

On July 11, 2005, the CA promulgated its assailed Decision, the dispositive portion of which
reads as follows:

WHEREFORE, in view of the foregoing, the petition is hereby GRANTED and the case is
REFERRED to the National Conciliation and Mediation Board for the designation of the
Voluntary Arbitrator or the constitution of a panel of Voluntary Arbitrators for the appropriate
resolution of the issue on the matter of the applicable CBA provision.
SO ORDERED.[4]

The CA ruled that while the suit filed by Merridy Jane is a money claim, the same basically
involves the interpretation and application of the provisions in the subject CBA. As such,
jurisdiction belongs to the voluntary arbitrator and not the labor arbiter.

Petitioner filed a Motion for Reconsideration but the CA denied it in its Resolution of April 18,
2006.

Hence, the instant petition raising the sole issue of whether or not the CA committed error in
ruling that the Labor Arbiter has no jurisdiction over the case.

Petitioner contends that Section 10 of Republic Act (R.A.) 8042, otherwise known as the
Migrant Workers and Overseas Filipinos Act of 1995, vests jurisdiction on the appropriate
branches of the NLRC to entertain disputes regarding the interpretation of a collective
bargaining agreement involving migrant or overseas Filipino workers. Petitioner argues that
the abovementioned Section amended Article 217 (c) of the Labor Code which, in turn,
confers jurisdiction upon voluntary arbitrators over interpretation or implementation of
collective bargaining agreements and interpretation or enforcement of company personnel
policies.

The pertinent provisions of Section 10 of R.A. 8042 provide as follows:

SEC. 10. Money Claims. - Notwithstanding any provision of law to the contrary, the Labor
Arbiters of the National Labor Relations Commission (NLRC) shall have the original and
exclusive jurisdiction to hear and decide, within ninety (90) calendar days after filing of the
complaint, the claims arising out of an employer-employee relationship or by virtue of any
law or contract involving Filipino workers for overseas deployment including claims for
actual, moral, exemplary and other forms of damages.

Article 217(c) of the Labor Code, on the other hand, states that:
xxxx

(c) Cases arising from the interpretation or implementation of collective bargaining

agreements and those arising from the interpretation or enforcement of company personnel
policies shall be disposed by the Labor Arbiter by referring the same to the grievance
machinery and voluntary arbitration as may be provided in said agreements.
On their part, respondents insist that in the present case, Article 217, paragraph (c) as well
as Article 261 of the Labor Code remain to be the governing provisions of law with respect to
unresolved grievances arising from the interpretation and implementation of collective
bargaining agreements. Under these provisions of law, jurisdiction remains with voluntary
arbitrators.

Article 261 of the Labor Code reads, thus:

ARTICLE 261. Jurisdiction of Voluntary Arbitrators or panel of Voluntary Arbitrators. The

Voluntary Arbitrator or panel of Voluntary Arbitrators shall have original and exclusive
jurisdiction to hear and decide all unresolved grievances arising from the interpretation or
implementation of the Collective Bargaining Agreement and those arising from the
interpretation or enforcement of company personnel policies referred to in the immediately
preceding article. Accordingly, violations of a Collective Bargaining Agreement, except those
which are gross in character, shall no longer be treated as unfair labor practice and shall be
resolved as grievances under the Collective Bargaining Agreement. For purposes of this
article, gross violations of Collective Bargaining Agreement shall mean flagrant and/or
malicious refusal to comply with the economic provisions of such agreement.

The Commission, its Regional Offices and the Regional Directors of the Department of Labor
and Employment shall not entertain disputes, grievances or matters under the exclusive and
original jurisdiction of the Voluntary Arbitrator or panel of Voluntary Arbitrators and shall
immediately dispose and refer the same to the Grievance Machinery or Voluntary Arbitration
provided in the Collective Bargaining Agreement.

The petition is without merit.

It is true that R.A. 8042 is a special law governing overseas Filipino workers. However, a
careful reading of this special law would readily show that there is no specific provision
thereunder which provides for jurisdiction over disputes or unresolved grievances regarding
the interpretation or implementation of a CBA. Section 10 of R.A. 8042, which is cited by
petitioner, simply speaks, in general, of claims arising out of an employer-employee
relationship or by virtue of any law or contract involving Filipino workers for overseas
deployment including claims for actual, moral, exemplary and other forms of damages. On
the other hand, Articles 217(c) and 261 of the Labor Code are very specific in stating that
voluntary arbitrators have jurisdiction over cases arising from the interpretation or
implementation of collective bargaining agreements. Stated differently, the instant case
involves a situation where the special statute (R.A. 8042) refers to a subject in general,
which the general statute (Labor Code) treats in particular.[5] In the present case, the basic
issue raised by Merridy Jane in her complaint filed with the NLRC is: which provision of the
subject CBA applies insofar as death benefits due to the heirs of Nelson are concerned. The
Court agrees with the CA in holding that this issue clearly involves the interpretation or
implementation of the said CBA. Thus, the specific or special provisions of the Labor Code
govern.

In any case, the Court agrees with petitioner's contention that the CBA is the law or contract
between the parties. Article 13.1 of the CBA entered into by and between respondent GCI
and AMOSUP, the union to which petitioner belongs, provides as follows:

The Company and the Union agree that in case of dispute or conflict in the interpretation or
application of any of the provisions of this Agreement, or enforcement of Company policies,
the same shall be settled through negotiation, conciliation or voluntary arbitration. The
Company and the Union further agree that they will use their best endeavor to ensure that
any dispute will be discussed, resolved and settled amicably by the parties hereof within
ninety (90) days from the date of filing of the dispute or conflict and in case of failure to settle
thereof any of the parties retain their freedom to take appropriate action.[6] (Emphasis
supplied)

From the foregoing, it is clear that the parties, in the first place, really intended to bring to
conciliation or voluntary arbitration any dispute or conflict in the interpretation or application
of the provisions of their CBA. It is settled that when the parties have validly agreed on a
procedure for resolving grievances and to submit a dispute to voluntary arbitration then that
procedure should be strictly observed.[7]

It may not be amiss to point out that the abovequoted provisions of the CBA are in
consonance with Rule VII, Section 7 of the present Omnibus Rules and Regulations
Implementing the Migrant Workers and Overseas Filipinos Act of 1995, as amended by
Republic Act No. 10022, which states that [f]or OFWs with collective bargaining agreements,
the case shall be submitted for voluntary arbitration in accordance with Articles 261 and 262
of the Labor Code. The Court notes that the said Omnibus Rules and Regulations were
promulgated by the Department of Labor and Employment (DOLE) and the Department of
Foreign Affairs (DFA) and that these departments were mandated to consult with the Senate
Committee on Labor and Employment and the House of Representatives Committee on
Overseas Workers Affairs.
In the same manner, Section 29 of the prevailing Standard Terms and Conditions Governing
the Employment of Filipino Seafarers on Board Ocean Going Vessels, promulgated by the
Philippine Overseas Employment Administration (POEA), provides as follows:

Section 29. Dispute Settlement Procedures. In cases of claims and disputes arising from
this employment, the parties covered by a collective bargaining agreement shall submit the
claim or dispute to the original and exclusive jurisdiction of the voluntary arbitrator or panel of
arbitrators. If the parties are not covered by a collective bargaining agreement, the parties
may at their option submit the claim or dispute to either the original and exclusive jurisdiction
of the National Labor Relations Commission (NLRC), pursuant to Republic Act (RA) 8042,
otherwise known as the Migrant Workers and Overseas Filipinos Act of 1995 or to the
original and exclusive jurisdiction of the voluntary arbitrator or panel of arbitrators. If there is
no provision as to the voluntary arbitrators to be appointed by the parties, the same shall be
appointed from the accredited voluntary arbitrators of the National Conciliation and
Mediation Board of the Department of Labor and Employment.

The Philippine Overseas Employment Administration (POEA) shall exercise original and
exclusive jurisdiction to hear and decide disciplinary action on cases, which are
administrative in character, involving or arising out of violations of recruitment laws, rules and
regulations involving employers, principals, contracting partners and Filipino seafarers.
(Emphasis supplied)

It is clear from the above that the interpretation of the DOLE, in consultation with their
counterparts in the respective committees of the Senate and the House of Representatives,
as well as the DFA and the POEA is that with respect to disputes involving claims of Filipino
seafarers wherein the parties are covered by a collective bargaining agreement, the dispute
or claim should be submitted to the jurisdiction of a voluntary arbitrator or panel of
arbitrators. It is only in the absence of a collective bargaining agreement that parties may opt
to submit the dispute to either the NLRC or to voluntary arbitration. It is elementary that rules
and regulations issued by administrative bodies to interpret the law which they are entrusted
to enforce, have the force of law, and are entitled to great respect.[8] Such rules and
regulations partake of the nature of a statute and are just as binding as if they have been
written in the statute itself.[9] In the instant case, the Court finds no cogent reason to depart
from this rule.

The above interpretation of the DOLE, DFA and POEA is also in consonance with the policy
of the state to promote voluntary arbitration as a mode of settling labor disputes.[10]

No less than the Philippine Constitution provides, under the third paragraph, Section 3,
Article XIII, thereof that [t]he State shall promote the principle of shared responsibility
between workers and employers and the preferential use of voluntary modes in settling
disputes, including conciliation, and shall enforce their mutual compliance therewith to foster
industrial peace.

Consistent with this constitutional provision, Article 211 of the Labor Code provides the
declared policy of the State [t]o promote and emphasize the primacy of free collective
bargaining and negotiations, including voluntary arbitration, mediation and conciliation, as
modes of settling labor or industrial disputes.

On the basis of the foregoing, the Court finds no error in the ruling of the CA that the
voluntary arbitrator has jurisdiction over the instant case.

WHEREFORE, the petition is DENIED. The Decision and Resolution of the Court of Appeals
in CA-G.R. SP No. 76489 dated July 11, 2005 and April 18, 2006, respectively, are
AFFIRMED.

SO ORDERED.

SECOND DIVISION
PEOPLES BROADCASTING G.R. No. 179652
(BOMBO RADYO PHILS., INC.),
Petitioner, Present:

CARPIO MORALES, J.,*

Acting Chairperson,
- versus - TINGA,
VELASCO, JR.,
LEONARDO-DE CASTRO,** and
BRION, JJ.
THE SECRETARY OF THE
DEPARTMENT OF LABOR AND Promulgated:
EMPLOYMENT, THE REGIONAL
DIRECTOR, DOLE REGION VII, May 8, 2009
and JANDELEON JUEZAN,
Respondents.
x----------------------------------------------------------------------------x

DECISION

TINGA, J.:

The present controversy concerns a matter of first impression, requiring as it does the
determination of the demarcation line between the prerogative of the Department of Labor
and Employment (DOLE) Secretary and his duly authorized representatives, on the one
hand, and the jurisdiction of the National Labor Relations Commission, on the other, under
Article 128 (b) of the Labor Code in an instance where the employer has challenged the
jurisdiction of the DOLE at the very first level on the ground that no employer-employee
relationship ever existed between the parties.

I.

The instant petition for certiorari under Rule 65 assails the decision and the resolution of the
Court of Appeals dated 26 October 2006 and 26 June 2007, respectively, in C.A. G.R. CEB-
SP No. 00855.[1]

The petition traces its origins to a complaint filed by Jandeleon Juezan (respondent) against
Peoples Broadcasting Service, Inc. (Bombo Radyo Phils., Inc) (petitioner) for illegal
deduction, non-payment of service incentive leave, 13th month pay, premium pay for holiday
and rest day and illegal diminution of benefits, delayed payment of wages and non-coverage
of SSS, PAG-IBIG and Philhealth before the Department of Labor and Employment (DOLE)
Regional Office No. VII, Cebu City.[2] On the basis of the complaint, the DOLE conducted a
plant level inspection on 23 September 2003. In the Inspection Report Form,[3] the Labor
Inspector wrote under the heading Findings/Recommendations non-diminution of benefits
and Note: Respondent deny employer-employee relationship with the complainant- see
Notice of Inspection results. In the Notice of Inspection Results[4] also bearing the date 23
September 2003, the Labor Inspector made the following notations:
Management representative informed that complainant is a drama talent hired on a per
drama participation basis hence no employer-employeeship [sic] existed between them. As
proof of this, management presented photocopies of cash vouchers, billing statement,
employments of specific undertaking (a contract between the talent director & the
complainant), summary of billing of drama production etc. They (mgt.) has [sic] not control of
the talent if he ventures into another contract w/ other broadcasting industries.

On the other hand, complainant Juezans alleged violation of non-diminution of benefits is

computed as follows:

@ P 2,000/15 days + 1.5 mos = P 6,000

(August 1/03 to Sept 15/03)

Note: Recommend for summary investigation or whatever action deem proper.[5]

Petitioner was required to rectify/restitute the violations within five (5) days from receipt. No
rectification was effected by petitioner; thus, summary investigations were conducted, with
the parties eventually ordered to submit their respective position papers.[6]

In his Order dated 27 February 2004,[7] DOLE Regional Director Atty. Rodolfo M. Sabulao
(Regional Director) ruled that respondent is an employee of petitioner, and that the former is
entitled to his money claims amounting to P203,726.30. Petitioner sought reconsideration of
the Order, claiming that the Regional Director gave credence to the documents offered by
respondent without examining the originals, but at the same time he missed or failed to
consider petitioners evidence. Petitioners motion for reconsideration was denied.[8] On
appeal to the DOLE Secretary, petitioner denied once more the existence of employer-
employee relationship. In its Order dated 27 January 2005, the Acting DOLE Secretary
dismissed the appeal on the ground that petitioner did not post a cash or surety bond and
instead submitted a Deed of Assignment of Bank Deposit.[9]

Petitioner elevated the case to the Court of Appeals, claiming that it was denied due process
when the DOLE Secretary disregarded the evidence it presented and failed to give it the
opportunity to refute the claims of respondent. Petitioner maintained that there is no
employer-employee relationship had ever existed between it and respondent because it was
the drama directors and producers who paid, supervised and disciplined respondent. It also
added that the case was beyond the jurisdiction of the DOLE and should have been
considered by the labor arbiter because respondents claim exceeded P5,000.00.

The Court of Appeals held that petitioner was not deprived of due process as the essence
thereof is only an opportunity to be heard, which petitioner had when it filed a motion for
reconsideration with the DOLE Secretary. It further ruled that the latter had the power to
order and enforce compliance with labor standard laws irrespective of the amount of
individual claims because the limitation imposed by Article 29 of the Labor Code had been
repealed by Republic Act No. 7730.[10] Petitioner sought reconsideration of the decision but
its motion was denied.[11]

Before this Court, petitioner argues that the National Labor Relations Commission (NLRC),
and not the DOLE Secretary, has jurisdiction over respondents claim, in view of Articles 217
and 128 of the Labor Code.[12] It adds that the Court of Appeals committed grave abuse of
discretion when it dismissed petitioners appeal without delving on the issues raised therein,
particularly the claim that no employer-employee relationship had ever existed between
petitioner and respondent. Finally, petitioner avers that there is no appeal, or any plain,
speedy and adequate remedy in the ordinary course of law available to it.

On the other hand, respondent posits that the Court of Appeals did not abuse its discretion.
He invokes Republic Act No. 7730, which removes the jurisdiction of the Secretary of Labor
and Employment or his duly authorized representatives, from the effects of the restrictive
provisions of Article 129 and 217 of the Labor Code, regarding the confinement of jurisdiction
based on the amount of claims.[13] Respondent also claims that petitioner was not denied
due process since even when the case was with the Regional Director, a hearing was
conducted and pieces of evidence were presented. Respondent stands by the propriety of
the Court of Appeals ruling that there exists an employer-employee relationship between him
and petitioner. Finally, respondent argues that the instant petition for certiorari is a wrong
mode of appeal considering that petitioner had earlier filed a Petition for Certiorari,
Mandamus and Prohibition with the Court of Appeals; petitioner, instead, should have filed a
Petition for Review.[14]
II.

The significance of this case may be reduced to one simple questiondoes the Secretary of
Labor have the power to determine the existence of an employer-employee relationship?

To resolve this pivotal issue, one must look into the extent of the visitorial and enforcement
power of the DOLE found in Article 128 (b) of the Labor Code, as amended by Republic Act
7730. It reads:

Article 128 (b) Notwithstanding the provisions of Articles 129 and 217 of this Code to the
contrary, and in cases where the relationship of employer-employee still exists, the Secretary
of Labor and Employment or his duly authorized representatives shall have the power to
issue compliance orders to give effect to the labor standards provisions of this Code and
other labor legislation based on the findings of labor employment and enforcement officers
or industrial safety engineers made in the course of inspection. The Secretary or his duly
authorized representative shall issue writs of execution to the appropriate authority for the
enforcement of their orders, except in cases where the employer contests the findings of the
labor employment and enforcement officer and raises issues supported by documentary
proofs which were not considered in the course of inspection. (emphasis supplied)
xxx

The provision is quite explicit that the visitorial and enforcement power of the DOLE comes
into play only in cases when the relationship of employer-employee still exists. It also
underscores the avowed objective underlying the grant of power to the DOLE which is to
give effect to the labor standard provision of this Code and other labor legislation. Of course,
a persons entitlement to labor standard benefits under the labor laws presupposes the
existence of employer-employee relationship in the first place.

The clause in cases where the relationship of employer-employee still exists signifies that
the employer-employee relationship must have existed even before the emergence of the
controversy. Necessarily, the DOLEs power does not apply in two instances, namely: (a)
where the employer-employee relationship has ceased; and (b) where no such relationship
has ever existed.

The first situation is categorically covered by Sec. 3, Rule 11 of the Rules on the Disposition
of Labor Standards Cases[15] issued by the DOLE Secretary. It reads:

Rule II MONEY CLAIMS ARISING FROM COMPLAINT/ROUTINE INSPECTION

Sec. 3. Complaints where no employer-employee relationship actually exists. Where

employer-employee relationship no longer exists by reason of the fact that it has already
been severed, claims for payment of monetary benefits fall within the exclusive and original
jurisdiction of the labor arbiters. Accordingly, if on the face of the complaint, it can be
ascertained that employer-employee relationship no longer exists, the case, whether
accompanied by an allegation of illegal dismissal, shall immediately be endorsed by the
Regional Director to the appropriate branch of the National Labor Relations Commission
(NLRC).

In the recent case of Bay Haven, Inc. v. Abuan,[16] this Court recognized the first situation
and accordingly ruled that a complainants allegation of his illegal dismissal had deprived the
DOLE of jurisdiction as per Article 217 of the Labor Code.[17]

In the first situation, the claim has to be referred to the NLRC because it is the NLRC which
has jurisdiction in view of the termination of the employer-employee relationship. The same
procedure has to be followed in the second situation since it is the NLRC that has jurisdiction
in view of the absence of employer-employee relationship between the evidentiary parties
from the start.

Clearly the law accords a prerogative to the NLRC over the claim when the employer-
employee relationship has terminated or such relationship has not arisen at all. The reason
is obvious. In the second situation especially, the existence of an employer-employee
relationship is a matter which is not easily determinable from an ordinary inspection,
necessarily so, because the elements of such a relationship are not verifiable from a mere
ocular examination. The intricacies and implications of an employer-employee relationship
demand that the level of scrutiny should be far above the cursory and the mechanical. While
documents, particularly documents found in the employers

office are the primary source materials, what may prove decisive are factors related to the
history of the employers business operations, its current state as well as accepted
contemporary practices in the industry. More often than not, the question of employer-
employee relationship becomes a battle of evidence, the determination of which should be
comprehensive and intensive and therefore best left to the specialized quasi-judicial body
that is the NLRC.

It can be assumed that the DOLE in the exercise of its visitorial and enforcement power
somehow has to make a determination of the existence of an employer-employee
relationship. Such prerogatival determination, however, cannot be coextensive with the
visitorial and enforcement power itself. Indeed, such determination is merely preliminary,
incidental and collateral to the DOLEs primary function of enforcing labor standards
provisions. The determination of the existence of employer-employee relationship is still
primarily lodged with the NLRC. This is the meaning of the clause in cases where the
relationship of employer-employee still exists in Art. 128 (b).

Thus, before the DOLE may exercise its powers under Article 128, two important questions
must be resolved: (1) Does the employer-employee relationship still exist, or alternatively,
was there ever an employer-employee relationship to speak of; and (2) Are there violations
of the Labor Code or of any labor law?

The existence of an employer-employee relationship is a statutory prerequisite to and a

limitation on the power of the Secretary of Labor, one which the legislative branch is entitled
to impose. The rationale underlying this limitation is to eliminate the prospect of competing
conclusions of the Secretary of Labor and the NLRC, on a matter fraught with questions of
fact and law, which is best resolved by the quasi-judicial body, which is the NRLC, rather
than an administrative official of the executive branch of the government. If the Secretary of
Labor proceeds to exercise his visitorial and enforcement powers absent the first requisite,
as the dissent proposes, his office confers jurisdiction on itself which it cannot otherwise
acquire.

The approach suggested by the dissent is frowned upon by common law. To wit:
[I]t is a general rule, that no court of limited jurisdiction can give itself jurisdiction by a wrong
decision on a point collateral to the merits of the case upon which the limit to its jurisdiction
depends; and however its decision may be final on all particulars, making up together that
subject matter which, if true, is within its jurisdiction, and however necessary in many cases
it may be for it to make a preliminary inquiry, whether some collateral matter be or be not
within the limits, yet, upon this preliminary question, its decision must always be open to
inquiry in the superior court.[18]

A more liberal interpretative mode, pragmatic or functional analysis, has also emerged in
ascertaining the jurisdictional boundaries of administrative agencies whose jurisdiction is
established by statute. Under this approach, the Court examines the intended function of the
tribunal and decides whether a particular provision falls within or outside that function, rather
than making the provision itself the determining centerpiece of the analysis.[19] Yet even
under this more expansive approach, the dissent fails.

A reading of Art. 128 of the Labor Code reveals that the Secretary of Labor or his authorized
representatives was granted visitorial and enforcement powers for the purpose of
determining violations of, and enforcing, the Labor Code and any labor law, wage order, or
rules and regulations issued pursuant thereto. Necessarily, the actual existence of an
employer-employee relationship affects the complexion of the putative findings that the
Secretary of Labor may determine, since employees are entitled to a different set of rights
under the Labor Code from the employer as opposed to non-employees. Among these
differentiated rights are those accorded by the labor standards provisions of the Labor Code,
which the Secretary of Labor is mandated to enforce. If there is no employer-employee
relationship in the first place, the duty of the employer to adhere to those labor standards
with respect to the non-employees is questionable.

This decision should not be considered as placing an undue burden on the Secretary of
Labor in the exercise of visitorial and enforcement powers, nor seen as an unprecedented
diminution of the same, but rather a recognition of the statutory limitations thereon. A mere
assertion of absence of employer-employee relationship does not deprive the DOLE of
jurisdiction over the claim under Article 128 of the Labor Code. At least a prima facie
showing of such absence of relationship, as in this case, is needed to preclude the DOLE
from the exercise of its power. The Secretary of Labor would not have been precluded from
exercising the powers under Article 128 (b) over petitioner if another person with better-
grounded claim of employment than that which respondent had. Respondent, especially if he
were an employee, could have very well enjoined other employees to complain with the
DOLE, and, at the same time, petitioner could ill-afford to disclaim an employment
relationship with all of the people under its aegis.
Without a doubt, petitioner, since the inception of this case had been consistent in
maintaining that respondent is not its employee. Certainly, a preliminary determination,
based on the evidence offered, and noted by the Labor Inspector during the inspection as
well as submitted during the proceedings before the Regional Director puts in genuine doubt
the existence of employer-employee relationship. From that point on, the prudent recourse
on the part of the DOLE should have been to refer respondent to the NLRC for the proper
dispensation of his claims. Furthermore, as discussed earlier, even the evidence relied on by
the Regional Director in his order are mere self-serving declarations of respondent, and
hence cannot be relied upon as proof of employer-employee relationship.
III.

Aside from lack of jurisdiction, there is another cogent reason to to set aside the Regional
Directors 27 February 2004 Order. A careful study of the case reveals that the said Order,
which found respondent as an employee of petitioner and directed the payment of
respondents money claims, is not supported by substantial evidence, and was even made in
disregard of the evidence on record.

It is not enough that the evidence be simply considered. The standard is substantial
evidence as in all other quasi-judicial agencies. The standard employed in the last sentence
of Article 128(b) of the Labor Code that the documentary proofs be considered in the course
of inspection does not apply. It applies only to issues other than the fundamental issue of
existence of employer-employee relationship. A contrary rule would lead to controversies on
the part of labor officials in resolving the issue of employer-employee relationship. The onset
of arbitrariness is the advent of denial of substantive due process.

As a general rule, the Supreme Court is not a trier of facts. This applies with greater force in
cases before quasi-judicial agencies whose findings of fact are accorded great respect and
even finality. To be sure, the same findings should be supported by substantial evidence
from which the said tribunals can make its own independent evaluation of the facts.
Likewise, it must not be rendered with grave abuse of discretion; otherwise, this Court will
not uphold the tribunals conclusion.[20] In the same manner, this Court will not hesitate to
set aside the labor tribunals findings of fact when it is clearly shown that they were arrived at
arbitrarily or in disregard of the evidence on record or when there is showing of fraud or error
of law.[21]

At the onset, it is the Courts considered view that the existence of employer- employee
relationship could have been easily resolved, or at least prima facie determined by the labor
inspector, during the inspection by looking at the records of petitioner which can be found in
the work premises. Nevertheless, even if the labor inspector had noted petitioners
manifestation and documents in the Notice of Inspection Results, it is clear that he did not
give much credence to said evidence, as he did not find the need to investigate the matter
further. Considering that the documents shown by petitioner, namely: cash vouchers, checks
and statements of account, summary billings evidencing payment to the alleged real
employer of respondent, letter-contracts denominated as Employment for a Specific
Undertaking, prima facie negate the existence of employer-employee relationship, the labor
inspector could have exerted a bit more effort and looked into petitioners payroll, for
example, or its roll of employees, or interviewed other employees in the premises. After all,
the labor inspector, as a labor regulation officer is given access to employers records and
premises at any time of day or night whenever work is being undertaken therein, and the
right to copy therefrom, to question any employee and investigate any fact, condition or
matter which may be necessary to determine violations or which may aid in the enforcement
of this Code and of any labor law, wage order or rules and regulations pursuant thereto.[22]
Despite these far-reaching powers of labor regulation officers, records reveal that no
additional efforts were exerted in the course of the inspection.

The Court further examined the records and discovered to its dismay that even the Regional
Director turned a blind eye to the evidence presented by petitioner and relied instead on the
self-serving claims of respondent.

In his position paper, respondent claimed that he was hired by petitioner in September 1996
as a radio talent/spinner, working from 8:00 am until 5 p.m., six days a week, on a gross rate
of P60.00 per script, earning an average of P15,0000.00 per month, payable on a semi-
monthly basis. He added that the payment of wages was delayed; that he was not given any
service incentive leave or its monetary commutation, or his 13th month pay; and that he was
not made a member of the Social Security System (SSS), Pag-Ibig and PhilHealth. By
January 2001, the number of radio programs of which respondent was a talent/spinner was
reduced, resulting in the reduction of his monthly income from P15,000.00 to only
P4,000.00, an amount he could barely live on. Anent the claim of petitioner that no
employer-employee relationship ever existed, respondent argued that that he was hired by
petitioner, his wages were paid under the payroll of the latter, he was under the control of
petitioner and its agents, and it was petitioner who had the power to dismiss him from his
employment.[23] In support of his position paper, respondent attached a photocopy of an
identification card purportedly issued by petitioner, bearing respondents picture and name
with the designation Spinner; at the back of the I.D., the following is written: This certifies
that the card holder is a duly Authorized MEDIA Representative of BOMBO RADYO
PHILIPPINES THE NO.1 Radio Network in the Country ***BASTA RADYO BOMBO***[24]
Respondent likewise included a Certification which reads:

This is to certify that MR. JANDELEON JUEZAN is a program employee of PEOPLES

BROADCASTING SERVICES, INC. (DYMF- Bombo Radyo Cebu) since 1990 up to the
present.
Furtherly certifies that Mr. Juezan is receiving a monthly salary of FIFTEEN THOUSAND
(P15,000.00) PESOS.
This certification is issued upon the request of the above stated name to substantiate loan
requirement.
Given this 18th day of April 2000, Cebu City , Philippines.
(signed)
GREMAN B. SOLANTE
Station Manager

On the other hand, petitioner maintained in its position paper that respondent had never
been its employee. Attached as annexes to its position paper are photocopies of cash
vouchers it issued to drama producers, as well as letters of employment captioned
Employment for a Specific Undertaking, wherein respondent was appointed by different
drama directors as spinner/narrator for specific radio programs.[25]

In his Order, the Regional Director merely made a passing remark on petitioners claim of
lack of employer-employee relationshipa token paragraphand proceeded to a detailed
recitation of respondents allegations. The documents introduced by petitioner in its position
paper and even those presented during the inspection were not given an iota of credibility.
Instead, full recognition and acceptance was accorded to the claims of respondentfrom the
hours of work to his monthly salary, to his alleged actual duties, as well as to his alleged
evidence. In fact, the findings are anchored almost verbatim on the self-serving allegations
of respondent.

Furthermore, respondents pieces of evidencethe identification card and the certification

issued by petitioners Greman Solante are not even determinative of an employer-employee
relationship. The certification, issued upon the request of respondent, specifically stated that
MR. JANDELEON JUEZAN is a program employee of PEOPLES BROADCASTING
SERVICES, INC. (DYMF- Bombo Radyo Cebu), it is not therefore crystal clear that
complainant is a station employee rather than a program employee hence entitled to all the
benefits appurtenant thereto,[26] as found by the DOLE Regional Director. Respondent
should be bound by his own evidence. Moreover, the classification as to whether one is a
station employee and program employee, as lifted from Policy Instruction No. 40,[27]
dividing the workers in the broadcast industry into only two groups is not binding on this
Court, especially when the classification has no basis either in law or in fact.[28]

Even the identification card purportedly issued by petitioner is not proof of employer-
employee relationship since it only identified respondent as an Authorized Representative of
Bombo Radyo, and not as an employee. The phrase gains significance when compared vis
a vis the following notation in the sample identification cards presented by petitioner in its
motion for reconsideration:

1. This is to certify that the person whose picture and signature appear hereon is an
employee of Bombo Radio Philippines.
2. This ID must be worn at all times within Bombo Radyo Philippines premises for
proper identification and security. Furthermore, this is the property of Bombo Radyo
Philippines and must be surrendered upon separation from the company.

HUMAN RESOURCE DEPARMENT

(Signed)
JENALIN D. PALER
HRD HEAD

Respondent tried to address the discrepancy between his identification card and the
standard identification cards issued by petitioner to its employees by arguing that what he
annexed to his position paper was the old identification card issued to him by petitioner. He
then presented a photocopy of another old identification card, this time purportedly issued to
one of the employees who was issued the new identification card presented by petitioner.
[29] Respondents argument does not convince. If it were true that he is an employee of
petitioner, he would have been issued a new identification card similar to the ones presented
by petitioner, and he should have presented a copy of such new identification card. His
failure to show a new identification card merely demonstrates that what he has is only his
Media ID, which does not constitute proof of his employment with petitioner.

It has long been established that in administrative and quasi-judicial proceedings, substantial
evidence is sufficient as a basis for judgment on the existence of employer-employee
relationship. Substantial evidence, which is the quantum of proof required in labor cases, is
that amount of relevant evidence which a reasonable mind might accept as adequate to
justify a conclusion.[30] No particular form of evidence is required to prove the existence of
such employer-employee relationship. Any competent and relevant evidence to prove the
relationship may be admitted.[31] Hence, while no particular form of evidence is required, a
finding that such relationship exists must still rest on some substantial evidence. Moreover,
the substantiality of the evidence depends on its quantitative as well as its qualitative
aspects.[32]

In the instant case, save for respondents self-serving allegations and self-defeating
evidence, there is no substantial basis to warrant the Regional Directors finding that
respondent is an employee of petitioner. Interestingly, the Order of the Secretary of Labor
denying petitioners appeal dated 27 January 2005, as well as the decision of the Court of
Appeals dismissing the petition for certiorari, are silent on the issue of the existence of an
employer-employee relationship, which further suggests that no real and proper
determination the existence of such relationship was ever made by these tribunals. Even the
dissent skirted away from the issue of the existence of employer-employee relationship and
conveniently ignored the dearth of evidence presented by respondent.
Although substantial evidence is not a function of quantity but rather of quality, the peculiar
environmental circumstances of the instant case demand that something more should have
been proffered.[33] Had there been other proofs of employment, such as respondents
inclusion in petitioners payroll, or a clear exercise of control, the Court would have affirmed
the finding of employer-employee relationship. The Regional Director, therefore, committed
grievous error in ordering petitioner to answer for respondents claims. Moreover, with the
conclusion that no employer-employee relationship has ever existed between petitioner and
respondent, it is crystal-clear that the DOLE Regional Director had no jurisdiction over
respondents complaint. Thus, the improvident exercise of power by the Secretary of Labor
and the Regional Director behooves the court to subject their actions for review and to
invalidate all the subsequent orders they issued.

IV.

The records show that petitioners appeal was denied because it had allegedly failed to post
a cash or surety bond. What it attached instead to its appeal was the Letter Agreement[34]
executed by petitioner and its bank, the cash voucher,[35] and the Deed of Assignment of
Bank Deposits.[36] According to the DOLE, these documents do not constitute the cash or
surety bond contemplated by law; thus, it is as if no cash or surety bond was posted when it
filed its appeal.

The Court does not agree.

The provision on appeals from the DOLE Regional Offices to the DOLE Secretary is in the
last paragraph of Art. 128 (b) of the Labor Code, which reads:

An order issued by the duly authorized representative of the Secretary of Labor and
Employment under this article may be appealed to the latter. In case said order involves a
monetary award, an appeal by the employer may be perfected only upon the posting of a
cash or surety bond issued by a reputable bonding company duly accredited by the
Secretary of Labor and Employment in the amount equivalent to the monetary award in the
order appealed from. (emphasis supplied)

While the requirements for perfecting an appeal must be strictly followed as they are
considered indispensable interdictions against needless delays and for orderly discharge of
judicial business, the law does admit exceptions when warranted by the circumstances.
Technicality should not be allowed to stand in the way of equitably and completely resolving
the rights and obligations of the parties.[37] Thus, in some cases, the bond requirement on
appeals involving monetary awards had been relaxed, such as when (i) there was
substantial compliance with the Rules; (ii) the surrounding facts and circumstances
constitute meritorious ground to reduce the bond; (iii) a liberal interpretation of the
requirement of an appeal bond would serve the desired objective of resolving controversies
on the merits; or (iv) the appellants, at the very least exhibited their willingness and/or good
faith by posting a partial bond during the reglementary period.[38]

A review of the documents submitted by petitioner is called for to determine whether they
should have been admitted as or in lieu of the surety or cash bond to sustain the appeal and
serve the ends of substantial justice.

The Deed of Assignment reads:

DEED OF ASSIGNMENT OF BANK DEPOSIT

WITH SPECIAL POWER OF ATTORNEY

KNOW ALL MEN BY THESE PRESENTS:

That I, GREMAN B. SOLANTE in my capacity as Station Manager of DYMF Cebu City,

PEOPLES BROADCASTING SERVICES, INC., a corporation duly authorized and existing
under and by virtue of the laws of the Philippines, for and in consideration of the sum of
PESOS: TWO HUNDRED THREE THOUSAND SEVEN HUNDRED TWENTY SIX PESOS
& 30/100 ONLY (P203,726.30) Phil. Currency, as CASH BOND GUARANTEE for the
monetary award in favor to the Plaintiff in the Labor Case docketed as LSED Case No.
R0700-2003-09-CI-09, now pending appeal.

That Respondent-Appellant do hereby undertake to guarantee available and sufficient funds

covered by Platinum Savings Deposit (PSD) No. 010-8-00038-4 of PEOPLES
BROADCASTING SERVICES, INC. in the amount of PESOS: TWO HUNDRED THREE
THOUSAND SEVEN HUNDRED TWENTY SIX PESOS & 30/100 ONLY (P203,726.30)
payable to Plaintiff-Appellee/Department of Labor and Employment Regional Office VII at
Queen City Development Bank, Cebu Branch, Sanciangko St. Cebu City.

It is understood that the said bank has the full control of Platinum Savings Deposit (PSD) No.
010-8-00038-4 from and after this date and that said sum cannot be withdrawn by the
Plaintiff-Appellee/ Department of Labor and Employment Regional Office VII until such time
that a Writ of Execution shall be ordered by the Appellate Office.
FURTHER, this Deed of Assignment is limited to the principal amount of PESOS: TWO
HUNDRED THREE THOUSAND SEVEN HUNDRED TWENTY SIX PESOS & 30/100 ONLY
(P203,726.30) Phil. Currency, therefore, any interest to be earned from the said Deposit will
be for the account holder.

IN WITNESS WHEREOF, I have hereunto affixed my signature this 18th day if June, 2004,
in the City of Cebu, Philippines.

PEOPLES BROADCASTING SERVICES, INC.

By:

(Signed)
GREMAN B. SOLANTE
Station Manager

As priorly mentioned, the Deed of Assignment was accompanied by a Letter Agreement

between Queen City Development Bank and petitioner concerning Platinum Savings Deposit
(PSD) No. 010-8-00038-4,[39] and a Cash Voucher issued by petitioner showing the amount
of P203,726.30 deposited at the said bank.
Casting aside the technical imprecision and inaptness of words that mark the three
documents, a liberal reading reveals the documents petitioner did assign, as cash bond for
the monetary award in favor of respondent in LSED Case NO. RO700-2003-CI-09, the
amount of P203,726.30 covered by petitioners PSD Account No. 010-8-00038-4 with the
Queen City Development Bank at Sanciangko St. Cebu City, with the depositary bank
authorized to remit the amount to, and upon withdrawal by respondent and or the
Department of Labor and Employment Regional Office VII, on the basis of the proper writ of
execution. The Court finds that the Deed of Assignment constitutes substantial compliance
with the bond requirement.

The purpose of an appeal bond is to ensure, during the period of appeal, against any
occurrence that would defeat or diminish recovery by the aggrieved employees under the
judgment if subsequently affirmed.[40] The Deed of Assignment in the instant case, like a
cash or surety bond, serves the same purpose. First, the Deed of Assignment constitutes not
just a partial amount, but rather the entire award in the appealed Order. Second, it is clear
from the Deed of Assignment that the entire amount is under the full control of the bank, and
not of petitioner, and is in fact payable to the DOLE Regional Office, to be withdrawn by the
same office after it had issued a writ of execution. For all intents and purposes, the Deed of
Assignment in tandem with the Letter Agreement and Cash Voucher is as good as cash.
Third, the Court finds that the execution of the Deed of Assignment, the Letter Agreement
and the Cash Voucher were made in good faith, and constituted clear manifestation of
petitioners willingness to pay the judgment amount.
The Deed of Assignment must be distinguished from the type of bank certification submitted
by appellants in Cordova v. Keysas Boutique,[41] wherein this Court found that such bank
certification did not come close to the cash or surety bond required by law. The bank
certification in Cordova merely stated that the employer maintains a depository account with
a balance of P23,008.19, and that the certification was issued upon the depositors request
for whatever legal purposes it may serve. There was no indication that the said deposit was
made specifically for the pending appeal, as in the instant case. Thus, the Court ruled that
the bank certification had not in any way ensured that the award would be paid should the
appeal fail. Neither was the appellee in the case prevented from making withdrawals from
the savings account. Finally, the amount deposited was measly compared to the total
monetary award in the judgment.[42]

V.

Another question of technicality was posed against the instant petition in the hope that it
would not be given due course. Respondent asserts that petitioner pursued the wrong mode
of appeal and thus the instant petition must be dismissed. Once more, the Court is not
convinced.

A petition for certiorari is the proper remedy when any tribunal, board or officer exercising
judicial or quasi-judicial functions has acted without or in excess of its jurisdiction, or with
grave abuse of discretion amounting to lack or excess of jurisdiction and there is no appeal,
nor any plain speedy, and adequate remedy at law. There is grave abuse of discretion when
respondent acts in a capricious or whimsical manner in the exercise of its judgment as to be
equivalent to lack of jurisdiction.[43]

Respondent may have a point in asserting that in this case a Rule 65 petition is a wrong
mode of appeal, as indeed the writ of certiorari is an extraordinary remedy, and certiorari
jurisdiction is not to be equated with appellate jurisdiction. Nevertheless, it is settled, as a
general proposition, that the availability of an appeal does not foreclose recourse to the
extraordinary remedies, such as certiorari and prohibition, where appeal is not adequate or
equally beneficial, speedy and sufficient, as where the orders of the trial court were issued in
excess of or without jurisdiction, or there is need to promptly relieve the aggrieved party from
the injurious effects of the acts of an inferior court or tribunal, e.g., the court has authorized
execution of the judgment.[44] This Court has even recognized that a recourse to certiorari is
proper not only where there is a clear deprivation of petitioners fundamental right to due
process, but so also where other special circumstances warrant immediate and more direct
action.[45]

In one case, it was held that the extraordinary writ of certiorari will lie if it is satisfactorily
established that the tribunal acted capriciously and whimsically in total disregard of evidence
material to or even decisive of the controversy,[46] and if it is shown that the refusal to allow
a Rule 65 petition would result in the infliction of an injustice on a party by a judgment that
evidently was rendered whimsically and capriciously, ignoring and disregarding
uncontroverted facts and familiar legal principles without any valid cause whatsoever.[47]
It must be remembered that a wide breadth of discretion is granted a court of justice in
certiorari proceedings.[48] The Court has not too infrequently given due course to a petition
for certiorari, even when the proper remedy would have been an appeal, where valid and
compelling considerations would warrant such a recourse.[49] Moreover, the Court allowed a
Rule 65 petition, despite the availability of plain, speedy or adequate remedy, in view of the
importance of the issues raised

therein.[50] The rules were also relaxed by the Court after considering the public interest
involved in the case;[51] when public welfare and the advancement of public policy dictates;
when the broader interest of justice so requires; when the writs issued are null and void; or
when the questioned order amounts to an oppressive exercise of judicial authority.[52]
The peculiar circumstances of this case warrant, as we held in Republic v. Court of Appeals,
107 SCRA 504, 524, the exercise once more of our exclusive prerogative to suspend our
own rules or to exempt a particular case from its operation as in x x Republic of the
Philippines v. Court of Appeals, et al., (83 SCRA 453, 478-480 [1978]), thus: x x The Rules
have been drafted with the primary objective of enhancing fair trials and expediting justice.
As a corollary, if their applications and operation tend to subvert and defeat instead of
promote and enhance it, their suspension is justified.[53]

The Regional Director fully relied on the self-serving allegations of respondent and
misinterpreted the documents presented as evidence by respondent. To make matters
worse, DOLE denied petitioners appeal based solely on petitioners alleged failure to file a
cash or surety bond, without any discussion on the merits of the case. Since the petition for
certiorari before the Court of Appeals sought the reversal of the two aforesaid orders, the
appellate court necessarily had to examine the evidence anew to determine whether the
conclusions of the DOLE were supported by the evidence presented. It appears, however,
that the Court of Appeals did not even review the assailed orders and focused instead on a
general discussion of due process and the jurisdiction of the Regional Director. Had the
appellate court truly reviewed the records of the case, it would have seen that there existed
valid and sufficient grounds for finding grave abuse of discretion on the part of the DOLE
Secretary as well the Regional Director. In ruling and acting as it did, the Court finds that the
Court of Appeals may be properly subjected to its certiorari jurisdiction. After all, this Court
has previously ruled that the extraordinary writ of certiorari will lie if it is satisfactorily
established that the tribunal had acted capriciously and whimsically in total disregard of
evidence material to or even decisive of the controversy.[54]

The most important consideration for the allowance of the instant petition is the opportunity
for the Court not only to set the demarcation between the NLRCs jurisdiction and the DOLEs
prerogative but also the procedure when the case involves the fundamental challenge on the
DOLEs prerogative based on lack of employer-employee relationship. As exhaustively
discussed here, the DOLEs prerogative hinges on the existence of employer-employee
relationship, the issue is which is at the very heart of this case. And the evidence clearly
indicates private respondent has never been petitioners employee. But the DOLE did not
address, while the Court of Appeals glossed over, the issue. The peremptory dismissal of the
instant petition on a technicality would deprive the Court of the opportunity to resolve the
novel controversy.

WHEREFORE, the petition is GRANTED. The Decision dated 26 October 2006 and the
Resolution dated 26 June 2007 of the Court of Appeals in C.A. G.R. CEB-SP No. 00855 are
REVERSED and SET ASIDE. The Order of the then Acting Secretary of the Department of
Labor and Employment dated 27 January 2005 denying petitioners
appeal, and the Orders of the Director, DOLE Regional Office No. VII, dated 24 May 2004
and 27 February 2004, respectively, are ANNULLED. The complaint against petitioner is
DISMISSED.

SO ORDERED.