OSCAR VILLAMARIA, JR. - versus - COURT OF APPEALS G.R. No.

165881 April 19, 2006

Before us is a Petition for Review on Certiorari under Rule 65 of the Revised Rules of Court assailing the Decision [1] and
Resolution[2] of the Court of Appeals (CA) in CA-G.R. SP No. 78720 which set aside the Resolution[3] of the National Labor Relations
Commission (NLRC) in NCR-30-08-03247-00, which in turn affirmed the Decision[4] of the Labor Arbiter dismissing the complaint
filed by respondent Jerry V. Bustamante.

Petitioner Oscar Villamaria, Jr. was the owner of Villamaria Motors, a sole proprietorship engaged in assembling
passenger jeepneys with a public utility franchise to operate along the Baclaran-Sucat route. By 1995, Villamaria stopped
assembling jeepneys and retained only nine, four of which he operated by employing drivers on a boundary basis. One of those
drivers was respondent Bustamante who drove the jeepney with Plate No. PVU-660. Bustamante remitted P450.00 a day to
Villamaria as boundary and kept the residue of his daily earnings as compensation for driving the vehicle. In August 1997, Villamaria
verbally agreed to sell the jeepney to Bustamante under the boundary-hulog scheme, where Bustamante would remit to
Villarama P550.00 a day for a period of four years; Bustamante would then become the owner of the vehicle and continue to drive
the same under Villamarias franchise. It was also agreed that Bustamante would make a downpayment of P10,000.00.
On August 7, 1997, Villamaria executed a contract entitled Kasunduan ng Bilihan ng Sasakyan sa Pamamagitan ng
Boundary-Hulog[5] over the passenger jeepney with Plate No. PVU-660, Chassis No. EVER95-38168-C and Motor No. SL-
26647. The parties agreed that if Bustamante failed to pay the boundary-hulog for three days, Villamaria Motors would hold on to
the vehicle until Bustamante paid his arrears, including a penalty of P50.00 a day; in case Bustamante failed to remit the daily
boundary-hulog for a period of one week, the Kasunduan would cease to have legal effect and Bustamante would have to return the
vehicle to Villamaria Motors.
Under the Kasunduan, Bustamante was prohibited from driving the vehicle without prior authority from Villamaria
Motors. Thus, Bustamante was authorized to operate the vehicle to transport passengers only and not for other purposes. He was
also required to display an identification card in front of the windshield of the vehicle; in case of failure to do so, any fine that may be
imposed by government authorities would be charged against his account. Bustamante further obliged himself to pay for the cost of
replacing any parts of the vehicle that would be lost or damaged due to his negligence. In case the vehicle sustained serious
damage, Bustamante was obliged to notify Villamaria Motors before commencing repairs. Bustamante was not allowed to wear
slippers, short pants or undershirts while driving. He was required to be polite and respectful towards the passengers. He was also
obliged to notify Villamaria Motors in case the vehicle was leased for two or more days and was required to attend any meetings
which may be called from time to time. Aside from the boundary-hulog, Bustamante was also obliged to pay for the annual
registration fees of the vehicle and the premium for the vehicles comprehensive insurance. Bustamante promised to strictly comply
with the rules and regulations imposed by Villamaria for the upkeep and maintenance of the jeepney.

Bustamante continued driving the jeepney under the supervision and control of Villamaria. As agreed upon, he made daily
remittances of P550.00 in payment of the purchase price of the vehicle. Bustamante failed to pay for the annual registration fees of
the vehicle, but Villamaria allowed him to continue driving the jeepney.

In 1999, Bustamante and other drivers who also had the same arrangement with Villamaria Motors failed to pay their
respective boundary-hulog. This prompted Villamaria to serve a Paalala,[6] reminding them that under the Kasunduan, failure to pay
the daily boundary-hulog for one week, would mean their respective jeepneys would be returned to him without any complaints. He
warned the drivers that the Kasunduan would henceforth be strictly enforced and urged them to comply with their obligation to avoid
litigation.
On July 24, 2000, Villamaria took back the jeepney driven by Bustamante and barred the latter from driving the vehicle.
On August 15, 2000, Bustamante filed a Complaint[7] for Illegal Dismissal against Villamaria and his wife Teresita. In his
Position Paper,[8] Bustamante alleged that he was employed by Villamaria in July 1996 under the boundary system, where he was
required to remit P450.00 a day. After one year of continuously working for them, the spouses Villamaria presented
the Kasunduan for his signature, with the assurance that he (Bustamante) would own the jeepney by March 2001 after
paying P550.00 in daily installments and that he would thereafter continue driving the vehicle along the same route under the same
franchise. He further narrated that in July 2000, he informed the Villamaria spouses that the surplus engine of the jeepney needed to
be replaced, and was assured that it would be done. However, he was later arrested and his drivers license was confiscated
because apparently, the replacement engine that was installed was taken from a stolen vehicle. Due to negotiations with the
apprehending authorities, the jeepney was not impounded. The Villamaria spouses took the jeepney from him on July 24, 2000, and
he was no longer allowed to drive the vehicle since then unless he paid them P70,000.00.
Bustamante prayed that judgment be rendered in his favor, thus:
WHEREFORE, in the light of the foregoing, it is most respectfully prayed that judgment be rendered
ordering the respondents, jointly and severally, the following:
1. Reinstate complainant to his former position without loss of seniority rights and execute a Deed of
Sale in favor of the complainant relative to the PUJ with Plate No. PVU-660;
2. Ordering the respondents to pay backwages in the amount of P400.00 a day and other benefits
computed from July 24, 2000 up to the time of his actual reinstatement;
3. Ordering respondents to return the amount of P10,000.00 and P180,000.00 for the expenses
incurred by the complainant in the repair and maintenance of the subject jeep;
4. Ordering the respondents to refund the amount of One Hundred (P100.00) Pesos per day counted
from August 7, 1997 up to June 2000 or a total of P91,200.00;
5. To pay moral and exemplary damages of not less than P200,000.00;
6. Attorneys fee[s] of not less than 10% of the monetary award.
Other just and equitable reliefs under the premises are also being prayed for.[9]

In their Position Paper,[10] the spouses Villamaria admitted the existence of the Kasunduan, but alleged that Bustamante failed to
pay the P10,000.00 downpayment and the vehicles annual registration fees. They further alleged that Bustamante eventually failed
to remit the requisite boundary-hulog of P550.00 a day, which prompted them to issue the Paalaala. Instead of complying with his
obligations, Bustamante stopped making his remittances despite his daily trips and even brought the jeepney to the province
without permission. Worse, the jeepney figured in an accident and its license plate was confiscated; Bustamante even abandoned
the vehicle in a gasoline station in Sucat, Paraaque City for two weeks. When the security guard at the gasoline station requested
that the vehicle be retrieved and Teresita Villamaria asked Bustamante for the keys, Bustamante told her: Di kunin ninyo. When the
vehicle was finally retrieved, the tires were worn, the alternator was gone, and the battery was no longer working.
Citing the cases of Cathedral School of Technology v. NLRC[11] and Canlubang Security Agency Corporation v.
NLRC,[12] the spouses Villamaria argued that Bustamante was not illegally dismissed since the Kasunduan executed on August 7,
1997 transformed the employer-employee relationship into that of vendor-vendee. Hence, the spouses concluded, there was no
legal basis to hold them liable for illegal dismissal. They prayed that the case be dismissed for lack of jurisdiction and patent lack of
merit.
In his Reply,[13] Bustamante claimed that Villamaria exercised control and supervision over the conduct of his
employment. He maintained that the rulings of the Court in National Labor Union v. Dinglasan,[14] Magboo v.
Bernardo,[15] and Citizen's League of Free Workers v. Abbas[16] are germane to the issue as they define the nature of the
owner/operator-driver relationship under the boundary system. He further reiterated that it was the Villamaria spouses who
presented the Kasunduan to him and that he conformed thereto only upon their representation that he would own the vehicle after
four years. Moreover, it appeared that the Paalala was duly received by him, as he, together with other drivers, was made to affix his
signature on a blank piece of paper purporting to be an attendance sheet.

On March 15, 2002, the Labor Arbiter rendered judgment[17] in favor of the spouses Villamaria and ordered the complaint dismissed
on the following ratiocination:
Respondents presented the contract of Boundary-Hulog, as well as the PAALALA, to prove their
claim that complainant violated the terms of their contract and afterwards abandoned the vehicle assigned to
him. As against the foregoing, [the] complaints (sic) mere allegations to the contrary cannot prevail.

Not having been illegally dismissed, complainant is not entitled to damages and attorney's fees. [18]

Bustamante appealed the decision to the NLRC,[19] insisting that the Kasunduan did not extinguish the employer-
employee relationship between him and Villamaria.While he did not receive fixed wages, he kept only the excess of the boundary-
hulog which he was required to remit daily to Villamaria under the agreement. Bustamante maintained that he remained an
employee because he was engaged to perform activities which were necessary or desirable to Villamarias trade or business.
The NLRC rendered judgment[20] dismissing the appeal for lack of merit, thus:
WHEREFORE, premises considered, complainant's appeal is hereby DISMISSED for reasons not
stated in the Labor Arbiter's decision but mainly on a jurisdictional issue, there being none over the subject
matter of the controversy.[21]

The NLRC ruled that under the Kasunduan, the juridical relationship between Bustamante and Villamaria was that of
vendor and vendee, hence, the Labor Arbiter had no jurisdiction over the complaint. Bustamante filed a Motion for Reconsideration,
which the NLRC resolved to deny on May 30, 2003.[22]

Bustamante elevated the matter to the CA via Petition for Certiorari, alleging that the NLRC erred
IN DISMISSING PETITIONERS APPEAL FOR REASON NOT STATED IN THE LABOR ARBITERS
DECISION, BUT MAINLY ON JURISDICTIONAL ISSUE;
IN DISREGARDING THE LAW AND PREVAILING JURISPRUDENCE WHEN IT DECLARED THAT THE
RELATIONSHIP WHICH WAS ESTABLISHED BETWEEN PETITIONER AND THE PRIVATE RESPONDENT
WAS DEFINITELY A MATTER WHICH IS BEYOND THE PROTECTIVE MANTLE OF OUR LABOR LAWS. [23]

Bustamante insisted that despite the Kasunduan, the relationship between him and Villamaria continued to be that of employer-
employee and as such, the Labor Arbiter had jurisdiction over his complaint. He further alleged that it is common knowledge that
operators of passenger jeepneys (including taxis) pay their drivers not on a regular monthly basis but on commission or boundary
basis, or even the boundary-hulog system. Bustamante asserted that he was dismissed from employment without any lawful or just
cause and without due notice.
For his part, Villamaria averred that Bustamante failed to adduce proof of their employer-employee relationship. He further
pointed out that the Dinglasan case pertains to the boundary system and not the boundary-hulog system, hence inapplicable in the
instant case. He argued that upon the execution of the Kasunduan, the juridical tie between him and Bustamante was transformed
into a vendor-vendee relationship. Noting that he was engaged in the manufacture and sale of jeepneys and not in the business of
transporting passengers for consideration, Villamaria contended that the daily fees which Bustmante paid were actually periodic
installments for the the vehicle and were not the same fees as understood in the boundary system. He added that the boundary-
hulog plan was basically a scheme to help the driver-buyer earn money and eventually pay for the unit in full, and for the owner to
profit not from the daily earnings of the driver-buyer but from the purchase price of the unit sold. Villamaria further asserted that the
apparently restrictive conditions in the Kasunduan did not mean that the means and method of driver-buyers conduct was
controlled, but were mere ways to preserve the vehicle for the benefit of both parties: Villamaria would be able to collect the agreed
purchase price, while Bustamante would be assured that the vehicle would still be in good running condition even after four
years. Moreover, the right of vendor to impose certain conditions on the buyer should be respected until full ownership of the
property is vested on the latter.Villamaria insisted that the parallel circumstances obtaining in Singer Sewing Machine Company v.
Drilon[24] has analogous application to the instant issue.

In its Decision[25] dated August 30, 2004, the CA reversed and set aside the NLRC decision. The fallo of the decision
reads:
 UPON THE VIEW WE TAKE IN THIS CASE, THUS, the impugned resolutions of the NLRC must be,
as they are hereby are, REVERSED AND SET ASIDE, and judgment entered in favor of petitioner:
1. Sentencing private respondent Oscar Villamaria, Jr. to pay petitioner Jerry
Bustamante separation pay computed from the time of his employment up to the time of
termination based on the prevailing minimum wage at the time of termination; and,

2. Condemning private respondent Oscar Villamaria, Jr. to pay petitioner Jerry

Bustamante back wages computed from the time of his dismissal up to March 2001 based
on the prevailing minimum wage at the time of his dismissal.
Without Costs. SO ORDERED.[26]

The appellate court ruled that the Labor Arbiter had jurisdiction over Bustamantes complaint. Under the Kasunduan, the
relationship between him and Villamaria was dual: that of vendor-vendee and employer-employee. The CA ratiocinated that
Villamarias exercise of control over Bustamantes conduct in operating the jeepney is inconsistent with the formers claim that he was
not engaged in the transportation business. There was no evidence that petitioner was allowed to let some other person drive the
jeepney.
The CA further held that, while the power to dismiss was not mentioned in the Kasunduan, it did not mean that Villamaria
could not exercise it. It explained that the existence of an employment relationship did not depend on how the worker was paid but
on the presence or absence of control over the means and method of the employees work. In this case, Villamarias directives (to
drive carefully, wear an identification card, don decent attire, park the vehicle in his garage, and to inform him about provincial trips,
etc.) was a means to control the way in which Bustamante was to go about his work. In view of Villamarias supervision and control
as employer, the fact that the boundary represented installment payments of the purchase price on the jeepney did not remove the
parties employer-employee relationship.
While the appellate court recognized that a weeks default in paying the boundary-hulog constituted an additional cause for
terminating Bustamantes employment, it held that the latter was illegally dismissed. According to the CA, assuming that Bustamante
failed to make the required payments as claimed by Villamaria, the latter nevertheless failed to take steps to recover the unit and
waited for Bustamante to abandon it. It also pointed out that Villamaria neither submitted any police report to support his claim that
the vehicle figured in a mishap nor presented the affidavit of the gas station guard to substantiate the claim that Bustamante
abandoned the unit.
Villamaria received a copy of the decision on September 8, 2004, and filed, on September 17, 2004, a motion for
reconsideration thereof. The CA denied the motion in a Resolution[27] dated November 2, 2004, and Villamaria received a copy
thereof on November 8, 2004.

Villamaria, now petitioner, seeks relief from this Court via petition for review on certiorari under Rule 65 of the Rules of Court,
alleging that the CA committed grave abuse of its discretion amounting to excess or lack of jurisdiction in reversing the decision of
the Labor Arbiter and the NLRC. He claims that the CA erred in ruling that the juridical relationship between him and respondent
under the Kasunduan was a combination of employer-employee and vendor-vendee relationships. The terms and conditions of
the Kasunduan clearly state that he and respondent Bustamante had entered into a conditional deed of sale over the jeepney; as
such, their employer-employee relationship had been transformed into that of vendor-vendee. Petitioner insists that he had the right
to reserve his title on the jeepney until after the purchase price thereof had been paid in full.

In his Comment on the petition, respondent avers that the appropriate remedy of petitioner was an appeal via a petition for review
on certiorari under Rule 45 of the Rules of Court and not a special civil action of certiorari under Rule 65. He argues that petitioner
failed to establish that the CA committed grave abuse of its discretion amounting to excess or lack of jurisdiction in its decision, as
the said ruling is in accord with law and the evidence on record.
Respondent further asserts that the Kasunduan presented to him by petitioner which provides for a boundary-
hulog scheme was a devious circumvention of the Labor Code of the Philippines. Respondent insists that his juridical relationship
with petitioner is that of employer-employee because he was engaged to perform activities which were necessary or desirable in the
usual business of petitioner, his employer.

In his Reply, petitioner avers that the Rules of Procedure should be liberally construed in his favor; hence, it behooves the Court to
resolve the merits of his petition.

We agree with respondents contention that the remedy of petitioner from the CA decision was to file a petition for review
on certiorari under Rule 45 of the Rules of Court and not the independent action of certiorari under Rule 65. Petitioner had 15 days
from receipt of the CA resolution denying his motion for the reconsideration within which to file the petition under Rule 45. [28] But
instead of doing so, he filed a petition for certiorari under Rule 65 on November 22, 2004, which did not, however, suspend the
running of the 15-day reglementary period; consequently, the CA decision became final and executory upon the lapse of the
reglementary period for appeal. Thus, on this procedural lapse, the instant petition stands to be dismissed.[29]

It must be stressed that the recourse to a special civil action under Rule 65 of the Rules of Court is proscribed by the remedy of
appeal under Rule 45. As the Court elaborated in Tomas Claudio Memorial College, Inc. v. Court of Appeals:[30]
We agree that the remedy of the aggrieved party from a decision or final resolution of the CA is to file a petition
for review on certiorari under Rule 45 of the Rules of Court, as amended, on questions of facts or issues of law
within fifteen days from notice of the said resolution. Otherwise, the decision of the CA shall become final and
executory. The remedy under Rule 45 of the Rules of Court is a mode of appeal to this Court from the decision
of the CA. It is a continuation of the appellate process over the original case. A review is not a matter of right but
is a matter of judicial discretion. The aggrieved party may, however, assail the decision of the CA via a petition
for certiorari under Rule 65 of the Rules of Court within sixty days from notice of the decision of the CA or its
resolution denying the motion for reconsideration of the same. This is based on the premise that in issuing the
 assailed decision and resolution, the CA acted with grave abuse of discretion, amounting to excess or lack of
jurisdiction and there is no plain, speedy and adequate remedy in the ordinary course of law. A remedy is
considered plain, speedy and adequate if it will promptly relieve the petitioner from the injurious effect of the
judgment and the acts of the lower court.

The aggrieved party is proscribed from filing a petition for certiorari if appeal is available, for the remedies of
appeal and certiorari are mutually exclusive and not alternative or successive.The aggrieved party is, likewise,
barred from filing a petition for certiorari if the remedy of appeal is lost through his negligence. A petition
for certiorari is an original action and does not interrupt the course of the principal case unless a temporary
restraining order or a writ of preliminary injunction has been issued against the public respondent from further
proceeding. A petition for certiorari must be based on jurisdictional grounds because, as long as the respondent
court acted within its jurisdiction, any error committed by it will amount to nothing more than an error of
judgment which may be corrected or reviewed only by appeal.[31]

However, we have also ruled that a petition for certiorari under Rule 65 may be considered as filed under Rule 45,
conformably with the principle that rules of procedure are to be construed liberally, provided that the petition is filed within the
reglementary period under Section 2, Rule 45 of the Rules of Court, and where valid and compelling circumstances warrant that the
petition be resolved on its merits.[32] In this case, the petition was filed within the reglementary period and petitioner has raised an
issue of substance: whether the existence of a boundary-hulog agreement negates the employer-employee relationship between the
vendor and vendee, and, as a corollary, whether the Labor Arbiter has jurisdiction over a complaint for illegal dismissal in such case.
We resolve these issues in the affirmative.

The rule is that, the nature of an action and the subject matter thereof, as well as, which court or agency of the
government has jurisdiction over the same, are determined by the material allegations of the complaint in relation to the law involved
and the character of the reliefs prayed for, whether or not the complainant/plaintiff is entitled to any or all of such reliefs.[33] A prayer
or demand for relief is not part of the petition of the cause of action; nor does it enlarge the cause of action stated or change the
legal effect of what is alleged.[34] In determining which body has jurisdiction over a case, the better policy is to consider not only the
status or relationship of the parties but also the nature of the action that is the subject of their controversy. [35]
Article 217 of the Labor Code, as amended, vests on the Labor Arbiter exclusive original jurisdiction only over the
following:
x x x (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 wage, 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 violation of Article 264 of this Code, including questions
involving the legality of strikes and lockouts; and
6. Except claims for Employees Compensation, Social Security, Medicare and
maternity benefits, all other claims, arising from employer-employee relationship,
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.

In the foregoing cases, an employer-employee relationship is an indispensable jurisdictional requisite. [36] The jurisdiction
of Labor Arbiters and the NLRC under Article 217 of the Labor Code is limited to disputes arising from an employer-employee
relationship which can only be resolved by reference to the Labor Code, other labor statutes or their collective bargaining
agreement.[37] Not every dispute between an employer and employee involves matters that only the Labor Arbiter and the NLRC can
resolve in the exercise of their adjudicatory or quasi-judicial powers. Actions between employers and employees where the
employer-employee relationship is merely incidental is within the exclusive original jurisdiction of the regular courts. [38] When the
principal relief is to be granted under labor legislation or a collective bargaining agreement, the case falls within the exclusive
jurisdiction of the Labor Arbiter and the NLRC even though a claim for damages might be asserted as an incident to such claim.[39]
We agree with the ruling of the CA that, under the boundary-hulog scheme incorporated in the Kasunduan, a dual juridical
relationship was created between petitioner and respondent: that of employer-employee and vendor-vendee. The Kasunduan did
not extinguish the employer-employee relationship of the parties extant before the execution of said deed.
As early as 1956, the Court ruled in National Labor Union v. Dinglasan[40] that the jeepney owner/operator-driver
relationship under the boundary system is that of employer-employee and not lessor-lessee. This doctrine was affirmed, under
similar factual settings, in Magboo v. Bernardo[41] and Lantaco, Sr. v. Llamas,[42] and was analogously applied to govern the
relationships between auto-calesa owner/operator and driver,[43] bus owner/operator and conductor,[44] and taxi owner/operator and
driver.[45]
The boundary system is a scheme by an owner/operator engaged in transporting passengers as a common carrier to
primarily govern the compensation of the driver, that is, the latters daily earnings are remitted to the owner/operator less the excess
of the boundary which represents the drivers compensation. Under this system, the owner/operator exercises control and
supervision over the driver. It is unlike in lease of chattels where the lessor loses complete control over the chattel leased but the
lessee is still ultimately responsible for the consequences of its use. The management of the business is still in the hands of the
owner/operator, who, being the holder of the certificate of public convenience, must see to it that the driver follows the route
prescribed by the franchising and regulatory authority, and the rules promulgated with regard to the business operations. The fact
that the driver does not receive fixed wages but only the excess of the boundary given to the owner/operator is not sufficient to
change the relationship between them. Indubitably, the driver performs activities which are usually necessary or desirable in the
usual business or trade of the owner/operator.[46]
Under the Kasunduan, respondent was required to remit P550.00 daily to petitioner, an amount which represented the
boundary of petitioner as well as respondents partial payment (hulog) of the purchase price of the jeepney.
Respondent was entitled to keep the excess of his daily earnings as his daily wage. Thus, the daily remittances also had a dual
purpose: that of petitioners boundary and respondents partial payment (hulog) for the vehicle. This dual purpose was expressly
stated in the Kasunduan. The well-settled rule is that an obligation is not novated by an instrument that expressly recognizes the old
one, changes only the terms of payment, and adds other obligations not incompatible with the old provisions or where the new
contract merely supplements the previous one. [47] The two obligations of the respondent to remit to petitioner the boundary-
hulog can stand together.
In resolving an issue based on contract, this Court must first examine the contract itself, keeping in mind that when the
terms of the agreement are clear and leave no doubt as to the intention of the contracting parties, the literal meaning of its
stipulations shall prevail.[48] The intention of the contracting parties should be ascertained by looking at the words used to project
their intention, that is, all the words, not just a particular word or two or more words standing alone. The various stipulations of a
contract shall be interpreted together, attributing to the doubtful ones that sense which may result from all of them taken
jointly.[49] The parts and clauses must be interpreted in relation to one another to give effect to the whole. The legal effect of a
contract is to be determined from the whole read together.[50]
Under the Kasunduan, petitioner retained supervision and control over the conduct of the respondent as driver of the
jeepney.
The parties expressly agreed that petitioner, as vendor, and respondent, as vendee, entered into a contract to sell the
jeepney on a daily installment basis of P550.00 payable in four years and that petitioner would thereafter become its owner. A
contract is one of conditional sale, oftentimes referred to as contract to sell, if the ownership or title over the property sold is retained
by the vendor, and is not passed to the vendee unless and until there is full payment of the purchase price and/or upon faithful
compliance with the other terms and conditions that may lawfully be stipulated.[52] Such payment or satisfaction of other
preconditions, as the case may be, is a positive suspensive condition, the failure of which is not a breach of contract, casual or
serious, but simply an event that would prevent the obligation of the vendor to convey title from acquiring binding force. [53] Stated
differently, the efficacy or obligatory force of the vendor's obligation to transfer title is subordinated to the happening of a future and
uncertain event so that if the suspensive condition does not take place, the parties would stand as if the conditional obligation had
never existed.[54] The vendor may extrajudicially terminate the operation of the contract, refuse conveyance, and retain the sums or
installments already received, where such rights are expressly provided for. [55]
Under the boundary-hulog scheme, petitioner retained ownership of the jeepney although its material possession was
vested in respondent as its driver. In case respondent failed to make his P550.00 daily installment payment for a week, the
agreement would be of no force and effect and respondent would have to return the jeepney to petitioner; the employer-employee
relationship would likewise be terminated unless petitioner would allow respondent to continue driving the jeepney on a boundary
basis of P550.00 daily despite the termination of their vendor-vendee relationship.
The juridical relationship of employer-employee between petitioner and respondent was not negated by the foregoing
stipulation in the Kasunduan, considering that petitioner retained control of respondents conduct as driver of the vehicle. As correctly
ruled by the CA:
The exercise of control by private respondent over petitioners conduct in operating the jeepney he
was driving is inconsistent with private respondents claim that he is, or was, not engaged in the transportation
business; that, even if petitioner was allowed to let some other person drive the unit, it was not shown that he
did so; that the existence of an employment relation is not dependent on how the worker is paid but on the
presence or absence of control over the means and method of the work; that the amount earned in excess of
the boundary hulog is equivalent to wages; and that the fact that the power of dismissal was not mentioned in
the Kasunduan did not mean that private respondent never exercised such power, or could not exercise such
power.
Moreover, requiring petitioner to drive the unit for commercial use, or to wear an identification card, or
to don a decent attire, or to park the vehicle in Villamaria Motors garage, or to inform Villamaria Motors about
the fact that the unit would be going out to the province for two days of more, or to drive the unit carefully, etc.
necessarily related to control over the means by which the petitioner was to go about his work; that the ruling
applicable here is not Singer Sewing Machine but National Labor Union since the latter case involved jeepney
owners/operators and jeepney drivers, and that the fact that the boundary here represented installment
payment of the purchase price on the jeepney did not withdraw the relationship from that of employer-
employee, in view of the overt presence of supervision and control by the employer.[56]

Neither is such juridical relationship negated by petitioners claim that the terms and conditions in the Kasunduan relative
to respondents behavior and deportment as driver was for his and respondents benefit: to insure that respondent would be able to
pay the requisite daily installment of P550.00, and that the vehicle would still be in good condition despite the lapse of four
years. What is primordial is that petitioner retained control over the conduct of the respondent as driver of the jeepney.
 Indeed, petitioner, as the owner of the vehicle and the holder of the franchise, is entitled to exercise supervision and
control over the respondent, by seeing to it that the route provided in his franchise, and the rules and regulations of the Land
Transportation Regulatory Board are duly complied with. Moreover, in a business establishment, an identification card is usually
provided not just as a security measure but to mainly identify the holder thereof as a bona fide employee of the firm who issues it.[57]
As respondents employer, it was the burden of petitioner to prove that respondents termination from employment was for
a lawful or just cause, or, at the very least, that respondent failed to make his daily remittances of P550.00 as boundary. However,
petitioner failed to do so. As correctly ruled by the appellate court:
It is basic of course that termination of employment must be effected in accordance with law. The just
and authorized causes for termination of employment are enumerated under Articles 282, 283 and 284 of the
Labor Code.
Parenthetically, given the peculiarity of the situation of the parties here, the default in the remittance
of the boundary hulog for one week or longer may be considered an additional cause for termination of
employment. The reason is because the Kasunduan would be of no force and effect in the event that the
purchaser failed to remit the boundary hulog for one week.

Moreover, well-settled is the rule that, the employer has the burden of proving that the dismissal of an employee
is for a just cause. The failure of the employer to discharge this burden means that the dismissal is not justified
and that the employee is entitled to reinstatement and back wages.
In the case at bench, private respondent in his position paper before the Labor Arbiter, alleged that
petitioner failed to pay the miscellaneous fee of P10,000.00 and the yearly registration of the unit; that petitioner
also stopped remitting the boundary hulog, prompting him (private respondent) to issue a Paalala, which
petitioner however ignored; that petitioner even brought the unit to his (petitioners) province without informing
him (private respondent) about it; and that petitioner eventually abandoned the vehicle at a gasoline station
after figuring in an accident. But private respondent failed to substantiate these allegations with solid, sufficient
proof. Notably, private respondents allegation viz, that he retrieved the vehicle from the gas station, where
petitioner abandoned it, contradicted his statement in the Paalala that he would enforce the provision (in
the Kasunduan) to the effect that default in the remittance of the boundary hulog for one week would result in
the forfeiture of the unit.

If it were true that petitioner did not remit the boundary hulog for one week or more, why did private respondent
not forthwith take steps to recover the unit, and why did he have to wait for petitioner to abandon it?

On another point, private respondent did not submit any police report to support his claim that petitioner really
figured in a vehicular mishap. Neither did he present the affidavit of the guard from the gas station to
substantiate his claim that petitioner abandoned the unit there.[58]

Petitioners claim that he opted not to terminate the employment of respondent because of magnanimity is negated by his
(petitioners) own evidence that he took the jeepney from the respondent only on July 24, 2000.

IN LIGHT OF ALL THE FOREGOING, the petition is DENIED. The decision of the Court of Appeals in CA-G.R. SP No.
78720 is AFFIRMED. Costs against petitioner. SO ORDERED.

PAUL V. SANTIAGO vs. CF SHARP CREW MANAGEMENT, INC. G.R. No. 162419 July 10, 2007

At the heart of this case involving a contract between a seafarer, on one hand, and the manning agent and the foreign
principal, on the other, is this erstwhile unsettled legal quandary: whether the seafarer, who was prevented from leaving the port of
Manila and refused deployment without valid reason but whose POEA-approved employment contract provides that the employer-
employee relationship shall commence only upon the seafarers actual departure from the port in the point of hire, is entitled to
relief?
This treats of the petition for review filed by Paul V. Santiago (petitioner) assailing the Decision and Resolution of the
Court of Appeals dated 16 October 2003 and 19 February 2004, respectively, in CA-G.R. SP No. 68404.
Petitioner had been working as a seafarer for Smith Bell Management, Inc. (respondent) for about five (5) years.2 On 3
February 1998, petitioner signed a new contract of employment with respondent, with the duration of nine (9) months. He was
assured of a monthly salary of US$515.00, overtime pay and other benefits. The following day or on 4 February 1998, the contract
was approved by the Philippine Overseas Employment Administration (POEA). Petitioner was to be deployed on board the "MSV
Seaspread" which was scheduled to leave the port of Manila for Canada on 13 February 1998.
A week before the scheduled date of departure, Capt. Pacifico Fernandez, respondents Vice President, sent a facsimile
message to the captain of "MSV Seaspread," which reads:
I received a phone call today from the wife of Paul Santiago in Masbate asking me not to send her husband to MSV
Seaspread anymore. Other callers who did not reveal their identity gave me some feedbacks that Paul Santiago this time if allowed
to depart will jump ship in Canada like his brother Christopher Santiago, O/S who jumped ship from the C.S. Nexus in Kita-kyushu,
Japan last December, 1997.
We do not want this to happen again and have the vessel penalized like the C.S. Nexus in Japan.
Forewarned is forearmed like his brother when his brother when he was applying he behaved like a Saint but in his heart
he was a serpent. If you agree with me then we will send his replacement. Kindly advise.
To this message the captain of "MSV Seaspread" replied:
Many thanks for your advice concerning P. Santiago, A/B. Please cancel plans for him to return to Seaspread.
 On 9 February 1998, petitioner was thus told that he would not be leaving for Canada anymore, but he was reassured that
he might be considered for deployment at some future date.
Petitioner filed a complaint for illegal dismissal, damages, and attorney's fees against respondent and its foreign principal,
Cable and Wireless (Marine) Ltd.5 The case was raffled to Labor Arbiter Teresita Castillon-Lora, who ruled that the employment
contract remained valid but had not commenced since petitioner was not deployed. According to her, respondent violated the rules
and regulations governing overseas employment when it did not deploy petitioner, causing petitioner to suffer actual damages
representing lost salary income for nine (9) months and fixed overtime fee, all amounting to US$7, 209.00.
The labor arbiter held respondent liable. The dispositive portion of her Decision dated 29 January 1999 reads:
WHEREFORE, premises considered, respondent is hereby Ordered to pay complainant actual damages in the amount of
US$7,209.00 plus 10% attorney's fees, payable in Philippine peso at the rate of exchange prevailing at the time of payment. All the
other claims are hereby DISMISSED for lack of merit. SO ORDERED.
On appeal by respondent, the National Labor Relations Commission (NLRC) ruled that there is no employer-employee
relationship between petitioner and respondent because under the Standard Terms and Conditions Governing the Employment of
Filipino Seafarers on Board Ocean Going Vessels (POEA Standard Contract), the employment contract shall commence upon
actual departure of the seafarer from the airport or seaport at the point of hire and with a POEA-approved contract. In the absence
of an employer-employee relationship between the parties, the claims for illegal dismissal, actual damages, and attorneys fees
should be dismissed.7 On the other hand, the NLRC found respondents decision not to deploy petitioner to be a valid exercise of its
management prerogative.8 The NLRC disposed of the appeal in this wise:
WHEREFORE, in the light of the foregoing, the assailed Decision dated January 29, 1999 is hereby AFFIRMED in so far
as other claims are concerned and with MODIFICATION by VACATING the award of actual damages and attorneys fees as well as
excluding Pacifico Fernandez as party respondent. SO ORDERED.
Petitioner moved for the reconsideration of the NLRCs Decision but his motion was denied for lack of merit.10 He
elevated the case to the Court of Appeals through a petition for certiorari.
In its Decision11 dated 16 October 2003, the Court of Appeals noted that there is an ambiguity in the NLRCs Decision
when it affirmed with modification the labor arbiters Decision, because by the very modification introduced by the Commission
(vacating the award of actual damages and attorneys fees), there is nothing more left in the labor arbiters Decision to affirm.12

According to the appellate court, petitioner is not entitled to actual damages because damages are not recoverable by a
worker who was not deployed by his agency within the period prescribed in the POEA Rules. It agreed with the NLRCs finding that
petitioners non-deployment was a valid exercise of respondents management prerogative. It added that since petitioner had not
departed from the Port of Manila, no employer-employee relationship between the parties arose and any claim for damages against
the so-called employer could have no leg to stand on.
Petitioners subsequent motion for reconsideration was denied on 19 February 2004.
The present petition is anchored on two grounds, to wit:
A. The Honorable Court of Appeals committed a serious error of law when it ignored [S]ection 10 of Republic Act [R.A.]
No. 8042 otherwise known as the Migrant Workers Act of 1995 as well as Section 29 of the Standard Terms and Conditions
Governing the Employment of Filipino Seafarers On-Board Ocean-Going Vessels (which is deemed incorporated under the
petitioners POEA approved Employment Contract) that the claims or disputes of the Overseas Filipino Worker by virtue of a
contract fall within the jurisdiction of the Labor Arbiter of the NLRC.
B. The Honorable Court of Appeals committed a serious error when it disregarded the required quantum of proof in labor
cases, which is substantial evidence, thus a total departure from established jurisprudence on the matter.
Petitioner maintains that respondent violated the Migrant Workers Act and the POEA Rules when it failed to deploy him
within thirty (30) calendar days without a valid reason. In doing so, it had unilaterally and arbitrarily prevented the consummation of
the POEA- approved contract. Since it prevented his deployment without valid basis, said deployment being a condition to the
consummation of the POEA contract, the contract is deemed consummated, and therefore he should be awarded actual damages,
consisting of the stipulated salary and fixed overtime pay.18 Petitioner adds that since the contract is deemed consummated, he
should be considered an employee for all intents and purposes, and thus the labor arbiter and/or the NLRC has jurisdiction to take
cognizance of his claims.19
Petitioner additionally claims that he should be considered a regular employee, having worked for five (5) years on board
the same vessel owned by the same principal and manned by the same local agent. He argues that respondents act of not
deploying him was a scheme designed to prevent him from attaining the status of a regular employee.
Petitioner submits that respondent had no valid and sufficient cause to abandon the employment contract, as it merely
relied upon alleged phone calls from his wife and other unnamed callers in arriving at the conclusion that he would jump ship like his
brother. He points out that his wife had executed an affidavit21 strongly denying having called respondent, and that the other
alleged callers did not even disclose their identities to respondent.22 Thus, it was error for the Court of Appeals to adopt the
unfounded conclusion of the NLRC, as the same was not based on substantial evidence.
On the other hand, respondent argues that the Labor Arbiter has no jurisdiction to award petitioners monetary claims. His
employment with respondent did not commence because his deployment was withheld for a valid reason. Consequently, the labor
arbiter and/or the NLRC cannot entertain adjudication of petitioners case much less award damages to him. The controversy
involves a breach of contractual obligations and as such is cognizable by civil courts.24 On another matter, respondent claims that
the second issue posed by petitioner involves a recalibration of facts which is outside the jurisdiction of this Court.
There is some merit in the petition.
There is no question that the parties entered into an employment contract on 3 February 1998, whereby petitioner was
contracted by respondent to render services on board "MSV Seaspread" for the consideration of US$515.00 per month for nine (9)
months, plus overtime pay. However, respondent failed to deploy petitioner from the port of Manila to Canada. Considering that
petitioner was not able to depart from the airport or seaport in the point of hire, the employment contract did not commence, and no
employer-employee relationship was created between the parties.
However, a distinction must be made between the perfection of the employment contract and the commencement of the
employer-employee relationship. The perfection of the contract, which in this case coincided with the date of execution thereof,
occurred when petitioner and respondent agreed on the object and the cause, as well as the rest of the terms and conditions
therein. The commencement of the employer-employee relationship, as earlier discussed, would have taken place had petitioner
been actually deployed from the point of hire. Thus, even before the start of any employer-employee relationship, contemporaneous
with the perfection of the employment contract was the birth of certain rights and obligations, the breach of which may give rise to a
cause of action against the erring party. Thus, if the reverse had happened, that is the seafarer failed or refused to be deployed as
agreed upon, he would be liable for damages.
Moreover, while the POEA Standard Contract must be recognized and respected, neither the manning agent nor the
employer can simply prevent a seafarer from being deployed without a valid reason.
Respondents act of preventing petitioner from departing the port of Manila and boarding "MSV Seaspread" constitutes a
breach of contract, giving rise to petitioners cause of action. Respondent unilaterally and unreasonably reneged on its obligation to
deploy petitioner and must therefore answer for the actual damages he suffered.
We take exception to the Court of Appeals conclusion that damages are not recoverable by a worker who was not
deployed by his agency. The fact that the POEA Rules27 are silent as to the payment of damages to the affected seafarer does not
mean that the seafarer is precluded from claiming the same. The sanctions provided for non-deployment do not end with the
suspension or cancellation of license or fine and the return of all documents at no cost to the worker. They do not forfend a seafarer
from instituting an action for damages against the employer or agency which has failed to deploy him.
The POEA Rules only provide sanctions which the POEA can impose on erring agencies. It does not provide for damages
and money claims recoverable by aggrieved employees because it is not the POEA, but the NLRC, which has jurisdiction over such
matters.
Despite the absence of an employer-employee relationship between petitioner and respondent, the Court rules that the
NLRC has jurisdiction over petitioners complaint. The jurisdiction of labor arbiters is not limited to claims arising from employer-
employee relationships. Section 10 of R.A. No. 8042 (Migrant Workers Act), provides that:
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 the 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. x x x
[Emphasis supplied]
Since the present petition involves the employment contract entered into by petitioner for overseas employment, his
claims are cognizable by the labor arbiters of the NLRC.
Article 2199 of the Civil Code provides that one is entitled to an adequate compensation only for such pecuniary loss
suffered by him as he has duly proved. Respondent is thus liable to pay petitioner actual damages in the form of the loss of nine (9)
months worth of salary as provided in the contract. He is not, however, entitled to overtime pay. While the contract indicated a fixed
overtime pay, it is not a guarantee that he would receive said amount regardless of whether or not he rendered overtime work. Even
though petitioner was "prevented without valid reason from rendering regular much less overtime service,"28 the fact remains that
there is no certainty that petitioner will perform overtime work had he been allowed to board the vessel. The amount of US$286.00
stipulated in the contract will be paid only if and when the employee rendered overtime work. This has been the tenor of our rulings
in the case of Stolt-Nielsen Marine Services (Phils.), Inc. v. National Labor Relations Commission29 where we discussed the matter
in this light:
The contract provision means that the fixed overtime pay of 30% would be the basis for computing the overtime pay if and
when overtime work would be rendered. Simply stated, the rendition of overtime work and the submission of sufficient proof that
said work was actually performed are conditions to be satisfied before a seaman could be entitled to overtime pay which should be
computed on the basis of 30% of the basic monthly salary. In short, the contract provision guarantees the right to overtime pay but
the entitlement to such benefit must first be established. Realistically speaking, a seaman, by the very nature of his job, stays on
board a ship or vessel beyond the regular eight-hour work schedule. For the employer to give him overtime pay for the extra hours
when he might be sleeping or attending to his personal chores or even just lulling away his time would be extremely unfair and
unreasonable.
The Court also holds that petitioner is entitled to attorneys fees in the concept of damages and expenses of litigation.
Attorney's fees are recoverable when the defendant's act or omission has compelled the plaintiff to incur expenses to protect his
interest.31 We note that respondents basis for not deploying petitioner is the belief that he will jump ship just like his brother, a mere
suspicion that is based on alleged phone calls of several persons whose identities were not even confirmed. Time and again, this
Court has upheld management prerogatives so long as they are exercised in good faith for the advancement of the employers
interest and not for the purpose of defeating or circumventing the rights of the employees under special laws or under valid
agreements.32 Respondents failure to deploy petitioner is unfounded and unreasonable, forcing petitioner to institute the suit
below. The award of attorneys fees is thus warranted.
However, moral damages cannot be awarded in this case. While respondents failure to deploy petitioner seems baseless
and unreasonable, we cannot qualify such action as being tainted with bad faith, or done deliberately to defeat petitioners rights, as
to justify the award of moral damages. At most, respondent was being overzealous in protecting its interest when it became too
hasty in making its conclusion that petitioner will jump ship like his brother.
We likewise do not see respondents failure to deploy petitioner as an act designed to prevent the latter from attaining the
status of a regular employee. Even if petitioner was able to depart the port of Manila, he still cannot be considered a regular
employee, regardless of his previous contracts of employment with respondent. In Millares v. National Labor Relations
Commission,33 the Court ruled that seafarers are considered contractual employees and cannot be considered as regular
employees under the Labor Code. Their employment is governed by the contracts they sign every time they are rehired and their
employment is terminated when the contract expires. The exigencies of their work necessitates that they be employed on a
contractual basis.34
WHEREFORE, petition is GRANTED IN PART. The Decision dated 16 October 2003 and the Resolution dated 19
February 2004 of the Court of Appeals are REVERSED and SET ASIDE. The Decision of Labor Arbiter Teresita D. Castillon-Lora
dated 29 January 1999 is REINSTATED with the MODIFICATION that respondent CF Sharp Crew Management, Inc. is ordered to
pay actual or compensatory damages in the amount of US$4,635.00 representing salary for nine (9) months as stated in the
contract, and attorneys fees at the reasonable rate of 10% of the recoverable amount. SO ORDERED.
HAWAIIAN-PHILIPPINE COMPANY vs. REYNALDO J. GULMATICO, Labor Arbiter, AND NATIONAL FEDERATION OF
SUGAR WORKERS-FOOD AND GENERAL TRADES G.R. No. 106231 November 16, 1994

This petition for certiorari and prohibition with preliminary injunction seeks to annul the Order dated June 29, 1992 issued
by public respondent Labor Arbiter Reynaldo J. Gulmatico denying petitioner's motion for "Claims on R.A. 809" in RAB VI Case No.
06-07-10256-89, the dispositive portion of which reads, in part:
WHEREFORE, premises considered, the motion to dismiss dated July 31, 1989 and the supplement thereto dated September 19,
1989 filed by respondent company together with the motion to dismiss filed by respondent Ramon Jison dated August 27, 1990 and
Francisco Jison dated September 20, 1990, respectively, are hereby DENIED.

The antecedent facts are as follows:

On July 4, 1989, respondent union, the National Federation of Sugar Workers-Food and General Trades (NFSW-FGT)
filed RAB VI Case No. 06-07-10256-89 against herein petitioner Hawaiian-Philippine Company for claims under Republic Act 809
(The Sugar Act of 1952). Respondent union claimed that the sugar farm workers within petitioner's milling district have never availed
of the benefits due them under the law.
Under Section 9 of R.A 809, otherwise known as the Sugar Act of 1952, it is provided, to wit:
Sec. 9. In addition to the benefits granted by the Minimum Wage Law, the proceeds of any increase in participation granted to
planters under this Act and above their present share shall be divided between the planter and his laborers in the following
proportions;
Sixty per centum of the increase participation for the laborers and forty per centum for the planters. The distribution of the share
corresponding to the laborers shall be made under the supervision of the Department of Labor.
On July 31, 1989, petitioner filed a "Motion to Dismiss," followed by a "Supplemental Motion to Dismiss" on September 19,
1989. Petitioner contended that public respondent Labor Arbiter has no jurisdiction to entertain and resolve the case, and that
respondent union has no cause of action against petitioner.
On August 23, 1989, respondent union filed an "Opposition to Motion to Dismiss."
On October 3,1989, petitioner applied a "Reply to Opposition" followed by a "Citation of Authorities in Support of Motion to
Dismiss."
On December 20, 1989, respondent union filed an amended complaint additionally impleading as complainants Efren
Elaco, Bienvenido Gulmatico, Alberto Amacio, Narciso Vasquez, Mario Casociano and all the other farm workers of the sugar
planters milling with petitioner from 1979 up to the present, and as respondents, Jose Maria Regalado, Ramon Jison, Rolly
Hernaez, Rodolfo Gamboa, Francisco Jison and all other sugar planters milling their canes with petitioner from 1979 up to the
present.
On August 27, 1990, Ramon Jison, one of the respondents impleaded in the amended complaint, filed a "Motion to
Dismiss and/or to Include Necessary Parties," praying for the inclusion as co-respondents of the Asociacion de Hacenderos de
Silan-Saravia, Inc. and the Associate Planters of Silay-Saravia, Inc.
On June 29, 1992, public respondent promulgated the assailed Order denying petitioner's Motion to Dismiss and
Supplemental Motion to Dismiss.
Hence, this petition filed by Hawaiian-Philippine Company.
Petitioner reasserts the two lesson earlier raised in its Motion to Dismiss which public respondent unfavorably resolved in
the assailed Order.
These two issues are first, whether public respondent Labor Arbiter has jurisdiction to hear and decide the case
against petitioner; and the second, whether respondent union and/or the farm workers represented by it have a cause of
action against petitioner.
Petitioner contends that the complaint filed against it cannot be categorized under any of the cases falling within the
jurisdiction of the Labor Arbiter as enumerated in Article 217 of the Labor Code, as amended, considering that no employer-
employee relationship exists between petitioner milling company and the farm workers represented by respondent union. Article 217
of the Labor Code provides:
Art. 217. Jurisdiction of Labor Arbiters and the Commission. (a) Except as otherwise provided under this Code, the Labor
Arbiters shall have original and exclusive jurisdiction to hear and decide, within thirty (30) calendar days after the submission of the
case by the parties for decision without extension, even in the absence of stenographic notes, the following cases involving all
workers, whether agricultural or non-agricultural:
1. Unfair labor practice cases;
2. Termination disputes;
3. If accompanied with a claim for reinstatement, those cases that workers may file involving wages, rates of pay,
hours of work and other terms and conditions of employment;
4. Claims for actual, moral, exemplary and other forms of damages arising from employer-employee relations;
5. Cases arising from any violation of Article 264 of this Code, including questions involving the legality of strikes
and lockouts; and
6. Except claims for employees' compensation, social security, medicare from maternity benefits, all other claims
arising from employer-employee relations, including those of persons in domestic or household service, involving an
amount exceeding Five Thousand Pesos (P5,000.00), whether or not accompanied with a claim for reinstatement.
In support of the contention that the Labor Arbiter has no jurisdiction to hear and decide the case against petitioner, the latter cites
the ruling in San Miguel Corporation vs. NLRC, 161 SCRA 719 [1988], wherein it was held that a single unifying element runs
through the cases and disputes falling under the jurisdiction of the Labor Arbiter and that is that all the enumerated cases and
disputes arise out of or are in connection with an employer-employee relationship, or some aspect or incident of such relationship.
Likewise, in Federation of Free Farmers vs. Court of Appeals, 107 SCRA 411 [1981], this Court held that:
. . . . From the beginning of the sugar industry, the centrals have never had any privity with the plantation laborers, since they had
their own laborers to take care of. . . . Nowhere in Republic Act 809 (the Sugar Act of 1952) can we find anything that creates any
relationship between the laborers of the planters and the centrals. . . .
. . . Under no principle of law or equity can we impose on the central . . . any liability to the plantation laborers. . . . (Emphasis
supplied)
On the strength of the aforecited authorities, petitioner contends that it is not a proper party and has no involvement in the
case filed by respondent union as it is not the employer of the respondent sugar workers.
Furthermore, to bolster its contention, petitioner cites the Rules and Regulations Implementing RA 809 issued by the then
Wage Administration Service pursuant to the Administrative Order of the Labor Secretary dated October 1, 1952. Section 1 thereof
states:
Sec. 1. The payment of the proceeds derived from the sixty per centum of any increase in the participation due the laborers shall
be directly paid to the individual laborer concerned at the end of each milling season by his respective planter under the Supervision
of the Secretary of Labor or his duly authorized representative by means of payrolls prepared by said planter. (Emphasis supplied)
In addition, under Letter of Instruction No. 854 dated May 1, 1979, it is provided:
1. Payment subject to supervision. The workers' share shall be paid directly by the planter concerned to the workers or
claimants entitled thereto subject to the supervision of the Minister of Labor or his duly designated representative.
The responsibility for the payment of the sugar workers' benefits under R.A. 809 was categorically ruled upon in the Federation of
Free Farmers case, supra., to wit:
. . . the matter of paying the plantation laborers of the respective planters becomes exclusively the concern of the planters, the
laborers and the Department of Labor. Under no principle of law or equity can we impose on the Central here VICTORIAS any
liability to the respective plantation laborers, should any of their respective planters-employers fail to pay their legal share. After all,
since under the law it is the Department of Labor which is the office directly called upon to supervise such payment, it is but
reasonable to maintain that if any blame is to be fixed for the unfortunate situation of the unpaid laborers, the same should
principally be laid on the planters and secondarily on the Department of Labor, but surely never on the central.
Whatever liability there exists between favor of the plantation laborers should be pinned on the PLANTERS, their respective
employers. (Emphasis supplied)
On the other hand, public respondent and respondent union maintain the position that privity exists between petitioner and
the sugar workers. Actually, public respondent, in resolving petitioner's Motion to Dismiss, skirted the issue of whether an employer-
employee relationship indeed exists between petitioner milling company and the sugar workers. He did not categorically rule thereon
but instead relied on the observation that when petitioner delivered to its planters the quedans representing its share, petitioner did
not first ascertain whether the shares of all workers or claimants were fully paid/covered pursuant to LOI No. 854, and that petitioner
did not have the necessary certification from the Department of Labor attesting to such fact of delivery. In view of these
observations, public respondent subscribed to the possibility that petitioner may still have a liability vis-a-vis the workers' share.
Consequently, in order that the workers would not have to litigate their claim separately, which would be tantamount to tolerating the
splitting of a cause of action, public respondent held that petitioner should still be included in this case as an indispensable party
without which a full determination of this case would not be obtained. We find for petitioner.
The Solicitor General, in its adverse Comment, correctly agreed with petitioner's contention that while the jurisdiction over
controversies involving agricultural workers has been transferred from the Court of Agrarian Relations to the Labor Arbiters under
the Labor Code as amended, the said transferred jurisdiction is however, not without limitations. The dispute or controversy must
still fall under one of the cases enumerated under Article 217 of the Labor Code, which cases, as ruled in San Miguel, supra., arise
out of or are in connection with an employer-employee relationship.
In the case at bar, it is clear that there is no employer-employee relationship between petitioner milling company and
respondent union and/or its members-workers, a fact which, the Solicitor General notes, public respondent did not dispute or was
silent about. Absent the jurisdictional requisite of an employer-employee relationship between petitioner and private respondent, the
inevitable conclusion is that public respondent is without jurisdiction to hear and decide the case with respect to petitioner.
Anent the issue of whether respondent union and/or its members-workers have a cause of action against petitioner, the
same must be resolved in the negative. To have a cause of action, the claimant must show that he has a legal right and the
respondent a correlative duty in respect thereof, which the latter violated by some wrongful act or omission (Marquez vs. Varela, 92
Phil. 373 [1952]). In the instant case, a simple reading of Section 9 of R.A. 809 and Section 1 of LOI 845 as aforequoted, would
show that the payment of the workers' share is a liability of the planters-employers, and not of the milling company/sugar central. We
thus reiterate Our ruling on this matter, as enunciated in Federation of Free Farmers, supra., to wit:
. . . . Nowhere in Republic Act No. 809 can we find anything that creates any relationship between the laborers of the planters and
the centrals. Under the terms of said Act, the old practice of the centrals issuing the quedans to the respective PLANTERS for their
share of the proceeds of milled sugar per their milling contracts has not been altered or modified. In other words, the language of the
Act does not in any manner make the central the insurer on behalf of the plantation laborers that the latter's respective employers-
planters would pay them their share. . . .
. . . . Accordingly, the only obligation of the centrals (under Section 9 of the Act), like VICTORIAS, is to give to the respective
planters, like PLANTERS herein, the planters' share in the proportion stipulated in the milling contract which would necessarily
include the portion of 60% pertaining to the laborers. Once this has been done, the central is already out of the picture. . . .
(Emphasis supplied)
In the case at bar, it is disputed that petitioner milling company has already distributed to its planters their respective
shares. Consequently, petitioner has fulfilled its part and has nothing more to do with the subsequent distribution by the planters of
the workers' share.
Public respondent's contention that petitioner is an indispensable party is not supported by the applicable provisions of the
Rules of Court. Under Section 7, Rule 3 thereof, indispensable parties are "parties in interest" without whom no final determination
of the action can be obtained. In this case, petitioner cannot be deemed as a party in interest since there is no privity or legal
obligation linking it to respondent union and/or its members-workers.
In order to further justify petitioner's compulsory joinder as a party to this case, public respondent relies on petitioners' lack
of certification from the Department of Labor of its delivery of the planters' shares as evidence of an alleged "conspicuous display of
concerted conspiracy between the respondent sugar central (petitioner) and its adherent planters to deprive the workers or
claimants of their shares in the increase in participation of the adherent planters." (Rollo, p. 56)
The assertion is based on factual conclusions which have yet to be proved. And even assuming for the sake of argument
that public respondent's conclusions are true, respondent union's and/or its workers' recourse lies with the Secretary of Labor, upon
whom authority is vested under RA 809 to supervise the payment of the workers' shares. Any act or omission involving the legal
right of the workers to said shares may be acted upon by the Labor Secretary either motu proprio or at the instance of the workers.
In this case however, no such action has been brought by the subject workers, thereby raising the presumption that no actionable
violation has been committed.
Public respondent is concerned that the respondent planters may easily put up the defense that the workers' share is with
petitioner milling company, giving rise to multiplicity of suits. The Solicitor General correctly postulates that the planters cannot
legally set up the said defense since the payment of the workers' share is a direct obligation of the planters to their workers that
cannot be shifted to the miller/central. Furthermore, the Solicitor General notes that there is nothing in RA 809 which suggests
directly or indirectly that the obligation of the planter to pay the workers' share is dependent upon his receipt from the miller of his
own share. If indeed the planter did not receive his just and due share from the miller, he is not without legal remedies to enforce his
rights. The proper recourse against a reneging miller or central is for the planter to implead the former not as an indispensable party
but as a third party defendant under Section 12, Rule 6 of the Rules of Court. In such case, herein petitioner milling company would
be a proper third party dependent because it is directly liable to the planters (the original defendants) for all or part of the workers'
claim. However, the planters involved in this controversy have not filed any complaint of such a nature against petitioner, thereby
lending credence to the conclusion that petitioner has fulfilled its part vis-a-vis its obligation under RA 809.

WHEREFORE, premises considered, the petition is GRANTED. Public respondent Reynaldo J. Gulmatico is hereby ORDERED to
DISMISS RAB VI Case No. 06-07-10256-89 with respect to herein petitioner Hawaiian-Philippine Company and to PROCEED WITH
DISPATCH in resolving the said case. SO ORDERED.

SULPICIO LINES, INC. vs. NLRC and JAIME CAGATAN G.R. No. 117650. March 7, 1996

Petitioner Sulpicio Lines, Inc., owner of MV Cotabato Princess, on January 15, 1992 dismissed private respondent Jaime
Cagatan, a messman of the said vessel, allegedly for being absent without leave for a prolonged period of six (6) months.
As a result of his dismissal, the private respondent filed a complaint for illegal dismissal before the National Labor
Relations Commission (NLRC) through its National Capital Region Arbitration Branch in Manila, docketed as NLRC-NCR Case No.
00-06-3163-92.
Responding to the said complaint, petitioner, on June 25, 1992, filed a Motion to Dismiss on the ground of improper
venue, stating, among other things, that the case for illegal dismissal should have been lodged with the NLRCs Regional Branch No.
VII (Cebu), as its main office was located in Cebu City.[2]

In an Order dated August 21, 1992 Labor Arbiter Arthur L. Amansec of the NLRC-NCR denied petitioners Motion to
Dismiss, holding that:
Considering that the complainant is a ship steward, traveled on board respondents ship along the Manila-Enstancia-Iloilo-
Zamboanga-Cotabato vice-versa route, Manila can be said to be part of the complainants territorial workplace.

The aforequoted Order was seasonably appealed to the NLRC by petitioner. On February 28, 1994, respondent NLRC
found petitioners appeal unmeritorious and sustained the Labor Arbiters August 21, 1992 ruling, explaining that under the New
NLRC Rules, the Commission or the Labor Arbiter before whom the case is pending may order a change of venue.[4] Finding no
grave abuse of discretion in the Labor Arbiters assailed Order, respondent NLRC emphasized that:
The complainant instituted the Action in Manila where he resides. Hence, we see no grave abuse of discretion on the part
of the labor arbiter in denying the respondents Motion to Dismiss as We find support in the basic principle that the State shall afford
protection to labor and that the NLRC is not bound by strict technical rules of procedure.
Undaunted, petitioner sought a reconsideration of the above Order, which the public respondent denied in its Resolution
dated July 22, 1994.[6] Consequently, petitioner comes to this Court for relief, in the form of a Special Civil Action for Certiorari
under Rule 65 of the Rules of Court, contending that public respondent NLRC acted with grave abuse of discretion amounting to
lack or excess of jurisdiction when it issued its assailed rulings.[7]
It is petitioners principal contention that a ship or vessel as workplace is an extension of its homeport or principal place of
business, and that being part of the territory of the homeport, (such) vessel is governed to a large extent by the laws and is under
the jurisdiction of the homeport.[8] Based on this submission, petitioner avers that its vessel-as-workplace is under the territorial
jurisdiction of the Regional Arbitration branch where (its) . . . principal office is located, which is Branch VII, located in Cebu City. We
disagree.

As early as 1911, this Court held that 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.[10] 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.
Even in cases where venue has been stipulated by the parties by contract, this Court has not hesitated to set aside
agreements on venue if the same would lead to a situation so grossly inconvenient to one party as to virtually negate his claim. In
Sweet Lines vs. Teves, involving a contract of adhesion, we held that:
An agreement will not be held valid where it practically negates the action of the claimants, such as the private
respondents herein. The philosophy underlying the provisions on transfer of venue of actions is the convenience of the plaintiffs as
well as his witnesses and to promote the ends of justice. Considering the expense and trouble a passenger residing outside Cebu
City would incur to prosecute a claim in the City of Cebu, he would most probably decide not to file the action at all. The condition
will thus defeat, instead of enhance, the ends of justice. Upon the other hand, petitioner had branches or offices in the respective
ports of call of the vessels and can afford to litigate in any of these places. Hence, the filing of the suit in the CFI of Misamis Oriental,
as was done in the instant case will not cause inconvenience to, much less prejudice petitioner.

In the case at bench, it is not denied that while petitioner maintains its principal office in Cebu City, it retains a major
booking and shipping office in Manila from which it earns considerable revenue, and from which it hires and trains a significant
number of its workforce. Its virulent insistence on holding the proceedings in the NLRCs regional arbitration branch in Cebu City is
obviously a ploy to inconvenience the private respondent, a mere steward who resides in Metro Manila, who would obviously not be
able to afford the frequent trips to Cebu City in order to follow up his case.
Even the provisions cited by petitioner in support of its contention that venue of the illegal dismissal case lodged by
private respondent is improperly laid, would not absolutely support his claim that respondent NLRC acted with grave abuse of
discretion in allowing the private respondent to file his case with the NCR arbitration branch.
Section 1, Rule IV of the NLRC Rules of Procedure on Venue, provides that:
Section 1. Venue - (a) All cases in 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.
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.
Moreover, Section 1, Rule IV of the 1990 NLRC Rules additionally provides that, 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. Since the private
respondents regular place of assignment is the vessel MV Cotabato Princess which plies the Manila-Estancia-Iloilo-Zamboanga-
Cotabato route, we are of the opinion that Labor Arbiter Arthur L. Amansec was correct in concluding that Manila could be
considered part of the complainants territorial workplace. Respondent NLRC, therefore, committed no grave abuse of discretion in
sustaining the labor arbiters denial of herein petitioners Motion to Dismiss.

WHEREFORE, premises considered, the instant petition is hereby DISMISSED for lack of merit. SO ORDERED.

NATIONAL UNION OF BANK EMPLOYEES (NUBE) vs. JUDGE ALFREDO M. LAZARO G.R. No. L-56431Jan. 19, 1988

The sole issue in this special civil action for certiorari is whether or not the courts may take cognizance of claims for
damages arising from a labor controversy.
The antecedent facts are not disputed.
On July 1, 1977, the Commercial Bank and Trust Company, a Philippine banking institution, entered into a collective
bargaining agreement with the Commercial Bank and Trust Company Union, representing the rank and file of the bank with a
membership of over one thousand employees, and an affiliated local of the National Union of Bank Employees, a national labor
organization.
The agreement was effective until June 30, 1980, with an automatic renewal clause until the parties execute a new
agreement.
On May 20, 1980, the union, together with the National Union of Bank Employees, submitted to the bank management
proposals for the renegotiation of a new collective bargaining agreement. The following day, however, the bank suspended
negotiations with the union. The bank had meanwhile entered into a merger with the Bank of the Philippine Islands, another
Philippine banking institution, which assumed all assets and liabilities thereof.
As a consequence, the union went to the then Court of First Instance of Manila, presided over by the respondent Judge,
on a complaint for specific performance, damages, and preliminary injunction against the private respondents. Among other things,
the complaint charged:
51. In entering in to such arrangement for the termination of the CURRENT CBA, and the consequent destruction to existing rights,
interests and benefits thereunder,CBTC is liable for wilful injury to the contract and property rights thereunder as provided in Article
2220 of the Civil Code of the Philippines;
52. By arranging for the termination of the CURRENT CBA in the manner above described, CBTC committed breach of said
contract in bad faith, in that CBTC had taken undue advantage of its own employees, by concealing and hiding the negotiations
towards an agreement on the sales and merger, when it was under a statutory duty to disclose and bargain on the effects thereof,
according to law;
54. In virtually suppressing the collective bargaining rights of plaintiffs under the law and as provided in the CURRENT CBA,
through shadow bargaining, calculated delay, suspension of negotiations, concealment of bargainable issues and high-handed
dictation, the CBTC and its defendant officials, as well as the BANK OF P.I. and its defendant officials, were all actuated by a
dishonest purpose to secure an undue advantage; on the part of the CBTC it was to avoid fresh and additional contractual
commitments, which would substantially lessen and diminish the profitability of the sale; and on the part of the BANKOF P.I., it was
to avoid having to face higher compensation rates of CBTC employees in the course of integration and merger which could force the
upgrading of the benefit package for the personnel of the merged operations, and thereby pushed personnel costs upwards;
substantial outlays and costs thereby entailed were all deftly avoided and evaded, through the expedient of deliberate curtailment
and suppression of contractual bargaining rights;
55. All the other defendants have actively cooperated with and abetted the CBTC and its defendant officers in negotiating,
contriving and effecting the above arrangements for the attainment of its dishonest purpose, for abuse of its rights, and for taking
undue advantage of its very own employees, through the secret sale and scheduled merger; the collective participation therein
evinces machination, deceit, wanton attitude, bad faith, and oppressive intent, wilfully causing loss or injury to plaintiffs in a manner
that is contrary to law, morals, good customs and public policy, in violation of Articles 21 and 28 of the Civil Code;
Predictably, the private respondents moved for the dismissal of the case on the ground, essentially, of lack of jurisdiction
of the court.
 On November 26, 1980, the respondent Judge issued an order, dismissing the case for lack of jurisdiction. According to
the court, the complaint partook of an unfair labor practice dispute notwithstanding the incidental claim for damages, jurisdiction over
which is vested in the labor arbiter. This order, as well as a subsequent one denying reconsideration, is now alleged as having been
issued 'in excess of his jurisdiction amounting to a grave abuse of discretion."
We sustain the dismissal of the case, which is, as correctly held by the respondent court, an unfair labor practice
controversy within the original and exclusive jurisdiction of the labor arbiters and the exclusive appellate jurisdiction of the National
Labor Relations Commission. The claim against the Bank of Philippine Islands the principal respondent according to the
petitioners for allegedly inducing the Commercial Bank and Trust Company to violate the existing collective bargaining agreement
in the process of re-negotiation, consists mainly of the civil aspect of the unfair labor practice charge referred to under Article 247 2
of the Labor Code.
Under Article 248 3 of the Labor Code, it shall be an unfair labor practice:
(a) To interfere with, restrain or coerce employees in the exercise of their right to self-organization;
(g) To violate the duty to bargain collectively as prescribed by this Code;
The act complained of is broad enough to embrace either provision. Since it involves collective bargaining whether or
not it involved an accompanying violation of the Civil Code it may rightly be categorized as an unfair labor practice. The civil
implications thereof do not defeat its nature as a fundamental labor offense.
As we stated, the damages (allegedly) suffered by the petitioners only form part of the civil component of the injury arising
from the unfair labor practice. Under Article 247 of the Code, "the civil aspects of all cases involving unfair labor practices, which
may include claims for damages and other affirmative relief, shall be under the jurisdiction of the labor arbiters.
The petitioners' claimed injury as a consequence of the tort allegedly committed by the private respondents, specifically,
the Bank of the Philippine Islands, under Article 1314 of the Civil Code, 5 does not necessarily give the courts jurisdiction to try the
damage suit. Jurisdiction is conferred by law 6 and not necessarily by the nature of the action. Civil controversies are not the
exclusive domain of the courts. In the case at bar, Presidential Decree No. 442, as amended by Batas Blg. 70, has vested such a
jurisdiction upon the labor arbiters, a jurisdiction the courts may not assume.
Jurisdiction over unfair labor practice cases, moreover, belongs generally to the labor department of the government,
never the courts. In Associated Labor Union v. Gomez, 7 we said:
A rule buttressed upon statute and reason that is frequently reiterated in jurisprudence is that labor cases involving unfair
practice are within the exclusive jurisdiction of the CIR. By now, this rule has ripened into dogma. It thus commands adherence, not
breach.
The fact that the Bank of the Philippine Islands is not a party to the collective bargaining agreement, for which it "cannot
be sued for unfair labor practice at the time of the action," 8 cannot bestow on the respondent court the jurisdiction it does not have.
In Cebu Portland Cement Co. v. Cement Workers' Union, 9 we held:
There is no merit in the allegation. In the first place, it must be remembered that jurisdiction is conferred by law; it is not
determined by the existence of an action in another tribunal. In other words, it is not filing of an unfair labor case in the Industrial
Court that divests the court of first instance jurisdiction over actions properly belonging to the former. It is the existence of a
controversy that properly falls within the exclusive jurisdiction of the Industrial Court and to which the civil action is linked or
connected that removes said civil case from the competence of the regular courts. It is for this reason that civil actions found to be
intertwined with or arising out of, a dispute exclusively cognizable by the Court of Industrial Relations were dismissed, even if the
cases were commenced ahead of the unfair labor practice proceeding, and jurisdiction to restrain picketing was decreed to belong
to the Court of Industrial Relations although no unfair labor practice case has as yet been instituted. For the court of first instance to
lose authority to pass upon a case, therefore, it is enough that unfair labor practice case is in fact involved in or attached to the
action, such fact of course being established by sufficient proof.
Furthermore, to hold that the alleged tortious act now attributed to the Bank of the Philippine Islands may be the subject of
a separate suit is to sanction split jurisdiction long recognized to be an offense against the orderly administration of justice. As stated
in Nolganza v. Apostol:
As far back as Associated Labor Union vs. Gomez [L-25999, February 9, 1967, 19 SCRA 304] the exclusive jurisdiction of the Court
of Industrial Relations in disputes of this character was upheld. "To hold otherwise," as succinctly stated by the ponente, Justice
Sanchez, "is to sanction split jurisdiction-which is obnoxious to the orderly administration of justice." Then, in Progressive Labor
Association vs. Atlas Consolidated Mining and Development Corporation [L-27585, May 29, 1970, 33 SCRA 349] decided three
years later, Justice J.B.L. Reyes, speaking for the Court, stressed that to rule that such demand for damages is to be passed upon
by the regular courts of justice, instead of leaving the matter to the Court of Industrial Relations, 'would be to sanction split
jurisdiction, which is prejudicial to the orderly administration of justice'. Thereafter, this Court, in the cases of Leoquinco vs. Canada
Dry Bottling Co. [L-28621, February 22, 1971, 37 SCRA 535] and Associated Labor Union v. Cruz ([L-28978, September 22, 1971,
41 SCRA 12], with the opinions coming from the same distinguished jurist, adhered to such a doctrine. The latest case in point, as
noted at the outset, is the Goodrich Employees Association decision [L-30211, October 5, 1976, 73 SCRA 297].
The petitioners' reliance upon Calderon v. Court of Appeals 12 is not well-taken. Calderon has since lost its persuasive force,
beginning with our ruling in PEPSI-COLA BOTTLING COMPANY v. MARTINEZ, 13 EBON v. DE GUZMAN, 14 and AGUSAN DEL
NORTE ELECTRIC COOP., INC. v. SUAREZ, 15 and following the promulgation of Presidential Decree No. 1691, restoring the
jurisdiction to decide money claims unto the labor arbiters.
Neither does the fact that the Bank of the Philippine Islands "was not an employer at the time the act was committed' abate a
recourse to the labor arbiter. It should be noted indeed that the Bank of the Philippine Islands assumed "all the assets and liabilities"
16 of the Commercial Bank and Trust Company. Moreover, under the Corporation Code:
5. The surviving or consolidated corporation shall be responsible and liable for all the liabilities and obligations of each of the
constituent corporations in the same manner as if such surviving or consolidated corporation had itself incurred such liabilities or
obligations; and any claim, action or proceeding pending by or against any of such constituent corporations may be prosecuted by
or against the surviving or consolidated corporation, as the case may be. Neither the rights of creditors nor any lien upon the
property of any of such constituent corporations shall be impaired by such merger or consolidation.
In sum, the public respondent has not acted with grave abuse of discretion. WHEREFORE, the petition is DISMISSED.
No costs.
ALBERTO S. SILVA vs. NLRC and PHILTREAD (FIRESTONE) TIRE AND RUBBER CORPORATION
G.R. No. 110226. June 19, 1997

Petitioners, all former employees of private respondent Philtread (Firestone) Tire and Rubber Corporation (Philtread, for brevity),
impute grave abuse of discretion on the National Labor Relations Commission (NLRC)[1] for issuing two resolutions, dated April 7,
1993, and November 18, 1992, which reconsidered a resolution it rendered on April 15, 1992. They allege that its resolution of April
15, 1992 became final and executory when Philtread failed to seasonably file a motion for reconsideration within the ten-day
reglementary period required by Article 223 of the Labor Code.

The record unfolds the following facts:

Sometime in 1985, petitioners, then rank-and-file employees and members of Philtread Workers Union (PWU),
volunteered for, and availed of, the retrenchment program instituted by Philtread with the understanding that they would have priority
in re-employment in the event that the company recovers from its financial crisis, in accordance with Section 4, Article III of the
Collective Bargaining Agreement concluded on July 5, 1983.[2]
In November 1986, Philtread, apparently having recovered from its financial reverses, expanded its operations and hired
new personnel. Upon discovery of this development, petitioners filed their respective applications for employment with Philtread,
which however, merely agreed to consider them for future vacancies. Subsequent demands for re-employment made by petitioners
were ignored. Even the request of the incumbent union for Philtread to stop hiring new personnel until petitioners were first hired
failed to elicit any favorable response.
Thus, on December 5, 1988, petitioners lodged a complaint[3] with the National Capital Region Arbitration Branch of the
NLRC for unfair labor practice (ULP), damages and attorneys fees against Philtread.
Both parties submitted their respective position papers. On its part, Philtread moved for the dismissal of the complaint
based on two grounds, namely: (1) that the NLRC lacked jurisdiction, there being no employer-employee relationship between it and
petitioners and that the basic issue involved was the interpretation of a contract, the CBA, which was cognizable by the regular
courts; and (2) that petitioners had no locus standi, not being privy to the CBA executed between the union and Philtread.
Petitioners, however, challenging Philtreads motion to dismiss, stressed that the complaint was one for unfair labor
practice precipitated by the unjust and unreasonable refusal of Philtread to re-employ them, as mandated by the provisions of
Section 4, Article III of the 1986 and 1983 CBAs. Being one for unfair labor practice, petitioners concluded that the NLRC had
jurisdiction over the case, pursuant to Article 217 (a) (1) of the Labor Code.
On August 31, 1989, Labor Arbiter Edgardo M. Madriaga rendered a decision dismissing the complaint but directing
Philtread to give petitioners priority in hiring, as well as those former employees similarly situated for available positions provided
they meet the necessary current qualifications.[4] In dismissing the complaint, the Labor Arbiter, however, did not tackle the
jurisdictional issue posed by Philtread in its position paper. Instead, he dwelt solely on the question whether the petitioners were
entitled to priority in re-employment on the basis of the CBA.
Petitioners duly appealed the decision of the Labor Arbiter to the NLRC. Philtread opted not to interpose an appeal
despite the Labor Arbiters failure to rule squarely on the question of jurisdiction.
On April 15, 1992, the NLRC issued a resolution reversing the decision of the Labor Arbiter. It directed Philtread to re-
employ petitioners and other employees similarly situated, regardless of age qualifications and other pre-employment conditions,
subject only to existing vacancies and a finding of good physical condition. This resolution was received by Atty. Abraham B. Borreta
of the law firm of Borreta, Gutierrez and Leogardo on May 5, 1992, as shown by the bailiffs return.
Subsequently, Atty. Borreta filed with the NLRC on May 20, 1992, an ex parte manifestation explaining that he was
returning the copy of the resolution rendered on April 15, 1992, which, according to him, was erroneously served on him by the
process server of the NLRC. He alleged that in the several conciliation conferences held, it was Atty. Daniel C. Gutierrez who
exclusively handled the case on behalf of Philtread and informed the Labor Arbiter and petitioners that the law firm of Borreta,
Gutierrez and Leogardo had already been dissolved.
Being of the impression that the April 15, 1992 resolution of the NLRC had been properly served at the address of the law
firm of Atty. Gutierrez and that no seasonable motion for reconsideration was ever filed by Philtread, petitioners moved for its
execution.
On November 18, 1992, the NLRC, acting on a motion for reconsideration filed by Atty. Gutierrez, promulgated one of its
challenged resolutions dismissing the complaint of petitioners. It ruled that while petitioners had standing to sue, the complaint
should have been filed with the voluntary arbitrator, pursuant to Article 261 of the Labor Code, since the primary issue was the
implementation and interpretation of the CBA.
Dismayed by the NLRCs sudden change of position, petitioners immediately moved for reconsideration. They pointed out
that the NLRCs reliance on Article 261 of the Labor Code was patently erroneous because it was the amended provision which was
being cited by the NLRC. They added that the amendment of Article 261 introduced by Republic Act No. 6715 took effect only on
March 21, 1989, or after the filing of the complaint on December 5, 1988. This being the case, petitioners argued that the
subsequent amendment cannot retroactively divest the Labor Arbiter of the jurisdiction already acquired in accordance with Articles
217 and 248 of the Labor Code. Petitioners further stressed that the resolution of April 15, 1992, had already become final and
executory since Philtreads counsel of record did not file any motion for reconsideration within the period of ten (10) days from
receipt of the resolution on May 5, 1992.
The NLRC, however, was not convinced by petitioners assertions. In another resolution issued on April 7, 1993, it affirmed
its earlier resolution dated November 18, 1992, ruling that even before the amendatory law took effect, matters involving bargaining
agreements were already within the exclusive jurisdiction of the voluntary arbitrator, as set forth in Article 262 of the Labor Code.
Hence, this petition.
As stated at the outset, petitioners fault the NLRC for issuing the assailed resolutions even when the resolution sought to
be reconsidered had already attained finality upon Philtreads failure to timely move for its reconsideration. They posit that since the
bailiffs return indicated May 5, 1992, as the date of receipt of the April 15, 1992 resolution by the law firm of Borreta, Gutierrez and
Leogardo, Philtreads counsel of record, then Philtread only had ten (10) calendar days or until May 15, 1992, within which to file a
motion for reconsideration. Since Philtread indisputably failed to file any such motion within said period, petitioners deemed it highly
irregular and capricious for the NLRC to still allow reconsideration of its April 15, 1992 resolution
 The petition is impressed with merit.

Time and again, this Court has been emphatic in ruling that the seasonable filing of a motion for reconsideration within the
10-day reglementary period following the receipt by a party of any order, resolution or decision of the NLRC, is a mandatory
requirement to forestall the finality of such order, resolution or decision.[5] The statutory bases for this is found in Article 223 of the
Labor Code[6] and Section 14, Rule VII of the New Rules of Procedure of the National Labor Relations Commission.[7]
In the case at bar, it is uncontroverted that Philtreads counsel filed a motion for reconsideration of the April 15, 1992
resolution only on June 5, 1992,[8] or 31 days after receipt of said resolution.[9] It was thus incumbent upon the NLRC to have
dismissed outright Philtreads late motion for reconsideration. By doing exactly the opposite, its actuation was not only whimsical and
capricious but also a demonstration of its utter disregard for its very own rules. Certiorari, therefore, lies.
To be sure, it is settled doctrine that the NLRC, as an administrative and quasi-judicial body, is not bound by the rigid
application of technical rules of procedure in the conduct of its proceedings.[10] However, the filing of a motion for reconsideration
and filing it ON TIME are not mere technicalities of procedure. These are jurisdictional and mandatory requirements which must be
strictly complied with. Although there are exceptions to said rule, the case at bar presents no peculiar circumstances warranting a
departure therefrom.
The Court is aware of Philtreads obvious attempt to skirt the requirement for seasonable filing of a motion for
reconsideration by persuading us that both the Labor Arbiter and the NLRC have no jurisdiction over petitioners complaint.
Jurisdiction, Philtread claims, lies instead with the voluntary arbitrator so that when the Labor Arbiter and the NLRC took cognizance
of the case, their decisions thereon were null and void and, therefore, incapable of attaining finality. In short, Philtread maintains that
the ten-day reglementary period could not have started running and, therefore, its motion could not be considered late.
The argument is not tenable. While we agree with the dictum that a void judgment cannot attain finality, said rule,
however, is only relevant if the tribunal or body which takes cognizance of a particular subject matter indeed lacks jurisdiction over
the same. In this case, the rule adverted to is misapplied for it is actually the Labor Arbiter and the NLRC which possess jurisdiction
over petitioners complaint and NOT the voluntary arbitrator, as erroneously contended by Philtread.
In this regard, we observe that there is a confusion in the minds of both Philtread and the NLRC with respect to the proper
jurisdiction of the voluntary arbitrator. They appear to share the view that once the question involved is an interpretation or
implementation of CBA provisions, which in this case is the re-employment clause, then the same necessarily falls within the
competence of the voluntary arbitrator pursuant to Article 261 of the Labor Code.
Respondents posture is too simplistic and finds no support in law or in jurisprudence. When the issue concerns an
interpretation or implementation of the CBA, one cannot immediately jump to the conclusion that jurisdiction is with the voluntary
arbitrator. There is an equally important need to inquire further if the disputants involved are the union and the employer; otherwise,
the voluntary arbitrator cannot assume jurisdiction. To this effect was the ruling of the Court in Sanyo Philippines Workers Union -
PSSLU v. Canizares,[11] where we clarified the jurisdiction of the voluntary arbitrator in this manner:
In the instant case, however, We hold that the Labor Arbiter and not the Grievance Machinery provided for in the CBA has
the jurisdiction to hear and decide the complaints of the private respondents. While it appears that the dismissal of the private
respondents was made upon the recommendation of PSSLU pursuant to the union security clause provided in the CBA, We are of
the opinion that these facts do not come within the phrase grievances arising from the interpretation or implementation of (their)
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.
Article 260 of the Labor Code on grievance machinery and voluntary arbitrator states that (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. It is further provided
in said article that the parties to a CBA shall name or designate their respective representatives to the grievance machinery and if
the grievance is not settled in that level, it shall automatically be referred to voluntary arbitrators (or panel of voluntary arbitrators)
designated in advance by the parties. It need not be mentioned that the parties to a CBA are the union and the company. Hence,
only disputes involving the union and the company shall be referred to the grievance machinery or voluntary arbitrators.
(Underscoring supplied)
Since the contending parties in the instant case are not the union and Philtread, then pursuant to the Sanyo doctrine, it is
not the voluntary arbitrator who can take cognizance of the complaint, notwithstanding Philtreads claim that the real issue is the
interpretation of the CBA provision on re-employment.
The Court, however, does not write finis to the discussion. A more important question arises: If the voluntary arbitrator
could not have assumed jurisdiction over the case, did the Labor Arbiter and the NLRC validly acquire jurisdiction when both of them
entertained the complaint?
A brief review of relevant statutory provisions is in order.
We note that at the time petitioners filed their complaint for unfair labor practice, damages and attorneys fees on
December 5, 1988, the governing provision of the Labor Code with respect to the jurisdiction of the Labor Arbiter and the NLRC was
Article 217 which states:
ART. 217. Jurisdiction of Labor Arbiters and the Commission. (a) The Labor Arbiters shall have the original and exclusive jurisdiction
to hear and decide within thirty (30) working days after submission of the case by the parties for decision, the following cases
involving all workers, whether agricultural or non-agricultural:
1. Unfair labor practice cases;
2. Those that workers may file involving wages, hours of work and other terms and conditions of employment;
3. All money claims of workers, including those based on non-payment or underpayment of wages, overtime compensation,
separation pay and other benefits provided by law or appropriate agreement, except claims for employees compensation, social
security, medicare and maternity benefits;
4. Cases involving household services; and
5. Cases arising from any violation of Article 265 of this Code, including questions involving the legality of strikes and lockouts.
(b) The Commission shall have exclusive appellate jurisdiction over all cases decided by Labor Arbiters.
Articles 261 and 262, on the other hand, defined the jurisdiction of the voluntary arbitrator, viz.:
ART. 261. Grievance machinery. - Whenever a grievance arises from the interpretation or implementation of a collective agreement,
including disciplinary actions imposed on members of the bargaining unit, the employer and the bargaining representative shall meet
to adjust the grievance. Where there is no collective agreement and in cases where the grievance procedure as provided herein
does not apply, grievances shall be subject to negotiation, conciliation or arbitration as provided elsewhere in this Code.
ART. 262. Voluntary arbitration. - All grievances referred to in the immediately preceding Article which are not settled through the
grievance procedure provided in the collective agreement shall be referred to voluntary arbitration prescribed in said agreement:
Provided, That termination disputes shall be governed by Article 278 of this Code, as amended, unless the parties agree to submit
them to voluntary arbitration.
Under the above provisions then prevailing, one can understand why petitioners lodged their complaint for ULP with the
Labor Arbiter. To their mind, Philtreads refusal to re-employ them was tantamount to a violation of the re-employment clause in the
1983 CBA which was also substantially reproduced in the 1986 CBA. At the time, any violation of the CBA was unqualifiedly treated
as ULP of the employer falling within the competence of the Labor Arbiter to hear and decide. Thus:
ART. 248. Unfair labor practices of employers. - It shall be unlawful for an employer to commit any of the following unfair
labor practice:
(i) To violate a collective bargaining agreement.
On March 21, 1989, however, Republic Act 6715,[12] or the so-called Herrera-Veloso Amendments, took effect, amending
several provisions of the Labor Code, including the respective jurisdictions of the Labor Arbiter, the NLRC and the voluntary
arbitrator. As a result, the present jurisdiction of the Labor Arbiter and the NLRC is as follows:
ART. 217. Jurisdiction of Labor Arbiters and the Commission. - (a) Except as otherwise provided under this Code the Labor Arbiters
shall have original and exclusive jurisdiction to hear and decide, within thirty (30) calendar days after the submission of the case by
the parties for decision without extension, even in the absence of stenographic notes, the following cases involving all workers,
whether agricultural or non-agricultural:
1. Unfair labor practice cases;
2. Termination disputes;
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; and
6. Except claims for Employees Compensation, Social Security, Medicare and maternity benefits, all other claims, arising from
employer-employee relations, including those of persons in domestic or household service, involving an amount 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.
while that of the voluntary arbitrator is defined in this wise:
ART. 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. x x x. (Underscoring supplied)
ART. 262. Jurisdiction over other labor disputes. - The Voluntary Arbitrator or panel of Voluntary Arbitrators, upon agreement of the
parties, shall also hear and decide all other labor disputes including unfair labor practices and bargaining deadlocks.
With the amendments introduced by RA 6715, it can be gleaned that the Labor Arbiter still retains jurisdiction over ULP
cases. There is, however, a significant change: The unqualified jurisdiction conferred upon the Labor Arbiter prior to the amendment
by RA 6715 has been narrowed down so that violations of a Collective Bargaining Agreement, except those which are gross in
character, shall no longer be treated as unfair labor practice but as grievances under the Collective Bargaining Agreement. It is
further stated that gross violations of Collective Bargaining Agreement shall mean flagrant and/or malicious refusal to comply with
the economic provisions of such agreement. Hence, for a ULP case to be cognizable by the Labor Arbiter, and the NLRC to
exercise its appellate jurisdiction, the allegations in the complaint should show prima facie the concurrence of two things, namely:
(1) gross violation of the CBA; AND (2) the violation pertains to the economic provisions of the CBA.
In several instances prior to the instant case, the Court already made its pronouncement that RA 6715 is in the nature of a
curative statute. As such, we declared that it can be applied retroactively to pending cases. Thus, in Briad Agro Development
Corporation v. Dela Cerna,[13] we held:
Republic Act No. 6715, like its predecessors, Executive Order No. 111 and Article 217, as amended, has retroactive
application. Thus, when this new law divested Regional Directors of the power to hear money claims, the divestment affected
pending litigations. It also affected this particular case. (Note that under par. 6, where the claim does not exceed P5,000.00, regional
directors have jurisdiction).
In Garcia v. Martinez, we categorically held that amendments relative to the jurisdiction of labor arbiters (under
Presidential Decree No. 1367, divesting the labor arbiter of jurisdiction) partake of the nature of curative statutes, thus:
It now appears that at the time this case was decided the lower court had jurisdiction over Velascos complaint although at
the time it was filed said court was not clothed with such jurisdiction. The lack of jurisdiction was cured by the issuance of the
amendatory decree which is in the nature of a curative statute with retrospective application to a pending proceeding, like Civil Case
No. 9657 (See 82 C.J.S. 1004).
Garcia has since been uniformly applied in subsequent cases. Thus, in Calderon v. Court of Appeals, reiterated that PD
No. 1367 [is] curative and retrospective in nature.
The Decision of this case, finally, acknowledged the retrospective characteristics of EOrder No. 111.
 With the Briad ruling in place, the implication is that the qualified jurisdiction of the Labor Arbiter and the NLRC should
have been applied when the ULP complaint was still pending. This means that petitioners should have been required to show in
their complaint the gross nature of the CBA violation, as well as the economic provision violated, without which the complaint would
be dismissible. Herein lies the problem. The Courts appreciation of petitioners cause of action is that, while it would make out a case
for ULP, under present law, however, the same falls short of the special requirements necessary to make it cognizable by the Labor
Arbiter and the NLRC. Unsubstantiated conclusions of bad faith and unjustified refusal to re-employ petitioners, to our mind, do not
constitute gross violation of the CBA for purposes of lodging jurisdiction with the Labor Arbiter and the NLRC. Although evidentiary
matters are not required (and even discouraged) to be alleged in a complaint, still, sufficient details supporting the conclusion of bad
faith and unjust refusal to re-employ petitioners must be indicated. Furthermore, it is even doubtful if the CBA provision on re-
employment fits into the accepted notion of an economic provision of the CBA. Thus, given the foregoing considerations, may the
Briad doctrine be applied to the instant case and cause its dismissal for want of jurisdiction of the Labor Arbiter and the NLRC?
Upon a careful and meticulous study of Briad, the Court holds that the rationale behind it does not apply to the present
case. We adopt instead the more recent case of Erectors, Inc. v. National Labor Relations Commission,[14] where we refused to
give retroactive application to Executive Order No. 797 which created the Philippine Overseas Employment Administration (POEA).
Under said law, POEA was vested with original and exclusive jurisdiction over all cases, including money claims, involving
employer-employee relations arising out of or by virtue of any law or contract involving Filipino workers for overseas
employment,[15] which jurisdiction was originally conferred upon the Labor Arbiter. As in the instant case, the Labor Arbiters
assumption of jurisdiction therein was likewise questioned in view of the subsequent enactment of E.O. 797. In ruling against the
retroactive application of the law, the Court explained its position as follows:
The rule is that jurisdiction over the subject matter is determined by the law in force at the time of the commencement of
the action. On March 31, 1982, at the time private respondent filed his complaint against the petitioner, the prevailing laws were
Presidential Decree No. 1691 and Presidential Decree No. 1391 which vested the Regional Offices of the Ministry of Labor and the
Labor Arbiters with original and exclusive jurisdiction over all cases involving employer-employee relations including money claims
arising out of any law or contracts involving Filipino workers for overseas employment. At the time of the filing of the complaint, the
Labor Arbiter had clear jurisdiction over the same.
E.O. No. 797 did not divest the Labor Arbiters authority to hear and decide the case filed by private respondent prior to its
effectivity. Laws should only be applied prospectively unless the legislative intent to give them retroactive effect is expressly
declared or is necessarily implied from the language used. We fail to perceive in the language of E.O. No. 797 an intention to give it
retroactive effect.
The case of Briad Agro Development Corp. vs. Dela Cerna cited by the petitioner is not applicable to the case at bar. In
Briad, the Court applied the exception rather than the general rule. In this case, Briad Agro Development Corp. and L.M. Camus
Engineering Corp. challenged the jurisdiction of the Regional Director of the Department of Labor and Employment over cases
involving workers money claims, since Article 217 of the Labor Code, the law in force at the time of the filing of the complaint, vested
in the Labor Arbiters exclusive jurisdiction over such cases. The Court dismissed the petition in its Decision dated June 29, 1989. It
ruled that the enactment of E.O. No. 111, amending Article 217 of the Labor Code, cured the Regional Directors lack of jurisdiction
by giving the Labor Arbiter and the Regional Director concurrent jurisdiction over all cases involving money claims. However, on
November 9, 1989, the Court, in a Resolution, reconsidered and set aside its June 29 Decision and referred the case to the Labor
Arbiter for proper proceedings, in view of the promulgation of Republic Act (R.A.) 6715 which divested the Regional Directors of the
power to hear money claims. It bears emphasis that the Court accorded E.O. No. 111 and R.A. 6715 a retroactive application
because as curative statutes, they fall under the exceptions to the rule on prospectivity of laws.
E.O. No. 111, amended Article 217 of the Labor Code to widen the workers access to the government for redress of
grievances by giving the Regional Directors and Labor Arbiters concurrent jurisdiction over cases involving money claims. This
amendment, however, created a situation where the jurisdiction of the Regional Directors and the Labor Arbiters overlapped. As a
remedy, R.A. 6715 further amended Article 217 by delineating their respective jurisdictions. Under R.A. 6715, the Regional Director
has exclusive original jurisdiction over cases involving money claims provided: (1) the claim is presented by an employer or person
employed in domestic or household service, or househelper under the Code; (2) the claimant, no longer being employed, does not
seek reinstatement; and (3) the aggregate money claim of the employee or househelper does not exceed P5,000.00. All other cases
within the exclusive and original jurisdiction of the Labor Arbiter. E.O. No. 111 and R.A. 6715 are therefore curative statutes. A
curative statute is enacted to cure defects in a prior law or to validate legal proceedings, instruments or acts of public authorities
which would otherwise be void for want of conformity with certain existing legal requirements.
The law at bar, E.O. No. 797, is not a curative statute. x x x.
We do not find any reason why the Court should not apply the above ruling to the case at bar, notwithstanding the fact
that a different law is involved. Actually, this is not the first time that the Court refused to apply RA 6715 retroactively.[16] Our
previous decisions on whether to give it retroactive application or not depended to a great extent on what amended provisions were
under consideration, as well as the factual circumstances to which they were made to apply. In Briad, the underlying reason for
applying RA 6715 retroactively was the fact that prior to its amendment, Article 217 of the Labor Code, as amended by then
Executive Order No. 111, created a scenario where the Labor Arbiters and the Regional Directors of the Department of Labor and
Employment (DOLE) had overlapping jurisdiction over money claims. This situation was viewed as a defect in the law so that when
RA No. 6715 was passed and delineated the jurisdiction of the Labor Arbiters and Regional Directors, the Court deemed it a
rectification of such defect; hence, the conclusion that it was curative in nature and, therefore, must be applied retroactively.
The same thing cannot be said of the case at bar. Like in Erectors, the instant case presents no defect in the law requiring
a remedy insofar as the jurisdiction of the Labor Arbiter and the Voluntary Arbitrator is concerned. There is here no overlapping of
jurisdiction to speak of because matters involving interpretation and implementation of CBA provisions, as well as interpretation and
enforcement of company personnel policies, have always been determined by the Voluntary Arbitrator even prior to RA 6715.
Similarly, all ULP cases were exclusively within the jurisdiction of the Labor Arbiter. What RA 6715 merely did was to re-apportion
the jurisdiction over ULP cases by conferring exclusive jurisdiction over such ULP cases that do not involve gross violation of a
CBAs economic provision upon the voluntary arbitrator. We do not see anything in the act of re-apportioning jurisdiction curative of
any defect in the law as it stood prior to the enactment of RA 6715. The Court view it as merely a matter of change in policy of the
lawmakers, especially since the 1987 Constitution adheres to the preferential use of voluntary modes of dispute settlement.[17]
This, instead of the inherent defect in the law, must be the rationale that prompted the amendment. Hence, we uphold the
jurisdiction of the Labor Arbiter which attached to this case at the time of its filing on December 5, 1988.
Finally, the contention that it was Atty. Gutierrez who exclusively represented Philtread and that the law firm of Borreta,
Gutierrez and Leogardo had been dissolved, are lame excuses to cast doubt on the propriety of service to Atty. Borreta. It must be
noted that the complaint of petitioners was filed on December 5, 1988. Presumably, the preliminary conferences adverted to by Atty.
Borreta, where Atty. Gutierrez supposedly declared that he was exclusively representing Philtread, transpired at around that date.
The Court, however, is surprised to discover that the record bears a Notice of Change of Address dated March 12, 1990, filed by
Atty. Gutierrez, indicating therein that the counsel for respondent (Philtread) was Borreta, Gutierrez and Leogardo whose address
could be found at the 3rd Floor, Commodore Condominium Arquiza corner M. Guerrero Streets, Ermita, Manila. If, indeed, Atty.
Gutierrez declared during the Labor Arbiters proceedings that he was exclusively representing Philtread, why then did he use the
firms name, and its new address at that, in the aforementioned notice to the NLRC? Moreover, why did Atty. Borreta take fifteen
days to file his Manifestation and inform the NLRC of the improper service of the resolution to him? Why did he not object
immediately to the service by the bailiff? Considering that Atty. Gutierrez and Atty. Borreta were once partners in their law firm, it
behooves Atty. Borreta to have at least advised his former partner of the receipt of the resolution. As a lawyer, his receipt of the
adverse resolution should have alerted him of the adverse consequences which might follow if the same were not acted upon
promptly, as what in fact happened here. As for Atty. Gutierrez, if the law firm of Borreta, Gutierrez, and Leogardo were really
dissolved, it was incumbent upon him not to have used the firms name in the first place, or he should have withdrawn the
appearance of the firm and entered his own appearance, in case the dissolution took place midstream. By failing to exercise either
option, Atty. Gutierrez cannot now blame the NLRC for serving its resolution at the address of the firm still on record.[18] To our
mind, these excuses cannot camouflage the clever ploy of Philtreads counsel to earn a last chance to move for reconsideration.
This Court, it bears emphasizing, is not impressed, but looks incredulously at such superficial moves.

WHEREFORE, the instant petition is hereby GRANTED. The assailed resolutions of the NLRC dated November 18, 1992, and April
7, 1993, are SET ASIDE, while its resolution dated April 15, 1992, is REINSTATED for immediate execution. SO ORDERED.

PIONEER CONCRETE PHILIPPINES, INC., PIONEER PHILIPPINES HOLDINGS v. ANTONIO D. TODARO

G.R. No. 154830 June 8, 2007

Before the Court is a Petition for Review on Certiorari seeking to annul and set aside the Decision1 of the Court of Appeals (CA)
dated October 31, 2000 in CA-G.R. SP No. 54155 and its Resolution2 of August 21, 2002 denying petitioners Motion for
Reconsideration.

The factual and procedural antecedents of the case are as follows:

On January 16, 1998, herein respondent Antonio D. Todaro (Todaro) filed with the Regional Trial Court (RTC) of Makati
City, a complaint for Sum of Money and Damages with Preliminary Attachment against Pioneer International Limited (PIL), Pioneer
Concrete Philippines, Inc. (PCPI), Pioneer Philippines Holdings, Inc. (PPHI), John G. McDonald (McDonald) and Philip J. Klepzig
(Klepzig).
In his complaint, Todaro alleged that PIL is a corporation duly organized and existing under the laws of Australia and is
principally engaged in the ready-mix concrete and concrete aggregates business; PPHI is the company established by PIL to own
and hold the stocks of its operating company in the Philippines; PCPI is the company established by PIL to undertake its business of
ready-mix concrete, concrete aggregates and quarrying operations in the Philippines; McDonald is the Chief Executive of the
Hongkong office of PIL; and, Klepzig is the President and Managing Director of PPHI and PCPI; Todaro has been the managing
director of Betonval Readyconcrete, Inc. (Betonval), a company engaged in pre-mixed concrete and concrete aggregate production;
he resigned from Betonval in February 1996; in May 1996, PIL contacted Todaro and asked him if he was available to join them in
connection with their intention to establish a ready-mix concrete plant and other related operations in the Philippines; Todaro
informed PIL of his availability and interest to join them; subsequently, PIL and Todaro came to an agreement wherein the former
consented to engage the services of the latter as a consultant for two to three months, after which, he would be employed as the
manager of PIL's ready-mix concrete operations should the company decide to invest in the Philippines; subsequently, PIL started
its operations in the Philippines; however, it refused to comply with its undertaking to employ Todaro on a permanent basis.
Instead of filing an Answer, PPHI, PCPI and Klepzig separately moved to dismiss the complaint on the grounds that the
complaint states no cause of action, that the RTC has no jurisdiction over the subject matter of the complaint, as the same is within
the jurisdiction of the NLRC, and that the complaint should be dismissed on the basis of the doctrine of forum non conveniens.
In its Order dated January 4, 1999, the RTC of Makati, Branch 147, denied herein petitioners' respective motions to
dismiss.6 Herein petitioners, as defendants, filed an Urgent Omnibus Motion7 for the reconsideration of the trial court's Order of
January 4, 1999 but the trial court denied it via its Order8 dated June 3, 1999.
On August 3, 1999, herein petitioners filed a Petition for Certiorari with the CA.9 On October 31, 2000, the CA rendered its
presently assailed Decision denying herein petitioners' Petition for Certiorari. Petitioners filed a Motion for Reconsideration but the
CA denied it in its Resolution dated August 21, 2002.
Hence, herein Petition for Review on Certiorari based on the following assignment of errors:
THE COURT OF APPEALS' CONCLUSION THAT THE COMPLAINT STATES A CAUSE OF ACTION AGAINST PETITIONERS IS
WITHOUT ANY LEGAL BASIS. THE ANNEXES TO THE COMPLAINT CLEARLY BELIE THE ALLEGATION OF EXISTENCE OF
AN EMPLOYMENT CONTRACT BETWEEN PRIVATE RESPONDENT AND PETITIONERS.
THE COURT OF APPEALS DECIDED A QUESTION OF SUBSTANCE IN A WAY NOT IN ACCORD WITH LAW AND WITH
APPLICABLE DECISIONS OF THE SUPREME COURT WHEN IT UPHELD THE JURISDICTION OF THE TRIAL COURT
DESPITE THE FACT THAT THE COMPLAINT INDUBITABLY SHOWS THAT IT IS AN ACTION FOR AN ALLEGED BREACH OF
EMPLOYMENT CONTRACT, AND HENCE, FALLS WITHIN THE EXLCUSIVE JURISDICTION OF THE NATIONAL LABOR
RELATIONS COMMISSION.
THE COURT OF APPEALS DISREGARDED AND FAILED TO CONSIDER THE PRINCIPLE OF "FORUM NON CONVENIENS" AS
A VALID GROUND FOR DISMISSING A COMPLAINT.
In their first assigned error, petitioners contend that there was no perfected employment contract between PIL and herein
respondent. Petitioners assert that the annexes to respondent's complaint show that PIL's offer was for respondent to be employed
as the manager only of its pre-mixed concrete operations and not as the company's managing director or CEO. Petitioners argue
that when respondent reiterated his intention to become the manager of PIL's overall business venture in the Philippines, he, in
effect did not accept PIL's offer of employment and instead made a counter-offer, which, however, was not accepted by PIL.
Petitioners also contend that under Article 1318 of the Civil Code, one of the requisites for a contract to be perfected is the consent
of the contracting parties; that under Article 1319 of the same Code, consent is manifested by the meeting of the offer and the
acceptance upon the thing and the cause which are to constitute the contract; that the offer must be certain and the acceptance
absolute; that a qualified acceptance constitutes a counter-offer. Petitioners assert that since PIL did not accept respondent's
counter-offer, there never was any employment contract that was perfected between them.
Petitioners further argue that respondent's claim for damages based on the provisions of Articles 19 and 21 of the Civil
Code is baseless because it was shown that there was no perfected employment contract.
Assuming, for the sake of argument, that PIL may be held liable for breach of employment contract, petitioners contend
that PCPI and PPHI, may not also be held liable because they are juridical entities with personalities which are separate and distinct
from PIL, even if they are subsidiary corporations of the latter. Petitioners also aver that the annexes to respondent's complaint
show that the negotiations on the alleged employment contract took place between respondent and PIL through its office in
Hongkong. In other words, PCPI and PPHI were not privy to the negotiations between PIL and respondent for the possible
employment of the latter; and under Article 1311 of the Civil Code, a contract is not binding upon and cannot be enforced against
one who was not a party to it even if he be aware of such contract and has acted with knowledge thereof.
Petitioners further assert that petitioner Klepzig may not be held liable because he is simply acting in his capacity as
president of PCPI and PPHI and settled is the rule that an officer of a corporation is not personally liable for acts done in the
performance of his duties and within the bounds of the authority conferred on him. Furthermore, petitioners argue that even if PCPI
and PPHI are held liable, respondent still has no cause of action against Klepzig because PCPI and PPHI have personalities which
are separate and distinct from those acting in their behalf, such as Klepzig.
As to their second assigned error, petitioners contend that since herein respondent's claims for actual, moral and
exemplary damages are solely premised on the alleged breach of employment contract, the present case should be considered as
falling within the exclusive jurisdiction of the NLRC.
With respect to the third assigned error, petitioners assert that the principle of forum non conveniens dictates that even
where exercise of jurisidiction is authorized by law, courts may refuse to entertain a case involving a foreign element where the
matter can be better tried and decided elsewhere, either because the main aspects of the case transpired in a foreign jurisdiction or
the material witnesses have their residence there and the plaintiff sought the forum merely to secure procedural advantage or to
annoy or harass the defendant. Petitioners also argue that one of the factors in determining the most convenient forum for conflicts
problem is the power of the court to enforce its decision. Petitioners contend that since the majority of the defendants in the present
case are not residents of the Philippines, they are not subject to compulsory processes of the Philippine court handling the case for
purposes of requiring their attendance during trial. Even assuming that they can be summoned, their appearance would entail
excessive costs. Petitioners further assert that there is no allegation in the complaint from which one can conclude that the evidence
to be presented during the trial can be better obtained in the Philippines. Moreover, the events which led to the present controversy
occurred outside the Philippines. Petitioners conclude that based on the foregoing factual circumstances, the case should be
dismissed under the principle of forum non conveniens.
In his Comment, respondent extensively quoted the assailed CA Decision maintaining that the factual allegations in the
complaint determine whether or not the complaint states a cause of action.
As to the question of jurisdiction, respondent contends that the complaint he filed was not based on a contract of
employment. Rather, it was based on petitioners' unwarranted breach of their contractual obligation to employ respondent. This
breach, respondent argues, gave rise to an action for damages which is cognizable by the regular courts.
Even assuming that there was an employment contract, respondent asserts that for the NLRC to acquire jurisdiction, the
claim for damages must have a reasonable causal connection with the employer-employee relationship of petitioners and
respondent.
Respondent further argues that there is a perfected contract between him and petitioners as they both agreed that the
latter shall employ him to manage and operate their ready-mix concrete operations in the Philippines. Even assuming that there was
no perfected contract, respondent contends that his complaint alleges an alternative cause of action which is based on the
provisions of Articles 19 and 21 of the Civil Code.
As to the applicability of the doctrine of forum non conveniens, respondent avers that the question of whether a suit
should be entertained or dismissed on the basis of the principle of forum non conveniens depends largely upon the facts of the
particular case and is addressed to the sound discretion of the trial judge, who is in the best position to determine whether special
circumstances require that the court desist from assuming jurisdiction over the suit.
The petition lacks merit.
Section 2, Rule 2 of the Rules of Court, as amended, defines a cause of action as the act or omission by which a party
violates a right of another. A cause of action exists if the following elements are present: (1) a right in favor of the plaintiff by
whatever means and under whatever law it arises or is created; (2) an obligation on the part of the named defendant to respect or
not to violate such right; and, (3) an act or omission on the part of such defendant violative of the right of the plaintiff or constituting a
breach of the obligation of the defendant to the plaintiff for which the latter may maintain an action for recovery of damages.
In Hongkong and Shanghai Banking Corporation Limited v. Catalan,12 this Court held:
The elementary test for failure to state a cause of action is whether the complaint alleges facts which if true would justify
the relief demanded. Stated otherwise, may the court render a valid judgment upon the facts alleged therein? The inquiry is into the
sufficiency, not the veracity of the material allegations. If the allegations in the complaint furnish sufficient basis on which it can be
maintained, it should not be dismissed regardless of the defense that may be presented by the defendants.
 Moreover, the complaint does not have to establish or allege facts proving the existence of a cause of action at the outset;
this will have to be done at the trial on the merits of the case.14 To sustain a motion to dismiss for lack of cause of action, the
complaint must show that the claim for relief does not exist, rather than that a claim has been defectively stated, or is ambiguous,
indefinite or uncertain.15
Hence, in resolving whether or not the Complaint in the present case states a cause of action, the trial court correctly
limited itself to examining the sufficiency of the allegations in the Complaint as well as the annexes thereto. It is proscribed from
inquiring into the truth of the allegations in the Complaint or the authenticity of any of the documents referred or attached to the
Complaint, since these are deemed hypothetically admitted by the respondent.
This Court has reviewed respondents allegations in its Complaint. In a nutshell, respondent alleged that herein petitioners
reneged on their contractual obligation to employ him on a permanent basis. This allegation is sufficient to constitute a cause of
action for damages.
The issue as to whether or not there was a perfected contract between petitioners and respondent is a matter which is not
ripe for determination in the present case; rather, this issue must be taken up during trial, considering that its resolution would
necessarily entail an examination of the veracity of the allegations not only of herein respondent as plaintiff but also of petitioners as
defendants.
The Court does not agree with petitioners' contention that they were not privy to the negotiations for respondent's possible
employment. It is evident from paragraphs 24 to 28 of the Complaint16 that, on various occasions, Klepzig conducted negotiations
with respondent regarding the latter's possible employment. In fact, Annex "H"17 of the complaint shows that it was Klepzig who
informed respondent that his company was no longer interested in employing respondent. Hence, based on the allegations in the
Complaint and the annexes attached thereto, respondent has a cause of action against herein petitioners.
As to the question of jurisdiction, this Court has consistently held that where no employer-employee relationship exists
between the parties and no issue is involved which may be resolved by reference to the Labor Code, other labor statutes or any
collective bargaining agreement, it is the Regional Trial Court that has jurisdiction.18 In the present case, no employer-employee
relationship exists between petitioners and respondent. In fact, in his complaint, private respondent is not seeking any relief under
the Labor Code, but seeks payment of damages on account of petitioners' alleged breach of their obligation under their agreement
to employ him. It is settled that an action for breach of contractual obligation is intrinsically a civil dispute.19 In the alternative,
respondent seeks redress on the basis of the provisions of Articles 19 and 21 of the Civil Code. Hence, it is clear that the present
action is within the realm of civil law, and jurisdiction over it belongs to the regular courts.20
With respect to the applicability of the principle of forum non conveniens in the present case, this Court's ruling in Bank of
America NT & SA v. Court of Appeals21 is instructive, to wit:
The doctrine of forum non conveniens, literally meaning the forum is inconvenient, emerged in private international law to
deter the practice of global forum shopping, that is to prevent non-resident litigants from choosing the forum or place wherein to
bring their suit for malicious reasons, such as to secure procedural advantages, to annoy and harass the defendant, to avoid
overcrowded dockets, or to select a more friendly venue. Under this doctrine, a court, in conflicts of law cases, may refuse
impositions on its jurisdiction where it is not the most "convenient" or available forum and the parties are not precluded from seeking
remedies elsewhere.
Whether a suit should be entertained or dismissed on the basis of said doctrine depends largely upon the facts of the
particular case and is addressed to the sound discretion of the trial court. In the case of Communication Materials and Design, Inc.
vs. Court of Appeals, this Court held that "xxx [a] Philippine Court may assume jurisdiction over the case if it chooses to do so;
provided, that the following requisites are met: (1) that the Philippine Court is one to which the parties may conveniently resort to; (2)
that the Philippine Court is in a position to make an intelligent decision as to the law and the facts; and, (3) that the Philippine Court
has or is likely to have power to enforce its decision."
Moreover, this Court enunciated in Philsec. Investment Corporation vs. Court of Appeals, that the doctrine of forum non
conveniens should not be used as a ground for a motion to dismiss because Sec. 1, Rule 16 of the Rules of Court does not include
said doctrine as a ground. This Court further ruled that while it is within the discretion of the trial court to abstain from assuming
jurisdiction on this ground, it should do so only after vital facts are established, to determine whether special circumstances require
the courts desistance; and that the propriety of dismissing a case based on this principle of forum non conveniens requires a factual
determination, hence it is more properly considered a matter of defense.22 (emphasis supplied)
In the present case, the factual circumstances cited by petitioners which would allegedly justify the application of the
doctrine of forum non conveniens are matters of defense, the merits of which should properly be threshed out during trial.

WHEREFORE, the instant petition is DENIED and the assailed Decision and Resolution of the Court of Appeals are AFFIRMED.
Costs against petitioners. SO ORDERED.

JULIUS KAWACHI and GAYLE KAWACHI vs. DOMINIE DEL QUERO and HON. JUDGE MANUEL R. TARO
G.R. No. 163768 March 27, 2007

This is a petition for review on certiorari under Rule 45 of the Rules of Civil Procedure, assailing two resolutions of the Regional Trial
Court (RTC), Branch 226, Quezon City which affirmed the jurisdiction of the Metropolitan Trial Court (MeTC), Branch 42, Quezon
City over private respondents action for damages against petitioner.

The following factual antecedents are matters of record.

In an Affidavit-Complaint dated 14 August 2002, private respondent Dominie Del Quero charged A/J Raymundo
Pawnshop, Inc., Virgilio Kawachi and petitioner Julius Kawachi with illegal dismissal, non-execution of a contract of employment,
violation of the minimum wage law, and non-payment of overtime pay. The complaint was filed before the National Labor Relations
Commission (NLRC).
 The complaint essentially alleged that Virgilio Kawachi hired private respondent as a clerk of the pawnshop and that on
certain occasions, she worked beyond the regular working hours but was not paid the corresponding overtime pay.
The complaint also narrated an incident on 10 August 2002, wherein petitioner Julius Kawachi scolded private respondent
in front of many people about the way she treated the customers of the pawnshop and afterwards terminated private respondents
employment without affording her due process.
On 7 November 2002, private respondent Dominie Del Quero filed an action for damages against petitioners Julius
Kawachi and Gayle Kawachi before the MeTC of Quezon City. The complaint, which was docketed as Civil Case No. 29522, alleged
the following:
2. That the Plaintiff was employed as a clerk in the pawnshop business office of the Defendants otherwise known as the A/J
RAYMUNDO PAWNSHOP, INC. located (sic) and with principal office address at Unit A Virka Bldg. Edsa Corner Roosevelt[,]
Quezon City, from May 27, 2002 to August 10, 2002;
3. That on August 10, 2002 at or about 11:30 AM, the Plaintiff was admonished by the Defendants Julius Kawachi and Gayle
Kawachi who are acting as manager and assistant manager respectively of the pawnshop business and alternately accused her of
having committed an act which she had not done and was scolded in a loud voice in front of many employees and customers in their
offices;
4. That further for no apparent reason the Plaintiff was ordered to get out and leave the pawnshop office and was told to wait for her
salary outside the office when she tried to explain that she had no fault in the complaint of the customer, (sic) [H]owever[,] her
explanation fell on deaf ears;
5. That she was instantly dismissed from her job without due process;
6. That the incident happened in front of many people which caused the Plaintiff to suffer serious embarrassment and shame so that
she could not do anything but cry because of the shameless way by which she was terminated from the service;
The complaint for damages specifically sought the recovery of moral damages, exemplary damages and attorneys fees.
Petitioners moved for the dismissal of the complaint on the grounds of lack of jurisdiction and forum-shopping or splitting
causes of action. At first, the MeTC granted petitioners motion and ordered the dismissal of the complaint for lack of jurisdiction in
an Order dated 2 January 2003.4 Upon private respondents motion, the MeTC reconsidered and set aside the order of dismissal in
an Order dated 3 March 2003.5 It ruled that no causal connection appeared between private respondents cause of action and the
employer-employee relations between the parties. The MeTC also rejected petitioners motion for reconsideration in an Order dated
22 April 2003.6
Thus, petitioners elevated the MeTCs aforesaid two orders to the RTC, Branch 226 of Quezon City, via a Petition for
Certiorari (With Prayer for Temporary Restraining Order and/or Preliminary Injunction). After due hearing, the RTC declined
petitioners prayer for a temporary restraining order. For her part, private respondent filed a Motion to Dismiss Petition.
On 20 October 2003, the RTC issued the assailed Resolution, upholding the jurisdiction of the MeTC over private
respondents complaint for damages.
The RTC held that private respondents action for damages was based on the alleged tortious acts committed by her
employers and did not seek any relief under the Labor Code. The RTC cited the pronouncement in Medina, et al. v. Hon. Castro-
Bartolome, etc., et al.8 where the Court held that the employees action for damages based on the slanderous remarks uttered by
the employer was within the regular courts jurisdiction since the complaint did not allege any unfair labor practice on the part of the
employer.
On 29 March 2004, the RTC denied petitioners motion for reconsideration.9 Hence, the instant petition for review on
certiorari, raising the sole issue of jurisdiction over private respondents complaint for damages.
Petitioners argue that the NLRC has jurisdiction over the action for damages because the alleged injury is work-related.
They also contend that private respondent should not be allowed to split her causes of action by filing the action for damages
separately from the labor case.
Private respondent maintains that there is no causal connection between her cause of action and the employer-employee
relations of the parties.
The petition is meritorious.
The jurisdictional controversy of the sort presented in this case has long been settled by this Court.
Article 217(a) of the Labor Code, as amended, clearly bestows upon the Labor Arbiter original and exclusive jurisdiction over claims
for damages arising from employer-employee relations in other words, the Labor Arbiter has jurisdiction to award not only the
reliefs provided by labor laws, but also damages governed by the Civil Code.10
In the 1999 case of San Miguel Corporation v. Etcuban,11 the Court noted what was then the current trend, and still is, to
refer worker-employer controversies to labor courts, unless unmistakably provided by the law to be otherwise. Because of the trend,
the Court noted further, jurisprudence has developed the "reasonable causal connection rule." Under this rule, if there is a
reasonable causal connection between the claim asserted and the employer-employee relations, then the case is within the
jurisdiction of our labor courts. In the absence of such nexus, it is the regular courts that have jurisdiction.
In San Miguel Corporation,13 the Court upheld the labor arbiters jurisdiction over the employees separate action for
damages, which also sought the nullification of the so-called "contract of termination" and noted that the allegations in the complaint
were so carefully formulated as to avoid a semblance of employer-employee relations.
In said case, the employees of San Miguel Corporation (SMC) availed of the "Retrenchment to Prevent Loss Program."
After their inclusion in the retrenchment program, the employees were given their termination letters and separation pay. In return,
the employees executed "receipt and release" documents in favor of the company. Subsequently, the employees learned that the
company was never in financial distress and was engaged in hiring new employees. Thus, they filed a complaint before the NLRC
for the declaration of nullity of the retrenchment program and prayed for reinstatement, backwages and damages. After the labor
arbiter dismissed the complaint, the employees filed an action for damages before the RTC, alleging the deception employed upon
them by SMC which led to their separation from the company. They sought the declaration of nullity of their so-called collective
"contract of termination" and the recovery of actual and compensatory damages, moral damages, exemplary damages, and
attorneys fees.
The Court held that the employees claim for damages was intertwined with their having been separated from their
employment without just cause and, consequently, had a reasonable causal connection with their employer-employee relations with
petitioner. The Court explained in this manner:
x x x First, their claim for damages is grounded on their having been deceived into serving their employment due to SMCs
concocted financial distress and fraudulent retrenchment programa clear case of illegal dismissal. Second, a comparison of
respondents complaint for the declaration of nullity of the retrenchment program before the labor arbiter and the complaint for the
declaration of nullity of their "contract of termination" before the RTC reveals that the allegations and prayer of the former are almost
identical with those of the latter except that the prayer for reinstatement was no longer included and the claim for backwages and
other benefits was replaced with a claim for actual damages. These are telltale signs that respondents claim for damages is
intertwined with their having been separated from their employment without just cause and, consequently, has a reasonable causal
connection with their employer-employee relations with SMC. Accordingly, it cannot be denied that respondents claim falls under
the jurisdiction of the labor arbiter as provided in paragraph 4 of Article 217.
The "reasonable causal connection rule" emerged in the 1987 case of Primero v. Intermediate Appellate Court,15 where
the Court recognized the jurisdiction of the labor arbiters over claims for damages in connection with termination of employment,
thus:
It is clear that the question of the legality of the act of dismissal is intimately related to the issue of the legality of the
manner by which that act of dismissal was performed. But while the Labor Code treats of the nature of, and the remedy available as
regards the first the employees separation from employment it does not at all deal with the second the manner of that
separation which is governed exclusively by the Civil Code. In addressing the first issue, the Labor Arbiter applies the Labor Code;
in addressing the second, the Civil Code. And this appears to be the plain and patent intendment of the law. For apart from the
reliefs expressly set out in the Labor Code flowing from illegal dismissal from employment, no other damages may be awarded to an
illegally dismissed employee other than those specified by the Civil Code. Hence, the fact that the issueof whether or not moral or
other damages were suffered by an employee and in the affirmative, the amount that should properly be awarded to him in the
circumstancesis determined under the provisions of the Civil Code and not the Labor Code, obviously was not meant to create a
cause of action independent of that for illegal dismissal and thus place the matter beyond the Labor Arbiters jurisdiction.
In the instant case, the allegations in private respondents complaint for damages show that her injury was the offshoot of
petitioners immediate harsh reaction as her administrative superiors to the supposedly sloppy manner by which she had discharged
her duties.
Petitioners reaction culminated in private respondents dismissal from work in the very same incident. The incident on 10
August 2002 alleged in the complaint for damages was similarly narrated in private respondents Affidavit-Complaint supporting her
action for illegal dismissal before the NLRC. Clearly, the alleged injury is directly related to the employer-employee relations of the
parties.
Where the employer-employee relationship is merely incidental and the cause of action proceeds from a different source
of obligation, the Court has not hesitated to uphold the jurisdiction of the regular courts. Where the damages claimed for were based
on tort, malicious prosecution, or breach of contract, as when the claimant seeks to recover a debt from a former employee or seeks
liquidated damages in the enforcement of a prior employment contract, the jurisdiction of regular courts was upheld. The scenario
that obtains in this case is obviously different. The allegations in private respondents complaint unmistakably relate to the manner of
her alleged illegal dismissal.
For a single cause of action, the dismissed employee cannot be allowed to sue in two forums: one, before the labor arbiter
for reinstatement and recovery of back wages or for separation pay, upon the theory that the dismissal was illegal; and two, before a
court of justice for recovery of moral and other damages, upon the theory that the manner of dismissal was unduly injurious or
tortious. Suing in the manner described is known as "splitting a cause of action," a practice engendering multiplicity of actions. It is
considered procedurally unsound and obnoxious to the orderly administration of justice.
In the instant case, the NLRC has jurisdiction over private respondents complaint for illegal dismissal and damages
arising therefrom. She cannot be allowed to file a separate or independent civil action for damages where the alleged injury has a
reasonable connection to her termination from employment. Consequently, the action for damages filed before the MeTC must be
dismissed.

WHEREFORE, the petition for review on certiorari is GRANTED. The two Resolutions dated 20 October 2003 and 29 March 2004 of
the Regional Trial Court, Branch 226, Quezon City are REVERSED and SET ASIDE. Costs against private respondent. SO
ORDERED.

RAMON C. LOZON vs. NLRC and PHILIPPINE AIRLINES, INC. G.R. No. 107660 January 2, 1995

Petitioner Ramon C. Lozon, a certified public accountant, was a Senior Vice-President-Finance of Private respondent Philippine
Airlines, Inc. ("PAL"), when his services were terminated on 19 December 1990 in the aftermath of the much-publicized "two-billion-
peso PALscam." Lozon started to work for the national carrier on 23 August 1967 and, for twenty-three years, steadily climbed the
corporate ladder until he became one of its vice-presidents.
His termination from the service was spawned by a letter sent some time in June 1990 by a member of PAL's board of
directors, then Solicitor General Francisco Chavez, to PAL President Dante Santos. Chavez demanded an investigation of twenty-
three irregularities allegedly committed by twenty-two high-ranking PAL officials. Among these officials was petitioner; he had been
administratively charged by Romeo David, Senior Vice-President for Corporate Services and Logistics Group, for his (Lozon)
purported involvement in four cases, labeled "Goldair," "Autographics," "Big Bang of 1983" and "Middle East." 2 Pending the
investigation of these cases by a panel 3 constituted by then President Corazon C. Aquino, petitioner was placed under preventive
suspension.
In the organizational meeting of the PAL board of directors on 19 October 1990 which occasion Feliciano R. Belmonte,
Jr., was elected chairman of the board while Dante G. Santos was designated president and chief executive officer, 4 the board
deferred action on the election or appointment of some senior officers of the company who, like petitioner, had been charged with
various offenses.
 On 18 January 1991, the PAL board of directors issued two resolutions relative to the investigation conducted by the
presidential investigating panel in the "Autographics" and "Goldair" cases. In "Autographics," petitioner was charged, along with
three other officials, 5 with "gross inefficiency, negligence, imprudence, mismanagement, dereliction of duty, failure to observe
and/or implement administrative and executive policies" and with the "concealment, or cover-up and prevention of the seasonal
discovery of the anomalous transactions" had with Autographics, Inc., resulting in, among other things, an overpayment by PAL to
Autographics in the amount of around P12 million. Petitioner was forthwith considered "resigned from the service . . . for loss of
confidence and for acts inimical to the interests of the company." 6 A similar conclusion was arrived at by the PAL board of directors
with regard to petitioner in the "Goldair" case where he, together with six other PAL officials, 7 were charged with like "offenses" that
had caused PAL's defraudation by Goldair, PAL's general sales agent in Australia, of 14.6 million Australian dollars.
Aggrieved by the action taken by the PAL board of directors, petitioner, on 26 June 1991 filed with the National Labor
Relations Commission ("NLRC") in Manila a complaint (docketed NLRC-NCR Case No. 00-06-03684-91) for illegal dismissal and for
reinstatement, with backwages and "fringe benefits such as Vacation leave, Sick leave, 13th month pay, Christmas Bonus, Medical
Expenses, car expenses, trip pass entitlement, etc., plus moral damages of P40 Million, exemplary damages of P10 Million and
reasonable attorney's fees."
On 09 August 1991, 10 the PAL board of directors also held petitioner as "resigned from the company" for loss of
confidence and for acts inimical to the interests of the company in the "Big Bang of 1983" case for his alleged role in the
irregularities that had precipitated the write-down (write-off) of assets amounting to P553 million from the books and financial
statements of PAL. 11 In the "Middle East" case, the PAL board of directors, on the anomalous administration of commercial
marketing arrangements in which PAL had lost an estimated P120 million.
PAL defended the validity of petitioner's dismissal before the Labor Arbiter. It questioned at the same time the jurisdiction
of the NLRC, positing the theory that since the investigating panel was constituted by then President Aquino, said panel, along with
the PAL board of directors, became "a parallel arbitration unit" which, in legal contemplation, should be deemed to have substituted
for the NLRC. Thus, PAL averred, petitioner's recourse should have been to appeal his case to the Office of the President. 13 On
the other hand, petitioner questioned the authority of the panel to conduct the investigation, asseverating that the charges leveled
against him were purely administrative in nature that could have well been ventilated under the grievance procedure outline in PAL's
Code of Discipline.
On 17 March 1992, Labor Arbiter Jose G. de Vera rendered a decision ruling for petitioner. 14 The decretal portion of the
decision read:
WHEREFORE, all the foregoing premises being considered, judgment is hereby rendered ordering the respondent Philippine
Airlines, Inc., to reinstate the complainant to his former position with all the rights, privileges, and benefits appertaining thereto plus
backwages, which as of March 15, 1992 already amounted to P2,632,500.00, exclusive of fringes. Further, the respondent company
is ordered to pay complainant as follows: P5,000.00 as moral damages; P1,000,000.00 as exemplary damages, and attorney's fees
equivalent to ten percent (10%) of all of the foregoing awards. SO ORDERED.

A day after promulgating the decision, the labor arbiter issued a writ of execution. PAL filed a motion to quash the writ
petitioner promptly opposed. After the labor arbiter had denied the motion to quash, PAL filed a petition for injunction with the NLRC
(docketed NLRC IC Case No. 00261-92). No decision was rendered by NLRC on this petition.
Meanwhile, PAL appealed the decision of the labor arbiter by filing a memorandum on appeal, 17 assailing, once again,
the jurisdiction of the NLRC but this time on the ground that the issue pertaining to the removal or dismissal of petitioner, a corporate
officer, was within the exclusive and original jurisdiction of the Securities and Exchange Commission ("SEC"). Petitioner interposed
a partial appeal praying for an increase in the amount of moral and exemplary damages awarded by the labor arbiter.
On 24 July 1992, the NLRC rendered a decision (in NLRC NCR Case No. 00-06-03684-91) 19 dismissing the case on the
strength of PAL's new argument on the issue of jurisdiction. 20 Petitioner's motion for reconsideration was denied by the NLRC.
The instant petition for certiorari filed with this Court raises these issues: (a) Whether or not the NLRC has jurisdiction
over the illegal dismissal case, and (b) on the assumption that the SEC has that jurisdiction, whether or not private respondent is
estopped from raising NLRC's lack of jurisdiction over the controversy.
We sustain NLRC's dismissal of the case.
Presidential Decree No. 902-A confers on the SEC original and exclusive jurisdiction to hear and decide controversies and cases
involving
a. Intra-corporate and partnership relations between or among the corporation, officers and stockholders and partners,
including their elections or appointments;
b. State and corporate affairs in relation to the legal existence of corporations, partnerships and associations or to their
franchises; and
c. Investors and corporate affairs, particularly in respect of devices and schemes, such as fraudulent practices, employed by
directors, officers, business associates, and/or other stockholders, partners, or members of registered firms; as well as
d. Petitions for suspension of payments filed by corporations, partnerships or associations possessing sufficient property to
cover all their debts but which foresee the impossibility of meeting them when they respectively fall due, or possessing insufficient
assets to cover their liabilities and said entities are upon petition or motu propio, placed under the management of a Rehabilitation
Receiver or Management Committee.
Specifically, in intra-corporate matters concerning the election or appointment of officers of a corporation, the decree
provides:
Sec. 5. In addition to the regulatory and adjudicative functions of the Securities and Exchange Commission over corporations,
partnerships and other forms of association registered with it as expressly granted under existing laws and decrees, it shall have
original and exclusive jurisdiction to hear and decide cases involving:
(c) Controversies in the election or appointments of directors, trustees, officers or managers of such corporations,
partnerships or association.
Petitioner himself admits that vice presidents are senior members of
management, 21 whose designations are no longer than just by means of ordinary promotions. In his own case, petitioner has been
elected to the position of Senior Vice-President Finance Group by PAL's board of directors at its organizational meeting held on
20 October 1989 pursuant to the By-laws, 22 under which, he would serve for a term of one year and until his successor shall have
been elected and qualified. 23 Petitioner, for reasons already mentioned, did not get to be re-elected thereafter. 24
In Fortune Cement Corporation v. NLRC, 25 the Court has quoted with approval the Solicitor General's contention that "a
corporate officer's dismissal is always a corporate act and/or intra-corporate controversy and that nature is not altered by the reason
or wisdom which the Board of Directors may have in taking such action." Not the least insignificant in the case at bench is that
petitioner's dismissal is intertwined with still another intra-corporate affair, earlier so ascribed as the "two-billion-peso PALscam," that
inevitably places the case under the specialized competence of the SEC and well beyond the ambit of a labor arbiter's normal
jurisdiction under the general provisions of Article 217 of the Labor Code.
Petitioner contends that the jurisdiction of the SEC excludes its cognizance over claims for vacation and sick leaves, 13th
month pay, Christmas bonus, medical expenses, car expenses, and other benefits, as well as for moral damages and attorney's
fees. 27 Dy v. NLRC 28 categorically states that the question of remuneration being asserted by an officer of a corporation is "not a
simple labor problem but a matter that comes within the area of corporate affairs and management, and is in fact, a corporate
controversy in contemplation of the Corporation Code." With regard to the matter of damages, in Andaya v. Abadia 29 where, in a
complaint filed before the Regional Trial Court, the president and general manager of the Armed Forces and Police Savings and
Loan Association ("AFPSLAI") questioned his ouster from the stewardship of the association, this Court, in dismissing the petition
assailing the order of the trial court which ruled that SEC, not the regular courts, had jurisdiction over the case, has said:
The allegations against herein respondents in the amended complaint unquestionably reveal intra-corporate controversies
cleverly conceals, although unsuccessfully, by use of civil law terms and phrases. The amended complaint impleads herein
respondents who, in their capacity as directors of AFPSLAI, allegedly convened an illegal meeting and voted for the reorganization
of management resulting in petitioner's ouster as corporate officer. While it may be said that the same corporate acts also give rise
to civil liability for damages, it does not follow that the case is necessarily taken out of the jurisdiction of the SEC as it may award
damages which can be considered consequential in the exercise of its adjudicative powers. Besides, incidental issues that properly
fall within the authority of a tribunal may also be considered by it to avoid multiplicity of actions. Consequently, in intra-corporate
matters such as those affecting the corporation, its directors, trustees, officers, shareholders, the issue of consequential damages
may just as well be resolved and adjudicated by the SEC. (Emphasis supplied.)
We here reiterate the above holdings for, indeed, controversies within the purview of Section 5 of P.D. No. 902-A must not
be so constricted as to deny to the SEC the sound exercise of its expertise and competence in resolving all closely related aspects
of such corporate disputes.
Petitioner maintains that PAL is estopped, nevertheless, from questioning the jurisdiction of the NLRC considering that
PAL did not hold the dispute to be intra-corporate until after the case had already been brought on appeal to the NLRC.
In the first place, there would not be much basis to indicate that PAL was "effectively barred by estoppel." 30 As early as
the initial stages of the controversy PAL had already raised the issue of jurisdiction albeit mistakenly at first on the ground that
petitioner's recourse was an appeal to the Office of the President. The error could not alter the fact that PAL did question even then
the jurisdiction of both the labor arbiter and the NLRC.
It has long been the established rule, moreover, that jurisdiction over a subject matter is conferred by law, 31 and the
question of lack of jurisdiction may be raised at anytime even on appeal. 32 In the recent case of La Naval Drug Corporation vs.
Court of Appeals, G.R. No. 103200, 31 August 1994, this Court said:
Lack of jurisdiction over the subject matter of the suit is yet another matter. Whenever it appears that the court has no
jurisdiction over the subject matter, the action shall be dismissed (Section 2, Rule 9, Rules of Court). This defense may be interpose
at any time, during appeal (Roxas vs. Rafferty, 37 Phil. 957) or even after final judgment (Cruzcosa vs. Judge Concepcion, et al.,
101 Phil. 146). Such is understandable, as this kind of jurisdiction is conferred by law and not within the courts, let alone the parties,
to themselves determine or conveniently set aside. In People vs. Casiano (111 Phil. 73, 93-94), this Court, on the issue of estoppel,
held:
"The operation of the principle of estoppel on the question of jurisdiction seemingly depends upon whether the lower court
actually had jurisdiction or not. If it had no jurisdiction, but the case was tried and decided upon the theory that it had jurisdiction, the
parties are not barred, on appeal, from assailing such jurisdiction, for the same "must exist as a matter of law, and may not be
conferred by consent of the parties or by estoppel" (5 C.J.S., 861-863). However, if the lower court had jurisdiction, and the case
was heard and decided upon a given theory, such, for instance, as that the court had no jurisdiction, the party who induced it to
adopt such theory will not be permitted, on appeal, to assume a inconsistent position that the lower court had jurisdiction. Here,
the principle of estoppel applies. The rule that jurisdiction is conferred by law, and does not depend upon the will of the parties, has
no bearing thereon."
Petitioner points to "PAL's scandalous duplicity" in questioning the jurisdiction of the NLRC in this particular controversy
while upholding it (NLRC's jurisdiction) in "Robin Dui v. Philippine Airlines" (Case No. 00-4-20267) pending before the Commission.
We need not delve into whether or not PAL's conduct does indeed smack of opportunities; suffice it to say that Robin Dui is entirely
an independent and separate case and, more than that, it is not before us in this instance.

WHEREFORE, the herein petition for certiorari is DISMISSED, and the decision appealed from is AFFIRMED, without prejudice to
petitioner's seeking, if circumstances permit, a recourse in the proper forum. No costs.
SO ORDERED.

TERESITA MONTOYA vs. TERESITA ESCAYO AND NLRC G.R. No. 82211-12 March 21, 1989

This petition for certiorari seeks the annullment and setting aside of the resolution 1 9dated August 20, 1987 of the
National Labor Relations Commission (NLRC), Third Division, which reversed and set aside the order dated September 27, 1985 of
Labor Arbiter Ethelwoldo R. Ovejera of the NLRC's Regional Arbitration Branch No. VI, Bacolod City, dismissing the complaint filed
by the private respondents against the petitioner. This petition raises a singular issue, i.e., the applicability of Presidential Decree
(P.D.) No. 1508, more commonly known as the Katarungang Pambarangay Law, to labor disputes.

The chronology of events leading to the present controversy is as follows:

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

WHEREFORE, the petition is DISMISSED. Costs against the petitioner. SO ORDERED.

FEDERICO S. ROBOSA v. NLRC
G.R. No. 176085 February 8, 2012

We resolve the petition for review on certiorari[1] seeking the reversal of the resolutions of the Court of Appeals (CA) rendered on
February 24, 2006[2] and December 14, 2006[3] in CA-G.R. SP No. 80436.

Factual Background
Federico S. Robosa, Rolando E. Pandy, Noel D. Roxas, Alexander Angeles, Veronica Gutierrez, Fernando Embat and
Nanette H. Pinto (petitioners) were rank-and-file employees of respondent Chemo-Technische Manufacturing, Inc. (CTMI), the
manufacturer and distributor of Wella products. They were officers and members of the CTMI Employees Union-DFA (union).
Respondent Procter and Gamble Philippines, Inc. (P & GPI) acquired all the interests, franchises and goodwill of CTMI during the
pendency of the dispute.
Sometime in the first semester of 1991, the union filed a petition for certification election at CTMI. On June 10, 1991, Med-
Arbiter Rasidali Abdullah of the Office of the Department of Labor and Employment in the National Capital Region (DOLE-NCR)
granted the petition. The DOLE-NCR conducted a consent election on July 5, 1991, but the union failed to garner the votes required
to be certified as the exclusive bargaining agent of the company.
On July 15, 1991, CTMI, through its President and General Manager Franklin R. de Luzuriaga, issued a memorandum[4]
announcing that effective that day: (1) all sales territories were demobilized; (2) all vehicles assigned to sales representatives should
be returned to the company and would be sold; (3) sales representatives would continue to service their customers through public
transportation and would be given transportation allowance; (4) deliveries of customers orders would be undertaken by the
warehouses; and (5) revolving funds for ex-truck selling held by sales representatives should be surrendered to the cashier (for
Metro Manila) or to the supervisor (for Visayas and Mindanao), and truck stocks should immediately be surrendered to the
warehouse.
On the same day, CTMI issued another memorandum[5] informing the companys sales representatives and sales drivers
of the new system in the Salon Business Groups selling operations.
The union asked for the withdrawal and deferment of CTMIs directives, branding them as union busting acts constituting
unfair labor practice. CTMI ignored the request. Instead, it issued on July 23, 1991 a notice of termination of employment to the
sales drivers, due to the abolition of the sales driver positions.[6]
On August 1, 1991, the union and its affected members filed a complaint for illegal dismissal and unfair labor practice,
with a claim for damages, against CTMI, De Luzuriaga and other CTMI officers. The union also moved for the issuance of a writ of
preliminary injunction and/or temporary restraining order (TRO).

The Compulsory Arbitration Proceedings

 The labor arbiter handling the case denied the unions motion for a stay order on the ground that the issues raised by the
petitioners can best be ventilated during the trial on the merits of the case. This prompted the union to file on August 16, 1991 with
the National Labor Relations Commission (NLRC), a petition for the issuance of a preliminary mandatory injunction and/or TRO.
On August 23, 1991, the NLRC issued a TRO.[8] It directed CTMI, De Luzuriaga and other company executives to (1)
cease and desist from dismissing any member of the union and from implementing the July 23, 1991 memorandum terminating the
services of the sales drivers, and to immediately reinstate them if the dismissals have been effected; (2) cease and desist from
implementing the July 15, 1991 memorandum grounding the sales personnel; and (3) restore the status quo ante prior to the
formation of the union and the conduct of the consent election.
Allegedly, the respondents did not comply with the NLRCs August 23, 1991 resolution. They instead moved to dissolve
the TRO and opposed the unions petition for preliminary injunction.
On September 12, 1991, the NLRC upgraded the TRO to a writ of preliminary injunction.[9] The respondents moved for
reconsideration. The union opposed the motion and urgently moved to cite the responsible CTMI officers in contempt of court.
On August 25, 1993, the NLRC denied the respondents motion for reconsideration and directed Labor Arbiter Cristeta
Tamayo to hear the motion for contempt. In reaction, the respondents questioned the NLRC orders before this Court through a
petition for certiorari and prohibition with preliminary injunction. The Court dismissed the petition for being premature. It also denied
the respondents motion for reconsideration, as well as a second motion for reconsideration, with finality. This notwithstanding, the
respondents allegedly refused to obey the NLRC directives. The respondents defiance, according to the petitioners, resulted in the
loss of their employment.
Meanwhile, the NLRC heard the contempt charge. On October 31, 2000, it issued a resolution[10] dismissing the charge.
It ordered the labor arbiter to proceed hearing the main case on the merits.
The petitioners moved for, but failed to secure, a reconsideration from the NLRC on the dismissal of the contempt charge.
They then sought relief from the CA by way of a petition for certiorari under Rule 65.

The CA Decision
The CA saw no need to dwell on the issues raised by the petitioners as the question it deemed appropriate for resolution
is whether the NLRCs dismissal of the contempt charge against the respondents may be the proper subject of an appeal. It opined
that the dismissal is not subject to review by an appellate court. Accordingly, the CA Special Sixth Division dismissed the petition in
its resolution of February 24, 2006.
The CA considered the prayer of P & GPI to be dropped as party-respondent moot and academic.
The petitioners sought a reconsideration, but the CA denied the motion in its resolution of December 14, 2006.[12] Hence,
the present Rule 45 petition.

The Petition
The petitioners charge the CA with grave abuse of discretion in upholding the NLRC resolutions, despite the reversible
errors the labor tribunal committed in dismissing the contempt charge against the respondents. They contend that the respondents
were guilty of contempt for their failure (1) to observe strictly the NLRC status quo order; and (2) to reinstate the dismissed
petitioners and to pay them their lost wages, sales commissions, per diems, allowances and other employee benefits. They also
claim that the NLRC, in effect, overturned this Courts affirmation of the TRO and of the preliminary injunction.
The petitioners assail the CAs reliance on the Courts ruling that a contempt charge partakes of a criminal proceeding
where an acquittal is not subject to appeal. They argue that the facts obtaining in the present case are different from the facts of the
cases where the Courts ruling was made. They further argue that by the nature of this case, the Labor Code and its implementing
rules and regulations should apply, but in any event, the appellate court is not prevented from reviewing the factual basis of the
acquittal of the respondents from the contempt charges.
The petitioners lament that the NLRC, in issuing the challenged resolutions, had unconstitutionally applied the law. They
maintain that not only did the NLRC unconscionably delay the disposition of the case for more than twelve (12) years; it also
rendered an unjust, unkind and dubious judgment. They bewail that [f]or some strange reason, the respondent NLRC made a queer
[somersault] from its earlier rulings which favor the petitioners.[13]

The Case for the Respondents

Franklin K. De Luzuriaga
De Luzuriaga filed a Comment[14] on May 17, 2007 and a Memorandum on December 4, 2008,[15] praying for a
dismissal of the petition.
De Luzuriaga argues that the CA committed no error when it dismissed the petition for certiorari since the dismissal of the
contempt charge against the respondents amounted to an acquittal where review by an appellate court will not lie. In any event, he
submits, the respondents were charged with indirect contempt which may be initiated only in the appropriate regional trial court,
pursuant to Section 12, Rule 71 of the Rules of Court. He posits that the NLRC has no jurisdiction over an indirect contempt charge.
He thus argues that the petitioners improperly brought the contempt charge before the NLRC.
Additionally, De Luzuriaga points out that the petition raises only questions of facts which, procedurally, is not allowed in a
petition for review on certiorari. Be this as it may, he submits that pursuant to Philippine Long Distance Telephone Company, Inc. v.
Tiamson,[16] factual findings of labor officials, who are deemed to have acquired expertise in matters within their respective
jurisdictions, are generally accorded not only respect but even finality. He stresses that the CA committed no reversible error in not
reviewing the NLRCs factual findings.
Further, De Luzuriaga contends that the petitioners verification and certification against forum shopping is defective
because it was only Robosa and Pandy who executed the document. There was no indication that they were authorized by Roxas,
Angeles, Gutierrez, Embat and Pinto to execute the required verification and certification.
Lastly, De Luzuriaga maintains that the petitioners are guilty of forum shopping as the reliefs prayed for in the petition
before the CA, as well as in the present petition, are the same reliefs that the petitioners may be entitled to in the complaint before
the labor arbiter.

P & GPI
 As it did with the CA when it was asked to comment on the petitioners motion for reconsideration,[18] P & GPI prays in its
Comment[19] and Memorandum[20] that it be dropped as a party-respondent, and that it be excused from further participating in the
proceedings. It argues that inasmuch as the NLRC resolved the contempt charge on the merits, an appeal from its dismissal through
a petition for certiorari is barred. Especially in its case, the dismissal of the petition for certiorari is correct because it was never
made a party to the contempt proceedings and, thus, it was never afforded the opportunity to be heard. It adds that it is an entity
separate from CTMI. It submits that it cannot be made to assume any or all of CTMIs liabilities, absent an agreement to that effect
but even if it may be liable, the present proceedings are not the proper venue to determine its liability, if any.
On December 16, 2008, the petitioners filed a Memorandum[21] raising essentially the same issues and arguments laid
down in the petition.

Issues
The parties submissions raise the following issues:
(1) whether the NLRC has contempt powers;
(2) whether the dismissal of a contempt charge is appealable; and
(3) whether the NLRC committed grave abuse of discretion in dismissing the contempt charge against the respondents.

On the first issue, we stress that under Article 218[22] of the Labor Code, the NLRC (and the labor arbiters) may hold any
offending party in contempt, directly or indirectly, and impose appropriate penalties in accordance with law. The penalty for direct
contempt consists of either imprisonment or fine, the degree or amount depends on whether the contempt is against the
Commission or the labor arbiter. The Labor Code, however, requires the labor arbiter or the Commission to deal with indirect
contempt in the manner prescribed under Rule 71 of the Rules of Court.
Rule 71 of the Rules of Court does not require the labor arbiter or the NLRC to initiate indirect contempt proceedings
before the trial court. This mode is to be observed only when there is no law granting them contempt powers.[24] As is clear under
Article 218(d) of the Labor Code, the labor arbiter or the Commission is empowered or has jurisdiction to hold the offending party or
parties in direct or indirect contempt. The petitioners, therefore, have not improperly brought the indirect contempt charges against
the respondents before the NLRC.
The second issue pertains to the nature of contempt proceedings, especially with respect to the remedy available to the
party adjudged to have committed indirect contempt or has been absolved of indirect contempt charges. In this regard, Section 11,
Rule 71 of the Rules of Court states that the judgment or final order of a court in a case of indirect contempt may be appealed to the
proper court as in a criminal case. This is not the point at issue, however, in this petition. It is rather the question of whether the
dismissal of a contempt charge, as in the present case, is appealable. The CA held that the NLRCs dismissal of the contempt
charges against the respondents amounts to an acquittal in a criminal case and is not subject to appeal.
The CA ruling is grounded on prevailing jurisprudence.
In Yasay, Jr. v. Recto,[25] the Court declared:
A distinction is made between a civil and [a] criminal contempt. Civil contempt is the failure to do something ordered by a court to be
done for the benefit of a party. A criminal contempt is any conduct directed against the authority or dignity of the court.
The Court further explained in Remman Enterprises, Inc. v. Court of Appeals[27] and People v. Godoy[28] the character
of contempt proceedings, thus
The real character of the proceedings in contempt cases is to be determined by the relief sought or by the dominant
purpose. The proceedings are to be regarded as criminal when the purpose is primarily punishment and civil when the purpose is
primarily compensatory or remedial.
Still further, the Court held in Santiago v. Anunciacion, Jr.[29] that:
But whether the first or the second, contempt is still a criminal proceeding in which acquittal, for instance, is a bar to a
second prosecution. The distinction is for the purpose only of determining the character of punishment to be administered.
In the earlier case of The Insurance Commissioner v. Globe Assurance Co., Inc.,[30] the Court dismissed the appeal from
the ruling of the lower court denying a petition to punish the respondent therein from contempt for lack of evidence. The Court said
in that case:
It is not the sole reason for dismissing this appeal. In the leading case of In re Mison, Jr. v. Subido, it was stressed by
Justice J.B.L. Reyes as ponente, that the contempt proceeding far from being a civil action is of a criminal nature and of summary
character in which the court exercises but limited jurisdiction. It was then explicitly held: Hence, as in criminal proceedings, an
appeal would not lie from the order of dismissal of, or an exoneration from, a charge of contempt of court.
Is the NLRCs dismissal of the contempt charges against the respondents beyond review by this Court? On this important
question, we note that the petitioners, in assailing the CA main decision, claim that the appellate court committed grave abuse of
discretion in not ruling on the dismissal by the NLRC of the contempt charges.[31] They also charge the NLRC of having gravely
abused its discretion and having committed reversible errors in:
(1) setting aside its earlier resolutions and orders, including the writ of preliminary injunction it issued, with its dismissal of the
petition to cite the respondents in contempt of court;
(2) overturning this Courts resolutions upholding the TRO and the writ of preliminary injunction;
(3) failing to impose administrative fines upon the respondents for violation of the TRO and the writ of preliminary injunction; and
(4) failing to order the reinstatement of the dismissed petitioners and the payment of their accrued wages and other benefits.
In view of the grave abuse of discretion allegation in this case, we deem it necessary to look into the NLRCs dismissal of
the contempt charges against the respondents. As the charges were rooted into the respondents alleged non-compliance with the
NLRC directives contained in the TRO[32] and the writ of preliminary injunction,[33] we first inquire into what really happened to
these directives.
The assailed NLRC resolution of October 31, 2000[34] gave us the following account on the matter -
On the first directive, x x x We find that there was no violation of the said order. A perusal of the records would show that in
compliance with the temporary restraining order (TRO), respondents reinstated back to work the sales drivers who complained of
illegal dismissal (Memorandum of Respondents, page 4).
 Petitioners allegation that there was only payroll reinstatement does not make the respondents guilty of contempt of court.
Even if the drivers were just in the garage doing nothing, the same does not make respondents guilty of contempt nor does it make
them violators of the injunction order. What is important is that they were reinstated and receiving their salaries.
As for petitioners Danilo Real, Roberto Sedano and Rolando Manalo, they have resigned from their jobs and were paid
their separation pay xxx (Exhibits 6, 6-A, 7, 7-A, 8, 8-A, Respondents Memorandum dated August 12, 1996). The issue of whether
they were illegally dismissed should be threshed out before the Labor Arbiter in whose sala the case of unfair labor practice and
illegal dismissal were (sic) filed. Records also show that petitioner Antonio Desquitado during the pendency of the case executed an
affidavit of desistance asking that he be dropped as party complainant in as much as he has already accepted separation benefits
totaling to P63,087.33.
With respect to the second directive ordering respondents to cease and desist from implementing the memoranda dated
July 15, 1991 designed to ground sales personnel who are members of the union, respondents alleged that they can no longer be
restrained or enjoined and that the status quo can no longer be restored, for implementation of the memorandum was already
consummated or was a fait accompli. x x x
All sales vehicles were ordered to be turned over to management and the same were already sold[.] xxx [I]t would be hard
to undo the sales transactions, the same being valid and binding. The memorandum of July 15, 1991 authorized still all sales
representatives to continue servicing their customers using public transportation and a transportation allowance would be issued.
The third directive of the Commission is to preserve the status quo ante between the parties.
Records reveal that WELLA AG of Germany terminated its Licensing Agreement with respondent company effective
December 31, 1991 (Exhibit 11, Respondents Memorandum).
On January 31, 1992, individual petitioners together with the other employees were terminated xxx. In fact, this event
resulted to the closure of the respondent company. The manufacturing and marketing operations ceased. This is evidenced by the
testimony of Rosalito del Rosario and her affidavit (Exh. 9, memorandum of Respondents) as well as Employers Monthly Report on
Employees Termination/dismissals/suspension xxx (Exhibits 12-A to 12-F, ibid) as well as the report that there is a permanent
shutdown/total closure of all units of operations in the establishment (Ibid). A letter was likewise sent to the Department of Labor and
Employment (Exh. 12, Ibid) in compliance with Article 283 of the Labor Code, serving notice that it will cease business operations
effective January 31, 1992.
The petitioners strongly dispute the above account. They maintain that the NLRC failed to consider the following:
1. CTMI violated the status quo ante order when it did not restore to their former work assignments the dismissed sales drivers.
They lament that their being garaged deprived them of benefits, and they were subjected to ridicule and psychological abuse. They
assail the NLRC for considering the payroll reinstatement of the drivers as compliance with its stay order.

They also bewail the NLRCs recognition of the resignation of Danilo Real, Roberto Sedano, Rolando Manalo and Antonio
Desquitado as they were just compelled by economic necessity to resign from their employment. The quitclaims they executed were
contrary to public policy and should not bar them from claiming the full measure of their rights, including their counsel who was
unduly deprived of his right to collect attorneys fees.
2. It was error for the NLRC to rule that the memorandum, grounding the sales drivers, could no longer be restrained or enjoined
because all sales vehicles were already sold. No substantial evidence was presented by the respondents to prove their allegation,
but even if there was a valid sale of the vehicles, it did not relieve the respondents of responsibility under the stay order.
3. The alleged termination of the licensing agreement between CTMI and WELLA AG of Germany, which allegedly resulted in the
closure of CTMIs manufacturing and marketing operations, occurred after the NLRCs issuance of the injunctive reliefs. CTMI failed
to present substantial evidence to support its contention that it folded up its operations when the licensing agreement was
terminated. Even assuming that there was a valid closure of CTMIs business operations, they should have been paid their lost
wages, allowances, incentives, sales commissions, per diems and other employee benefits from August 23, 1991 up to the date of
the alleged termination of CTMIs marketing operations.
Did the NLRC commit grave abuse of discretion in dismissing the contempt charges against the respondents? An act of a
court or tribunal may only be considered as committed in grave abuse of discretion when it was performed in a capricious or
whimsical exercise of judgment which is equivalent to lack of jurisdiction. The abuse of discretion must be so patent and gross as to
amount to an evasion of a positive duty enjoined by law, or to act at all in contemplation of law, as where the power is exercised in
an arbitrary and despotic manner by reason of passion or personal hostility.
The petitioners insist that the respondents violated the NLRC directives, especially the status quo ante order, for their
failure to reinstate the dismissed petitioners and to pay them their benefits. In light of the facts of the case as drawn above, we
cannot see how the status quo ante or the employer-employee situation before the formation of the union and the conduct of the
consent election can be maintained. As the NLRC explained, CTMI closed its manufacturing and marketing operations after the
termination of its licensing agreement with WELLA AG of Germany. In fact, the closure resulted in the termination of CTMIs
remaining employees on January 31, 1992, aside from the sales drivers who were earlier dismissed but reinstated in the payroll, in
compliance with the NLRC injunction. The petitioners termination of employment, as well as all of their money claims, was the
subject of the illegal dismissal and unfair labor practice complaint before the labor arbiter. The latter was ordered by the NLRC on
October 31, 2000 to proceed hearing the case.[36] The NLRC thus subsumed all other issues into the main illegal dismissal and
unfair labor practice case pending with the labor arbiter. On this point, the NLRC declared:
Note that when the injunction order was issued, WELLA AG of Germany was still under licensing agreement with
respondent company. However, the situation has changed when WELLA AG of Germany terminated its licensing agreement with
the respondent, causing the latter to close its business.
Respondents could no longer be ordered to restore the status quo as far as the individual petitioners are concerned as
these matters regarding the termination of the employees are now pending litigation with the Arbitration Branch of the Commission.
To resolve the incident now regarding the closure of the respondent company and the matters alleged by petitioners such as the
creations of three (3) new corporations xxx as successor-corporations are matters best left to the Labor Arbiter hearing the merits of
the unfair labor practice and illegal dismissal cases.[37]
We find no grave abuse of discretion in the assailed NLRC ruling. It rightly avoided delving into issues which would clearly
be in excess of its jurisdiction for they are issues involving the merits of the case which are by law within the original and exclusive
jurisdiction of the labor arbiter.[38] To be sure, whether payroll reinstatement of some of the petitioners is proper; whether the
resignation of some of them was compelled by dire economic necessity; whether the petitioners are entitled to their money claims;
and whether quitclaims are contrary to law or public policy are issues that should be heard by the labor arbiter in the first instance.
The NLRC can inquire into them only on appeal after the merits of the case shall have been adjudicated by the labor arbiter.
The NLRC correctly dismissed the contempt charges against the respondents. The CA likewise committed no grave
abuse of discretion in not disturbing the NLRC resolution.
In light of the above discussion, we find no need to dwell into the other issues the parties raised.
WHEREFORE, premises considered, we hereby DENY the petition for lack of merit and AFFIRM the assailed resolutions
of the Court of Appeals.

SO ORDERED.

SAN MIGUEL CORPORATION v. NLRC G.R. No. 108001 March 15, 1996

1. LABOR LAW AND SOCIAL LEGISLATION; LABOR CODE; LABOR ARBITER; ORIGINAL AND EXCLUSIVE JURISDICTION;
TERMINATION DISPUTES AND UNFAIR LABOR PRACTICES; EXCEPTIONS; NOT PRESENT IN CASE AT BAR. - The law in
point is Article 217 (a) of the Labor Code. It is elementary that this law is deemed written into the CBA. In fact, the law speaks in
plain and unambiguous terms that termination disputes, together with unfair labor practices, are matters falling under the original
and exclusive jurisdiction of the Labor Arbiter. The sole exception can be found under Article 262 of the same Code, which provides:
The voluntary arbitrator or panel of voluntary arbitrators, upon agreement of the parties, shall also hear and decide all other labor
disputes including unfair labor practices and bargaining deadlocks. The exception, being present, the Labor Arbiter properly has
jurisdiction over the complaint filed by the respondent union for illegal dismissal and unfair labor practice. The filing of a request for
reconsideration by the respondent union, which is the condition sine qua non to categorize the termination dispute and the ULP
complaint as a grievable dispute as per CBA, was decidedly absent in the case at bench. Hence, the respondent union acted well
within their rights in filing their complaint directly with the Labor Arbiter.
2. ID.; ID.; ID.; ID.; ID.; DETERMINED BY ALLEGATIONS OF THE COMPLAINT. The questioned discharges due to alleged
redundancy can hardly be considered company personnel policies and therefore need not directly be subject to the grievance
machinery nor to voluntary arbitration. All of the dismissed employees were officers and members of their respective unions, and
their employers failed to give a satisfactory explanation as to why this group of employees was singled out. It may be the case that
the discharges may really be for a bona fide authorized caused under Article 283 of the Labor Code. But it is also possible that such
may be a scheme to camouflage the real intention of discriminating against union members. In any case, these matters will be best
ventilated in a hearing before the Labor Arbiter. The complaint alleges facts sufficient to constitute a bona fide case of ULP,
cognizable by the Labor Arbiter. This is consistent with the rule that jurisdiction over the subject matter is determined by the
allegations of the complaint.

In the herein petition for certiorari under Rule 65, petitioners question the jurisdiction of the Labor Arbiter to hear a
complaint for unfair labor practice, illegal dismissal, and damages, notwithstanding the provision for grievance and arbitration in the
Collective Bargaining Agreement.

Let us unfurl the facts.

Private respondents, employed by petitioner San Miguel Corporation (SMC) as mechanics, machinists, and carpenters,
were and still are, bona fide officers and members of private respondent Ilaw at Buklod ng Manggagawa.
On or about July 31, 1990, private respondents were served a Memorandum from petitioner Angel G. Roa, Vice-President
and Manager of SMCs Business Logistics Division (BLD), to the effect that they had to be seperated from the service effective
October 31, 1990 on the ground of redundancy or excesss personnel. Respondent union, in behalf of private respondents, opposed
the intended dismissal and asked for a dialogue with management.
Accordingly, a series of dialogues were held between petitioners and private respondents. Even before the conclusion of
said dialogues, the aforesaid petitioner Angel Roa issued another Memorandum on October 1, 1990 informing private respondents
that they would be dismissed from work effective as of the close of business hours on November 2, 1990. Private respondents were
in fact purged on the date aforesaid.
Thus, on February 25, 1991, private respondents filed a complaint against petitioners for Illegal Dismissal and Unfair
Labor Practices, with a prayer for damages and attorneys fees, with the Arbitration Branch of respondent National Labor Relations
Commission. The complaint[1] was assigned to Labor Arbiter Eduardo F. Carpio for hearing and proper disposition.
On April 15, 1991, petitioners filed a motion to dismiss the complaint, alleging that respondent Labor Arbiter had no
jurisdiction over the subject matter of the complaint, and that respondent Labor Arbiter must defer consideration of the unfair labor
practice complaint until after the parties have gone through the grievance procedure provided for in the existing Collective
Bargaining Agreement (CBA). Respondent Labor Arbiter denied this motion in a Resolution, dated September 23, 1991.
The petitioners appealed the denial to respondent Commission on November 8, 1991. Unimpressed by the grounds
therefor, respondent Commission dismissed the appeal in its assailed Resolution, dated August 11, 1992. Petitioners promptly filed
a Motion for Reconsideration which, however, was denied through the likewise assailed Resolution, dated October 29, 1992.
Hence, the instant petition for certiorari alleging the following grounds was filed by the petitioners:
I. RESPONDENT LABOR ARBITER CANNOT EXERCISE JURISDICTION OVER THE ALLEGED ILLEGAL TERMINATION AND
ALLEGED ULP CASES WITHOUT PRIOR RESORT TO GRIEVANCE AND ARBITRATION PROVIDED UNDER THE CBA.
II. THE STRONG STATE POLICY ON THE PROMOTION OF VOLUNTARY MODES OF SETTLEMENT OF LABOR DISPUTES
CRAFTED IN THE CONSTITUTION AND THE LABOR CODE DICTATES THE SUBMISSION OF THE CBA DISPUTE TO
GRIEVANCE AND ARBITRATION.
 Petitioners posit the basic principle that a collective bargaining agreement is a contract between management and labor
that must bind and be enforced in the first instance as between the parties thereto. In this case, the CBA between the petitioners
and respondent union provides, under Section 1, Article V entitled ARBITRATION, that wages, hours of work, conditions of
employment and/or employer-employee relations shall be settled by arbitration. Petitioners thesis is that the dispute as to the
termination of the union members and the unfair labor practice should first be settled by arbitration, and not directly by the labor
arbiter, following the above provision of the CBA, which ought to be treated as the law between the parties thereto.
The argument is unmeritorious. The law in point is Article 217 (a) of the Labor Code. It is elementary that this law is
deemed written into the CBA. In fact, the law speaks in plain and unambiguous terms that termination disputes, together with unfair
labor practices, are matters falling under the original and exclusive 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 x x x the following cases involving all workers,
whether agricultural or non-agricultural:
(1) Unfair labor practice cases:
(2) Termination disputes;
The sole exception to the above rule can be found under Article 262 of the same Code, which provides:
Aricle 262. Jurisdiction over other labor disputes - The voluntary arbitrator or panel of voluntary arbitrators, upon agreement of the
parties, shall also hear and decide all other labor disputes including unfair labor practices and bargaining deadlocks. (As added by
R.A. 6715)
We subjected the records of this case, particularly the CBA, to meticulous scrutiny and we find no agreement between
SMC and the respondent union that would state in unequivocal language that petitioners and the respondent union conform to the
submission of termination disputes and unfair labor practices to voluntary arbitration. Section 1, Article V of the CBA, cited by the
herein petitioners, certainly does not provide so. Hence, consistent with the general rule under Article 217 (a) of the Labor Code, the
Labor Arbiter properly has jurisdiction over the complaint filed by the respondent union on February 25, 1991 for illegal dismissal
and unfair labor practice.
Petitioners point however to Section 2, Article III of the CBA, under the heading Job Security, to show that the dispute is a
proper subject of the grievance procedure, viz:
x x x The UNION, however, shall have the right to seek reconsideration of any discharge, lay-off or disciplinary action, and such
requests for reconsideration shall be considered a dispute or grievance to be dealt with in accordance with the procedure outlined in
Article IV hereof [on Grievance Machinery] x x x[3] (Emphasis ours)
Petitioners allege that respondent union requested management for a reconsideration and review of the companys
decision to terminate the employment of the union members. By this act, petitioners argue, respondent union recognized that the
questioned dismissal is a grievable dispute by virtue of Section 2, Article III of the CBA. This allegation was strongly denied by the
respondent union. In a Memorandum filed for the public respondent NLRC, the Solicitor General supported the position of the
respondent union that it did not seek reconsideration from the SMC management in regard to the dismissal of the employees.
Petitioners fail miserably to prove that, indeed, the respondent union requested for a reconsideration or review of the
management decision to dismiss the private respondents. A punctilious examination of the records indubitably reveals that at no
time did the respondent union exercise its right to seek reconsideration of the companys move to terminate the employment of the
union members, which request for reconsideration would have triggered the application of Section 2, Article III of the CBA, thus
resulting in the treatment of the dispute as a grievance to be dealt with in accordance with the Grievance Machinery laid down in
Article IV of, the CBA. Stated differently, the filing of a request. for reconsideration by the respondent union, which is the condition
sine qua non to categorize the termination dispute and the ULP complaint as a grievable dispute, was decidedly absent in the case
at bench. Hence, the respondent union acted well within their rights in filing their complaint for illegal dismissal and ULP directly with
the Labor Arbiter under Article 217 (a) of the Labor Code.
Second. Petitioners insist that involved in the controversy is the interpretation and implementation of the CBA which is
grievable and arbitrable by law under Article 217(c) of the Labor Code, viz:
ART. 217(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 amended by R.A. 6715).
Petitioners theorize that since respondents questioned the discharges, the main question for resolution is whether SMC
had the management right or prerogative to effect the discharges on the ground of redundancy, and this necessarily calls for the
interpretation or implementation of Article III (Job Security) in relation to Article IV (Grievance Machinery)of the CBA.
Petitioners theory does not hold water. There is no connection whatsoever between SMCs management prerogative to
effect the discharges and the interpretation or implementation of Articles III and IV of the CBA. The only relevant provision under
Article III that may need interpretation or implementation is Section 2 which was cited herein. However, as patiently pointed out by
this court, said provision does not come into play considering that the union never exercised its right to seek reconsideration of the
discharges effected by the company. It would have been different had the union sought reconsideration. Such recourse under
Section 2 would have been treated as a grievance under Article IV (Grievance Machinery) of the CBA, thus calling for the possible
interpretation or implementation of the entire provision on Grievance Machinery as agreed upon by the parties. This was not the
case however. The union brought the termination dispute directly to the Labor Arbiter rendering Articles III and IV of the CBA
inapplicable for the resolution of this case.
The discharges, petitioners also contend, call for the interpretation or enforcement of company personnel policies,
particulary SMCs personnel policies on lay-offs arising from redundacy, and so, they may be considered grievable and arbitrable by
virtue of Article 2 17(c). Not necessarily so. 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, is the rules and regulations governing disciplinary actions.[5] Judging therefrom, the questioned
discharges due to alleged redundancy can hardly be cosidered company personnel policies and therefore need not directly be
subject to the grievance machinery nor to voluntary arbitration.
 Third. Petitioners would like to persuade us that respondents ULP claims are merely conclusory and cannot serve to vest
jurisdiction to the Labor Arbiters. Petitioners argue with passion: How was the discharges (sic) right to self-organization restrained
by their termination? Respondent did not show.. There is no allegation of the existence of anti-union animus or of the ultimate facts
showing how the discharges affected the rights to self-organization of individual respondents.[6] In short, petitioners maintain that
respondents complaint does not allege a genuine case for ULP.
The Court is not convinced.

The complaint alleges that:

5. Individual complainants are bona fide officers and members of complainant Ilaw at Buklod ng Manggagawa (IBM). They are
active and militant in the affairs and activities of the union.
23. The dismissal or lock-out from work of the individual complainants clearly constitutes an act of unfair labor practices in the light
of the fact that the work being performed by the individual complainants are being contracted out by the respondent company, and,
therefore, deprives individual complainants of their right to work and it constitutes a criminal violation of existing laws.
25. The acts of the respondent company in economically coercing employees to accept payment of seperation and/or retirement
benefits, pending final resolution of the labor disputes between the parties constitute acts of unfair labor practice in the light of the
fact that there is undue interference, restraint, and coercion of employees in the exercise of their right to self-organization and
collective bargaining.
Short of pre-empting the proceedings before the Labor Arbiter, the above complaint, makes Out a genuine case for ULP.
In Manila Pencil Co. v. CIR,[8] This Court had occasion to observe that even where business conditions justified a lay-off
of employees, unfair labor practices were committed in the form of discriminatory dismissal where only unionists were permanently
dismissed. This was despite the valid excuse given by the Manila Pencil Company that the dismissal of the employees was due to
the reduction of the companys dollar allocations for importation and that both union members and non-union members were laid-off.
The Court, thru Justice Makalintal, rebuffed the petitioner Company and said:
x x x The explanation, however, does not by any means account for the permanent dismissal of five of the unionists, where it does
not appear that non-unionists were similarly dismissed.
And the discrimination shown by the Company strongly is confirmed by the fact that during the period from October 1958
to August 17, 1959 it hired from fifteen to twenty new employees and ten apprentices. It says these employees were for its new lead
factory, but is (sic) not shown that the five who had been permanently dismissed were not suitable for work in that new factory.
A similar ruling was made by this Court in Peoples Bank and Trust Co. v. Peoples Bank and Trust Co. Employees
Union[9] involving the lay-off by a bank of sixty-five (65) employees who were active union members allegedly by reason of
retrechment. The Court likewise found the employer in that case to have committed ULP in effecting the discharges.
This Court was more emphatic however in Bataan Shipyard and Engineering Co., Inc. v. NLRC, et al.:[10]
Under the circumstances obtaining in this case, We are inclined to believe that the company had indeed been
discriminatory in selecting the employees who were to be retrenched. All of the retrenched employees are officers and members of
the NAFLU. The record of the case is bereft of any satisfactory explanation from the Company regarding this situation. As such, the
action taken by the firm becomes highly suspect. It leads Us to conclude that the firm had been discriminating against membership
in the NAFLU, an act which amounts to interference in the employees exercise of their right of self-organization. Under Art. 249
(now Art. 248) of the Labor Code of the Philippines, such interference is considered an act of unfair labor practice on the part of the
Company.
It matters not that the cause of termination in the above cited cases was retrenchment while that in the instant case was
redundancy. The important fact is that in all of these cases, including the one at bar, all of the dismissed employees were officers
and members of their respective unions, and their employers failed to give a satisfactory explanation as to why this group of
employees was singled out.
It may be the case that employees other than union members may have been terminated also by petitioner SMC on
account of its redundancy program. If that is true, the discharges may really be for a bona fide authorized cause under Article
283[11] of the Labor Code. On the other hand, it is also possible that such may only be a clever scheme of the petitioner company
to camouflage its real intention of discriminating against union members particularly the private respondents. In any case, these
matters will be best ventilated in a hearing before the Labor Arbiter.
It is for the above reason that we cannot hold the petitioners guilty of the ULP charge. This will be the task of the Labor
Arbiter. We however find that based on the cicumstances surrounding this case and settled jurisprudence on the subject, the
complaint filed by the private respondents on February 25, 1991 alleges facts sufficient to costitute a bona fide case of ULP, and
therefore properly cognizable by the Labor Arbiter under Article 2 17(a) of the Labor Code. This is consistent with the rule that
jurisdictioin over the subject matter is determined by the allegations of the complaint.
Finally, petitioners try to impress on this Court the strong State policy on the promotion of voluntary modes of settlement
of labor disputes crafted in the Constitution and the Labor Code which dictate the submission of the CBA dispute to grievance and
arbitration.
In this regard, the response of the Solicitor General is apt:
Petitioners deserve commendation for divulging and bringing to public respondents attention the noble legislative intent behind the
law mandating the inclusion of grievance and voluntary arbitration provisions in the CBA. However, in the absence of an express
legal conferment thereof, jurisdiction cannot be appropriated by an official or tribunal (sic) no matter how well-intentioned it is, even
in the pursuit of the clearest substantial right (Concurring Opinion of Justice Barredo, Estanislao v. Honrado, 114 SCRA 748, 29
June 1982).[14]

In the same manner, petitioners cannot arrogate into the powers of voluntary arbitrators the original and exclusive
jurisdiction of Labor Arbiters over unfair labor practices, termination disputes, and claims for damages, in the absence of an express
agreement between the parties in order for Article 262[15] of the Labor Law to apply in the case at bar.

WHEREFORE, the instant petition is DISMISSED for lack of merit and the resolutions of the National Labor Relations
Commission dated August 11, 1992 and October 29, 1992 are hereby AFFIRMED.
SO ORDERED.
ROSARIO MANEJA vs. NLRC and MANILA MIDTOWN HOTEL G.R. No. 124013. June 5, 1998

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.
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.
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).
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.
 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.
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.
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.
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.

JOSE Y. SONZA vs. ABS-CBN BROADCASTING CORPORATION G.R. No. 138051. June 10, 2004

The Case
Before this Court is a petition for review on certiorari[1] assailing the 26 March 1999 Decision[2] of the Court of Appeals in CA-G.R.
SP No. 49190 dismissing the petition filed by Jose Y. Sonza (SONZA). The Court of Appeals affirmed the findings of the National
Labor Relations Commission (NLRC), which affirmed the Labor Arbiters dismissal of the case for lack of jurisdiction.

The Facts
In May 1994, respondent ABS-CBN Broadcasting Corporation (ABS-CBN) signed an Agreement (Agreement) with the
Mel and Jay Management and Development Corporation (MJMDC). ABS-CBN was represented by its corporate officers while
MJMDC was represented by SONZA, as President and General Manager, and Carmela Tiangco (TIANGCO), as EVP and
Treasurer. Referred to in the Agreement as AGENT, MJMDC agreed to provide SONZAs services exclusively to ABS-CBN as talent
for radio and television. The Agreement listed the services SONZA would render to ABS-CBN, as follows:
a. Co-host for Mel & Jay radio program, 8:00 to 10:00 a.m., Mondays to Fridays;
b. Co-host for Mel & Jay television program, 5:30 to 7:00 p.m., Sundays.
ABS-CBN agreed to pay for SONZAs services a monthly talent fee of P310,000 for the first year and P317,000 for the
second and third year of the Agreement. ABS-CBN would pay the talent fees on the 10th and 25th days of the month.
On 1 April 1996, SONZA wrote a letter to ABS-CBNs President, Eugenio Lopez III, which reads:
Dear Mr. Lopez,
We would like to call your attention to the Agreement dated May 1994 entered into by your goodself on behalf of ABS-CBN with our
company relative to our talent JOSE Y. SONZA.
As you are well aware, Mr. Sonza irrevocably resigned in view of recent events concerning his programs and career. We consider
these acts of the station violative of the Agreement and the station as in breach thereof. In this connection, we hereby serve notice
of rescission of said Agreement at our instance effective as of date.
Mr. Sonza informed us that he is waiving and renouncing recovery of the remaining amount stipulated in paragraph 7 of the
Agreement but reserves the right to seek recovery of the other benefits under said Agreement.
Thank you for your attention. Very truly yours, JOSE Y. SONZA - President and Gen. Manager.
On 30 April 1996, SONZA filed a complaint against ABS-CBN before the Department of Labor and Employment, National
Capital Region in Quezon City. SONZA complained that ABS-CBN did not pay his salaries, separation pay, service incentive leave
pay, 13th month pay, signing bonus, travel allowance and amounts due under the Employees Stock Option Plan (ESOP).
On 10 July 1996, ABS-CBN filed a Motion to Dismiss on the ground that no employer-employee relationship existed
between the parties. SONZA filed an Opposition to the motion on 19 July 1996.
Meanwhile, ABS-CBN continued to remit SONZAs monthly talent fees through his account at PCIBank, Quezon Avenue
Branch, Quezon City. In July 1996, ABS-CBN opened a new account with the same bank where ABS-CBN deposited SONZAs
talent fees and other payments due him under the Agreement.
In his Order dated 2 December 1996, the Labor Arbiter[5] denied the motion to dismiss and directed the parties to file their
respective position papers. The Labor Arbiter ruled:
In this instant case, complainant for having invoked a claim that he was an employee of respondent company until April
15, 1996 and that he was not paid certain claims, it is sufficient enough as to confer jurisdiction over the instant case in this Office.
And as to whether or not such claim would entitle complainant to recover upon the causes of action asserted is a matter to be
resolved only after and as a result of a hearing. Thus, the respondents plea of lack of employer-employee relationship may be
pleaded only as a matter of defense. It behooves upon it the duty to prove that there really is no employer-employee relationship
between it and the complainant.
The Labor Arbiter then considered the case submitted for resolution. The parties submitted their position papers on 24
February 1997.
 On 11 March 1997, SONZA filed a Reply to Respondents Position Paper with Motion to Expunge Respondents Annex 4
and Annex 5 from the Records. Annexes 4 and 5 are affidavits of ABS-CBNs witnesses Soccoro Vidanes and Rolando V. Cruz.
These witnesses stated in their affidavits that the prevailing practice in the television and broadcast industry is to treat talents like
SONZA as independent contractors.
The Labor Arbiter rendered his Decision dated 8 July 1997 dismissing the complaint for lack of jurisdiction.[6] The
pertinent parts of the decision read as follows:
While Philippine jurisprudence has not yet, with certainty, touched on the true nature of the contract of a talent, it stands to
reason that a talent as above-described cannot be considered as an employee by reason of the peculiar circumstances surrounding
the engagement of his services.
It must be noted that complainant was engaged by respondent by reason of his peculiar skills and talent as a TV host and
a radio broadcaster. Unlike an ordinary employee, he was free to perform the services he undertook to render in accordance with
his own style. The benefits conferred to complainant under the May 1994 Agreement are certainly very much higher than those
generally given to employees. For one, complainant Sonzas monthly talent fees amount to a staggering P317,000. Moreover, his
engagement as a talent was covered by a specific contract. Likewise, he was not bound to render eight (8) hours of work per day as
he worked only for such number of hours as may be necessary.
The fact that per the May 1994 Agreement complainant was accorded some benefits normally given to an employee is
inconsequential. Whatever benefits complainant enjoyed arose from specific agreement by the parties and not by reason of
employer-employee relationship. As correctly put by the respondent, All these benefits are merely talent fees and other contractual
benefits and should not be deemed as salaries, wages and/or other remuneration accorded to an employee, notwithstanding the
nomenclature appended to these benefits. Apropos to this is the rule that the term or nomenclature given to a stipulated benefit is
not controlling, but the intent of the parties to the Agreement conferring such benefit.
The fact that complainant was made subject to respondents Rules and Regulations, likewise, does not detract from the
absence of employer-employee relationship. As held by the Supreme Court, The line should be drawn between rules that merely
serve as guidelines towards the achievement of the mutually desired result without dictating the means or methods to be employed
in attaining it, and those that control or fix the methodology and bind or restrict the party hired to the use of such means. The first,
which aim only to promote the result, create no employer-employee relationship unlike the second, which address both the result
and the means to achieve it. (Insular Life Assurance Co., Ltd. vs. NLRC, et al., G.R. No. 84484, November 15, 1989).
SONZA appealed to the NLRC. On 24 February 1998, the NLRC rendered a Decision affirming the Labor Arbiters
decision. SONZA filed a motion for reconsideration, which the NLRC denied in its Resolution dated 3 July 1998.
On 6 October 1998, SONZA filed a special civil action for certiorari before the Court of Appeals assailing the decision and
resolution of the NLRC. On 26 March 1999, the Court of Appeals rendered a Decision dismissing the case.
Hence, this petition.

The Rulings of the NLRC and Court of Appeals

The Court of Appeals affirmed the NLRCs finding that no employer-employee relationship existed between SONZA and
ABS-CBN. Adopting the NLRCs decision, the appellate court quoted the following findings of the NLRC:
x x x the May 1994 Agreement will readily reveal that MJMDC entered into the contract merely as an agent of complainant Sonza,
the principal. By all indication and as the law puts it, the act of the agent is the act of the principal itself. This fact is made particularly
true in this case, as admittedly MJMDC is a management company devoted exclusively to managing the careers of Mr. Sonza and
his broadcast partner, Mrs. Carmela C. Tiangco. (Opposition to Motion to Dismiss)
Clearly, the relations of principal and agent only accrues between complainant Sonza and MJMDC, and not between
ABS-CBN and MJMDC. This is clear from the provisions of the May 1994 Agreement which specifically referred to MJMDC as the
AGENT. As a matter of fact, when complainant herein unilaterally rescinded said May 1994 Agreement, it was MJMDC which issued
the notice of rescission in behalf of Mr. Sonza, who himself signed the same in his capacity as President.
Moreover, previous contracts between Mr. Sonza and ABS-CBN reveal the fact that historically, the parties to the said
agreements are ABS-CBN and Mr. Sonza. And it is only in the May 1994 Agreement, which is the latest Agreement executed
between ABS-CBN and Mr. Sonza, that MJMDC figured in the said Agreement as the agent of Mr. Sonza.
We find it erroneous to assert that MJMDC is a mere labor-only contractor of ABS-CBN such that there exist[s] employer-
employee relationship between the latter and Mr. Sonza. On the contrary, We find it indubitable, that MJMDC is an agent, not of
ABS-CBN, but of the talent/contractor Mr. Sonza, as expressly admitted by the latter and MJMDC in the May 1994 Agreement.
It may not be amiss to state that jurisdiction over the instant controversy indeed belongs to the regular courts, the same
being in the nature of an action for alleged breach of contractual obligation on the part of respondent-appellee. As squarely apparent
from complainant-appellants Position Paper, his claims for compensation for services, 13th month pay, signing bonus and travel
allowance against respondent-appellee are not based on the Labor Code but rather on the provisions of the May 1994 Agreement,
while his claims for proceeds under Stock Purchase Agreement are based on the latter. A portion of the Position Paper of
complainant-appellant bears perusal:
Under [the May 1994 Agreement] with respondent ABS-CBN, the latter contractually bound itself to pay complainant a
signing bonus consisting of shares of stockswith FIVE HUNDRED THOUSAND PESOS (P500,000.00).
Similarly, complainant is also entitled to be paid 13th month pay based on an amount not lower than the amount he was
receiving prior to effectivity of (the) Agreement.
Under paragraph 9 of (the May 1994 Agreement), complainant is entitled to a commutable travel benefit amounting to at
least One Hundred Fifty Thousand Pesos (P150,000.00) per year.
Thus, it is precisely because of complainant-appellants own recognition of the fact that his contractual relations with ABS-
CBN are founded on the New Civil Code, rather than the Labor Code, that instead of merely resigning from ABS-CBN, complainant-
appellant served upon the latter a notice of rescission of Agreement with the station, per his letter dated April 1, 1996, which
asserted that instead of referring to unpaid employee benefits, he is waiving and renouncing recovery of the remaining amount
stipulated in paragraph 7 of the Agreement but reserves the right to such recovery of the other benefits under said Agreement.
(Annex 3 of the respondent ABS-CBNs Motion to Dismiss dated July 10, 1996).
Evidently, it is precisely by reason of the alleged violation of the May 1994 Agreement and/or the Stock Purchase
Agreement by respondent-appellee that complainant-appellant filed his complaint. Complainant-appellants claims being anchored
on the alleged breach of contract on the part of respondent-appellee, the same can be resolved by reference to civil law and not to
labor law. Consequently, they are within the realm of civil law and, thus, lie with the regular courts. As held in the case of Dai-Chi
Electronics Manufacturing vs. Villarama, 238 SCRA 267, 21 November 1994, an action for breach of contractual obligation is
intrinsically a civil dispute.[9] (Emphasis supplied)
The Court of Appeals ruled that the existence of an employer-employee relationship between SONZA and ABS-CBN is a
factual question that is within the jurisdiction of the NLRC to resolve.[10] A special civil action for certiorari extends only to issues of
want or excess of jurisdiction of the NLRC.[11] Such action cannot cover an inquiry into the correctness of the evaluation of the
evidence which served as basis of the NLRCs conclusion.[12] The Court of Appeals added that it could not re-examine the parties
evidence and substitute the factual findings of the NLRC with its own.

The Issue
In assailing the decision of the Court of Appeals, SONZA contends that:
THE COURT OF APPEALS GRAVELY ERRED IN AFFIRMING THE NLRCS DECISION AND REFUSING TO FIND THAT AN
EMPLOYER-EMPLOYEE RELATIONSHIP EXISTED BETWEEN SONZA AND ABS-CBN, DESPITE THE WEIGHT OF
CONTROLLING LAW, JURISPRUDENCE AND EVIDENCE TO SUPPORT SUCH A FINDING.[14]

The Courts Ruling

We affirm the assailed decision.
No convincing reason exists to warrant a reversal of the decision of the Court of Appeals affirming the NLRC ruling which
upheld the Labor Arbiters dismissal of the case for lack of jurisdiction.
The present controversy is one of first impression. Although Philippine labor laws and jurisprudence define clearly the
elements of an employer-employee relationship, this is the first time that the Court will resolve the nature of the relationship between
a television and radio station and one of its talents. There is no case law stating that a radio and television program host is an
employee of the broadcast station.
The instant case involves big names in the broadcast industry, namely Jose Jay Sonza, a known television and radio
personality, and ABS-CBN, one of the biggest television and radio networks in the country.
SONZA contends that the Labor Arbiter has jurisdiction over the case because he was an employee of ABS-CBN. On the
other hand, ABS-CBN insists that the Labor Arbiter has no jurisdiction because SONZA was an independent contractor.

Employee or Independent Contractor?

The existence of an employer-employee relationship is a question of fact. Appellate courts accord the factual findings of
the Labor Arbiter and the NLRC not only respect but also finality when supported by substantial evidence.[15] Substantial evidence
means such relevant evidence as a reasonable mind might accept as adequate to support a conclusion.[16] A party cannot prove
the absence of substantial evidence by simply pointing out that there is contrary evidence on record, direct or circumstantial. The
Court does not substitute its own judgment for that of the tribunal in determining where the weight of evidence lies or what evidence
is credible.[17]
SONZA maintains that all essential elements of an employer-employee relationship are present in this case. Case law has
consistently held that the elements of an employer-employee relationship are: (a) the selection and engagement of the employee;
(b) the payment of wages; (c) the power of dismissal; and (d) the employers power to control the employee on the means and
methods by which the work is accomplished.[18] The last element, the so-called control test, is the most important element.
A. Selection and Engagement of Employee
ABS-CBN engaged SONZAs services to co-host its television and radio programs because of SONZAs peculiar skills,
talent and celebrity status. SONZA contends that the discretion used by respondent in specifically selecting and hiring complainant
over other broadcasters of possibly similar experience and qualification as complainant belies respondents claim of independent
contractorship.
Independent contractors often present themselves to possess unique skills, expertise or talent to distinguish them from
ordinary employees. The specific selection and hiring of SONZA, because of his unique skills, talent and celebrity status not
possessed by ordinary employees, is a circumstance indicative, but not conclusive, of an independent contractual relationship. If
SONZA did not possess such unique skills, talent and celebrity status, ABS-CBN would not have entered into the Agreement with
SONZA but would have hired him through its personnel department just like any other employee.
In any event, the method of selecting and engaging SONZA does not conclusively determine his status. We must consider
all the circumstances of the relationship, with the control test being the most important element.

B. Payment of Wages
ABS-CBN directly paid SONZA his monthly talent fees with no part of his fees going to MJMDC. SONZA asserts that this
mode of fee payment shows that he was an employee of ABS-CBN. SONZA also points out that ABS-CBN granted him benefits and
privileges which he would not have enjoyed if he were truly the subject of a valid job contract.
All the talent fees and benefits paid to SONZA were the result of negotiations that led to the Agreement. If SONZA were
ABS-CBNs employee, there would be no need for the parties to stipulate on benefits such as SSS, Medicare, x x x and 13th month
pay[20] which the law automatically incorporates into every employer-employee contract.[21] Whatever benefits SONZA enjoyed
arose from contract and not because of an employer-employee relationship.
SONZAs talent fees, amounting to P317,000 monthly in the second and third year, are so huge and out of the ordinary
that they indicate more an independent contractual relationship rather than an employer-employee relationship. ABS-CBN agreed to
pay SONZA such huge talent fees precisely because of SONZAs unique skills, talent and celebrity status not possessed by ordinary
employees. Obviously, SONZA acting alone possessed enough bargaining power to demand and receive such huge talent fees for
his services. The power to bargain talent fees way above the salary scales of ordinary employees is a circumstance indicative, but
not conclusive, of an independent contractual relationship.
The payment of talent fees directly to SONZA and not to MJMDC does not negate the status of SONZA as an
independent contractor. The parties expressly agreed on such mode of payment. Under the Agreement, MJMDC is the AGENT of
SONZA, to whom MJMDC would have to turn over any talent fee accruing under the Agreement.
C. Power of Dismissal
For violation of any provision of the Agreement, either party may terminate their relationship. SONZA failed to show that
ABS-CBN could terminate his services on grounds other than breach of contract, such as retrenchment to prevent losses as
provided under labor laws.
During the life of the Agreement, ABS-CBN agreed to pay SONZAs talent fees as long as AGENT and Jay Sonza shall
faithfully and completely perform each condition of this Agreement.[24] Even if it suffered severe business losses, ABS-CBN could
not retrench SONZA because ABS-CBN remained obligated to pay SONZAs talent fees during the life of the Agreement. This
circumstance indicates an independent contractual relationship between SONZA and ABS-CBN.
SONZA admits that even after ABS-CBN ceased broadcasting his programs, ABS-CBN still paid him his talent fees.
Plainly, ABS-CBN adhered to its undertaking in the Agreement to continue paying SONZAs talent fees during the remaining life of
the Agreement even if ABS-CBN cancelled SONZAs programs through no fault of SONZA.
SONZA assails the Labor Arbiters interpretation of his rescission of the Agreement as an admission that he is not an
employee of ABS-CBN. The Labor Arbiter stated that if it were true that complainant was really an employee, he would merely
resign, instead. SONZA did actually resign from ABS-CBN but he also, as president of MJMDC, rescinded the Agreement. SONZAs
letter clearly bears this out.[26] However, the manner by which SONZA terminated his relationship with ABS-CBN is immaterial.
Whether SONZA rescinded the Agreement or resigned from work does not determine his status as employee or independent
contractor.

D. Power of Control
Since there is no local precedent on whether a radio and television program host is an employee or an independent
contractor, we refer to foreign case law in analyzing the present case. The United States Court of Appeals, First Circuit, recently
held in Alberty-Vlez v. Corporacin De Puerto Rico Para La Difusin Pblica (WIPR)[27] that a television program host is an
independent contractor. We quote the following findings of the U.S. court:
Several factors favor classifying Alberty as an independent contractor. First, a television actress is a skilled position
requiring talent and training not available on-the-job. x x x In this regard, Alberty possesses a masters degree in public
communications and journalism; is trained in dance, singing, and modeling; taught with the drama department at the University of
Puerto Rico; and acted in several theater and television productions prior to her affiliation with Desde Mi Pueblo. Second, Alberty
provided the tools and instrumentalities necessary for her to perform. Specifically, she provided, or obtained sponsors to provide,
the costumes, jewelry, and other image-related supplies and services necessary for her appearance. Alberty disputes that this factor
favors independent contractor status because WIPR provided the equipment necessary to tape the show. Albertys argument is
misplaced. The equipment necessary for Alberty to conduct her job as host of Desde Mi Pueblo related to her appearance on the
show. Others provided equipment for filming and producing the show, but these were not the primary tools that Alberty used to
perform her particular function. If we accepted this argument, independent contractors could never work on collaborative projects
because other individuals often provide the equipment required for different aspects of the collaboration. x x x

Third, WIPR could not assign Alberty work in addition to filming Desde Mi Pueblo. Albertys contracts with WIPR
specifically provided that WIPR hired her professional services as Hostess for the Program Desde Mi Pueblo. There is no evidence
that WIPR assigned Alberty tasks in addition to work related to these tapings.
Applying the control test to the present case, we find that SONZA is not an employee but an independent contractor. The
control test is the most important test our courts apply in distinguishing an employee from an independent contractor.[29] This test is
based on the extent of control the hirer exercises over a worker. The greater the supervision and control the hirer exercises, the
more likely the worker is deemed an employee. The converse holds true as well the less control the hirer exercises, the more likely
the worker is considered an independent contractor.
First, SONZA contends that ABS-CBN exercised control over the means and methods of his work.
SONZAs argument is misplaced. ABS-CBN engaged SONZAs services specifically to co-host the Mel & Jay programs.
ABS-CBN did not assign any other work to SONZA. To perform his work, SONZA only needed his skills and talent. How SONZA
delivered his lines, appeared on television, and sounded on radio were outside ABS-CBNs control. SONZA did not have to render
eight hours of work per day. The Agreement required SONZA to attend only rehearsals and tapings of the shows, as well as pre-
and post-production staff meetings.[31] ABS-CBN could not dictate the contents of SONZAs script. However, the Agreement
prohibited SONZA from criticizing in his shows ABS-CBN or its interests.[32] The clear implication is that SONZA had a free hand on
what to say or discuss in his shows provided he did not attack ABS-CBN or its interests.
We find that ABS-CBN was not involved in the actual performance that produced the finished product of SONZAs
work.[33] ABS-CBN did not instruct SONZA how to perform his job. ABS-CBN merely reserved the right to modify the program
format and airtime schedule for more effective programming.[34] ABS-CBNs sole concern was the quality of the shows and their
standing in the ratings. Clearly, ABS-CBN did not exercise control over the means and methods of performance of SONZAs work.
SONZA claims that ABS-CBNs power not to broadcast his shows proves ABS-CBNs power over the means and methods
of the performance of his work. Although ABS-CBN did have the option not to broadcast SONZAs show, ABS-CBN was still
obligated to pay SONZAs talent fees. Thus, even if ABS-CBN was completely dissatisfied with the means and methods of SONZAs
performance of his work, or even with the quality or product of his work, ABS-CBN could not dismiss or even discipline SONZA. All
that ABS-CBN could do is not to broadcast SONZAs show but ABS-CBN must still pay his talent fees in full.
Clearly, ABS-CBNs right not to broadcast SONZAs show, burdened as it was by the obligation to continue paying in full
SONZAs talent fees, did not amount to control over the means and methods of the performance of SONZAs work. ABS-CBN could
not terminate or discipline SONZA even if the means and methods of performance of his work - how he delivered his lines and
appeared on television - did not meet ABS-CBNs approval. This proves that ABS-CBNs control was limited only to the result of
SONZAs work, whether to broadcast the final product or not. In either case, ABS-CBN must still pay SONZAs talent fees in full until
the expiry of the Agreement.
In Vaughan, et al. v. Warner, et al.,[36] the United States Circuit Court of Appeals ruled that vaudeville performers were
independent contractors although the management reserved the right to delete objectionable features in their shows. Since the
management did not have control over the manner of performance of the skills of the artists, it could only control the result of the
work by deleting objectionable features.
SONZA further contends that ABS-CBN exercised control over his work by supplying all equipment and crew. No doubt,
ABS-CBN supplied the equipment, crew and airtime needed to broadcast the Mel & Jay programs. However, the equipment, crew
and airtime are not the tools and instrumentalities SONZA needed to perform his job. What SONZA principally needed were his
talent or skills and the costumes necessary for his appearance. [38] Even though ABS-CBN provided SONZA with the place of work
and the necessary equipment, SONZA was still an independent contractor since ABS-CBN did not supervise and control his work.
ABS-CBNs sole concern was for SONZA to display his talent during the airing of the programs.
A radio broadcast specialist who works under minimal supervision is an independent contractor.[40] SONZAs work as
television and radio program host required special skills and talent, which SONZA admittedly possesses. The records do not show
that ABS-CBN exercised any supervision and control over how SONZA utilized his skills and talent in his shows.
Second, SONZA urges us to rule that he was ABS-CBNs employee because ABS-CBN subjected him to its rules and
standards of performance. SONZA claims that this indicates ABS-CBNs control not only [over] his manner of work but also the
quality of his work.
The Agreement stipulates that SONZA shall abide with the rules and standards of performance covering talents[41] of
ABS-CBN. The Agreement does not require SONZA to comply with the rules and standards of performance prescribed for
employees of ABS-CBN. The code of conduct imposed on SONZA under the Agreement refers to the Television and Radio Code of
the Kapisanan ng mga Broadcaster sa Pilipinas (KBP), which has been adopted by the COMPANY (ABS-CBN) as its Code of
Ethics.[42] The KBP code applies to broadcasters, not to employees of radio and television stations. Broadcasters are not
necessarily employees of radio and television stations. Clearly, the rules and standards of performance referred to in the Agreement
are those applicable to talents and not to employees of ABS-CBN.

In any event, not all rules imposed by the hiring party on the hired party indicate that the latter is an employee of the former.[43] In
this case, SONZA failed to show that these rules controlled his performance. We find that these general rules are merely guidelines
towards the achievement of the mutually desired result, which are top-rating television and radio programs that comply with
standards of the industry. We have ruled that:
Further, not every form of control that a party reserves to himself over the conduct of the other party in relation to the
services being rendered may be accorded the effect of establishing an employer-employee relationship. The facts of this case fall
squarely with the case of Insular Life Assurance Co., Ltd. vs. NLRC. In said case, we held that:
Logically, the line should be drawn between rules that merely serve as guidelines towards the achievement of the
mutually desired result without dictating the means or methods to be employed in attaining it, and those that control or fix the
methodology and bind or restrict the party hired to the use of such means. The first, which aim only to promote the result, create no
employer-employee relationship unlike the second, which address both the result and the means used to achieve it.
The Vaughan case also held that one could still be an independent contractor although the hirer reserved certain
supervision to insure the attainment of the desired result. The hirer, however, must not deprive the one hired from performing his
services according to his own initiative.
Lastly, SONZA insists that the exclusivity clause in the Agreement is the most extreme form of control which ABS-CBN
exercised over him.
This argument is futile. Being an exclusive talent does not by itself mean that SONZA is an employee of ABS-CBN. Even
an independent contractor can validly provide his services exclusively to the hiring party. In the broadcast industry, exclusivity is not
necessarily the same as control.
The hiring of exclusive talents is a widespread and accepted practice in the entertainment industry.[46] This practice is not
designed to control the means and methods of work of the talent, but simply to protect the investment of the broadcast station. The
broadcast station normally spends substantial amounts of money, time and effort in building up its talents as well as the programs
they appear in and thus expects that said talents remain exclusive with the station for a commensurate period of time.[47] Normally,
a much higher fee is paid to talents who agree to work exclusively for a particular radio or television station. In short, the huge talent
fees partially compensates for exclusivity, as in the present case.

MJMDC as Agent of SONZA

SONZA protests the Labor Arbiters finding that he is a talent of MJMDC, which contracted out his services to ABS-CBN.
The Labor Arbiter ruled that as a talent of MJMDC, SONZA is not an employee of ABS-CBN. SONZA insists that MJMDC is a labor-
only contractor and ABS-CBN is his employer.
In a labor-only contract, there are three parties involved: (1) the labor-only contractor; (2) the employee who is ostensibly
under the employ of the labor-only contractor; and (3) the principal who is deemed the real employer. Under this scheme, the labor-
only contractor is the agent of the principal. The law makes the principal responsible to the employees of the labor-only contractor
as if the principal itself directly hired or employed the employees.[48] These circumstances are not present in this case.
There are essentially only two parties involved under the Agreement, namely, SONZA and ABS-CBN. MJMDC merely
acted as SONZAs agent. The Agreement expressly states that MJMDC acted as the AGENT of SONZA. The records do not show
that MJMDC acted as ABS-CBNs agent. MJMDC, which stands for Mel and Jay Management and Development Corporation, is a
corporation organized and owned by SONZA and TIANGCO. The President and General Manager of MJMDC is SONZA himself. It
is absurd to hold that MJMDC, which is owned, controlled, headed and managed by SONZA, acted as agent of ABS-CBN in
entering into the Agreement with SONZA, who himself is represented by MJMDC. That would make MJMDC the agent of both ABS-
CBN and SONZA.
As SONZA admits, MJMDC is a management company devoted exclusively to managing the careers of SONZA and his
broadcast partner, TIANGCO. MJMDC is not engaged in any other business, not even job contracting. MJMDC does not have any
other function apart from acting as agent of SONZA or TIANGCO to promote their careers in the broadcast and television
industry.[49]

Policy Instruction No. 40

 SONZA argues that Policy Instruction No. 40 issued by then Minister of Labor Blas Ople on 8 January 1979 finally settled
the status of workers in the broadcast industry. Under this policy, the types of employees in the broadcast industry are the station
and program employees.
Policy Instruction No. 40 is a mere executive issuance which does not have the force and effect of law. There is no legal
presumption that Policy Instruction No. 40 determines SONZAs status. A mere executive issuance cannot exclude independent
contractors from the class of service providers to the broadcast industry. The classification of workers in the broadcast industry into
only two groups under Policy Instruction No. 40 is not binding on this Court, especially when the classification has no basis either in
law or in fact.

Affidavits of ABS-CBNs Witnesses

SONZA also faults the Labor Arbiter for admitting the affidavits of Socorro Vidanes and Rolando Cruz without giving his
counsel the opportunity to cross-examine these witnesses. SONZA brands these witnesses as incompetent to attest on the
prevailing practice in the radio and television industry. SONZA views the affidavits of these witnesses as misleading and irrelevant.
While SONZA failed to cross-examine ABS-CBNs witnesses, he was never prevented from denying or refuting the
allegations in the affidavits. The Labor Arbiter has the discretion whether to conduct a formal (trial-type) hearing after the submission
of the position papers of the parties, thus:
Section 3. Submission of Position Papers/Memorandum
These verified position papers shall cover only those claims and causes of action raised in the complaint excluding those that may
have been amicably settled, and shall be accompanied by all supporting documents including the affidavits of their respective
witnesses which shall take the place of the latters direct testimony. x x x
Section 4. Determination of Necessity of Hearing. Immediately after the submission of the parties of their position
papers/memorandum, the Labor Arbiter shall motu propio determine whether there is need for a formal trial or hearing. At this stage,
he may, at his discretion and for the purpose of making such determination, ask clarificatory questions to further elicit facts or
information, including but not limited to the subpoena of relevant documentary evidence, if any from any party or witness.
The Labor Arbiter can decide a case based solely on the position papers and the supporting documents without a formal
trial.[51] The holding of a formal hearing or trial is something that the parties cannot demand as a matter of right.[52] If the Labor
Arbiter is confident that he can rely on the documents before him, he cannot be faulted for not conducting a formal trial, unless
under the particular circumstances of the case, the documents alone are insufficient. The proceedings before a Labor Arbiter are
non-litigious in nature. Subject to the requirements of due process, the technicalities of law and the rules obtaining in the courts of
law do not strictly apply in proceedings before a Labor Arbiter.

Talents as Independent Contractors

ABS-CBN claims that there exists a prevailing practice in the broadcast and entertainment industries to treat talents like
SONZA as independent contractors. SONZA argues that if such practice exists, it is void for violating the right of labor to security of
tenure.
The right of labor to security of tenure as guaranteed in the Constitution[53] arises only if there is an employer-employee
relationship under labor laws. Not every performance of services for a fee creates an employer-employee relationship. To hold that
every person who renders services to another for a fee is an employee - to give meaning to the security of tenure clause - will lead
to absurd results.
Individuals with special skills, expertise or talent enjoy the freedom to offer their services as independent contractors. The
right to life and livelihood guarantees this freedom to contract as independent contractors. The right of labor to security of tenure
cannot operate to deprive an individual, possessed with special skills, expertise and talent, of his right to contract as an independent
contractor. An individual like an artist or talent has a right to render his services without any one controlling the means and methods
by which he performs his art or craft. This Court will not interpret the right of labor to security of tenure to compel artists and talents
to render their services only as employees. If radio and television program hosts can render their services only as employees, the
station owners and managers can dictate to the radio and television hosts what they say in their shows. This is not conducive to
freedom of the press.

Different Tax Treatment of Talents and Broadcasters

The National Internal Revenue Code (NIRC)[54] in relation to Republic Act No. 7716,[55] as amended by Republic Act
No. 8241,[56] treats talents, television and radio broadcasters differently. Under the NIRC, these professionals are subject to the
10% value-added tax (VAT) on services they render. Exempted from the VAT are those under an employer-employee
relationship.[57] This different tax treatment accorded to talents and broadcasters bolters our conclusion that they are independent
contractors, provided all the basic elements of a contractual relationship are present as in this case.

Nature of SONZAs Claims

SONZA seeks the recovery of allegedly unpaid talent fees, 13th month pay, separation pay, service incentive leave,
signing bonus, travel allowance, and amounts due under the Employee Stock Option Plan. We agree with the findings of the Labor
Arbiter and the Court of Appeals that SONZAs claims are all based on the May 1994 Agreement and stock option plan, and not on
the Labor Code. Clearly, the present case does not call for an application of the Labor Code provisions but an interpretation and
implementation of the May 1994 Agreement. In effect, SONZAs cause of action is for breach of contract which is intrinsically a civil
dispute cognizable by the regular courts.

WHEREFORE, we DENY the petition. The assailed Decision of the Court of Appeals dated 26 March 1999 in CA-G.R. SP No.
49190 is AFFIRMED. Costs against petitioner.
SO ORDERED.
MA. ISABEL T. SANTOS v. SERVIER PHILIPPINES, INC. and NLRC G.R. No. 166377 November 28, 2008

Before this Court is a Petition for Review on Certiorari under Rule 45 of the Rules of Court, seeking to set aside the Court of
Appeals (CA) Decision,[1] dated August 12, 2004 and its Resolution[2] dated December 17, 2004, in CA-G.R. SP No. 75706.

The facts, as culled from the records, are as follows:

Petitioner Ma. Isabel T. Santos was the Human Resource Manager of respondent Servier Philippines, Inc. since 1991
until her termination from service in 1999. On March 26 and 27, 1998, petitioner attended a meeting[3] of all human resource
managers of respondent, held in Paris, France. Since the last day of the meeting coincided with the graduation of petitioners only
child, she arranged for a European vacation with her family right after the meeting. She, thus, filed a vacation leave effective March
30, 1998.
On March 29, 1998, petitioner, together with her husband Antonio P. Santos, her son, and some friends, had dinner at
Leon des Bruxelles, a Paris restaurant known for mussels[5] as their specialty. While having dinner, petitioner complained of
stomach pain, then vomited. Eventually, she was brought to the hospital known as Centre Chirurgical de LQuest where she fell into
coma for 21 days; and later stayed at the Intensive Care Unit (ICU) for 52 days. The hospital found that the probable cause of her
sudden attack was alimentary allergy, as she had recently ingested a meal of mussels which resulted in a concomitant uticarial
eruption.
During the time that petitioner was confined at the hospital, her husband and son stayed with her in Paris. Petitioners
hospitalization expenses, as well as those of her husband and son, were paid by respondent.
In June 1998, petitioners attending physicians gave a prognosis of the formers condition; and, with the consent of her
family, allowed her to go back to the Philippines for the continuation of her medical treatment. She was then confined at the St.
Lukes Medical Center for rehabilitation.[8] During the period of petitioners rehabilitation, respondent continued to pay the formers
salaries; and to assist her in paying her hospital bills.
In a letter dated May 14, 1999, respondent informed the petitioner that the former had requested the latters physician to
conduct a thorough physical and psychological evaluation of her condition, to determine her fitness to resume her work at the
company. Petitioners physician concluded that the former had not fully recovered mentally and physically. Hence, respondent was
constrained to terminate petitioners services effective August 31, 1999.[9]
As a consequence of petitioners termination from employment, respondent offered a retirement package which consists
of:
Retirement Plan Benefits: P 1,063,841.76
Insurance Pension at P20,000.00/month
for 60 months from company-sponsored
group life policy: P 1,200,000.00
Educational assistance: P 465,000.00
Medical and Health Care: P 200,000.00
Of the promised retirement benefits amounting to P1,063,841.76, only P701,454.89 was released to petitioners husband,
the balance[11] thereof was withheld allegedly for taxation purposes. Respondent also failed to give the other benefits listed above.
Petitioner, represented by her husband, instituted the instant case for unpaid salaries; unpaid separation pay; unpaid
balance of retirement package plus interest; insurance pension for permanent disability; educational assistance for her son; medical
assistance; reimbursement of medical and rehabilitation expenses; moral, exemplary, and actual damages, plus attorneys fees. The
case was docketed as NLRC-NCR Case No. 30-06-02520-01.
On September 28, 2001, Labor Arbiter Aliman D. Mangandog rendered a Decision[13] dismissing petitioners complaint.
The Labor Arbiter stressed that respondent had been generous in giving financial assistance to the petitioner.[14] He likewise noted
that there was a retirement plan for the benefit of the employees. In denying petitioners claim for separation pay, the Labor Arbiter
ratiocinated that the same had already been integrated in the retirement plan established by respondent. Thus, petitioner could no
longer collect separation pay over and above her retirement benefits.[15] The arbiter refused to rule on the legality of the deductions
made by respondent from petitioners total retirement benefits for taxation purposes, as the issue was beyond the jurisdiction of the
NLRC.[16] On the matter of educational assistance, the Labor Arbiter found that the same may be granted only upon the submission
of a certificate of enrollment.[17] Lastly, as to petitioners claim for damages and attorneys fees, the Labor Arbiter denied the same
as the formers dismissal was not tainted with bad faith.
On appeal to the National Labor Relations Commission (NLRC), the tribunal set aside the Labor Arbiters decision, ruling
that:
WHEREFORE, premises considered, Complainants appeal is partly GRANTED. The Labor Arbiters decision in the above-entitled
case is hereby SET ASIDE. Respondent is ordered to pay Complainants portion of her separation pay covering the following: 1)
P200,000.00 for medical and health care from September 1999 to April 2001; and 2) P35,000.00 per year for her sons high school
(second year to fourth year) education and P45,000.00 per semester for the latters four-year college education, upon presentation of
any applicable certificate of enrollment.

The NLRC emphasized that petitioner was not retired from the service pursuant to law, collective bargaining agreement
(CBA) or other employment contract; rather, she was dismissed from employment due to a disease/disability under Article 284[20] of
the Labor Code.[21] In view of her non-entitlement to retirement benefits, the amounts received by petitioner should then be treated
as her separation pay.[22] Though not legally obliged to give the other benefits, i.e., educational assistance, respondent volunteered
to grant them, for humanitarian consideration. The NLRC therefore ordered the payment of the other benefits promised by the
respondent.[23] Lastly, it sustained the denial of petitioners claim for damages for the latters failure to substantiate the same.
Unsatisfied, petitioner elevated the matter to the Court of Appeals which affirmed the NLRC decision.
Hence, the instant petition.
At the outset, the Court notes that initially, petitioner raised the issue of whether she was entitled to separation pay,
retirement benefits, and damages. In support of her claim for separation pay, she cited Article 284 of the Labor Code, as amended.
However, in coming to this Court via a petition for review on certiorari, she abandoned her original position and alleged that she
was, in fact, not dismissed from employment based on the above provision. She argued that her situation could not be characterized
as a disease; rather, she became disabled. In short, in her petition before us, she now changes her theory by saying that she is not
entitled to separation pay but to retirement pay pursuant to Section 4,[26] Article V of the Retirement Plan, on disability retirement.
She, thus, prayed for the full payment of her retirement benefits by giving back to her the amount deducted for taxation purposes.
In our Resolution[27] dated November 23, 2005 requiring the parties to submit their respective memoranda, we
specifically stated:
No new issues may be raised by a party in the Memorandum and the issues raised in the pleadings but not included in the
Memorandum shall be deemed waived or abandoned.
Being summations of the parties previous pleadings, the Court may consider the Memoranda alone in deciding or
resolving this petition.
Pursuant to the above resolution, any argument raised in her petition, but not raised in her Memorandum,[28] is deemed
abandoned.[29] Hence, the only issue proper for determination is the propriety of deducting P362,386.87 from her total benefits, for
taxation purposes. Nevertheless, in order to resolve the legality of the deduction, it is imperative that we settle, once and for all, the
ground relied upon by respondent in terminating the services of the petitioner, as well as the nature of the benefits given to her after
such termination. Only then can we decide whether the amount deducted by the respondent should be paid to the petitioner.
Respondent dismissed the petitioner from her employment based on Article 284 of the Labor Code, as amended, which
reads:
Art. 284. DISEASE AS GROUND FOR TERMINATION
An employer may terminate the services of an employee who has been found to be suffering from any disease and whose continued
employment is prohibited by law or is prejudicial to his health as well as to the health of his co-employees: Provided, That he is paid
separation pay equivalent to at least one (1) month salary or to one-half (1/2) month salary for every year of service, whichever is
greater, a fraction of at least six (6) months being considered as one (1) whole year.
As she was dismissed on the abovementioned ground, the law gives the petitioner the right to demand separation pay.
However, respondent established a retirement plan in favor of all its employees which specifically provides for disability retirement,
to wit:
Sec. 4. DISABILITY RETIREMENT
In the event that a Member is retired by the Company due to permanent total incapacity or disability, as determined by a competent
physician appointed by the Company, his disability retirement benefit shall be the Full Members Account Balance determined as of
the last valuation date. x x x.
On the basis of the above-mentioned retirement plan, respondent offered the petitioner a retirement package which
consists of retirement plan benefits, insurance pension, and educational assistance.[31] The amount of P1,063,841.76 represented
the disability retirement benefit provided for in the plan; while the insurance pension was to be paid by their insurer; and the
educational assistance was voluntarily undertaken by the respondent as a gesture of compassion to the petitioner.
We have declared in Aquino v. National Labor Relations Commission[33] that the receipt of retirement benefits does not
bar the retiree from receiving separation pay. Separation pay is a statutory right designed to provide the employee with the
wherewithal during the period that he/she is looking for another employment. On the other hand, retirement benefits are intended to
help the employee enjoy the remaining years of his life, lessening the burden of worrying about his financial support, and are a form
of reward for his loyalty and service to the employer.[34] Hence, they are not mutually exclusive. However, this is only true if there is
no specific prohibition against the payment of both benefits in the retirement plan and/or in the Collective Bargaining Agreement
(CBA).[35]
In the instant case, the Retirement Plan bars the petitioner from claiming additional benefits on top of that provided for in
the Plan. Section 2, Article XII of the Retirement Plan provides:
Section 2. NO DUPLICATION OF BENEFITS
No other benefits other than those provided under this Plan shall be payable from the Fund. Further, in the event the
Member receives benefits under the Plan, he shall be precluded from receiving any other benefits under the Labor Code or under
any present or future legislation under any other contract or Collective Bargaining Agreement with the Company.

There being such a provision, as held in Cruz v. Philippine Global Communications, Inc.,[37] petitioner is entitled only to
either the separation pay under the law or retirement benefits under the Plan, and not both.
Clearly, the benefits received by petitioner from the respondent represent her retirement benefits under the Plan. The
question that now confronts us is whether these benefits are taxable. If so, respondent correctly made the deduction for tax
purposes. Otherwise, the deduction was illegal and respondent is still liable for the completion of petitioners retirement benefits.
Respondent argues that the legality of the deduction from petitioners total benefits cannot be taken cognizance of by this
Court since the issue was not raised during the early stage of the proceedings.[38]
We do not agree.
Records reveal that as early as in petitioners position paper filed with the Labor Arbiter, she already raised the legality of
said deduction, albeit designated as unpaid balance of the retirement package. Petitioner specifically averred that P362,386.87 was
not given to her by respondent as it was allegedly a part of the formers taxable income.[39] This is likewise evident in the Labor
Arbiter and the NLRCs decisions although they ruled that the issue was beyond the tribunals jurisdiction. They even suggested that
petitioners claim for illegal deduction could be addressed by filing a tax refund with the Bureau of Internal Revenue.
Contrary to the Labor Arbiter and NLRCs conclusions, petitioners claim for illegal deduction falls within the tribunals
jurisdiction. It is noteworthy that petitioner demanded the completion of her retirement benefits, including the amount withheld by
respondent for taxation purposes. The issue of deduction for tax purposes is intertwined with the main issue of whether or not
petitioners benefits have been fully given her. It is, therefore, a money claim arising from the employer-employee relationship, which
clearly falls within the jurisdiction[41] of the Labor Arbiter and the NLRC.
This is not the first time that the labor tribunal is faced with the issue of illegal deduction. In Intercontinental Broadcasting
Corporation (IBC) v. Amarilla,[42] IBC withheld the salary differentials due its retired employees to offset the tax due on their
retirement benefits. The retirees thus lodged a complaint with the NLRC questioning said withholding. They averred that their
retirement benefits were exempt from income tax; and IBC had no authority to withhold their salary differentials. The Labor Arbiter
took cognizance of the case, and this Court made a definitive ruling that retirement benefits are exempt from income tax, provided
that certain requirements are met.
 Nothing, therefore, prevents us from deciding this main issue of whether the retirement benefits are taxable.
We answer in the affirmative.
Section 32 (B) (6) (a) of the New National Internal Revenue Code (NIRC) provides for the exclusion of retirement benefits
from gross income, thus:
(6) Retirement Benefits, Pensions, Gratuities, etc.
a) Retirement benefits received under Republic Act 7641 and those received by officials and employees of private firms, whether
individual or corporate, in accordance with a reasonable private benefit plan maintained by the employer: Provided, That the retiring
official or employee has been in the service of the same employer for at least ten (10) years and is not less than fifty (50) years of
age at the time of his retirement: Provided further, That the benefits granted under this subparagraph shall be availed of by an
official or employee only once. x x x.
Thus, for the retirement benefits to be exempt from the withholding tax, the taxpayer is burdened to prove the concurrence
of the following elements: (1) a reasonable private benefit plan is maintained by the employer; (2) the retiring official or employee
has been in the service of the same employer for at least ten (10) years; (3) the retiring official or employee is not less than fifty (50)
years of age at the time of his retirement; and (4) the benefit had been availed of only once.
As discussed above, petitioner was qualified for disability retirement. At the time of such retirement, petitioner was only 41
years of age; and had been in the service for more or less eight (8) years. As such, the above provision is not applicable for failure
to comply with the age and length of service requirements. Therefore, respondent cannot be faulted for deducting from petitioners
total retirement benefits the amount of P362,386.87, for taxation purposes.
WHEREFORE, the petition is DENIED for lack of merit. The Court of Appeals Decision dated August 12, 2004 and its
Resolution dated December 17, 2004, in CA-G.R. SP No. 75706 are AFFIRMED. SO ORDERED.

ALFREDO F. PRIMERO vs. INTERMEDIATE APPELLATE COURT and DM TRANSIT G.R. No. 72644 Dec. 14, 1987

The question on which the petitioner's success in the instant appeal depends, and to which he would have us give an
affirmative answer, is whether or not, having recovered separation pay by judgment of the Labor Arbiter which held that he had
been fired by respondent DM Transit Corporation without just cause he may subsequently recover moral damages by action in a
regular court, upon the theory that the manner of his dismissal from employment was tortious and therefore his cause of action was
intrinsically civil in nature.
Petitioner Primero was discharged from his employment as bus driver of DM Transit Corporation (hereafter, simply DM) in
August, 1974 after having been employed therein for over 6 years. The circumstances attendant upon that dismissal are recounted
by the Court of Appeals 1 as follows:
Undisputably, since August 1, 1974, appellee's bus dispatcher did not assign any bus to be driven by appellant Primero.
No reason or cause was given by the dispatcher to appellant for not assigning a bus to the latter for 23 days (pp. 6-14, 21-22, tsn,
May 15, 1979).
Also, for 23 days, appellant was given a run-around from one management official to another, pleading that he be allowed
to work as his family was in dire need of money and at the same time inquiring (why) he was not allowed to work or drive a bus of
the company. Poor appellant did not only get negative results but was given cold treatment, oftentimes evaded and given confusing
information, or ridiculed, humiliated, or sometimes made to wait in the offices of some management personnel of the appellee (pp.
2-29, tsn, May 15, 1979).
(The) General Manager and (the) Vice-President and Treasurer ... wilfully and maliciously made said appellant ... seesaw
or ... go back and forth between them for not less than ten (10) times within a period of 23 days ... but (he) got negative results from
both corporate officials. Worse, on the 23rd day of his ordeal appellant was suddenly told by General Manager Briones to seek
employment with other bus companies because he was already dismissed from his job with appellee (without having been) told of
the cause of his hasty and capricious dismissal ... (pp. 8, 11-13, 25, tsn, May 15, 1979).
Impelled to face the harsh necessities of life as a jobless person and worried by his immediate need for money, appellant
pleaded with Corporate President Demetrio Munoz, Jr. for his reinstatement and also asked P300.00 as financial assistance, but the
latter told the former that he (Munoz, Jr.) will not give him even one centavo and that should appellant sue him in court, then that will
be the time President Munoz, Jr. will pay him, if Munoz, Jr. loses the case x x (pp. 21-22, tsn, May 15, 1979).
Appellant also advised (the) President of the oppressive, anti-social and inhumane acts of subordinate officers ... (but)
Munoz, Jr. did nothing to resolve appellant's predicament and ... just told the latter to go back ... to ... Briones, who insisted that
appellant seek employment with other bus firms in Metro Manila ... (but) admitted that the appellant has not violated any company
rule or regulation ... (pp. 23-26, tsn, May 15, 1979).
... In pursuance (of) defendant's determination to oppress plaintiff and cause further loss, irreparable injury, prejudice and
damage, (D.M. Transit) in bad faith and with malice persuaded other firms (California Transit, Pascual Lines, De Dios Transit,
Negrita Corporation, and MD Transit) not to employ (appellant) in any capacity after he was already unjustly dismissed by said
defendant ... (paragraph 8 of plaintiff's complaint).
These companies with whom appellant applied for a job called up the D.M. Transit Office (which) ... told them ... that they
should not accept (appellant) because (he) was dismissed from that Office.
Primero instituted proceedings against DM with the Labor Arbiters of the Department of Labor, for illegal dismissal, and for
recovery of back wages and reinstatement. It is not clear from the record whether these proceedings consisted of one or two actions
separately filed. What is certain is that he withdrew his claims for back wages and reinstatement, "with the end in view of filing a
damage suit" "in a civil court which has exclusive jurisdiction over his complaint for damages on causes of action founded on
tortious acts, breach of employment contract ... and consequent effects (thereof ).
In any case, after due investigation, the Labor Arbiter rendered judgment dated January 24, 1977 ordering DM to pay
complainant Primero P2,000.00 as separation pay in accordance with the Termination Pay Law. 3 The judgment was affirmed by
the National Labor Relations Commission and later by the Secretary of Labor, the case having been concluded at this level on
March 3, 1978.
 Under the provisions of the Labor Code in force at that time, Labor Arbiters had jurisdiction inter alia over
1) claims involving non-payment or underpayment of wages, overtime compensation, social security and medicare benefits,
and
2) all other cases or matters arising from employer-employee relations, unless otherwise expressly excluded. 5
And we have since held that under these "broad and comprehensive" terms of the law, Labor Arbiters possessed original
jurisdiction over claims for moral and other forms of damages in labor disputes. 6
The jurisdiction of Labor Arbiters over such claims was however removed by PD 1367, effective May 1, 1978, which
explicitly provided that "Regional Directors shall not indorse and Labor Arbiters shall not entertain claims for moral or other forms of
damages."
Some three months afterwards, Primero brought suit against DM in the Court of First Instance of Rizal seeking recovery of
damages caused not only by the breach of his employment contract, but also by the oppressive and inhuman, and consequently
tortious, acts of his employer and its officers antecedent and subsequent to his dismissal from employment without just cause.
While this action was pending in the CFI, the law governing the Labor Arbiters' jurisdiction was once again revised. The
amending act was PD 1691, effective May 1, 1980. It eliminated the restrictive clause placed by PD 1367, that Regional Directors
shall not indorse and Labor Arbiters entertain claims for moral or other forms of damages. And, as we have had occasion to declare
in several cases, it restored the principle that "exclusive and original jurisdiction for damages would once again be vested in labor
arbiters;" eliminated "the rather thorny question as to where in labor matters the dividing line is to be drawn between the power
lodged in an administrative body and a court;' " and, "in the interest of greater promptness in the disposition of labor matters, ...
spared (courts of) the often onerous task of determining what essentially is a factual matter, namely, the damages that may be
incurred by either labor or management as a result of disputes or controversies arising from employer-employee relations." 9
Parenthetically, there was still another amendment of the provision in question which, however, has no application to the case at
bar. The amendment was embodied in B.P. Blg. 227, effective June 1, 1982. 10
On August 11, 1980 the Trial Court rendered judgment dismissing the complaint on the ground of lack of jurisdiction, for
the reason that at the time that the complaint was filed. on August 17, 1978, the law the Labor Code as amended by PD 1367,
eff. May 1, 1978 conferred exclusive, original jurisdiction over claims for moral or other damages, not on ordinary courts, but on
Labor Arbiters.
This judgment was affirmed by the Intermediate Appellate Court, by Decision rendered on June 29, 1984. This is the
judgment now subject of the present petition for review on certiorari. The decision was reached by a vote of 3 to 2. The dissenters,
placing reliance on certain of our pronouncements, opined that Primero's causes of action were cognizable by the courts, that
existence of employment relations was not alone decisive of the issue of jurisdiction, and that such relations may indeed give rise to
"civil" as distinguished from purely labor disputes, as where an employer's right to dismiss his employee is exercised tortiously, in a
manner oppressive to labor, contrary to morals, good customs or public policy.
Primero has appealed to us from this judgment of the IAC praying that we overturn the majority view and sustain the
dissent.
Going by the literal terms of the law, it would seem clear that at the time that Primero filed his complaints for illegal
dismissal and recovery of backwages, etc. with the Labor Arbiter, the latter possessed original and exclusive jurisdiction also over
claims for moral and other forms of damages; this, in virtue of Article 265 12 of PD 442, otherwise known as the Labor Code,
effective from May 1, 1974. In other words, in the proceedings before the Labor Arbiter, Primero plainly had the right to plead and
prosecute a claim not only for the reliefs specified by the Labor Code itself for unlawful termination of employment, but also for moral
or other damages under the Civil Code arising from or connected with that termination of employment. And this was the state of the
law when he moved for the dismissal of his claims before the Labor Arbiter, for reinstatement and recovery of back wages, so that
he might later file a damage suit "in a civil court which has exclusive jurisdiction over his complaint ... founded on tortious acts,
breach of employment contract ... and consequent effects (thereof)."
The legislative intent appears clear to allow recovery in proceedings before Labor Arbiters of moral and other forms of
damages, in all cases or matters arising from employer-employee relations. This would no doubt include, particularly, instances
where an employee has been unlawfully dismissed. In such a case the Labor Arbiter has jurisdiction to award to the dismissed
employee not only the reliefs specifically provided by labor laws, but also moral and other forms of damages governed by the Civil
Code. Moral damages would be recoverable, for example, where the dismissal of the employee was not only effected without
authorized cause and/or due process for which relief is granted by the Labor Code but was attended by bad faith or fraud, or
constituted an act oppressive to labor, or was done in a manner contrary to morals, good customs or public policy 14 for which
the obtainable relief is determined by the Civil Code 15 (not the Labor Code). Stated otherwise, if the evidence adduced by the
employee before the Labor Arbiter should establish that the employer did indeed terminate the employee's services without just
cause or without according him due process, the Labor Arbiter's judgment shall be for the employer to reinstate the employee and
pay him his back wages or, exceptionally, for the employee simply to receive separation pay. These are reliefs explicitly prescribed
by the Labor Code. 16 But any award of moral damages by the Labor Arbiter obviously cannot be based on the Labor Code but
should be grounded on the Civil Code. Such an award cannot be justified solely upon the premise (otherwise sufficient for redress
under the Labor Code) that the employer fired his employee without just cause or due process. Additional facts must be pleaded
and proven to warrant the grant of moral damages under the Civil Code, these being, to repeat, that the act of dismissal was
attended by bad faith or fraud, or was oppressive to labor, or done in a manner contrary to morals, good customs, or public policy;
and, of course, that social humiliation, wounded feelings, grave anxiety, etc., resulted therefrom. 17
It is clear that the question of the legality of the act of dismissal is intimately related to the issue of the legality of the
manner by which that act of dismissal was performed. But while the Labor Code treats of the nature of, and the remedy available as
regards the first the employee's separation from employment it does not at all deal with the second the manner of that
separation which is governed exclusively by the Civil Code. In addressing the first issue, the Labor Arbiter applies the Labor
Code; in addressing the second, the Civil Code. And this appears to be the plain and patent intendment of the law. For apart from
the reliefs expressly set out in the Labor Code flowing from illegal dismissal from employment, no other damages may be awarded
to an illegally dismissed employee other than those specified by the Civil Code. Hence, the fact that the issue-of whether or not
moral or other damages were suffered by an employee and in the affirmative, the amount that should properly be awarded to him in
the circumstances-is determined under the provisions of the Civil Code and not the Labor Code, obviously was not meant to create
a cause of action independent of that for illegal dismissal and thus place the matter beyond the Labor Arbiter's jurisdiction.
 Thus, an employee who has been illegally dismissed (i.e., discharged without just cause or being accorded due process),
in such a manner as to cause him to suffer moral damages (as determined by the Civil Code), has a cause of action for
reinstatement and recovery of back wages and damages. When he institutes proceedings before the Labor Arbiter, he should make
a claim for all said reliefs. He cannot, to be sure, be permitted to prosecute his claims piecemeal. He cannot institute proceedings
separately and contemporaneously in a court of justice upon the same cause of action or a part thereof. He cannot and should not
be allowed to sue in two forums: one, before the Labor Arbiter for reinstatement and recovery of back wages, or for separation pay,
upon the theory that his dismissal was illegal; and two, before a court of justice for recovery of moral and other damages, upon the
theory that the manner of his dismissal was unduly injurious, or tortious. This is what in procedural law is known as splitting causes
of action, engendering multiplicity of actions. It is against such mischiefs that the Labor Code amendments just discussed are
evidently directed, and it is such duplicity which the Rules of Court regard as ground for abatement or dismissal of actions,
constituting either litis pendentia (auter action pendant) or res adjudicata, as the case may be. 18 But this was precisely what
Primero's counsel did. He split Primero's cause of action; and he made one of the split parts the subject of a cause of action before
a court of justice. Consequently, the judgment of the Labor Arbiter granting Primero separation pay operated as a bar to his
subsequent action for the recovery of damages before the Court of First Instance under the doctrine of res judicata, The rule is that
the prior "judgment or order is, with respect to the matter directly adjudged or as to any other matter that could have been raised in
relation thereto, conclusive between the parties and their successors in interest by title subsequent to the commencement of the
action or special proceeding, litigating for the same thing and under the same title and in the same capacity.
We are not unmindful of our previous rulings on the matter cited in the dissent to the decision of the Court of Appeals
subject of the instant petition, 20 notably, Quisaba v. Sta Ines-Melale Veneer & Plywood Inc., where a distinction was drawn
between the right of the employer to dismiss an employee, which was declared to be within the competence of labor agencies to
pass upon, and the "manner in which the right was exercised and the effects flowing therefrom," declared to be a matter cognizable
only by the regular courts because "intrinsically civil." 21 We opine that it is this very distinction which the law has sought to
eradicate as being so tenuous and so difficult to observe, 22 and, of course, as herein pointed out, as giving rise to split jurisdiction,
or to multiplicity of actions, "a situation obnoxious to the orderly administration of justice. 23 Actually we merely reiterate in this
decision the doctrine already laid down in other cases (Garcia v. Martinez, 84 SCRA 577; Ebon v. de Guzman, 13 SCRA 52;
Bengzon v. Inciong, 91 SCRA 248; Pepsi-Cola Bottling Co. v. Martinez, 112 SCRA 578; Aguda v. Vallejos, 113 SCRA 69; Getz v.
C.A., 116 SCRA 86; Cardinal Industries v. Vallejos, 114 SCRA 471; Sagmit v. Sibulo, 133 SCRA 359) to the effect that the grant of
jurisdiction to the Labor Arbiter by Article 217 of the Labor Code is sufficiently comprehensive to include claims for moral and
exemplary damages sought to be recovered from an employer by an employee upon the theory of his illegal dismissal. Rulings to
the contrary are deemed abandoned or modified accordingly.

WHEREFORE, the petition is DISMISSED, without pronouncement as to costs.

NICASIO P. RODRIGUEZ JR. v. ANTONIO L. AGUILAR SR. G.R. No. 159482. August 30, 2005

Claims for moral and exemplary damages arising from employer-employee relations fall within the original and exclusive
jurisdiction of the National Labor Relations Commission, not the regular courts. Hence, in the present case, the trial court should not
have entertained the Complaint filed by respondent for damages arising from the alleged oppressive manner of his dismissal by
petitioners.

The Case
Before the Court is a Petition for Review[1] under Rule 45 of the Rules of Court, seeking to reverse and set aside the
March 31, 2003 Decision[2] of the Court of Appeals (CA) in CA-GR SP No. 74278 and its August 5, 2003 Resolution[3] denying
petitioners Motion for Reconsideration. The assailed CA Decision disposed as follows:
WHEREFORE, for lack of merit, the petition is DISMISSED.

The Facts
The antecedents were summarized by the CA as follows:
Petitioners are members of the Board of Directors of Philippine Postal Savings Bank, Inc. (PPSBI) at Liwasang Bonifacio,
Manila; private respondent Antonio L. Aguilar was employed as Vice President of its Finance and Administrative Group from
February 14, 2000 to January 31, 2001, and thereafter as Compliance Officer until September 26, 2001 when his services were
terminated.
On October 25, 2001, private respondent filed a complaint against petitioners with the Regional Trial Court, Branch 49,
City of Manila alleging that he was illegally dismissed by the petitioners in an oppressive way; that the cause of his dismissal was his
principled act of exposing anomalies in the bank; that considering the seriousness of the violations of internal control and bank
policies, there is a need to prohibit petitioners from performing their functions as members of the Board in their own personal
capacity. He prayed for the award of damages, the issuance of a temporary restraining order enjoining the petitioners from
dismissing him or in the alternative, to immediately reinstate him, and the prohibition of the petitioners from performing their personal
and official acts in the bank.
On October 29, 2001, public respondent Judge motu proprio dismissed the complaint for lack of jurisdiction stating that
jurisdiction over the case lies with the Labor Arbiter of the National Labor Relations Commission.
Unaware of the dismissal[,] petitioners, on November 9, 2001, filed a Motion to Dismiss private respondents complaint on
the ground of the RTCs lack of jurisdiction over the subject matter of the complaint.
On November 12, 2001, private respondent filed a Motion for Reconsideration of the Order dated 29 October 2001.
However, on November 26, 2001, he filed an Ex-Parte Motion to Withdraw Motion For Reconsideration of the Dismissal Order and
In Lieu Thereof to Submit Amended Complaint, which was attached thereto. In his Amended Complaint, he emphasized that his
dismissal (constructive and actual) was done in a very oppressive manner. His prayer for reinstatement was deleted.
 In an Order dated January 4, 2002, public respondent Judge admitted the Amended Complaint reasoning that
amendment was a matter of right before defendants filed a responsive pleading, the motion to dismiss not being a responsive
pleading. Petitioners were ordered to file their Answer within fifteen (15) days from receipt thereof.
On January 30, 2002, without filing a Motion for Reconsideration of the above Order, petitioners again filed a Motion to
Dismiss, this time of the Amended Complaint, on the ground of lack of jurisdiction over the persons of the petitioners and over the
subject matter of the claim.
In an Order dated February 8, 2002, public respondent Judge ruled that petitioners filing of the above Motion to Dismiss
was tantamount to a voluntary appearance through a pleading that vested the court with jurisdiction over their persons. Petitioners
were given an additional ten (10) days within which to submit an Answer, otherwise, said defendants (herein petitioners), may be
declared in default.
Petitioners then filed a Motion for Reconsideration dated February 15, 2002, reiterating their prayer for the dismissal of the
Amended Complaint. This was denied in the Order dated March 1, 2002.
On April 4, 2002, respondent filed a Motion to Declare Defendants As in Default and For Judgment On the Pleadings
grounded on petitioners failure to file their Answer within the additional ten (10)-day period granted by the court. Citing Ortigas & Co.
Ltd. v. Velasco (254 SCRA 234), public respondent noted that defendants were heedless and unyielding to the Orders of the Court
particularly its directive to file an Answer to the Amended Complaint and that the defendants continually ignored and refused to
submit to the Orders of the Court, and inasmuch as no responsive pleading has been filed by them within the period fixed by the
Court in its Order dated June 7, 2002 which granted respondents motion and declared defendants-petitioners in default.
On the 15th day from receipt thereof on June 19, 2002, petitioners filed on July 1, 2002 an ordinary Motion for
Reconsideration on the above Order, (not a Motion to Set Aside the Order of Default under Rule 9 Sec. 3(b), Rules of Civil
Procedure) which was denied in an Order dated July 19, 2002.
On the same date of July 19, 2002, public respondent issued the assailed decision (Judgment by Default) in favor of the
private respondent ratiocinating as follows:
The Court shall not delve into the legality of Mr. Aguilars demotion and, later on, dismissal by the PPSB Board of Directors
for to do so would intrude into the jurisdiction of the Labor Arbiters of the National Labor Relations Commission. Rather, this Court
shall concern itself with the manner in which the said demotion and dismissal were carried out and the consequent effects thereof,
which, as jurisprudence teaches us, are well within this Courts jurisdiction to inquire into.
From the foregoing, confluence of events, which stand unrebutted the defendants having been declared in default, there
can be no question that Mr. Aguilars demotion and dismissal from service was pursued in a highly abusive, oppressive and clearly
anti-social manner.
On August 7, 2002, petitioners filed an Omnibus Motion contending that the Order of Default did not deprive them of their
right to notice, which public respondent violated when private respondents evidence was received without notifying them; that the
presentation of evidence ex parte was premature considering that they were still entitled to question the propriety of the Order of
Default and that, in fact, they filed a motion for reconsideration of the Order of default. Petitioners reiterated that the Amended
Complaint was filed out of time considering that the Order of Dismissal dated 29 October 2001 had already became final. On August
16, 2002, the public respondent issued the assailed Order denying the Omnibus Motion.
Petitioners filed before the CA a Petition for Certiorari under Rule 65, challenging the July 19, 2002 Decision and the
August 16, 2002 Order of the Regional Trial Court (RTC), alleging that it had gravely abused its discretion in the following ways:
1. Holding that Mr. Aguilars ex parte withdrawal of his Motion for Reconsideration of the Order of Dismissal did not cause it to
become final and executory.
2. Taking cognizance of the Amended Complaint because [private respondent] had deleted his prayers for the other reliefs that fall
within the jurisdiction of the labor court.
3. Declaring [petitioners] in default and in allowing the presentation of and receiving [private respondents] evidence ex parte in
violation of the Rules.
Petitioners prayed that the lower courts judgment by default, as well as said courts all other orders and findings after its
Order of dismissal of the original Complaint[,] be reversed and set aside, and that the case in question be dismissed for lack of
jurisdiction and for having been decided in violation of the Rules.[7]

Ruling of the Court of Appeals

Agreeing with the RTC, the CA held that the withdrawal of the Motion for Reconsideration filed by respondent had not
resulted in the finality of the Dismissal Order dated October 29, 2001, since he had simultaneously amended his Complaint. This he
had every right to do, said the CA, because no responsive pleading had yet been filed by petitioners. It opined that the Amended
Complaint superseded his original Complaint and mooted the issue raised in his Motion for Reconsideration. It further said that the
rules on the amendment of pleadings may be liberally construed to avoid a multiplicity of suits; and to ensure that the real
controversies between the parties would be presented, their rights determined, and the case decided on the merits without
unnecessary delay.
The CA likewise ruled that the RTC had jurisdiction over the case, because of the civil nature of the cause of action; that
is, the alleged oppressive manner of respondents dismissal that had resulted in damages.
Lastly, the CA found no grave abuse of discretion on the part of the RTC in declaring petitioners in default, then
afterwards receiving ex parte the evidence presented by respondent, and rendering a judgment of default. The appellate court
stressed that as early as the January 4, 2002 Order, the RTC had directed petitioners to answer the Amended Complaint. The trial
court reiterated the directive in the February 8, 2002 Order, with a warning that if they failed to answer within ten days, they would
be declared in default.
The two Orders, which petitioners had not challenged either by a motion for reconsideration or by a petition for certiorari,
thus attained finality. According to the CA, their prayer for the dismissal of the Amended Complaint was reiterated in both their
Omnibus Motion filed after the denial on January 30, 2002, of their Motion to Dismiss the Amended Complaint, as well as in their
subsequent Motions for Reconsideration. These amounted to multiple motions for reconsideration, which are proscribed under
Section 5 of Rule 37 of the Rules of Civil Procedure.
As to the ex parte reception of respondents evidence, the CA pointed out that under Section 3 of Rule 9, the court may
proceed to render judgment based entirely on the plaintiffs Complaint without need of receiving evidence. If so, the appellate court
said, it would be reasonable to conclude that petitioners did not have any demandable right to be given notice of the ex parte
reception of respondents evidence.
Hence, this Petition.
Issues
Petitioners raise the following issues for our consideration:
I. The Honorable Court of Appeals erred in sustaining the finding of the trial court that Mr. Aguilars ex parte withdrawal of his Motion
for Reconsideration of the Order of dismissal of the original Complaint did not cause said Order to become final and executory.
II. The Honorable Court of Appeals erred in sustaining the trial court that it could allow the amendment of the original Complaint
purely as a matter of right before a responsive pleading is filed, despite prevailing jurisprudence to the contrary.
III. The Honorable Court of Appeals erred in sustaining that the trial court could take cognizance of Mr. Aguilars Amended Complaint
because it had deleted the prayers for other reliefs that fall within the jurisdiction of the National Labor Relations Commission.
IV. The Honorable Court of Appeals erred in sustaining the trial court that it could receive Mr. Aguilars evidence ex parte without
notice to petitioners despite pertinent rules and jurisprudence to the contrary.[9]

In brief, the issues are as follows: (1) What are the effects of the withdrawal of the Motion for Reconsideration of
the RTCs dismissal of the Complaint? (2) Did the RTC have jurisdiction over the Amended Complaint?

The Courts Ruling

The Petition is meritorious.
First Issue:
Withdrawal of the Motion for Reconsideration
It is settled that an amendment of a complaint may be allowed even if an order for its dismissal has been issued, as long
as the motion to amend is filed before the dismissal order becomes final.[10] The reason for allowing the amendment on this
condition is that, upon finality of the dismissal, the court loses jurisdiction and control over the complaint. Thus, it can no longer
make any disposition on the complaint in a manner inconsistent with the dismissal.[11] After the order of dismissal without prejudice
becomes final, and therefore falls outside the courts power to modify, a party who wishes to reinstate the case has no remedy other
than to file a new complaint.[12]
The instant case deals with a Motion for Reconsideration[13] of the trial courts Order dismissing the case for lack of
jurisdiction. The Motion was filed on November 13, 2001, within the 15-day reglementary period for appeal,[14] and later withdrawn
and substituted with a Motion to Admit Amended Complaint. Petitioners contention is that the withdrawal of the Motion for
Reconsideration would have a retroactive effect, such that it would be as if no motion had been filed at all; and, hence, the Motion
for Admission of the Amended Complaint -- filed beyond the 15-day reglementary period, after the dismissal had become final --
should no longer be entertained, much less admitted.
The trial court accepted the Amended Complaint and held that the dismissal Order had not attained finality, because the
15-day reglementary period under the Rules had tolled upon the filing of the Motion for Reconsideration; and would begin to run
again only after the party concerned would have received the courts Resolution on the Motion.[15] As it had not yet ruled on the
Motion for Reconsideration when respondent filed his Amended Complaint, the trial court opined that the Amended Complaint may
be deemed to have been filed within the prescribed time.
We rule otherwise. The trial court erroneously admitted the Amended Complaint. Upon the withdrawal by respondent of
his Motion for Reconsideration, it was as if no motion had been filed. Hence, the Order of the trial court under question became final
and executory 15 days from notice by the party concerned.
In the same manner that the withdrawal of an appeal has the effect of rendering the appealed decision[16] final and
executory, the withdrawal of the Motion for Reconsideration in the present case had the effect of rendering the dismissal Order final
and executory. By then, there was no more complaint that could be amended, even for the first time as a matter of right.
Notably, respondent does not refute petitioners argument that his Motion for Admission of his Amended Complaint was
filed after the lapse of the 15-day reglementary period to reconsider or set aside the dismissal. What he insists upon is his
contention that the Order of dismissal did not become final and executory, because the Motion for Reconsideration had not yet been
resolved at the time he filed his Amended Complaint.
By way of analogy, petitioners cite Olympia International v. Court of Appeals,[17] in which the plaintiffs two civil actions
were dismissed by the trial court on a joint Motion to Dismiss filed by the plaintiff and the defendant:
It is equally important to note that the right to file a new action in this case has long prescribed, for while the
commencement of a civil action stops the running of the statute of prescription or limitations, its dismissal or voluntary abandonment
by the plaintiff leaves the parties in exactly the same position as though no action had been commenced at all. The commencement
of an action, by reason of its dismissal or abandonment, takes no time out of the period of prescription.
In like manner, while the filing of the Motion for Reconsideration interrupted the running of the 15-day reglementary
period, its withdrawal left respondent in exactly the same position as though no motion had been filed at all. The withdrawal of the
Motion for Reconsideration effectively erased the tolling of the reglementary period to amend the Complaint.
Second Issue:
Jurisdiction
Under Article 217(a) of the Labor Code, as amended by Republic Act No. 6715 which took effect on March 21, 1989, labor
arbiters shall have original and exclusive jurisdiction to hear and decide: [c]laims for actual, moral, exemplary and other forms of
damages arising from the employer-employee relations x x x.
Clearly, in the case before us, respondents claim for damages against petitioners arose from a prior employer-employee
relationship. The averments in the Complaint indisputably show that his claim for damages was anchored on and was a
consequence of the termination of his employment with PPSBI.
Indeed, the trial court initially made this observation when it dismissed motu proprio respondents Complaint.[19] It ruled
that the manner in which the dismissal was implemented was anti-social, oppressive and in disregard of procedural due process x x
x is but an incident part and parcel of the main issue which is the alleged illegal dismissal of [respondent]. The trial court likewise
opined that the plea of respondent for reinstatement made his case one of illegal dismissal per se.
 Later, however, it reversed its dismissal Order after he subsequently amended his Complaint by deleting his prayer for
reinstatement and by stressing that his claim for damages had resulted from the alleged oppressive manner of his dismissal.
The trial court should have dismissed the Amended Complaint. With regard to claims for damages under paragraph 4 of
Article 217, quoted above, jurisprudence has applied the reasonable connection rule: if there is a reasonable causal connection
between the claim asserted and the employer-employee relations, then the case falls within the jurisdiction of the labor arbiter.[20]
We do not agree with the trial court that the case became a civil dispute simply because respondent had not asked for reinstatement
in his Amended Complaint. An employee need not seek reinstatement in order to have a complaint heard by the labor arbiter.
A comparison of the original[22] and the Amended Complaint[23] reveals that the allegations and the prayers in both are
almost identical, except that the prayer for reinstatement and the claim for salary increases and allowances are no longer included in
the Amended Complaint. These are telltale signs that the claim of respondent for damages is intertwined with his separation from
his employment, allegedly without a just cause. Consequently, his claim has a reasonable causal connection with his employer-
employee relations with the bank.
The Court is aware that the Civil Code provisions on human relations and damages may be used as bases for justifying
his claim. But, the fact remains: the present action primarily involves an employer-employee relationship. The damages he incurred
are mere consequences of the alleged injury brought about by his perceived illegal dismissal. The civil ramifications of his actual
claim cannot alter the reality that it is primordially a labor matter cognizable by the labor tribunals.
Under Article 217 (a) of the Labor Code, the labor arbiter has the jurisdiction to award to a dismissed employee not only
the reliefs provided by the Labor Code, but also moral and other forms of damages governed by the Civil Code.[24] Although a
dismissal from employment may be a violation not only of the Labor but also of the Civil Code,[25] an illegally dismissed employee
has only a single cause of action.
Moral damages are recoverable when, for example, the dismissal was effected without an authorized cause and/or due
process -- for which relief is granted by the Labor Code -- and also when the dismissal (1) was attended by bad faith or fraud; (2)
constituted an act oppressive to labor; or (3) was done in a manner contrary to morals, good customs or public policy. For any of
these, the obtainable relief is determined by the Civil Code.
This Court expounded on this matter in the earlier case Primero v. Intermediate Appellate Court,[27] which we quote:
It is clear that the question of the legality of the act of dismissal is intimately related to the issue of the legality of the manner by
which that act of dismissal was performed. But while the Labor Code treats of the nature of, and the remedy available as regards the
first the employees separation from employment it does not at all deal with the second the manner of that separation which is
governed exclusively by the Civil Code. In addressing the first issue, the Labor Arbiter applies the Labor Code; in addressing the
second, the Civil Code. And this appears to be the plain and patent intendment of the law. For apart from the reliefs expressly set
out in the Labor Code flowing from illegal dismissal from employment, no other damages may be awarded to an illegally dismissed
employee other than those specified by the Civil Code. Hence, the fact that the issue of whether or not moral or other damages
were suffered by an employee and in the affirmative, the amount that should properly be awarded to him in the circumstances is
determined under the provisions of the Civil Code and not the Labor Code, obviously was not meant to create a cause of action
independent of that for illegal dismissal and thus place the matter beyond the Labor Arbiters jurisdiction.
Hence, for a single cause of action, the dismissed employee cannot be allowed to sue in two forums: one, before the labor
arbiter for reinstatement and recovery of back wages or for separation pay, upon the theory that the dismissal was illegal; and two,
before a court of justice for recovery of moral and other damages, upon the theory that the manner of dismissal was unduly injurious
or tortious. Suing in the manner described is known as splitting a cause of action, a practice engendering a multiplicity of actions. It
is considered procedurally unsound and obnoxious to the orderly administration of justice.
Splitting a cause of action was precisely what private respondent did in filing the Amended Complaint. He split his cause
of action, then made one of the split parts the subject of his Amended Complaint before a court of justice.
Precisely, such duplicity prodded the lawmakers to amend the Labor Code by restoring to the labor arbiters the jurisdiction
over claims for damages of this nature. From 1979 to 1980, jurisdiction over employment-predicated actions for damages vacillated
from labor tribunals to regular courts, and back to labor tribunals.
On May 1, 1979, Presidential Decree No. 1367 amended the then existing Article 217[28] of the Labor Code to the effect
that [r]egional Directors shall not indorse and Labor Arbiters shall not entertain claims for moral or other forms of damages.[29] But
this limitation of jurisdiction did not last long, because on May 1, 1980, PD 1691[30] nullified PD 1367 and restored Article 217 of the
Labor Code almost to its original form. PD 1691 once again vested in the labor arbiters and the NLRC the jurisdiction over all money
claims of workers and all other claims arising from employer-employee relations, including moral and exemplary damages.[31] In
Ebon v. De Guzman,[32] this Court explained:
The lawmaker in divesting the Labor Arbiters and the NLRC of jurisdiction to award moral and other forms of damages in labor
cases could have assumed that the Labor Arbiters position-paper procedure of ascertaining the facts in dispute might not be an
adequate tool for arriving at a just and accurate assessment of damages, as distinguished from backwages and separation pay, and
that the trial procedure in the Court of First Instance [now Regional Trial Court] would be a more effective means of determining
such damages. x x x

Evidently, the lawmaking authority had second thoughts about depriving the Labor Arbiters and the NLRC of the
jurisdiction to award damages in labor cases because that set up would mean duplicity of suits, splitting the cause of action and
possible conflicting findings and conclusions by two tribunals on one and the same claim.

Presently, as amended by RA 6715, the jurisdiction of the NLRC under Article 217 of the Labor Code is comprehensive
enough to include claims for all forms of damages arising from the employer-employee relations.

WHEREFORE, the Petition is GRANTED, and the assailed Decision REVERSED and SET ASIDE. The Amended
Complaint in Civil Case No. 01102147, filed with the Regional Trial Court (Branch 49) of the City of Manila, is hereby DISMISSED.
No pronouncement as to costs.
SO ORDERED.
PURIFICACION G. TABANG vs. NLRC G.R. No. 121143. January 21, 1997

This is a petition for certiorari which seeks to annul the resolution of the National Labor Relations Commission (NLRC),
dated June 26, 1995, affirming in toto the order of the labor arbiter, dated April 26, 1994, which dismissed petitioners complaint for
illegal dismissal with money claims for lack of jurisdiction.
The records show that petitioner Purificacion Tabang was a founding member, a member of the Board of Trustees, and
the corporate secretary of private respondent Pamana Golden Care Medical Center Foundation, Inc., a non-stock corporation
engaged in extending medical and surgical services.
On October 30, 1990, the Board of Trustees issued a memorandum appointing petitioner as Medical Director and Hospital
Administrator of private respondents Pamana Golden Care Medical Center in Calamba, Laguna.
Although the memorandum was silent as to the amount of remuneration for the position, petitioner claims that she
received a monthly retainer fee of five thousand pesos (P5,000.00) from private respondent, but the payment thereof was allegedly
stopped in November, 1991.
As medical director and hospital administrator, petitioner was tasked to run the affairs of the aforesaid medical center and
perform all acts of administration relative to its daily operations.
On May 1, 1993, petitioner was allegedly informed personally by Dr. Ernesto Naval that in a special meeting held on April
30, 1993, the Board of Trustees passed a resolution relieving her of her position as Medical Director and Hospital Administrator, and
appointing the latter and Dr. Benjamin Donasco as acting Medical Director and acting Hospital Administrator, respectively. Petitioner
averred that she thereafter received a copy of said board resolution.
On June 6, 1993, petitioner filed a complaint for illegal dismissal and non-payment of wages, allowances and 13th month
pay before the labor arbiter.
Respondent corporation moved for the dismissal of the complaint on the ground of lack of jurisdiction over the subject
matter. It argued that petitioners position as Medical Director and Hospital Administrator was interlinked with her position as member
of the Board of Trustees, hence, her dismissal is an intra-corporate controversy which falls within the exclusive jurisdiction of the
Securities and Exchange Commission (SEC).
Petitioner opposed the motion to dismiss, contending that her position as Medical Director and Hospital Administrator was
separate and distinct from her position as member of the Board of Trustees. She claimed that there is no intra-corporate controversy
involved since she filed the complaint in her capacity as Medical Director and Hospital Administrator, or as an employee of private
respondent.
On April 26, 1994, the labor arbiter issued an order dismissing the complaint for lack of jurisdiction. He ruled that the case
falls within the jurisdiction of the SEC, pursuant to Section 5 of Presidential Decree No. 902-A.
Petitioners motion for reconsideration was treated as an appeal by the labor arbiter who consequently ordered the
elevation of the entire records of the case to public respondent NLRC for appellate review.
On appeal, respondent NLRC affirmed the dismissal of the case on the additional ground that the position of a Medical
Director and Hospital Administrator is akin to that of an executive position in a corporate ladder structure, hence, petitioners removal
from the said position was an intra-corporate controversy within the original and exclusive jurisdiction of the SEC.
Aggrieved by the decision, petitioner filed the instant petition which we find, however, to be without merit.
We agree with the findings of the NLRC that it is the SEC which has jurisdiction over the case at bar. The charges against
herein private respondent partake of the nature of an intra-corporate controversy. Similarly, the determination of the rights of
petitioner and the concomitant liability of private respondent arising from her ouster as a medical director and/or hospital
administrator, which are corporate offices, is an intra-corporate controversy subject to the jurisdiction of the SEC.
Contrary to the contention of petitioner, a medical director and a hospital administrator are considered as corporate
officers under the by-laws of respondent corporation. Section 2(i), Article I thereof states that one of the powers of the Board of
Trustees is (t)o appoint a Medical Director, Comptroller/Administrator, Chiefs of Services and such other officers as it may deem
necessary and prescribe their powers and duties.
The president, vice-president, secretary and treasurer are commonly regarded as the principal or executive officers of a
corporation, and modern corporation statutes usually designate them as the officers of the corporation.[5] However, other offices are
sometimes created by the charter or by-laws of a corporation, or the board of directors may be empowered under the by-laws of a
corporation to create additional offices as may be necessary.
It has been held that an office is created by the charter of the corporation and the officer is elected by the directors or
stockholders.[7] On the other hand, an employee usually occupies no office and generally is employed not by action of the directors
or stockholders but by the managing officer of the corporation who also determines the compensation to be paid to such employee.
In the case at bar, considering that herein petitioner, unlike an ordinary employee, was appointed by respondent
corporations Board of Trustees in its memorandum of October 30, 1990,[9] she is deemed an officer of the corporation. Perforce,
Section 5(c) of Presidential Decree No. 902-A, which provides that the SEC exercises exclusive jurisdiction over controversies in the
election or appointment of directors, trustees, officers or managers of corporations, partnerships or associations, applies in the
present dispute. Accordingly, jurisdiction over the same is vested in the SEC, and not in the Labor Arbiter or the NLRC.
Moreover, the allegation of petitioner that her being a member of the Board of Trustees was not one of the considerations
for her appointment is belied by the tenor of the memorandum itself. It states: We hope that you will uphold and promote the mission
of our foundation,[10] and this cannot be construed other than in reference to her position or capacity as a corporate trustee.
A corporate officers dismissal is always a corporate act, or an intra-corporate controversy, and the nature is not altered by
the reason or wisdom with which the Board of Directors may have in taking such action.[11] Also, an intra-corporate controversy is
one which arises between a stockholder and the corporation. There is no distinction, qualification, nor any exemption whatsoever.
The provision is broad and covers all kinds of controversies between stockholders and corporations.
With regard to the amount of P5,000.00 formerly received by herein petitioner every month, the same cannot be
considered as compensation for her services rendered as Medical Director and Hospital Administrator. The vouchers[13] submitted
by petitioner show that the said amount was paid to her by PAMANA, Inc., a stock corporation which is separate and distinct from
herein private respondent. Although the payments were considered advances to Pamana Golden Care, Calamba branch, there is no
evidence to show that the Pamana Golden Care stated in the vouchers refers to herein respondent Pamana Golden Care Medical
Center Foundation, Inc.
 Pamana Golden Care is a division of Pamana, Inc., while respondent Pamana Golden Care Medical Center Foundation,
Inc. is a non-stock, non-profit corporation. It is stated in the memorandum of petitioner that Pamana, Inc. is a stock and profit
corporation selling pre-need plan for education, pension and health care. The health care plan is called Pamana Golden Care Plan
and the holders are called Pamana Golden Care Card Holders or, simply, Pamana Members.
It is an admitted fact that herein petitioner is a retained physician of Pamana, Inc., whose patients are holders of the
Pamana Golden Care Card. In fact, in her complaint[15] filed before the Regional Trial Court of Calamba, herein petitioner is asking,
among others, for professional fees and/or retainer fees earned for her treatment of Pamana Golden Care card holders.[16] Thus, at
most, said vouchers can only be considered as proof of payment of retainer fees made by Pamana, Inc. to herein petitioner as a
retained physician of Pamana Golden Care.
Moreover, even assuming that the monthly payment of P5,000.00 was a valid claim against respondent corporation, this
would not operate to effectively remove this case from the jurisdiction of the SEC. In the case of Cagayan de Oro Coliseum, Inc. vs.
Office of the Minister of Labor and Employment, etc., et al.,[17] we ruled that (a)lthough the reliefs sought by Chavez appear to fall
under the jurisdiction of the labor arbiter as they are claims for unpaid salaries and other remunerations for services rendered, a
close scrutiny thereof shows that said claims are actually part of the perquisites of his position in, and therefore interlinked with, his
relations with the corporation. In Dy, et al., vs. NLRC, et al., the Court said: (t)he question of remuneration involving as it does, a
person who is not a mere employee but a stockholder and officer, an integral part, it might be said, of the corporation, is not a simple
labor problem but a matter that comes within the area of corporate affairs and management and is in fact a corporate controversy in
contemplation of the Corporation Code.

WHEREFORE, the questioned resolution of the NLRC is hereby AFFIRMED, without prejudice to petitioners taking recourse to and
seeking relief through the appropriate remedy in the proper forum. SO ORDERED.

RUBBERWORLD [PHILS.], INC vs. NLRC G.R. No. 128003 July 26, 2000

What is before the Court for resolution is a petition to annul the resolution of the National Labor Relations Commission (NLRC),1
affirming the labor-arbiter's award but deleting the moral and exemplary damages.

The facts are as follows:

Petitioner Rubberworld (Phils.), Inc. [hereinafter Rubberworld], a corporation established in 1965, was engaged in
manufacturing footwear, bags and garments.
Aquilino Magsalin, Pedro Manibo, Ricardo Borja, Benjamin Camitan, Alicia M. San Pedro, and Felomena Tolin were
employed as dispatcher, warehouseman, issue monitor, foreman, jacks cementer and outer sole attacher, respectively.
On August 26, 1994, Rubberworld filed with the Department of Labor and Employment a notice of temporary shutdown of
operations to take effect on September 26, 1994. Before the effectivity date, however, Rubberworld was forced to prematurely
shutdown its operations.
On November 11, 1994, private respondents filed with the National Labor Relations Commission a complaint2 against
petitioner for illegal dismissal and non-payment of separation pay.
On November 22, 1994, Rubberworld filed with the Securities and Exchange Commission (SEC) a petition for declaration
of suspension of payments with a proposed rehabilitation plan.
On December 28, 1994, SEC issued the following order:
"Accordingly, with the creation of the Management Committee, all actions for claims against Rubberworld Philippines, Inc.
pending before any court, tribunal, office, board, body, Commission or sheriff are hereby deemed SUSPENDED.
"Consequently, all pending incidents for preliminary injunctions, writ or attachments, foreclosures and the like are hereby
rendered moot and academic. "SO ORDERED."
On January 24, 1995, petitioners submitted to the labor arbiter a motion to suspend the proceedings invoking the SEC
order dated December 28, 1994. The labor arbiter did not act on the motion and ordered the parties to submit their respective
position papers.
On December 10, 1995, the labor arbiter rendered a decision, which provides:
"In the light of the foregoing, respondents are hereby declared guilty of ILLEGAL SHUTDOWN and that respondents are
ordered to pay complainants their separation pay equivalent to one (1) month pay for every year of service.
Considering the malicious act of closing the business precipitately without due regard to the rights of complainants, moral
damages and exemplary damage in the sum of P 50,000.00 and P 30,000.00 respectively is hereby awarded for each of the
complainants.
Finally 10 % of all sums owing to complainants is hereby adjudged as attorney's fees. SO ORDERED.
On February 5, 1996, petitioners appealed to the National Labor Relations Commission (NLRC) alleging abuse of
discretion and serious errors in the findings of facts of the labor arbiter.
On August 30, 1996, NLRC issued a resolution, the dispositive portion of which reads:
"PREMISES CONSIDERED, the decision appealed from is hereby, AFFIRMED with MODIFICATION in that the award of
moral and exemplary damages is hereby, DELETED. SO ORDERED.
On November 20, 1996, NLRC denied petitioners' motion for reconsideration.
Hence, this petition.7
The issue is whether or not the Department of Labor and Employment, the Labor Arbiter and the National Labor
Relations Commission may legally act on the claims of respondents despite the order of the Securities and Exchange
Commission suspending all actions against a company under rehabilitation by a management committee created by the
Securities and Exchange Commission.
 Presidential Decree No. 902-A is clear that "all actions for claims against corporations, partnerships or associations under
management or receivership pending before any court, tribunal, board or body shall be suspended accordingly." The law did not
make any exception in favor of labor claims.
"The justification for the automatic stay of all pending actions for claims is to enable the management committee or the
rehabilitation receiver to effectively exercise its/his powers free from any judicial or extra judicial interference that might unduly
hinder or prevent the 'rescue' of the debtor company. To allow such other actions to continue would only add to the burden of the
management committee or rehabilitation receiver, whose time, effort and resources would be wasted in defending claims against the
corporation instead of being directed toward its restructuring and rehabilitation."
Thus, the labor case would defeat the purpose of an automatic stay.1wphi1 To rule otherwise would open the floodgates
to numerous claims and would defeat the rescue efforts of the management committee.
Besides, even if an award is given to private respondents, the ruling could not be enforced as long as petitioner is under
management committee.
This finds ratiocination in that the power to hear and decide labor disputes is deemed suspended when the Securities and
Exchange Commission puts the corporation under rehabilitation.
Thus, when NLRC proceeded to decide the case despite the SEC suspension order, the NLRC acted without or in excess
of its jurisdiction to hear and decide cases. As a consequence, any resolution, decision or order that it rendered or issued without
jurisdiction is a nullity.
WHEREFORE, the petition is hereby GRANTED. The decision of the labor arbiter dated December 10, 1995 and the
NLRC resolution dated August 30, 1996, are SET ASIDE. No costs. SO ORDERED.

PERPETUAL HELP CREDIT COOPERATIVE, INC. vs. BENEDICTO FABURADA G.R. No. 121948. Oct. 8, 2001

On January 3, 1990, Benedicto Faburada, Sisinita Vilar, Imelda Tamayo and Harold Catipay, private respondents, filed a
complaint against the Perpetual Help Credit Cooperative, Inc. (PHCCI), petitioner, with the Arbitration Branch, Department of Labor
and Employment (DOLE), Dumaguete City, for illegal dismissal, premium pay on holidays and rest days, separation pay, wage
differential, moral damages, and attorneys fees.
Forthwith, petitioner PHCCI filed a motion to dismiss the complaint on the ground that there is no employer-employee
relationship between them as private respondents are all members and co-owners of the cooperative. Furthermore, private
respondents have not exhausted the remedies provided in the cooperative by-laws.
On September 3, 1990, petitioner filed a supplemental motion to dismiss alleging that Article 121 of R.A. No. 6939,
otherwise known as the Cooperative Development Authority Law which took effect on March 26, 1990, requires conciliation or
mediation within the cooperative before a resort to judicial proceeding.
On the same date, the Labor Arbiter denied petitioner's motion to dismiss, holding that the case is impressed with
employer-employee relationship and that the law on cooperatives is subservient to the Labor Code.
On November 23, 1993, the Labor Arbiter rendered a decision, the dispositive portion of which reads:
WHEREFORE, premises considered, judgment is hereby rendered declaring complainants illegally dismissed, thus respondent is
directed to pay Complainants backwages computed from the time they were illegally dismissed up to the actual reinstatement but
subject to the three year backwages rule, separation pay for one month for every year of service since reinstatement is evidently not
feasible anymore, to pay complainants 13th month pay, wage differentials and Ten Percent (10%) attorneys fees from the aggregate
monetary award. However, complainant Benedicto Faburada shall only be awarded what are due him in proportion to the nine and a
half months that he had served the respondent, he being a part-time employee.
All other claims are hereby dismissed for lack of merit.
The computation of the foregoing awards is hereto attached and forms an integral part of this decision.
On appeal[1], the NLRC affirmed the Labor Arbiter's decision.
Hence, this petition by the PHCCI.

The issue for our resolution is whether or not respondent judge committed grave abuse of discretion in ruling
that there is an employer-employee relationship between the parties and that private respondents were illegally dismissed.
Petitioner PHCCI contends that private respondents are its members and are working for it as volunteers. Not being
regular employees, they cannot sue petitioner.
In determining the existence of an employer-employee relationship, the following elements are considered: (1) the
selection and engagement of the worker or the power to hire; (2) the power to dismiss; (3) the payment of wages by whatever
means; and (4) the power to control the workers conduct, with the latter assuming primacy in the overall consideration. No particular
form of proof is required to prove the existence of an employer-employee relationship. Any competent and relevant evidence may
show the relationship.
The above elements are present here. Petitioner PHCCI, through Mr. Edilberto Lantaca, Jr., its Manager, hired private
respondents to work for it. They worked regularly on regular working hours, were assigned specific duties, were paid regular wages
and made to accomplish daily time records just like any other regular employee. They worked under the supervision of the
cooperative manager. But unfortunately, they were dismissed.
That an employer-employee exists between the parties is shown by the averments of private respondents in their
respective affidavits, carefully considered by respondent NLRC in affirming the Labor Arbiter's decision, thus:
Benedicto Faburada -Regular part-time Computer programmer/ operator. Worked with the Cooperative since June 1,
1988 up to December 29, 1989. Work schedule: Tuesdays and Thursdays, from 1:00 p.m. to 5:30 p.m. and every Saturday from
8:00 to 11:30 a.m. and 1:00 to 4:00 p.m. and for at least three (3 ) hours during Sundays. Monthly salary: P1,000.00 -from June to
December 1988; P1,350.00 - from January to June 1989; and P1,500.00 from July to December 1989. Duties: Among others, Enter
data into the computer; compute interests on savings deposits, effect mortuary deductions and dividends on fixed deposits; maintain
the masterlist of the cooperative members; perform various forms for mimeographing; and perform such other duties as may be
assigned from time to time.
 Sisinita Vilar -Clerk. Worked with the Cooperative since December 1, 1987 up to December 29, 1989. Work schedule:
Regular working hours. Monthly salary: P500.00 - from December 1, 1987 to December 31, 1988; P1,000.00 - from January 1, 1989
to June 30, 1989; and P1,150.00 - from July 1, 1989 to December 31, 1989. Duties: Among others, Prepare summary of salary
advances, journal vouchers, daily summary of disbursements to respective classifications; schedule loans; prepare checks and cash
vouchers for regular and emergency loans; reconcile bank statements to the daily summary of disbursements; post the monthly
balance of fixed and savings deposits in preparation for the computation of interests, dividends, mortuary and patronage funds;
disburse checks during regular and emergency loans; and perform such other bookkeeping and accounting duties as may be
assigned to her from time to time.
Imelda C. Tamayo - Clerk. Worked with the Cooperative since October 19, 1987 up to December 29, 1989. Work
schedule: Monday to Friday - 8:00 to 11:30 a.m and 2:00 to 5:30 p.m.; every Saturday - 8:00 to 11:30 a.m and 1:00 to 4:00 p.m; and
for one Sunday each month - for at least three (3) hours. Monthly salary: P60.00 - from October to November 1987; P250.00 for
December 1987; P500.00 - from January to December 1988; P950 - from January to June 1989; and P1,000.00 from July to
December 1989. Duties: Among others, pick up balances for the computation of interests on savings deposit, mortuary, dividends
and patronage funds; prepare cash vouchers; check petty cash vouchers; take charge of the preparation of new passbooks and
ledgers for new applicants; fill up members logbook of regular depositors, junior depositors and special accounts; take charge of
loan releases every Monday morning; assist in the posting and preparation of deposit slips; receive deposits from members; and
perform such other bookkeeping and accounting duties as may be assigned her from time to time.
Harold D. Catipay - Clerk. Worked with the Cooperative since March 3 to December 29, 1989. Work schedule: - Monday
to Friday - 8:00 to 11:30 a.m. and 2:00 to 5:30 p.m.; Saturday - 8:00 to 11:30 a.m. and 1:00 to 4:00 p.m.; and one Sunday each
month - for at least three (3) hours. Monthly salary: P900.00 - from March to June 1989; P1,050.00 - from July to December 1989.
Duties: Among others, Bookkeeping, accounting and collecting duties, such as, post daily collections from the two (2) collectors in
the market; reconcile passbooks and ledgers of members in the market; and assist the other clerks in their duties.
All of them were given a memorandum of termination on January 2, 1990, effective December 29, 1989.
We are not prepared to disregard the findings of both the Labor Arbiter and respondent NLRC, the same being supported
by substantial evidence, that quantum of evidence required in quasi-judicial proceedings, like this one.
Necessarily, this leads us to the issue of whether or not private respondents are regular employees. Article 280 of the
Labor Code provides for three kinds of employees: (1) regular employees or those who have been engaged to perform activities
which are usually necessary or desirable in the usual business or trade of the employer; (2) project employees or those whose
employment has been fixed for a specific project or undertaking, the completion or termination of which has been determined at the
time of the engagement of the employee or where the work or service to be performed is seasonal in nature and the employment is
for the duration of the season; and (3) casual employees or those who are neither regular nor project employees.[3] The employees
who are deemed regular are: (a) those who have been engaged to perform activities which are usually necessary or desirable in the
usual trade or business of the employer; and (b) those casual employees who have rendered at least one (1) year of service,
whether such service is continuous or broken, with respect to the activity in which they are employed.[4] Undeniably, private
respondents were rendering services necessary to the day-to-day operations of petitioner PHCCI. This fact alone qualified them as
regular employees.
All of them, except Harold D. Catipay, worked with petitioner for more than one (1) year: Benedicto Faburada, for one and
a half (1 1/2) years; Sisinita Vilar, for two (2) years; and Imelda C. Tamayo, for two (2) years and two (2) months. That Benedicto
Faburada worked only on a part-time basis, does not mean that he is not a regular employee. Ones regularity of employment is not
determined by the number of hours one works but by the nature and by the length of time one has been in that particular job.[5]
Petitioner's contention that private respondents are mere volunteer workers, not regular employees, must necessarily fail. Its
invocation of San Jose City Electric Cooperative vs. Ministry of Labor and Employment (173 SCRA 697, 703 (1989 ) is misplaced.
The issue in this case is whether or not the employees-members of a cooperative can organize themselves for purposes of
collective bargaining, not whether or not the members can be employees. Petitioner missed the point.
As regular employees or workers, private respondents are entitled to security of tenure. Thus, their services may be
terminated only for a valid cause, with observance of due process.
The valid causes are categorized into two groups: the just causes under Articles 282 of the Labor Code and the
authorized causes under Articles 283 and 284 of the same Code. The just causes are: (1) serious misconduct or willful disobedience
of lawful orders in connection with the employees work; (2) gross or habitual neglect of duties; (3) fraud or willful breach of trust; (4)
commission of a crime or an offense against the person of the employer or his immediate family member or representative; and,
analogous cases. The authorized causes are: (1) the installation of labor-saving devices; (2) redundancy; (3) retrenchment to
prevent losses; and (4) closing or cessation of operations of the establishment or undertaking, unless the closing is for the purpose
of circumventing the provisions of law. Article 284 provides that an employer would be authorized to terminate the services of an
employee found to be suffering from any disease if the employees continued employment is prohibited by law or is prejudicial to his
health or to the health of his fellow employees.
Private respondents were dismissed not for any of the above causes. They were dismissed because petitioner considered
them to be mere voluntary workers, being its members, and as such work at its pleasure. Petitioner thus vehemently insists that
their dismissal is not against the law.
Procedural due process requires that the employer serve the employees to be dismissed two (2) written notices before the
termination of their employment is effected: (a) the first, to apprise them of the particular acts or omissions for which their dismissal
is sought and (b) the second, to inform them of the decision of the employer that they are being dismissed.[7] In this case, only one
notice was served upon private respondents by petitioner. It was in the form of a Memorandum signed by the Manager of the
Cooperative dated January 2, 1990 terminating their services effective December 29, 1989. Clearly, petitioner failed to comply with
the twin requisites of a valid notice.
We hold that private respondents have been illegally dismissed.
Petitioner contends that the labor arbiter has no jurisdiction to take cognizance of the complaint of private respondents
considering that they failed to submit their dispute to the grievance machinery as required by P.D 175 (strengthening the
Cooperative Movement)[8] and its implementing rules and regulations under LOI 23. Likewise, the Cooperative Development
Authority did not issue a Certificate of Non-Resolution pursuant to Section 8 of R.A. 6939 or the Cooperative Development Authority
Law.
 As aptly stated by the Solicitor General in his comment, P.D. 175 does not provide for a grievance machinery where a
dispute or claim may first be submitted. LOI 23 refers to instructions to the Secretary of Public Works and Communications to
implement immediately the recommendation of the Postmaster General for the dismissal of some employees of the Bureau of Post.
Obviously, this LOI has no relevance to the instant case.
Article 121 of Republic Act No. 6938 (Cooperative Code of the Philippines) provides the procedure how cooperative
disputes are to be resolved, thus:
ART. 121. Settlement of Disputes.- Disputes among members, officers, directors, and committee members, and intra-cooperative
disputes shall, as far as practicable, be settled amicably in accordance with the conciliation or mediation mechanisms embodied in
the bylaws of the cooperative, and in applicable laws.
Should such a conciliation/mediation proceeding fail, the matter shall be settled in a court of competent jurisdiction.
Complementing this Article is Section 8 of R.A. No. 6939 (Cooperative Development Authority Law) which reads:
SEC. 8 Mediation and Conciliation.- Upon request of either or both parties, the Authority shall mediate and conciliate disputes within
a cooperative or between cooperatives: Provided, That if no mediation or conciliation succeeds within three (3) months from request
thereof, a certificate of non-resolution shall be issued by the Commission prior to the filing of appropriate action before the proper
courts.
The above provisions apply to members, officers and directors of the cooperative involved in disputes within a cooperative
or between cooperatives.
There is no evidence that private respondents are members of petitioner PHCCI and even if they are, the dispute is about
payment of wages, overtime pay, rest day and termination of employment. Under Art. 217 of the Labor Code, these disputes are
within the original and exclusive jurisdiction of the Labor Arbiter.

As illegally dismissed employees, private respondents are therefore entitled to reinstatement without loss of seniority
rights and other privileges and to full backwages, inclusive of allowances, plus other benefits or their monetary equivalent computed
from the time their compensation was witheld from them up to the time of their actual reinstatement.[9] Since they were dismissed
after March 21, 1989, the effectivity date of R.A. 6715[10] they are granted full backwages, meaning, without deducting from their
backwages the earnings derived by them elsewhere during the period of their illegal dismissal.[11] If reinstatement is no longer
feasible, as when the relationship between petitioner and private respondents has become strained, payment of their separation pay
in lieu of reinstatement is in order.
WHEREFORE, the petition is hereby DENIED. The decision of respondent NLRC is AFFIRMED, with modification in the
sense that the backwages due private respondents shall be paid in full, computed from the time they were illegally dismissed up to
the time of the finality of this Decision. SO ORDERED.

SMART COMMUNICATIONS, INC. v. JOSE LENI Z. SOLIDUM G.R. No. 197763, December 07, 2015

The Case
These are consolidated petitions filed under Rule 45 of the Rules of Court assailing the Decision dated April 4, 20111 and
Resolution dated July 14, 20112 of the Court of Appeals (CA) in CA-G.R. SP No. 109765 entitled Jose Leni Z. Solidum v. National
Labor Relations Commission (First Division), Smart Communications, Inc., Napoleon L. Nazareno and Ricky P. Isla. The CA
Decision affirmed with modification the Resolution dated January 26, 2009 and Decision dated May 29, 2009 of the National Labor
Relations Commission (NLRC) in NLRC Case No. 00-11-09564-05.

The Facts
The facts as found by the CA are as follows:

In an Employment Contract dated April 26, 2004,3 Smart Communications, Inc. (Smart) hired Jose Leni Solidum
(Solidum) as Department Head of Smart Prepaid/Buddy Activations under the Product Marketing Group. Existing company
procedures provide that a department head shall approve project proposals coming from his marketing assistants and product
managers/officers. Once approved, a finance officer will assign a reference number to the project with a stated budget allocation. If
the Company decides to engage the services of a duly accredited creative agency, the department head will coordinate with it to
discuss the details of the project. The implementation details and total amount of the project will then be included in a Cost Estimate
(CE) submitted to the Company, routed for approval, and returned to the selected agency for implementation. After the project is
carried out, the agency will bill the Company by sending the CE with attached invoices and other supporting documents.
On September 21, 2005, Solidum received a Notice to Explain of even date4 from the Company charging him with acts of
dishonesty and breach of trust and confidence. In summary, he was charged with violating "various company policies by
misrepresenting and using his position and influence in his grant plot to defraud Smart by conceptualizing fictitious marketing
events, appointing fictitious advertising agencies to supposedly carry out marketing events and submitting fictitious documents to
make it appear that the marketing events transpired."5 He was charged with the following infractions: (1) falsification and/or
knowingly submitting falsified contents of reports/documents relative to his duties and responsibilities; (2) obtaining through
fraudulent means materials, goods or services from the Company; (3) failing or refusing to disclose to the Company any existing or
future dealings, transactions, relationships, etc. posing or would pose possible conflict of interest; (4) other forms of deceit, fraud,
swindling, and misrepresentation committed by an employee against the company or its representative; and (5) fraud or willful
breach of trust in relation to transactions covered by Invoice No. 2921 and CE No. 2005-533 as well as CE Nos. 2005-413, 2005-
459, 2005-461, 2005-526, 2005-460, 2005-552 and 2005-527 that were approved/noted by him. Solidum received a copy of the
Notice on the same date. Pending administrative investigation, Solidum was placed under preventive suspension without pay for a
period of thirty (30) days.
 In a letter dated September 26, 2005,6 Solidum denied the charges and claimed that he never defrauded nor deceived
the Company in his transactions.
Continued audit investigation, however, revealed that Solidum approved/noted several CEs covering activities for which
payments were made but did not actually carried out. Unaccredited third parties were also engaged in the implementation of the
projects. Thus, the Company issued another Notice to Explain dated October 21, 20057 to Solidum, this time covering the following
additional CEs: 2005-416, 2005-480, 2005-481, 2005-479, 2005-512, 2005-513, and 2005-533. Solidum was again preventively
suspended for another ten (10) days. Further, the Company scheduled the administrative investigation of the case on October 26,
2005.
Solidum then sent a letter dated October 24, 20058 to the Company requesting copies of the pertinent documents so he
can prepare an intelligible explanation. In another letter dated October 26, 2005,9 Solidum stated that the investigation is highly
suspicious and his extended suspension imposed undue burden. He also reserved his right to present evidence. In his last letter
dated October 28, 2005,10 Solidum declared that he shall no longer receive or entertain notices or memorandum, except the final
decision resolving the administrative charges against him.
Thereafter, the Company issued a letter dated November 2, 2005, alleging that Solidum refused to accept the documents
that he had requested. Using this allegation, the Company imposed an additional preventive suspension often (10) days on Solidum.
Based on the available evidence, the Company decided to dismiss Solidum for breach of trust in a Notice of Decision
dated November 9, 2005.11 Corollarily, a Notice of Termination was served on him on November 11, 2005.
Aggrieved, Solidum filed a complaint dated November 19, 2005 for illegal suspension and dismissal with money claims
before the Arbitration Branch of the NLRC claiming that his extended suspension and subsequent termination were without just
cause and due process.
In a Decision dated July 3, 2006,12 the labor arbiter declared that the extended period of suspension without pay was
illegal and that Solidum was unjustly dismissed from work without observance of procedural due process. He was ordered reinstated
and was awarded backwages and monetary claims. The labor arbiter ratiocinated that the ground of breach of trust and confidence
is restricted to managerial employees; however, no substantial evidence was presented to prove that Solidum has the prerogatives
akin to a manager other than his titular designation as department head.
The Company appealed the adverse decision of the labor arbiter to the NLRC but was denied for having been filed out of
time and/or for non-perfection, thus:
Records show that respondents received a copy of the Decision on "July 10, 2006" (See Registry Return Receipt, p. 561, Record)
However, respondents filed their appeal only on "July 25, 2006" x x x already beyond the reglementary ten (10) calendar day period
for filing an appeal to the Commission. x x x
Moreover, perusal of the appeal shows that the appeal bond attached to it is not accompanied by a security deposit or
collateral. The CERTIFICATE OF NO COLLATERAL x x x that was submitted by the bonding company stating that the bond was
issued on (sic) behalf of respondent SMART "without collateral because they are our valued client" and that "[t]he company declares
its commitment to honor the validity of the foregoing bond notwithstanding the absence of collateral" does not serve any purpose
other than an admission that the security deposit or collateral requirement under Section 6, Rule VI of the Revised Rules of
[Procedure of the NLRC for perfecting an appeal was not complied with. Needless to state, the absence of a security deposit or
collateral securing the bond renders the appeal legally infirm.13ChanRoblesVirtualawlibrary
In its motion for reconsideration, the Company insisted that the appeal was filed within the reglementary period considering that it
received the labor arbiter's decision only on July 13, 2006 and not July 10, 2006. It presented among others the Certification from
Makati Central Post Office, the pertinent page of the letter carrier's Registry Book, and the respective affidavit of the letter carrier
and the Company's receiving clerk. It added that in case of conflict between the registry receipt and the postmaster's certification,
the latter should prevail. Likewise, the Company maintained that the surety bond was secured by its goodwill and the alleged lack of
collateral or security will not render the bond invalid in view of the surety's unequivocal commitment to pay the monetary award.
Finding merit in the motion, the NLRC issued a Resolution dated January 26, 200914 reversing its earlier ruling and giving
due course to the appeal. It upheld the certification of the postmaster over the registry receipt and found that there was substantial
compliance with the bond requirement, viz:
Given the factual milieu, the Commission rules that respondents' appeal was indeed filed within the ten (10) day period x x x. Since
the Decision [of the Labor Arbiter] dated July 3, 2006 was received by respondents on July 13, 2006, respondents have (sic)
effectively until July 25, 2006 (considering that July 23 was a Sunday, and July 24 was a declared nonworking day) x x x.
As to the absence of security deposit or collateral, the Commission x x x finds that respondents were able to comply
substantially with the pre-requisite for the perfection of appeal.
x x x While the appeal bond was posted without security or collateral, the Certification dated July 20, 2006, issued by the
bonding company attests to the latter's "commitment to honor the validity of the foregoing bond notwithstanding the absence of
collateral." Otherwise stated, the very purpose of a security or collateral should be deemed served considering the guarantee of the
bonding company to pay the entire amount of the bond in the event respondents suffer an adverse disposition of their appeal. It
matters not that the bond was issued on behalf of respondents without collateral for after all, the bond is accompanied by a
declaration under oath bearing the bonding company's commitment to honor the validity of the surety bond and attesting that the
surety bond is genuine and shall be in effect until the final disposition of the case.
The NLRC likewise reversed the labor arbiter's decision. It ruled that the seriousness of Solidum's infractions justified the
additional period of suspension. It added that the labor arbiter erred in declaring Solidum's dismissal illegal and without just cause
on the basis that he is not a managerial employee. On the contrary, overwhelming evidence showed that Solidum holds a position of
trust and has violated various company policies. Finally, the NLRC found that Solidum was accorded procedural due process. The
dispositive portion of the Resolution thus reads:
WHEREFORE, the foregoing considered, the Commission hereby resolves as follows:
complainant's Motion to Inhibit dated June 13, 2008 is DENIED for lack of merit.
respondents' Motion for Reconsideration dated July 27, 2007 is GRANTED and their instant appeal dated July 25, 2006 is given
DUE COURSE. the Commission's Resolution dated July 4, 2007 is SET ASIDE and VACATED.
the appealed Decision a quo dated July 3, 2006 is SET ASIDE and new one is ENTERED dismissing the complaint below for lack of
merit. SO ORDERED.
 Thus, Solidum appealed to the CA. The CA then rendered the assailed Decision dated April 4, 2011 affirming with
modification the Decision of the NLRC. The dispositive portion of the CA Decision reads:
FOR THESE REASONS, the Court AFFIRMS the NLRC Resolution dated January 26, 2009 with the MODIFICATION that petitioner
Jose Leni Solidum be paid his salaries and benefits which accrued during the period of his extended preventive suspension.
SO ORDERED.
From such Decision both parties moved for reconsideration. The CA denied such Motions in a Resolution dated July 14,
2011. From such ruling of the appellate court, both parties appealed. Hence, the instant petitions.

The Issues
In G.R. No. 197763, Smart raises the following issues:
(A) The Court of Appeals gravely erred in declaring illegal the second preventive suspension imposed by petitioner Smart upon the
respondent.
(B) The Court of Appeals gravely erred in declaring that petitioner Smart may not place the respondent under another preventive
suspension after discovery of additional offenses notwithstanding that the offenses committed by the respondent warrant another
preventive suspension

The Court's Ruling

The petitions must be denied.
Solidum's 2nd preventive suspension is valid
In G.R. No. 197763, Smart contended:
On the same vein, the respondent was validly placed under second preventive suspension for the reason that pending investigation
of separate and distinct set of offenses committed by the respondent as contained in the second Notice to Explain dated 21 October
2005 (Annex F hereof), his continued presence in the company premises during the investigation poses serious and imminent threat
to the life or property of the employer and co-workers.17ChanRoblesVirtualawlibrary
On the other hand, Solidum claims that his preventive suspension of 20 days is an extension of his initial 30-day suspension and,
hence, illegal and constitutes constructive dismissal.
Smart's position is impressed with merit.
The relevant provisions regarding preventive suspensions are found in Sections 8 and 9 of Rule XXIII, Book V of the Omnibus Rules
Implementing the Labor Code (Omnibus Rules), as amended by Department Order No. 9, Series of 1997, which read as follows:
Section 8. Preventive suspension. The employer may place the worker concerned under preventive suspension only if his continued
employment poses a serious and imminent threat to the life or property of the employer or of his co-workers.
Section 9. Period of suspension. No preventive suspension shall last longer than thirty (30) days. The employer shall
thereafter reinstate the worker in his former or in a substantially equivalent position or the employer may extend the period of
suspension provided that during the period of extension, he pays the wages and other benefits due to the worker. In such case, the
worker shall not be bound to reimburse the amount paid to him during the extension if the employer decides, after completion of the
hearing, to dismiss the worker, (Emphasis supplied)
By a preventive suspension an employer protects itself from further harm or losses because of the erring employee. This
concept was explained by the Court in Gatbonton v. National Labor Relations Commission:18
Preventive suspension is a disciplinary measure for the protection of the company's property pending investigation of any alleged
malfeasance or misfeasance committed by the employee. The employer may place the worker concerned under preventive
suspension if his continued employment poses a serious and imminent threat to the life or property of the employer or of his co-
workers. However, when it is determined that there is no sufficient basis lo justify an employee's preventive suspension, the latter is
entitled to the payment of salaries during the time of preventive suspension. (Emphasis supplied)
Such principle was applied by the Court in Bluer Than Blue Joint Ventures/Mary Ann Dela Vega v. Esteban,19 where it was ruled:
Preventive suspension is a measure allowed by law and afforded to the employer if an employee's continued employment poses a
serious and imminent threat to the employer's life or property or of his co-workers. It may be legally imposed against an employee
whose alleged violation is the subject of an investigation.
In this case, the petitioner was acting well within its rights when it imposed a 10-day preventive suspension on Esteban.
While it may be that the acts complained of were committed by Esteban almost a year before the investigation was conducted, still,
it should be pointed out that Esteban was performing functions that involve handling of the petitioner's property and funds, and the
petitioner had every right to protect its assets and operations pending Esteban's investigation. (Emphasis supplied)
While the Omnibus Rules limits the period of preventive suspension to thirty (30) days, such time frame pertains only to one offense
by the employee. For an offense, it cannot go beyond 30 days. However, if the employee is charged with another offense, then the
employer is entitled to impose a preventive suspension not to exceed 30 days specifically for the new infraction. Indeed, a fresh
preventive suspension can be imposed for a separate or distinct offense. Thus, an employer is well within its rights to preventively
suspend an employee for other wrongdoings that may be later discovered while the first investigation is ongoing.
As in this case, Smart was able to uncover other wrongdoings committed by Solidum during the investigation for the initial
charges against him. These newly discovered transgressions would, thus, require an additional period to investigate. The first batch
of offenses was captured in the September 21, 2005 Notice to Explain issued by Smart. The notice covers fraud or willful breach of
trust in relation to transactions covered by Invoice No. 2921 and CE No. 2005-533 as well as CE Nos. 2005-413, 2005-459, 2005-
461, 2005-526, 2005-460, 2005-552 and 2005-527 that were noted by him. For these offenses, Solidum was issued a preventive
suspension without pay for 30 days.
On October 21, 2005, Smart, however, issued another notice to explain to Solidum this time involving additional CEs:
2005-416, 2005-480, 2005-481, 2005-479, 2005-512, and 2005-513. Solidum was again preventively suspended for twenty (20)
days. The preventive suspension of 20 days is not an extension of the suspension issued in relation to the September 21, 2005
Notice to Explain but is a totally separate preventive suspension for the October 21, 2005 Notice to Explain. As earlier pointed out,
the transactions covered by the 30-day preventive suspension are different from that covered by the 20-day preventive suspension.
Such being the case the court a quo was incorrect when it treated said suspension as an "extension" and, consequently, it is a
miscue to award Solidum the payment of back salaries and benefits corresponding to the 20-day preventive suspension of Solidum.
As to the issues raised by Solidum in G.R. No. 197836, the same are bereft of merit.
 Smart's appeal from the Decision of the labor arbiter was filed within the reglementary period
Solidum contends that Smart's motion for reconsideration of the labor arbiter's Decision was filed out of time. The issue
here is: When did Smart receive a copy of the Decision? The confusion originated from the date stamped by the receiving clerk of
Smart on the receiving copy of the Decision as July 10, 2006. Smart claims that the stamped date was erroneous as it actually
received a copy of the Decision only on July 13, 2006. Such claim is supported by the certification from the postmaster of the Makati
Central Post Office, the letter carrier's Registry Book, and the affidavits of the letter carrier and Smart's receiving clerk. With such
overwhelming evidence, there can be no other conclusion except that Smart received a copy of the Decision on July 13, 2006 and
filed their motion for reconsideration within the prescribed 10-day period on July 25, 2006, as July 24, 2006 fell on a Sunday. Thus,
Smart's Motion was timely filed.
Smart substantially complied with the requirements of an appeal bond
Next, Solidum questions the validity of the appeal bond filed by Smart, pointing out the lack of a proof of security deposit
or collateral necessary to perfect its appeal to the NLRC. To recall, Section 6, Rule VI of the 2005 NLRC Revised Rules of
Procedure states:
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 bond, which shall either be in the form of cash deposit or surety bond
equivalent in amount to the monetary award, exclusive of damages and attorney's fees.
In case of surety bond, the same shall be issued by a reputable bonding company duly accredited by the Commission or
the Supreme Court, and shall be accompanied by original or certified true copies of the following:
c) proof of security deposit or collateral securing the bond: provided, that a check shall not be considered as an acceptable security.
(Emphasis supplied)
Thus, Solidum claims that the lack of proof of security deposit or collateral securing the bond renders the bond irregular and the
appeal legally infirm.
We disagree.
As aptly found by the NLRC, substantial compliance with the rules on appeal bonds has been repeatedly held by this
Court to be sufficient for the perfection of an appeal:
The perfection of an appeal within the reglementary period and in the manner prescribed by law is jurisdictional, and noncompliance
with such legal requirement is fatal and effectively renders the judgment final and executory. As provided in Article 223 of the Labor
Code, as amended, 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.
However, not only in one case has this Court relaxed this requirement in order to bring about the immediate and
appropriate resolution of cases on the merits. In Quiambao v. National Labor Relations Commission, this Court allowed the
relaxation of the requirement when there is substantial compliance with the rule. Likewise, in Ong v. Court of Appeals, the Court
held that the bond requirement on appeals may be relaxed when there is substantial compliance with the Rules of Procedure of the
NLRC or when the appellant shows willingness to post a partial bond. The Court held that "while the bond requirement on appeals
involving monetary awards has been relaxed in certain cases, this can only be done where there was substantial compliance of the
Rules or where the appellants, at the very least, exhibited willingness to pay by posting a partial bond."
Furthermore, considering that it is the NLRC that has interpreted its own rules on this matter, the Court is inclined to
accept such interpretation. The Court has held, "By reason of the special knowledge and expertise of administrative agencies over
matters falling under their jurisdiction, they are in a better position to pass judgment on those matters."21 Moreover, the NLRC
properly relaxed the rules on appeal bonds.
The NLRC has the power and authority to promulgate rules of procedure under Article 218(a) of the Labor Code. As such,
it can suspend the rules if it finds that the interests of justice will be better served if the strict compliance with the rules should be
relaxed. In short, a substantial compliance may be allowed by the NLRC especially in this case where the party which submitted the
bond is a multibillion company which can easily pay whatever monetary award may be adjudged against it. Even if there is no proof
of security deposit or collateral, the surety bond issued by an accredited company is adequate to answer for the liability if any to be
incurred by Smart.
Solidum is not entitled to reinstatement
Next, Solidum claims that due to the extension of his period of preventive suspension, he must be considered as having
been constructively dism issed and entitled to reinstatement and backwages. To support his claim, Solidum cites Maricalum
Mining Corporation v. Decorion22 Such case, however, is not factually on all fours with the instant case. In Maricalum, the Court
ruled that Decorion was illegally constructively dismissed, which is why he was entitled to reinstatement. Here, Solidum was validly
dismissed for loss of trust and confidence. Thus, his reliance on Maricalum is misplaced and will not justify his reinstatement.
As to Solidum's claim of denial of due process, such issues are factual in nature. This Court, not being a trier of facts, will
not pass upon such issues, as ruled in Nahas v. Olarte:23
The Court is not a trier of facts; factual findings of the labor tribunals when affirmed by the CA are generally accorded not only
respect, but even finality, and are binding on this Court.
Notably, Solidum's allegation that he was denied his right to counsel was passed upon the NLRC in this wise:
Similarly, the Commission is not convinced with Labor Arbiter Pati's finding that the complainant was deprived on his right to counsel
when he was not allowed to be assisted by his counsel at the alleged investigation held on September 21, 2005. Other than his bare
claim, there is no evidence on record buttressing complainant's claim.24 x x x (Emphasis supplied)
Similarly, Solidum contends that he did not receive other documents necessary for him to be apprised of the charges against him.
Such are also issues of fact. The NLRC ruled on this matter in this wise:
The Commission is likewise not convinced with the finding of Labor Arbiter Pati that complainant was deprived of due
process when he was not furnished copies of the documents he referred to in his letter dated October 24, 2005 thereby prompting
him not to attend the hearings on October 26 and 28, 2005. There is evidence to show that respondents furnished copies of the
documents requested by complainant but which the latter refused to received when they were sent to his residence.25 x x x
It is not necessary that witnesses be cross-examined by counsel of the adverse party in proceedings before the labor
arbiter
 Solidum further alleges that he was denied the right to cross-examine the witnesses who submitted affidavits in favor of
Smart; thus, the affidavits must be considered hearsay and inadmissible. In support of such contention, Solidum cites Naguit v.
National Labor Relations Commission26
Such contention is misplaced.
The controlling jurisprudence on the matter is the ruling in the more recent Philippine Long Distance Telephone Company
v. Honrado,27 where the Court ruled:
It is hornbook in employee dismissal cases that "[t]he essence of due process is an opportunity to be heard, or as applied to
administrative proceedings, an opportunity to explain one's side x x x. A formal or trial type hearing is not at all times and in all
instances essential to due process, the requirements of which are satisfied where the parties are afforded fair and reasonable
opportunity to explain their side of the controversy." Neither is it necessary that the witnesses be cross-examined by counsel for the
adverse party. (Emphasis supplied)
The Court explained the reason why cross-examination is not required in the proceedings before the labor arbiter in Reyno v. Manila
Electric Company,28 citing Rabago v. National Labor Relations Commission29 where the Court ruled:
x x x The argument that the affidavit is hearsay because the affiants were not presented for cross-examination is not persuasive
because the rules of evidence are not strictly observed in proceedings before administrative bodies like the NLRC where decisions
may be reached on the basis of position papers only. x x x
Clearly, the alleged denial of Solidum's request to cross-examine the witnesses of Smart does not render their affidavits hearsay.
Thus, these pieces of evidence were properly considered by the labor tribunal.
Solidum was a managerial employee of Smart
Next, Solidum argues that he is not a fiduciary or managerial employee and, therefore, cannot be legally dismissed on the ground of
loss of trust and confidence. Article 212(m) of the Labor Code defines a Managerial Employee as:
(m) 'Managerial employee' is one who is vested with powers or prerogatives to lay down and execute management policies and/or
to hire, transfer, suspend, lay-off recall, discharged, assign or discipline employees. x x x
The NLRC found that Solidum was a managerial employee in this wise:
The facts on hand indubitably show that complainant occupied the position of Department Mead and held the same with trust and
confidence as required him under his employment contract. As Department Head of the Smart Buddy Activations and Usage Group,
complainant led and directed his subordinates composed of product managers, product officers, and senior marketing assistants to
achieving the company's marketing goals. Moreover, complainant appears to have the authority to devise, implement and control
strategic and operational policies of the Department he was then heading. Likewise, it cannot be denied that complainant's
Department has a budget of millions of pesos over which he exercises the power to allocate to different marketing projects
conceptualized by him and/or his subordinates. The records would also show that for complainant's services, he received a monthly
salary in the hefty amount of P233,910.00, monthly allowance of P19,000.00, and bonuses and incentives of more than P7 Million.
Under the foregoing facts, complainant's duties and responsibilities, coupled with the amount of salaries he is receiving
and other benefits he is entitled to, certainly show that his position of Department Head is managerial in nature.30 (Emphasis
supplied)
Solidum denies that he is a managerial employee by stating that just because he directed subordinates, he should be considered a
managerial employee. He also argues that just because he had a large salary does not mean that he was a managerial employee.
Finally, Solidum denies having the power to lay down and execute management policies.
Notably, however, Solidum does not deny having "the authority to devise, implement and control strategic and operational
policies of the Department he was then heading." This is clearly the authority to lay down and execute management policies.
Consequently, the CA affirmed these findings. Thus, the NLRC and the CA correctly found that Solidum was a managerial
employee. As such, he may be validly dismissed for loss of trust and confidence.

The rulings of trial court in criminal cases generally do not bind the labor tribunals
Further, Solidum alleges that he did not commit any dishonesty-related offense that would justify Smart's loss of
confidence in him. He supports such allegation with the rulings of two (2) trial courts of Makati City that ruled that Solidum did not
commit any fraud in the subject transactions.
Solidum's reliance on the rulings of the trial courts is misplaced. His acquittal before such courts cannot bind the labor
tribunal.
In Amadeo Fishing Corporation v. Nierra,31 the Court ruled that "an acquittal in criminal prosecution does not have the
effect of extinguishing liability for dismissal on the ground of breach of trust and confidence." While in Vergara v. National Labor
Relations Commission,32 the Court was even more succinct and ruled that the filing of the complaint by. the public prosecutor is a
sufficient ground for a dismissal of an employee for loss of trust and confidence, to wit:
The Court finds adequate basis for private respondent's loss of trust and confidence in petitioner, x x x Besides, the evidence
supporting the criminal charge, found after preliminary investigation as sufficient to show prima facie guilt, constitutes just cause for
his termination based on loss of trust and confidence. To constitute just cause, petitioner's malfeasance did not require criminal
conviction. Verily, petitioner was dismissed not because he was convicted of theft, but because his dishonest acts were substantially
proven, (Emphasis supplied)
In the instant case, both the NLRC and the CA found Solidum guilty of the alleged acts that constituted grounds for his dismissal for
loss of trust and confidence, which were summarized by the CA as follows:
First, Solidum noted two versions of CE No. 2005-533 with description "Buy SIM Download All You Can" but containing different
particulars. Specifically, the second CE included charges from various radio stations which are not found in the first CE. However,
the Company discovered that the only projects with approved radio components were the "Mindanao Kolek Mo To Promo" which
ended on July 15, 2005; the "Visayas Kolek Mo To Promo" which ended on August 15, 2005, and the "Smart Download and Win"
with promo period from August 22 to October 22, 2005. The "Buy SIM Download All You Can" has no approved radio component.
Moreover, Solidum submitted certificates of performance from various radio stations which are outside of the promo periods.
Second, in the implementation of several projects, Solidum endorsed unaccredited third parties, which is already a
violation of established company policies. One of these corporations is M&M Events, Inc., which turned out as a non-existing
corporation. The Smart Senior Product Officer Ma. Luisa Suguitan even testified that she has not worked with an agency such as
M&M Events, Inc. Worse, the said entity cannot be found in its declared business address and the VAT registration number
appearing on its sales invoice is registered under a different company. Moreover, Solidum approved CE No. 2005-459 and CE No.
2005-460, pertaining to different projects, but with attached invoices from M&M Events, Inc. bearing the same date and amount.
Finally, Solidum deviated from the existing company procedures. He presented CEs to his subordinate product manager for
signature with his approval already affixed. Later, it was discovered that the duly signed CEs were altered without the knowledge of
the product manager. He even dictated to the agency the title to be used and the details that should be included in the CEs. The
CEs were then forwarded directly to him instead of the Smart marketing point person. Solidum also charged certain projects against
the budget of another approved program.
Such findings of the NLRC and affirmed by the CA are binding on this Court. Thus, Solidum's petition must also fail on this point.

WHEREFORE, the petition of Jose Leni Z. Solidum in G.R. No. 197836 is hereby DENIED. The petition of petitioners Smart
Communications, Inc, et al. in G.R. No. 197763 is PARTIALLY GRANTED. The Court of Appeals Decision dated April 4, 2011 is
hereby AFFIRMED with MODIFICATION that the award of salaries and benefits that accrued during the period of extended
preventive suspension is DELETED.

No costs.

SO ORDERED.