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Republic of the Philippines

SUPREME COURT

Manila

SECOND DIVISION

G.R. No. L-56431 January 19, 1988

NATIONAL UNION OF BANK EMPLOYEES, In Its Own Right And In Behalf Of CBTC EMPLOYEES Affiliated With It; CBTC
EMPLOYEES UNION, In Its Own Right And Interest And In Behalf Of All CBTC Rank And File Employees Including Its
Members, BENJAMIN GABAT, BIENVENIDO MORALEDA, ELICITA GAMBOA, FAUSTINO TEVES, SALVADOR LISING, and
NESTOR DE LOS SANTOS, petitioners,

vs.

THE HON. JUDGE ALFREDO M. LAZARO, CFI-MANILA BRANCH XXXV; COMMERCLKL BANK AND TRUST COMPANY OF THE
PHILIPPINES; BANK OF THE PHILIPPINE ISLANDS; AYALA CORPORATION; MANUEL J. MARQUEZ; ENRIQUE ZOBEL; ALBERTO
VILLA-ABRILLE; VICENTE A. PACIS, JR.; and DEOGRACIAS A. FERNANDO, respondents.

SARMIENTO, J.:

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:

xxx xxx xxx

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;

xxx xxx xxx

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; 1

xxx xxx xxx

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;

xxx xxx xxx

(g) To violate the duty to bargain collectively as prescribed by this Code;

xxx xxx xxx

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. 4

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:

xxx xxx xxx

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. 10

xxx xxx xxx

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: 11

xxx xxx xxx

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].

xxx xxx xxx

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:

xxx xxx xxx

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. 17

xxx xxx xxx

In sum, the public respondent has not acted with grave abuse of discretion.

WHEREFORE, the petition is DISMISSED. No costs.

Yap (Chairman), Melencio-Herrera and Paras, JJ., concur.

Padilla, J., took no part.

Footnotes

1 Rollo, 46, 47, emphases in the original.

2 As amended by Presidential Decree No. 1691 (May 1, 1980) and Batas Blg. 70 (May 1, 1980) as amended further
by Batas Blg. 227, June 1, 1982.

3 Id.

4 Supra, Pres. Decree No. 442, Art. 247.

5 ART. 1314. Any third person who induces another to violate his contract shall be liable for damages to the other
contracting party.

6 Pepsi-Cola Bottling Company v. Martinez, No. L-58877, March 17, 1982, 112 SCRA 578 (1982).

7 No. L-25999, February 9, 1967, 19 SCRA 304 (1967).

8 Rollo, Id., 15.

9 No. L-30174, May 31, 1972, 45 SCRA 337 (1972).

10 At 341.

11 No. L-32953, March 31, 1977, 76 SCRA 190 (1977).

12 No. L-52235, October 28, 1980, 100 SCRA 459 (1980).

13 Supra.

14 No. L-58265, March 25, 1982, 113 Supra.SCRA 52 (1982).

15 No. L-60716, October 27, 1983, 125 SCRA 436 (1983).

16 Rollo, Id., 218.

17 Corp. Code, sec. 80 (5).

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THIRD DIVISION

[G.R. No. 124193. March 6, 1998]

WILLIAM DAYAG, EDUARDO CORTON, EDGARDO CORTON, LEOPOLDO NAGMA, ALOY FLORES, ROMEO PUNAY and EDWIN
DAYAG, petitioners, vs. HON. POTENCIANO S. CANIZARES, JR., NATIONAL LABOR RELATIONS COMMISSION and YOUNGS
CONSTRUCTION CORPORATION, respondents.

DECISION

ROMERO, J.:

On March 11, 1993, petitioners William Dayag, Edwin Dayag, Eduardo Corton, Edgardo Corton, Leopoldo Nagma, Aloy
Flores, and Romeo Punay filed a complaint for illegal dismissal, non-payment of wages, overtime pay, premium pay,
holiday pay, service incentive leave, 13th month pay, and actual, moral and exemplary damages against Alfredo Young, a
building contractor doing business under the firm name Youngs Construction. They filed the complaint with the National
Capital Region Arbitration Branch of the NLRC which docketed the same as NLRC-NCR-Case No. 00-03-01891-93. The case
was subsequently assigned to Labor Arbiter Potenciano Canizares, Jr.

Petitioners alleged that they were hired in 1990 by Young to work as tower crane operators at the latters construction site
at Platinum 2000 in San Juan, Metro Manila. In November 1991, they were transferred to Cebu City to work at the
construction of his Shoemart Cebu project. Petitioners worked in Cebu until February 1993, except for Punay who stayed
up to September 29, 1992 only and Nagma, until October 21, 1992.

On January 30, 1993, William Dayag asked for permission to go to Manila to attend to family matters. He was allowed to
do so but was not paid for the period January 23-30, 1993, allegedly due to his accountability for the loss of certain
construction tools. Eduardo Corton had earlier left on January 16, 1993, purportedly due to harassment by Young. In
February 1993, Edgardo Corton, Aloy Flores and Edwin Dayag also left Cebu for Manila, allegedly for the same reason.
Thereafter, petitioners banded together and filed the complaint previously mentioned.

Instead of attending the initial hearings set by the labor arbiter, Young filed, on July 6, 1993, a motion to transfer the case
to the Regional Arbitration Branch, Region VII of the NLRC. He claimed that the workplace where petitioners were
regularly assigned was in Cebu City and that, in consonance with Section 1(a) of Rule IV of the New Rules of Procedure of
the NLRC,[1] the case should have been filed in Cebu City. Young submitted in evidence a certificate of registration of
business name showing his companys address as Corner SudlonEspaa Streets, Pari-an, Cebu City; its business permit
issued by the Office of the Mayor of Cebu City and a certification by the Philippine National PoliceCebu City Police Station
2 that petitioners had been booked therein for qualified theft upon the complaint of Youngs Construction.

Petitioners opposed the same, arguing that all of them, except for Punay, were, by that time, residents of Metro Manila
and that they could not afford trips to Cebu City. Besides, they claimed that respondent had its main office at Corinthian
Gardens in Quezon City. Young, in reply, declared that the Corinthian Gardens address was not his principal place of
business, but actually his residence, which he also used as a correspondent office for his construction firm.

Agreeing that petitioners workplace when the cause of action accrued was Cebu City, the labor arbiter, on September 8,
1993, granted Youngs motion and ordered the transmittal of the case to the regional arbitration branch of Region VII.
Petitioners promptly appealed said order to the NLRC, which, however, dismissed the same on January 31, 1995, for lack
of merit.

Citing Nestl Philippines, Inc. vs. NLRC[2] and Cruzvale, Inc. vs. Laguesma,[3] petitioners moved for a reconsideration of the
January 31, 1995 resolution of the Commission. Acting favorably on said motion, the Commission, on August 25, 1995,
annulled and set aside its resolution of January 31, 1995, and remanded the case to the original arbitration branch of the
National Capital Region for further proceedings. This prompted Young, in turn, to file his own motion for reconsideration
seeking the reversal of the August 25, 1995 resolution of the Commission. Finding the two above-cited cases to be
inapplicable to instant case, the Commission made a volte-face and reconsidered its August 25, 1995 resolution. It
reinstated the resolution of January 31, 1995, directing the transfer of the case to Cebu City. In addition, it ruled that no
further motion of a similar nature would be entertained. Hence, the recourse to this Court by petitioners, who raise the
following as errors:

1. THE LABOR ARBITER A QUO ERRED IN ISSUING THE DISPUTED ORDER DATED SEPTEMBER 8, 1993 WHEN, OBVIOUSLY,
THE SAID MOTION TO TRANSFER VENUE WAS FILED IN VIOLATION OF SECTIONS 4 AND 5 OF RULE 15 OF THE REVISED
RULES OF COURT.

2. PUBLIC RESPONDENTS ERRED IN ISSUING THE DISPUTED JUDGMENT WHEN, OBVIOUSLY, THE RESPONDENT, BY FILING
ITS POSITION PAPER, HAS WAIVED ITS RIGHT TO QUESTION THE VENUE OF THE INSTANT CASE.

3. THE PUBLIC RESPONDENTS ERRED IN CONCLUDING THAT THE WORKPLACE OF THE COMPLAINANTS IS AT CEBU CITY
AND IN DECLARING THAT THE PROPER VENUE IS AT CEBU CITY.

Petitioner contends that the labor arbiter acted with grave abuse of discretion when it entertained Youngs motion to
transfer venue since it did not specify the time and date when it would be heard by the labor arbiter. They raise the
suppletory application of the Rules of Court, specifically Sections 4 and 5 of Rule 15,[4] in relation to Section 3 of Rule I of
the New Rules of Procedure of the NLRC, in support of their contention.

We find no merit in petitioners argument. In a long line of decisions,[5] this Court has consistently ruled that the
application of technical rules of procedure in labor cases may be relaxed to serve the demands of substantial justice. As
provided by Article 221 of the Labor Code rules of evidence prevailing in courts of law or equity shall not be controlling
and it is the spirit and intention of this Code that the Commission and its members and the Labor Arbiters shall use every
and all reasonable means to ascertain the facts in each case speedily and objectively and without regard to technicalities
of law or procedure, all in the interest of due process. Furthermore, while it is true that any motion that does not comply
with the requirements of Rule 15 should not be accepted for filing and, if filed, is not entitled to judicial cognizance, this
Court has likewise held that where a rigid application of the rule will result in a manifest failure or miscarriage of justice,
technicalities may be disregarded in order to resolve the case. Litigations should, as much as possible, be decided on the
merits and not on technicalities.[6] Lastly, petitioners were able to file an opposition to the motion to transfer venue
which, undisputedly, was considered by the labor arbiter when he issued the disputed order of September 8, 1993. There
is, hence, no showing that petitioners have been unduly prejudiced by the motions failure to give notice of hearing.

Given the foregoing, it seems improper to nullify Youngs motion on a mere technicality. Petitioners averments should be
given scant consideration to give way to the more substantial matter of equitably determining the rights and obligations
of the parties. It need not be emphasized that rules of procedure must be interpreted in a manner that will help secure
and not defeat justice.[7]

Likewise, petitioners harp on Youngs so-called waiver of his right to contest the venue of the instant case. They argue that
Young is estopped from questioning the venue herein as his motion to transfer venue was actually a position paper, a
close scrutiny of the same purportedly showing that he admitted and denied certain allegations found in petitioners
complaint.

Petitioners contention rings hollow. Even if the questioned motion was at the same time a position paper, Section 1(c) of
Rule IV provides: (w)hen improper venue is not objected to before or at the time of the filing of position papers, such
question shall be deemed waived (Emphasis supplied). Consequently, there is no waiver of improper venue if a party
questions venue simultaneously with the filing of a position paper. Moreover, nowhere in the New Rules of Procedure of
the NLRC is there a requirement that a party must object solely to venue, on penalty of waiving the same. In fact, Section
1(d) provides that:

The venue of an action may be changed or transferred to a different Regional Arbitration Branch other than where the
complaint was filed by written agreement of the parties or when the Commission or Labor Arbiter before whom the case
is pending so orders, upon motion by the proper party in meritorious cases (Emphasis supplied).

Youngs acts are in consonance with this provision, for he seasonably made representations to transfer the venue of the
action in the proper motion.

Finally, while it is true that objections to venue are deemed waived if the respondent, through conduct, manifests
satisfaction with the venue until after the trial, or abides by it until the matter has proceeded to a hearing,[8] no waiver of
the defense of venue on the ground of estoppel by conduct can be attributed to Young, who consistently and persistently
contested the same even before trial.

Similarly, petitioners reliance on Nestl[9] and Cruzvale[10] is likewise misplaced. While Nestl ruled that Rule IV of the New
Rules of Procedure of the NLRC does not constitute a complete rule on venue in cases cognizable by labor arbiters,
Section 2, Rule 4 of the Rules of Court[11] having suppletory effect, it also held that the foregoing provision of the Rules of
Court applies only where the petitioners are labor unions or where a single act of an employer gives rise to a cause of
action common to many of its employees working in different branches or workplaces of the former. It is not denied that
petitioners herein are not represented by a union; nor were they assigned to different workplaces by Young. Likewise,
Cruzvale is inapplicable to the case at bar, the issue involved therein being the propriety of the DOLE Region IV Offices
taking cognizance of a petition for certification election when the companys place of business was in Cubao, Quezon City,
while the workplace of the petitioning union was elsewhere. The instant case does not involve any certification election;
nor are the workplace of the employees and place of business of the employer different.

Young cannot, however, derive comfort from the foregoing, this petition having been overtaken by events. In the recent
case of Sulpicio Lines, Inc. vs. NLRC[12] this Court held that the question of venue essentially pertains to the trial and
relates more to the convenience of the parties rather than upon the substance and merits of the case. It underscored the
fact that the permissive rules underlying provisions on venue are intended to assure convenience for the plaintiff and his
witnesses and to promote the ends of justice. With more reason does the principle find applicability in cases involving
labor and management because of the doctrine well-entrenched in our jurisdiction that the State shall afford full
protection to labor. The Court held that Section 1(a), Rule IV of the NLRC Rules of Procedure on Venue was merely
permissive. In its words:

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.

The rationale for the rule is obvious. The worker, being the economically-disadvantaged partywhether as
complainant/petitioner or as respondent, as the case may be, the nearest governmental machinery to settle the dispute
must be placed at his immediate disposal, and the other party is not to be given the choice of another competent agency
sitting in another place as this will unduly burden the former.[13] In fact, even in cases where venue has been stipulated
by the parties, this Court has not hesitated to set aside the same if it would lead to a situation so grossly inconvenient to
one party as to virtually negate his claim. Again, in Sulpicio Lines, this Court, citing Sweet Lines vs. Teves,[14] held that:

An agreement will not be held valid where it practically negates the action of the claimant, 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 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 could 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 hand, the ruling specifying the National Capital Region Arbitration Branch as the venue of the present action
cannot be considered oppressive to Young. His residence in Corinthian Gardens also serves as his correspondent office.
Certainly, the filing of the suit in the National Capital Region Arbitration Branch in Manila will not cause him as much
inconvenience as it would the petitioners, who are now residents of Metro Manila, if the same was heard in Cebu.
Hearing the case in Manila would clearly expedite proceedings and bring about the speedy resolution of instant case.

WHEREFORE, premises considered, the resolution of February 12, 1996, of public respondent NLRC, transferring the
instant case to the Seventh Regional Arbitration Branch, Cebu City, is SET ASIDE. Instead, its resolution dated August 25,
1995, remanding the case to the Arbitration Branch of Origin, is hereby REINSTATED and AFFIRMED.
SO ORDERED.

Narvasa, C.J. (Chairman), Kapunan and Purisima, JJ., concur.

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

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

[2] 209 SCRA 834 (1992).

[3] 238 SCRA 389 (1994).

[4] Section 4. Hearing of Motion. Except for motions which the court may act upon without prejudicing the rights of the
adverse party, every written motion shall be set for hearing by the applicant.

Every written motion required to be heard and the notice of the hearing thereof shall be served in such a manner as to
ensure its receipt by the other party at least three (3) days before the date of the hearing, unless the court for good cause
sets the hearing on shorter notice.

Section 5. Notice of hearing.The notice of hearing shall be addressed to all parties concerned, and shall specify the time
and date of the hearing which must not be later than ten (10) days after the filing of the motion.

[5] Lopez, Jr. vs. NLRC, 245 SCRA 644 (1995); Philippine-Singapore Ports Corp. vs. NLRC, 218 SCRA 77 (1993); Sadol vs.
Pilipinas Kao, Inc., 186 SCRA 491 (1990); PT&T Corporation vs. NLRC, 183 SCRA 451 (1990); Ford Philippines Salaried
Employees Assocation vs. NLRC, 156 SCRA 284 (1987).

[6] People vs. Leviste, 255 SCRA 238 (1996).

[7] El Toro Security Agency, Inc. vs. NLRC, 256 SCRA 363 (1996).

[8] 92 C.J.S., p. 774.

[9] Supra, Note 3.

[10] Supra, Note 4.

[11] Section 2. Venue of personal actions. All other actions may be commenced and tried where the plaintiffs or any of
the principal plaintiffs resides, or where the defendant or any of the principal defendants resides, or in the case of a non-
resident defendant where he may be found, at the election of the plaintiff.

[12] 254 SCRA 506 (1996).

[13] Supra, Note 3.

[14] 83 SCRA 361 (1978).

1. Labor Arbiter’s Jurisdiction, in General HAWAIIAN-PHILIPPINE CO. v GULMATICO, et al., G.R. No. 106231, November
16,1994FACTS:National Federation of Sugar Workers-Food and General Trades, private respondent,filed an action against
Hawaiian Philippine Company for claims under RA 809 (the Sugar act of1952). They alleged that they have never availed of
the benefits due them under the said law.Under such statute, the proceeds of any increase in participation shall be
divided, in which 60%for laborers’ and 40% for the planters.Hawaiian, petitioner, argued that respondent Labor Arbiter
Gulmatico has no jurisdictionover the case considering their case which does not fall under Article 217 of the Labor Code.
Itfurther contended that it has no employer-employee relationship. ISSUE:Whether or not public respondent Labor
Arbiter has jurisdiction to hear and decide thecase against petitioner.HELD:While jurisdiction over controversies involving
agricultural workers has been transferredfrom the Court of Agrarian Relations to the Labor Arbiters under the
Labor Code, saidtransferred jurisdiction is however, not without limitations. The controversy must fall under oneof the
cases enumerated in the Labor Code which was due or in connection with an employer-employee relationship.However,
there is no employer- employee relationship between petitioner and respondentunion. Hence, respondent labor arbiter
has no jurisdiction to hear and decide the case against thepetitioner.Wherefore, petition is granted.2. Venue; Worker’s
Option: Waiver DAYAG, et al v CANIZARES, NLRC, G.R. NO. 124193, March 6, 1998FACTS:Petitioners were hired to work
as tower crane operators by one Alfredo Young, a buildingcontractor doing business in the name of Young’s construction.
In 1991, they were transferred toCebu City to work for Young’s Shoemart Cebu Project. Petitioner William Dayag
askedpermission to go to Manila to attend family matters and was allowed to do so but was not paidfor January 23-30
due to his accountability for the loss of certain construction tools. The otherpetitioners left due to harassment by young.
Thereafter, petitioner banded together and filed acomplaint against Young before the NCR Arbitration Branch NLRC which
was assigned toLabor Arbiter Cenizares.

Further, Young filed a “Motion to transfer the case” to the Reginal Arbitration Brach,Region VII of the NLRC. He contended
that the case should be filed in Cebu City because it isthe location of the workplace of the petitioner. However, it was
opposed by the petitioner on theground that they are both form Metro Manila and that they could not afford trips to
Cebu, inaddition, they claimed that respondent’s main office is in Corinthian Garden in Quezon City.Labor Arbiter
Cenozares granted Young’s motion to transfer the case in Cebu. Petitionerappealed to NLRC but such was dismissed.
Hence, they filed a MFR and this time thecommission set aside its previous decision and remanded the case to the
original arbitrationbranch of the NCR for further proceedings. On the other hand, Young filed his own MFR and theNLRC
reinstated its first decision directing the transfer of the case to Cebu City.ISSUE:Whether the Labor Arbiter acted with
grave abuse of discretion when it entertainedYoung’s motion to transfer.HELD:No.The SC ruled that litigations should, as
much as possible, be decided on the merits andnot on technicalities. Petitioners were able to file an opposition on the
“motion to transfer case”which was considered by Labor Arbiter Cenizares. Hence, there is no showing that they
havebeen unduly prejudiced by the motion’s failure to give notice and hearing.However, Young cannot derive comfort
from this petition. The SC held that the questionof venue relates more to the convenience of the parties rather than upon
the substance and meritsof the case. This is to assure convenience for the plaintiff and his witness and to promote
theends of justice under the principle that the state shall afford protection to labor. The reason forthis is that the worker,
being the economically-disadvantaged party, the nearest governmentalmachinery to settle the dispute must be placed at
his immediate disposal, and the other party isnot to be given the choice of another competent agency sitting in another
place as this willunduly burden the former.WHEREFORE, petition is granted.

prevnext

of 3

Syllabi\Synopsis

FIRST DIVISION

[G.R. No. 124382. August 16, 1999]

PASTOR DIONISIO V. AUSTRIA, petitioner, vs. HON. NATIONAL LABOR RELATIONS COMMISSION (Fourth Division), CEBU
CITY, CENTRAL PHILIPPINE UNION MISSION CORPORATION OF THE SEVENTH-DAY ADVENTIST, ELDER HECTOR V. GAYARES,
PASTORS REUBEN MORALDE, OSCAR L. ALOLOR, WILLIAM U. DONATO, JOEL WALES, ELY SACAY, GIDEON BUHAT, ISACHAR
GARSULA, ELISEO DOBLE, PROFIRIO BALACY, DAVID RODRIGO, LORETO MAYPA, MR. RUFO GASAPO, MR. EUFRONIO
IBESATE, MRS. TESSIE BALACY, MR. ZOSIMO KARA-AN, and MR. ELEUTERIO LOBITANA, respondents.

DECISION

KAPUNAN, J.:

Subject to the instant petition for certiorari under Rule 65 of the Rules of Court is the Resolution[1] of public respondent
National Labor Relations Commission (the NLRC), rendered on 23 January 1996, in NLRC Case No. V-0120-93, entitled
Pastor Dionisio V. Austria vs. Central Philippine Union Mission Corporation of Seventh Day Adventists, et. al., which
dismissed the case for illegal dismissal filed by the petitioner against private respondents for lack of jurisdiction.

Private Respondent Central Philippine Union Mission Corporation of the Seventh-Day Adventists (hereinafter referred to
as the SDA) is a religious corporation duly organized and existing under Philippine law and is represented in this case by
the other private respondents, officers of the SDA. Petitioner, on the other hand, was a Pastor of the SDA until 31 October
1991, when his services were terminated.

The records show that petitioner Pastor Dionisio V. Austria worked with the SDA for twenty eight (28) years from 1963 to
1991.[2] He began his work with the SDA on 15 July 1963 as a literature evangelist, selling literature of the SDA over the
island of Negros. From then on, petitioner worked his way up the ladder and got promoted several times. In January,
1968, petitioner became the Assistant Publishing Director in the West Visayan Mission of the SDA. In July, 1972, he was
elevated to the position of Pastor in the West Visayan Mission covering the island of Panay, and the provinces of Romblon
and Guimaras. Petitioner held the same position up to 1988. Finally, in 1989, petitioner was promoted as District Pastor of
the Negros Mission of the SDA and was assigned at Sagay, Balintawak and Toboso, Negros Occidental, with twelve (12)
churches under his jurisdiction. In January, 1991, petitioner was transferred to Bacolod City. He held the position of
district pastor until his services were terminated on 31 October 1991.

On various occasions from August up to October, 1991, petitioner received several communications[3] from Mr. Eufronio
Ibesate, the treasurer of the Negros Mission asking him to admit accountability and responsibility for the church tithes
and offerings collected by his wife, Mrs. Thelma Austria, in his district which amounted to P15,078.10, and to remit the
same to the Negros Mission.

In his written explanation dated 11 October 1991,[4] petitioner reasoned out that he should not be made accountable for
the unremitted collections since it was private respondents Pastor Gideon Buhat and Mr. Eufronio Ibesate who authorized
his wife to collect the tithes and offerings since he was very sick to do the collecting at that time.

Thereafter, on 16 October 1991, at around 7:30 a.m., petitioner went to the office of Pastor Buhat, the president of the
Negros Mission. During said call, petitioner tried to persuade Pastor Buhat to convene the Executive Committee for the
purpose of settling the dispute between him and the private respondent, Pastor David Rodrigo. The dispute between
Pastor Rodrigo and petitioner arose from an incident in which petitioner assisted his friend, Danny Diamada, to collect
from Pastor Rodrigo the unpaid balance for the repair of the latters motor vehicle which he failed to pay to Diamada.[5]
Due to the assistance of petitioner in collecting Pastor Rodrigos debt, the latter harbored ill-feelings against petitioner.
When news reached petitioner that Pastor Rodrigo was about to file a complaint against him with the Negros Mission, he
immediately proceeded to the office of Pastor Buhat on the date abovementioned and asked the latter to convene the
Executive Committee. Pastor Buhat denied the request of petitioner since some committee members were out of town
and there was no quorum. Thereafter, the two exchanged heated arguments. Petitioner then left the office of Pastor
Buhat. While on his way out, petitioner overheard Pastor Buhat saying, Pastor daw inisog na ina iya (Pastor you are talking
tough).[6] Irked by such remark, petitioner returned to the office of Pastor Buhat, and tried to overturn the latters table,
though unsuccessfully, since it was heavy. Thereafter, petitioner banged the attache case of Pastor Buhat on the table,
scattered the books in his office, and threw the phone.[7] Fortunately, private respondents Pastors Yonilo Leopoldo and
Claudio Montao were around and they pacified both Pastor Buhat and petitioner.

On 17 October 1991, petitioner received a letter[8] inviting him and his wife to attend the Executive Committee meeting
at the Negros Mission Conference Room on 21 October 1991, at nine in the morning. To be discussed in the meeting were
the non-remittance of church collection and the events that transpired on 16 October 1991. A fact-finding committee was
created to investigate petitioner. For two (2) days, from October 21 and 22, the fact-finding committee conducted an
investigation of petitioner. Sensing that the result of the investigation might be one-sided, petitioner immediately wrote
Pastor Rueben Moralde, president of the SDA and chairman of the fact-finding committee, requesting that certain
members of the fact-finding committee be excluded in the investigation and resolution of the case.[9] Out of the six (6)
members requested to inhibit themselves from the investigation and decision-making, only two (2) were actually
excluded, namely: Pastor Buhat and Pastor Rodrigo. Subsequently, on 29 October 1991, petitioner received a letter of
dismissal[10] citing misappropriation of denominational funds, willful breach of trust, serious misconduct, gross and
habitual neglect of duties, and commission of an offense against the person of employers duly authorized representative,
as grounds for the termination of his services.

Reacting against the adverse decision of the SDA, petitioner filed a complaint[11] on 14 November 1991, before the Labor
Arbiter for illegal dismissal against the SDA and its officers and prayed for reinstatement with backwages and benefits,
moral and exemplary damages and other labor law benefits.

On 15 February 1993, Labor Arbiter Cesar D. Sideo rendered a decision in favor of petitioner, the dispositive portion of
which reads thus:
WHEREFORE, PREMISES CONSIDERED, respondents CENTRAL PHILIPPINE UNION MISSION CORPORATION OF THE
SEVENTH-DAY ADVENTISTS (CPUMCSDA) and its officers, respondents herein, are hereby ordered to immediately
reinstate complainant Pastor Dionisio Austria to his former position as Pastor of Brgy. Taculing, Progreso and Banago,
Bacolod City, without loss of seniority and other rights and backwages in the amount of ONE HUNDRED FIFTEEN
THOUSAND EIGHT HUNDRED THIRTY PESOS (P115,830.00) without deductions and qualificatioons.

Respondent CPUMCSDA is further ordered to pay complainant the following:

A. 13th month pay - P21,060.00

B. Allowance - P 4,770.83

C. Service Incentive

Leave Pay - P 3,461.85

D. Moral Damages - P50,000.00

E. Exemplary

Damages - P25,000.00

F. Attorneys Fee - P22,012.27

SO ORDERED.[12]

The SDA, through its officers, appealed the decision of the Labor Arbiter to the National Labor Relations Commission,
Fourth Division, Cebu City. In a decision, dated 26 August 1994, the NLRC vacated the findings of the Labor Arbiter. The
decretal portion of the NLRC decision states:

WHEREFORE, the Decision appealed from is hereby VACATED and a new one ENTERED dismissing this case for want of
merit.

SO ORDERED.[13]
Petitioner filed a motion for reconsideration of the above-named decision. On 18 July 1995, the NLRC issued a Resolution
reversing its original decision. The dispositive portion of the resolution reads:

WHEREFORE, premises considered, Our decision dated August 26, 1994 is VACATED and the decision of the Labor Arbiter
dated February 15, 1993 is REINSTATED.

SO ORDERED.[14]

In view of the reversal of the original decision of the NLRC, the SDA filed a motion for reconsideration of the above
resolution. Notable in the motion for reconsideration filed by private respondents is their invocation, for the first time on
appeal, that the Labor Arbiter has no jurisdiction over the complaint filed by petitioner due to the constitutional provision
on the separation of church and state since the case allegedly involved and ecclesiastical affair to which the State cannot
interfere.

The NLRC, without ruling on the merits of the case, reversed itself once again, sustained the argument posed by private
respondents and, accordingly, dismissed the complaint of petitioner. The dispositive portion of the NLRC resolution dated
23 January 1996, subject of the present petition, is as follows:

WHEREFORE, in view of all the foregoing, the instant motion for reconsideration is hereby granted. Accordingly, this case
is hereby DISMISSED for lack of jurisdiction.

SO ORDERED.[15]

Hence, the recourse to this Court by petitioner.

After the filing of the petition, the Court ordered the Office of the Solicitor General (the OSG) to file its comment on
behalf of public respondent NLRC. Interestingly, the OSG filed a manifestation and motion in lieu of comment[16] setting
forth its stand that it cannot sustain the resolution of the NLRC. In its manifestation, the OSG submits that the termination
of petitioner of his employment may be questioned before the NLRC as the same is secular in nature, not ecclesiastical.
After the submission of memoranda of all the parties, the case was submitted for decision.

The issues to be resolved in this petition are:

1) Whether or not the Labor Arbiter/NLRC has jurisdiction to try and decide the complaint filed by petitioner against the
SDA;

2) Whether or not the termination of the services of petitioner is an ecclesiastical affair, and, as such, involves the
separation of church and state; and
3) Whether or not such termination is valid.

The first two issues shall be resolved jointly, since they are related.

Private respondents contend that by virtue of the doctrine of separation of church and state, the Labor Arbiter and the
NLRC have no jurisdiction to entertain the complaint filed by petitioner. Since the matter at bar allegedly involves the
discipline of a religious minister, it is to be considered a purely ecclesiastical affair to which the State has no right to
interfere.

The contention of private respondents deserves scant consideration. The principle of separation of church and state finds
no application in this case.

The rationale of the principle of the separation of church and state is summed up in the familiar saying, Strong fences
make good neighbors.[17] The idea advocated by this principle is to delineate the boundaries between the two
institutions and thus avoid encroachments by one against the other because of a misunderstanding of the limits of their
respective exclusive jurisdictions.[18] The demarcation line calls on the entities to render therefore unto Ceasar the things
that are Ceasars and unto God the things that are Gods.[19] While the State is prohibited from interfering in purely
ecclesiastical affairs, the Church is likewise barred from meddling in purely secular matters.[20]

The case at bar does not concern an ecclesiastical or purely religious affair as to bar the State from taking cognizance of
the same. An ecclesiastical affair is one that concerns doctrine, creed, or form or worship of the church, or the adoption
and enforcement within a religious association of needful laws and regulations for the government of the membership,
and the power of excluding from such associations those deemed unworthy of membership.[21] Based on this definition,
an ecclesiastical affair involves the relationship between the church and its members and relate to matters of faith,
religious doctrines, worship and governance of the congregation. To be concrete, examples of this so-called ecclesiastical
affairs to which the State cannot meddle are proceedings for excommunication, ordinations of religious ministers,
administration of sacraments and other activities with which attached religious significance. The case at bar does not even
remotely concern any of the abovecited examples. While the matter at hand relates to the church and its religious
minister it does not ipso facto give the case a religious significance. Simply stated, what is involved here is the relationship
of the church as an employer and the minister as an employee. It is purely secular and has no relation whatsoever with
the practice of faith, worship or doctrines of the church. In this case, petitioner was not excommunicated or expelled from
the membership of the SDA but was terminated from employment. Indeed, the matter of terminating an employee, which
is purely secular in nature, is different from the ecclesiastical act of expelling a member from the religious congregation.

As pointed out by the OSG in its memorandum, the grounds invoked for petitioners dismissal, namely: misappropriation
of denominational funds, willful breach of trust, serious misconduct, gross and habitual neglect of duties and commission
of an offense against the person of his employers duly authorize representative, are all based on Article 282 of the Labor
Code which enumerates the just causes for termination of employment.[22] By this alone, it is palpable that the reason
for petitioners dismissal from the service is not religious in nature. Coupled with this is the act of the SDA in furnishing
NLRC with a copy of petitioners letter of termination. As aptly stated by the OSG, this again is an eloquent admission by
private respondents that NLRC has jurisdiction over the case. Aside from these, SDA admitted in a certification[23] issued
by its officer, Mr. Ibesate, that petitioner has been its employee for twenty-eight (28) years. SDA even registered
petitioner with the Social Security System (SSS) as its employee. As a matter of fact, the workers records of petitioner
have been submitted by private respondents as part of their exhibits. From all of these it is clear that when the SDA
terminated the services of petitioner, it was merely exercising its management prerogative to fire an employee which it
believes to be unfit for the job. As such, the State, through the Labor Arbiter and the NLRC, has the right to take
cognizance of the case and to determine whether the SDA, as employer, rightfully exercised its management prerogative
to dismiss an employee. This is in consonance with the mandate of the Constitution to afford full protection to labor.

Under the Labor Code, the provision which governs the dismissal of employees, is comprehensive enough to include
religious corporations, such as the SDA, in its coverage. Article 278 of the Labor Code on post-employment states that the
provisions of this Title shall apply to all establishments or undertakings, whether for profit or not. Obviously, the cited
article does not make any exception in favor of a religious corporation. This is made more evident by the fact that the
Rules Implementing the Labor Code, particularly, Section 1, Rule 1, Book VI on the Termination of Employment and
Retirement, categorically includes religious institutions in the coverage of the law, to wit:

Section 1. Coverage. This Rule shall apply to all establishments and undertakings, whether operated for profit or not,
including educational, medical, charitable and religious institutions and organizations, in cases of regular employment
with the exception of the Government and its political subdivisions including government-owned or controlled
corporations.[24]

With this clear mandate, the SDA cannot hide behind the mantle of protection of the doctrine of separation of church and
state to avoid its responsibilities as an employer under the Labor Code.

Finally, as correctly pointed out by petitioner, private respondents are estopped from raising the issue of lack of
jurisdiction for the first time on appeal. It is already too late in the day for private respondents to question the jurisdiction
of the NLRC and the Labor Arbiter since the SDA had fully participated in the trials and hearings of the case from start to
finish. The Court has already ruled that the active participation of a 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.[25] Thus, the active participation of private respondents in the
proceedings before the Labor Arbiter and the NLRC mooted the question on jurisdiction.

The jurisdictional question now settled, we shall now proceed to determine whether the dismissal of petitioner was valid.

At the outset, we note that as a general rule, findings of fact of administrative bodies like the NLRC are binding upon this
Court. A review of such findings is justified, however, in instances when the findings of the NLRC differ from those of the
labor arbiter, as in this case.[26] When the findings of NLRC do not agree with those of the Labor Arbiter, this Court must
of necessity review the records to determine which findings should be preferred as more comformable to the evidentiary
facts.[27]

We turn now to the crux of the matter. In termination cases, the settled rule is that the burden of proving that the
termination was for a valid or authorized cause rests on the employer.[28] Thus, private respondents must not merely rely
on the weaknesses of petitioners evidence but must stand on the merits of their own defense.

The issue being the legality of petitioners dismissal, the same must be measured against the requisites for a valid
dismissal, namely: (a) the employee must be afforded due process, i.e., he must be given an opportunity to be heard and
to defend himself, and; (b) the dismissal must be for a valid cause as provided in Article 282 of the Labor Code.[29]
Without the concurrence of this twin requirements, the termination would, in the eyes of the law, be illegal.[30]
Before the services of an employee can be validly terminated, Article 277 (b) of the Labor Code and Section 2, Rule XXIII,
Book V of the Rules Implementing the Labor Code further require the employer to furnish the employee with two (2)
written notices, to wit: (a) a written notice served on the employee specifying the ground or grounds for termination, and
giving to said employee reasonable opportunity within which to explain his side; and, (b) a written notice of termination
served on the employee indicating that upon due consideration of all the circumstances, grounds have been established
to justify his termination.

The first notice, which may be considered as the proper charge, serves to apprise the employee of the particular acts or
omissions for which his dismissal is sought.[31] The second notice on the other hand seeks to inform the employee of the
employers decision to dismiss him.[32] This decision, however, must come only after the employee is given a reasonable
period from receipt of the first notice within which to answer the charge and ample opportunity to be heard and defend
himself with the assistance of a representative, if he so desires.[33] This is in consonance with the express provision of the
law on the protection to labor and the broader dictates of procedural due process.[34] Non-compliance therewith is fatal
because these requirements are conditions sine quo non before dismissal may be validly effected.[35]

Private respondent failed to substantially comply with the above requirements. With regard to the first notice, the
letter,[36] dated 17 October 1991, which notified petitioner and his wife to attend the meeting on 21 October 1991,
cannot be construed as the written charge required by law. A perusal of the said letter reveals that it never categorically
stated the particular acts or omissions on which petitioners impending termination was grounded. In fact, the letter never
even mentioned that petitioner would be subject to investigation. The letter merely mentioned that petitioner and his
wife were invited to a meeting wherein what would be discussed were the alleged unremitted church tithes and the
events that transpired on 16 October 1991. Thus, petitioner was surprised to find out that the alleged meeting turned out
to be an investigation. From the tenor of the letter, it cannot be presumed that petitioner was actually on the verge of
dismissal. The alleged grounds for the dismissal of petitioner from the service were only revealed to him when the actual
letter of dismissal was finally issued. For this reason, it cannot be said that petitioner was given enough opportunity to
properly prepare for his defense. While admittedly, private respondents complied with the second requirement, the
notice of termination, this does not cure the initial defect of lack of the proper written charge required by law.

In the letter of termination,[37] dated 29 October 1991, private respondents enumerated the following as grounds for the
dismissal of petitioner, namely: misappropriation of denominational funds, willful breach of trust, serious misconduct,
gross and habitual neglect of duties, and commission of an offense against the person of employers duly authorized
representative. Breach of trust and misappropriation of denominational funds refer to the alleged failure of petitioner to
remit to the treasurer of the Negros Mission tithes, collections and offerings amounting to P15,078.10 which were
collected by his wife, Mrs. Thelma Austria, in the churches under his jurisdiction. On the other hand, serious misconduct
and commission of an offense against the person of the employers duly authorized representative pertain to the 16
October 1991 incident wherein petitioner allegedly committed an act of violence in the office of Pastor Gideon Buhat. The
final ground invoked by private respondents is gross and habitual neglect of duties allegedly committed by petitioner.

We cannot sustain the validity of dismissal based on the ground of breach of trust. Private respondents allege that they
have lost their confidence in petitioner for his failure, despite demands, to remit the tithes and offerings amounting to
P15,078.10, which were collected in his district. A careful study of the voluminous records of the case reveals that there is
simply no basis for the alleged loss of confidence and breach of trust. Settled is the rule that under Article 282 (c) of the
Labor Code, the breach of trust must be willful. A breach is willful if it is done intentionally, knowingly and purposely,
without justifiable excuse, as distinguished from an act done carelessly, thoughtlessly, heedlessly or inadvertently.[38] It
must rest on substantial grounds and not on the employers arbitrariness, whims, caprices or suspicion; otherwise, the
employee would eternally remain at the mercy of the employer.[39] It should be genuine and not simulated.[40] This
ground has never been intended to afford an occasion for abuse, because of its subjective nature. The records show that
there were only six (6) instances when petitioner personally collected and received from the church treasurers the tithes,
collections, and donations for the church.[41] The stenographic notes on the testimony of Naomi Geniebla, the Negros
Mission Church Auditor and a witness for private respondents, show that Pastor Austria was able to remit all his
collections to the treasurer of the Negros Mission.[42]

Though private respondents were able to establish that petitioner collected and received tithes and donations several
times, they were not able to establish that petitioner failed to remit the same to the Negros Mission, and that he
pocketed the amount and used it for his personal purpose. In fact, as admitted by their own witness, Naomi Geniebla,
petitioner remitted the amounts which he collected to the Negros Mission for which corresponding receipts were issued
to him. Thus, the allegations of private respondents that petitioner breached their trust have no leg to stand on.

In a vain attempt to support their claim of breach of trust, private respondents try to pin on petitioner the alleged non-
remittance of the tithes collected by his wife. This argument deserves little consideration. First of all, as proven by
convincing and substantial evidence consisting of the testimonies of the witnesses for private respondents who are
church treasurers, it was Mrs. Thelma Austria who actually collected the tithes and donations from them, and, who failed
to remit the same to the treasurer of the Negros Mission. The testimony of these church treasurers were corroborated
and confirmed by Ms. Geniebla and Mr. Ibesate, officers of the SDA. Hence, in the absence of conspiracy and collusion,
which private respondents failed to demonstrate, between petitioner and his wife, petitioner cannot be made
accountable for the alleged infraction committed by his wife. After all, they still have separate and distinct personalities.
For this reason, the Labor Arbiter found it difficult to see the basis for the alleged loss of confidence and breach of trust.
The Court does not find any cogent reason, therefore, to digress from the findings of the Labor Arbiter which is fully
supported by the evidence on record.

With respect to the grounds of serious misconduct and commission of an offense against the person of the employers
duly authorized representative, we find the same unmeritorious and, as such, do not warrant petitioners dismissal from
the service.

Misconduct has been defined as improper or wrong conduct. It is the transgression of some established and definite rule
of action, a forbidden act, a dereliction of duty, willful in character, and implies wrongful intent and not mere error in
judgment.[43] For misconduct to be considered serious it must be of such grave and aggravated character and not merely
trivial or unimportant.[44] Based on this standard, we believe that the act of petitioner in banging the attache case on the
table, throwing the telephone and scattering the books in the office of Pastor Buhat, although improper, cannot be
considered as grave enough to be considered as serious misconduct. After all, as correctly observed by the Labor Arbiter,
though petitioner committed damage to property, he did not physically assault Pastor Buhat or any other pastor present
during the incident of 16 October 1991. In fact, the alleged offense committed upon the person of the employers
representatives was never really established or proven by private respondents. Hence, there is no basis for the allegation
that petitioners act constituted serious misconduct or that the same was an offense against the person of the employers
duly authorized representative. As such, the cited actuation of petitioner does not justify the ultimate penalty of dismissal
from employment. While the Constitution does not condone wrongdoing by the employee, it nevertheless urges a
moderation of the sanctions that may be applied to him in light of the many disadvantages that weigh heavily on him like
an albatross on his neck.[45] Where a penalty less punitive would suffice, whatever missteps may have been committed
by the worker ought not be visited with a consequence so severe such as dismissal from employment.[46] For the
foregoing reasons, we believe that the minor infraction committed by petitioner does not merit the ultimate penalty of
dismissal.

The final ground alleged by private respondents in terminating petitioner, gross and habitual neglect of duties, does not
requires an exhaustive discussion. Suffice it to say that all private respondents had were allegations but not proof. Aside
from merely citing the said ground, private respondents failed to prove culpability on the part of petitioner. In fact, the
evidence on record shows otherwise. Petitioners rise from the ranks disclose that he was actually a hard-worker. Private
respondents evidence,[47] which consisted of petitioners Workers Reports, revealed how petitioner travelled to different
churches to attend to the faithful under his care. Indeed, he labored hard for the SDA, but, in return, he was rewarded
with a dismissal from the service for a non-existent cause.

In view of the foregoing, we sustain the finding of the Labor Arbiter that petitioner was terminated from service without
just or lawful cause. Having been illegally dismissed, petitioner is entitled to reinstatement to his former position without
loss of seniority right[48] and the payment of full backwages without any deduction corresponding to the period from his
illegal dismissal up to actual reinstatement.[49]

WHEREFORE, the petition for certiorari is GRANTED. The challenged Resolution of public respondent National Labor
Relations Commission, rendered on 23 January 1996, is NULLIFIED and SET ASIDE. The Decision of the Labor Arbiter, dated
15 February 1993, is reinstated and hereby AFFIRMED.

SO ORDERED.

Davide, Jr., C.J., (Chairman), Puno, Pardo, and Ynares-Santiago, JJ., concur.

[1] Penned by Presiding Commissioner Irenea E. Ceniza and concurred in by Commissioner Amorito V. Caete.
Commissioner Bernabe S. Batuhan dissented. Records, Vol. 1, p. 901.

[2] Exhibit B for petitioner, Id., at 467.

[3] Exhibits 5, 6, 7, 8, and 9 for private respondents, Id., at 355 359.

[4] Exhibit M for petitioner, Id., at 252.

[5] Decision of the labor arbiter, Id., at 489, 531.

[6] Id., at 532.

[7] Ibid.

[8] Exhibit H for petitioner, Id., at 247.

[9] Exhibit C for petitioner, Id., at 239.

[10] Exhibit E for petitioner, Id., at 241.

[11] Records, Vol. 1, p. 1.

[12] Decision of the Labor Arbiter, Id., at 489, 536.

[13] Decision of the NLRC, Id., at 611, 618.

[14] Resolution of the NLRC, Id., at 789, 796.

[15] Id., at 901, 903.

[16] Rollo, p. 188.

[17] ISAGANI A. CRUZ, PHILIPPINE POLITICAL LAW (1998), p. 68.

[18] Ibid.

[19] Id.

[20] Id.

[21] BLACKS LAW DICTIONARY, Fifth Edition (1979), p. 460.

[22] Rollo, p. 233.

[23] Exhibit B for petitioner, Records, Vol. 1, p. 238.

[24] Emphasis supplied.

[25] Maneja vs. NLRC and Manila Midtown Hotel, G.R. No. 124013, June 5, 1998, citing Marquez vs. Secretary of Labor,
171 SCRA 337 (1989).
[26] Lim, et al. vs. NLRC, et al., G.R. No. 124630, February 19, 1999.

[27] Arboleda vs. NLRC and Manila Electric Company, G.R. No. 119509, February 11, 1999, citing Tanala vs. NLRC, 252
SCRA 314 (1996).

[28] Id., citing Gesulgon vs. NLRC, 219 SCRA 561 (1993).

[29] Id., citing Pizza Hut/Progressive Devt. Corp. vs. NLRC, 252 SCRA 531 (1996).

[30] Salaw vs. NLRC, 202 SCRA 7, 12 (1991) citing San Miguel Corporation vs. NLRC, 173 SCRA 314 (1989).

[31] Tiu v. NLRC, 215 SCRA 540, 551 (1992).

[32] Ibid.

[33] Id.

[34] Id., at 552.

[35] Id., citing Metro Port Service, Inc. v. NLRC, 171 SCRA 190 (1989).

[36] Exhibit H for petitioner, Records, Vol. 1, p. 247.

[37] Exhibit E for petitioner, Id., at 241.

[38] Atlas Consolidated Mining & Devt. Corp. vs. NLRC and Isabelo O. Villacencio, G.R. No. 122033, May 21, 1998.

[39] Ibid.

[40] Id.

[41] Exhibits 47, 49, 50, 51, 52, and 53 for private respondents, Records, Vol. 1, pp. 398, 400 403.

[42] TSN, June 22, 1992, pp. 198-199; August 18, 1992, pp. 189-191, 198-201.
[43] Alma Cosep, et al. vs. NLRC and Premiere Development Bank, G.R. No. 124966, June 16, 1998.

[44] Ibid.

[45] Gandara Mill Supply and Milagros Sy vs. NLRC and Silvestre Germano, G.R. No. 126703, December 29, 1998 citing
Diosdado de Vera vs. NLRC, 191 SCRA 633 (1990).

[46] PLDT vs. NLRC and Enrique Gabriel, G.R. No. 106947, February 11, 1999, citing Madlos vs. NLRC, 254 SCRA 248
(1996).

[47] Exhibits 44 46 for private respondents, Records, Vol. 1, pp. 395 397.

[48] Salaw vs. NLRC, supra note 30 citing Santos vs. NLRC, 154 SCRA 166 (1987).

[49] Joaquin Servidad vs. NLRC, 265 SCRA 61, 71 (1996).

Austria v. NLRC G.R. No. 124382 August 16, 1999

Austria v. NLRC

G.R. No. 124382 August 16, 1999

KTA: Relationship of the church as an employer and the minister as an employee is purely secular in nature because it has
no relation with the practice of faith, worship or doctrines of the church, such affairs are governed by labor laws. The
Labor Code applies to all establishments, whether religious or not.

Facts:

The Seventh Day Adventists(SDA) is a religious corporation under Philippine law. The petitioner was a pastor of the SDA
for 28 years from 1963 until 1991, when his services were terminated.

On various occasions from August to October 1991, Austria received several communications form Ibesate, the treasurer
of the Negros Mission, asking him to admit accountability and responsibility for the church tithes and offerings collected
by his wife, Thelma Austria, in his district and to remit the same to the Negros Mission.

The petitioner answered saying that he should not be made accountable since it was Pastor Buhat and Ibesate who
authorized his wife to collect the tithes and offerings since he was very ill to be able to do the collecting.
A fact-finding committee was created to investigate. The petitioner received a letter of dismissal citing:

1) Misappropriation of denominational funds;

2) Willful breach of trust;

3) Serious misconduct;

4) Gross and habitual neglect of duties; and

5) Commission of an offense against the person of 
employer's duly authorized representative as grounds for the
termination of his services.

Petitioner filed a complaint with the Labor Arbiter for illegal dismissal, and sued the SDA for reinstatement and backwages
plus damages. Decision was rendered in favor of petitioner.

SDA appealed to the NLRC. Decision was rendered in favor of respondent.

Issue:

1. Whether or not the termination of the services of the petitioner is an ecclesiastical affair, and, as such, involves the
separation of church and state.

2. Whether or not the Labor Arbiter/NLRC has jurisdiction to try and decide the complaint filed by petitioner against the
SDA.

Held/Ratio:

1. No. The matter at hand relates to the church and its religious ministers but what is involved here is the relationship of
the church as an employer and the minister as an employee, which is purely secular because it has no relationship with
the practice of faith, worship or doctrines. The grounds invoked for petitioner’s dismissal are all based on Art. 282 of
Labor Code.

2. Yes. SDA was exercising its management prerogative (not religious prerogative) to fire an employee which it believes is
unfit for the job. It would have been a different case if Austria was expelled or excommunicated from the SDA.

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Republic of the Philippines

SUPREME COURT

Manila

FIRST DIVISION

G.R. Nos. 75746-48 December 14, 1987

ORESHOOT MINING COMPANY, petitioner,

vs.

HON. DIOSCORA C. ARELLANO, Director, Regional Office No. IV, MOLE, HON. VICENTE LEOGARDO, JR., Deputy Minister,
MOLE, THE ACTING SHERIFF, RO No. 4, MOLE, RODRIGO BAACO, MANUEL RODRIGUEZ, MELCHOR GUMPAL et al.

NARVASA, J.:

Assailed in this special civil action of certiorari is the Order of the Deputy Minister of Labor and Employment, affirming
with modification the Order of the Director of Regional Office No. IV which, in three (3) separate but consolidated
proceedings, directed the reinstatement of private respondents and the payment to them of back wages and certain
other benefits. 1

The Regional Director's Order, dated October 6, 1981, contained the following disposition, to with

WHEREFORE, premises considered, an Order is hereby entered as follows:

1. Respondent Oreshoot Mining Co. is hereby ordered to immediately reinstate to their former positions without
loss of seniority rights with full backwages as computed above, the complainants Rodrigo Baaco, Manuel Rodriguez,
Rolando Pacaldo Silvestre Teodoro, Albino Bungalso and Rufino Bungalso;

2. Respondent is also hereby ordered to pay the complainants the benefits in accordance with the computations
made above and is required that henceforth it should give the same benefits to all of its employees.

3. The total amount of benefits due the employees above referred to is P117,905.00.
Oresho.filed two (2) motions for reconsideration. The first was denied; the second was treated as an appeal and
transmitted by the Regional Director to the Office of the Minister of Labor and Employment. Acting thereon, the Deputy
Minister rendered an Order on May 27, 1985, affirming the aforesaid adjudgment made by the Regional Director with the
modification that sixteen (16) employees, who signed an affidavit of desistance in Oreshoot's favor, dated November 12,
1981, were dropped as party complainants. Subsequently, the Regional director issued a writ of execution on March 19,
1986 which the MOLE Deputy Sheriff sought to implement in July, 1986.

Oreshoot has come to this Court advocating the theory that all the proceedings above mentioned are void because the
Regional Director had no jurisdiction to take cognizance of and adjudicate the claims of private respondents. Additionally,
it imputes grave abuse of discretion to the Regional Director in (1) consolidating the three cases filed against it and
deciding them as one notwithstanding that the last two cases were filed after the first had already been submitted for
decision; (2) in not informing it Oreshoot of the non-indorsement of the cases to the Labor Arbiter as required by Article
227 (now Article 228) of the Labor Code; and (3) ruling that there were no valid grounds for its shutdown of its business
on account of economic difficulties caused by world-wide recession.

Oreshoot is correct as regards its claim of the Regional Director's lack of competence over the cases in question. The
respondent Regional Director had no jurisdiction to try and decide claims of workers and employees of their illegal
dismissal from employment, and for their reinstatement and recovery of monetary and other benefits consequent
thereto. The writ of certiorari will issue in Oreshoot's favor. The same issue was raised in Zambales Base Metals, Inc. vs.
The Minister of Labor, et al., G.R. No. 73184-88, Nov. 26, 1986. In that case, in a substantially analogous factual context,
this Court, 2 resolved the issue in the following manner.

The issue is simple enough. The applicable provision is Article 217 of the Labor Code, which states as follows:

ART. 217. Jurisdiction of Labor Arbiters and the Commission — (a) The Labor Arbiters shall have the original and
exclusive jurisdiction to hear and decide within thirty (30) working days after submission of the case by the parties for
decision, the following cases involving all workers. whether agricultural or non-agricultural:

l. 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 benefit

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.
xxx xxx xxx

This article does not even need construction. It is obvious therefrom that only the labor arbiter could decide the cases
filed by the employees as they involved 'money claims' falling under No. 3 of the enumeration. As for the regional
director, the authority he invokes under Article 128 of the Labor Code confers upon him only visitorial powers over the
employer's premises and records, including the right to require compliance with the labor standards provisions of the
Code, such as those relating to industrial safety. Nowhere in the said article is the regional director empowered to share
the original and exclusive jurisdiction' conferred on the labor arbiters by Article 217.

At the time of the filing of the cases at bar, original and exclusive jurisdiction was vested in Labor Arbiters to hear and
decide inter alia (1) 11 all money claims of workers, including those based on non-payment or underpayment of wages,
overtime compensation, separation pay and other benefits provided by law or appropriate agreement, except claims for
employees' compensation, social security, medicare and maternity benefits," and (2) "all other claims arising from
employer-employee relations, unless expressly excluded by ... (the) Code. 3

The Regional Director had direct and administrative control and supervision over (a)ll Labor Arbiters in his region. 4 As
such he was empowered to assign cases to Labor Arbiters, "taking into consideration their workload, nature of the case,
complexity of the issues involved and other factors, with the view of expediting disposition of cases." A Labor Arbiter
could take cognizance only of "cases indorsed to him for compulsory arbitration by the Bureau or by the Regional
Director, " but the "indorsement or non-indorsement of the Regional Director ... (could) be appealed to the Bureau within
ten working days from receipt of the notice.5

In the case of a money claim, the Regional Director's power was limited to receiving the complaint, investigating it and
trying to effect conciliation, and, if no settlement was reached, certifying the case to the Labor Arbiter. That certification
could not however be made if (a) the complaint patently lacks cause of action; (b) the causes of action have already
prescribed (c) the complaint patently partakes of the nature of harassment; and (d) the complaint is barred by prior
judgment. 6

In cases of shutdowns or dismissals, as to which prior clearance was formerly required, the Regional Director was
empowered to initially decide whether to certify the same to the Executive Labor Arbiter or to summarily investigate and
decide it within 10 days from filing; but if there had been a 11 preventive suspension on the employee effected by the
employer, the Regional Director ... (was) bound to rule first thereon: whether to lift or sustain the same or to stop or give
due course to an intended one. " As a matter of policy the Regional Director certified the case to the Executive Arbiter "(a)
if the nature of the case does not suit summary investigation, or (b) if intricate questions of law are involved." And if he
did not deny the application, he had to "immediately certify the same to the Executive Arbiter for hearing and decision on
the merits. 7

It is worthy of note that where there was need for "hearing and decision on the merits" as regards applications for
clearance to shut down or dismiss, that function of hearing and deciding was not entrusted to the Regional Director but to
the Executive Arbiter (or other Labor Arbiters). This is clear from the provision requiring the Regional Director to certify
the case to the Executive Arbiter. That and other related provisions make clear that in reality, the only power accorded to
the Director was either to deny the application for shut down or dismissal after "summary investigation," or certify the
same to the Executive Arbiter. And he could only himself act on an application for clearance to shut down or dismiss, only
if the case did not involve "intricate questions of law" or was not otherwise suited for summary investigation. 8 But, to
repeat, where there was necessity to pass "upon the merits" of an application, he could not deny it, but had perforce to
certify it to the Executive Arbiter.
It is also worthy of note that the jurisdiction of the Regional Director in this regard is by express terms confined to
applications for shut downs and dismissals; i.e., those projected or proposed to be effected in future. Withheld from him
by necessary implication, therefore, are cases involving actual shut downs or dismissals, already effected by the employer,
where determination of the merits thereof becomes inevitable upon complaint of the employees thereby affected. 9

Now, when Batas Pambansa Bilang 130 took effect on August 21, 1981, the clearance requirement for shut downs and
dismissals was eliminated. The power of the Regional Director to pass upon applications therefor thus disappeared. So,
too, did his power to indorse cases to Labor Arbiters vanish; the Labor Arbiters were placed by the batas under the
supervision of the Chairman of the National Labor Relations Commission. Withal, the Regional Director retained the
power to conciliate in termination cases (but not to pass upon and decide the merits thereof). 10

The latest amendment to Article 217 of the Labor Code was worked by Section 2, Batas Pambansa Bilang 227, effective
June 1, 1982. Said Section 217, as lastly amended, is reproduced in full in the excerpt from Zambales Base Metals, Inc. v.
Minister of Labor, 146 SCRA 50 quoted earlier in this opinion. 11 It will at once be perceived that the amendment does
not at all affect, much less expand, the jurisdiction of the Regional Director. The Director continues to be without
competence or authority to hear and decide any of the matters specifically placed by law within the original and exclusive
jurisdiction of Labor Arbiters.

In this case the Court will therefore make the same disposition as it did in Zambales. "Inasmuch as the proceedings before
the regional director were null and void ab initio for lack of jurisdiction, the complaints for (back) wages and other
benefits filed by the employees against the petitioner should be remanded to the labor arbiter for appropriate action,"
with the expectation "that resolution of these cases will be effected with the least possible delay." The other issues raised
by the petitioner obviously need no longer be resolved.

WHEREFORE, the questioned Order of the public respondents dated October 6, 1981 and May 27, 1985, and other
related orders and writs, are hereby nullified and set aside. The private respondents' complaints are remanded to the
corresponding labor arbiter, with the direction that the same be heard and decided with all deliberate disptach. No costs.

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

Footnotes

1 Rodrigo Baaco and 33 other employees.

2 Per Mr. Justice Isagani A. Cruz.

3 Art. 217, Labor Code, as amended by PD 1691 eff. May 1, 1980. The other cases within the Labor Arbiters'
exclusive jurisdiction were: (1) unfair labor practice cases; (2) unresolved issues in collective bargaining, including those
that involve wages, hours of work and other terms and conditions of employment; and (3) cases involving household
services.

4 Sec. 5, Implementing Rules and Regulations, PD 1391, eff. May 29,1978.

5 Art. 228, Labor Code; see Abad v. Phil. American General Insurance Co., Inc., 108 SCRA 717.

6 Book V, Rule XII, Implementing Rules and Regulations of the Labor Code.

7 Policy Instructions Nos. 6 and 14, April 23, 1976; Sec. 8, Rule XIV, Book V, Implementing Rules and Regulations of
the Labor Code.

8 Grounds for denial of the application for clearance to shut down or dismiss workers were explicitly prescribed: (1)
there was a showing of unfair labor practice in connection with the proposed shut down or dismissal; (2) the ground
therefor is not one of the just causes provided for under Art. 283 of the Labor Code; (3) the projected shut down will
seriously affect public interest.

9 Sec. 9, Rule XIV, Book V, Implementing Rules & Regulations, supra.

10 Sagmit v. Sibulo, 133 SCRA 359.

11 At page 2, supra

* Designated a Special Member of the First Division.

The Lawphil Project - Arellano Law Foundation

Constitution Statutes Executive Issuances Judicial Issuances Other Issuances Jurisprudence International Legal
Resources AUSL Exclusive

.R. No. L-31390. April 15, 1988.]

FREE TELEPHONE WORKERS UNION, Petitioner, v. PHILIPPINE LONG DISTANCE TELEPHONE COMPANY and the
HONORABLE COURT OF APPEALS, Respondents.
SYLLABUS

1. REMEDIAL LAW; JURISDICTION OVER DAMAGES ARISING FROM LABOR DISPUTES. — The Court of First Instance
had no jurisdiction over actions for the recovery of damages arising from labor disputes. (Holganza v. Apostol, G.R. No. L-
9115, August 31, 1956; PLDT Co. v. Free Telephone Workers Union, 116 SCRA 145).

DECISION

NARVASA, J.:

Naught but application of established and familiar precedent is what is needful to terminate the proceedings at bar.

On complaint of the Philippine Long Distance Telephone Company, hereafter, simply, PLDT, the Manila Court of First
Instance rendered judgment condemning the labor organization representing the company’s employees, the Free
Telephone Workers Union, to pay actual damages amounting to P95,925.00, with 6% interest thereon from March 5,
1963. The Court found that the union had declared a strike in violation of a so-called "no-strike clause" in the parties
collective bargaining agreement then in force, to the effect that "there shall be no strikes, walkout, stoppage or slowdown
of work, boycotts, secondary boycotts . . . during the term of the agreement" ; and that the strike had caused injury to the
employer.

The Court of Industrial Relations, on the other hand, had assumed jurisdiction of the strike — allegedly staged in protest
against unfair labor practices of the company (in relation more particularly to the disciplinary suspension of a member of
the Union’s Board of Directors) — and had directed the strikers to return to work pending final resolution of the
controversy.

The Court of Appeals affirmed the judgment of the Manila Court of First Instance. Invoking PAFLU v. Tan, 1 it overruled
the Union’s objections to the Lower Court’s jurisdiction, declaring that actions for recovery of damages for breach of
contract were not within the jurisdiction of the Court of Industrial Relations but of the civil courts, even those growing out
of a labor dispute. It also rejected the Union’s argument that since its officers had been cleared of responsibility by the
Trial Court, "exemption from liability of ordinary members and the union follows necessarily," the officers having been
exempted from personal liability upon a finding that they had merely acted in the union’s behalf. The Appellate Court
finally turned down the claim that "acceptance (by the management) of the strikers . . . to their former positions . . .
renders the question of strike legality moot and academic," the claim having been asserted for the first time only on
appeal.chanrobles law library : red
In a bid to overthrow the judgment of the Court of Appeals, and that of the Court of First Instance thereby sustained, the
Union has appealed to this Court by certiorari. It contends in its petition for review that -

1) the CFI had no jurisdiction over the complaint for damages for breach of a contract resulting from a decision of
the CIR in a labor dispute certified to it by the President of the Philippines, specially where that court is still in process of
determining the legality of the strike alleged to constitute the breach and consequently, the right of the strikers to
continue in employment;

2) the case had become academic when the strikers were accepted back to work;

3) the CFI erred in holding the UNION liable for damages, because the applicable law, R.A. 875, limits penalty for
illegal strikes; and

4) it was error to declare the Union liable for acts of its officers who had been found to have given the order to strike
in good faith, and who were exempted from any liability.

In Holganza va. Apostol, 2 this Court passed upon the question of jurisdiction over actions for the recovery of damages in
connection with labor disputes, and there declared that —

". . . As far back as Associated Labor Union v. Gomez, the exclusive jurisdiction of the Court of Industrial Relations in
disputes of this character was upheld. "To hold other wise 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 v. Atlas Consolidated Mining and Development Corporation, 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 Leoquenio v. Canada Dry Bottling
Co. and Associated Labor Union v. Cruz, with the opinions coming from the same distinguished jurist, adhered to such a
doctrine the latest case in point, as noted at the outsets, is the Goodrich Employees Association decision . . ."cralaw
virtua1aw library

The doctrine reviewed and enunciated in Holganza was reaffirmed in PLDT Co. v. Free Telephone Workers Union,
promulgated on August 30, 1982, which ruled that "the regular courts, . . (e.g.) Court of First Instance, . . have no
jurisdiction over complaints for damages of this nature." 3

It thus appears that the Court of First Instance had no jurisdiction over the subject matter if the complaint for damages
filed with it by the PLDT, and that court’s judgment was on that account a nullity. It judgment will therefore have to be
invalidated and aside, as also that of the court of Appeals upholding it. The judgment being void and inexistent, there is no
need to consider and determine the correctness of the other arguments asserted against it.

WHEREFORE, the decision of the Court of Appeals subject of the instant appeal, and that of the Court of First Instance by
it affirmed are REVERSE AND SET ASIDE; all the proceedings in Civil Case No. 53282 of the court are declared null and void,
and the case is DISMISSED, without pronouncement as to costs.chanrobles virtual lawlibrary
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Republic of the Philippines

SUPREME COURT

Manila

THIRD DIVISION

G.R. No. 78524 January 20, 1989

PLANTERS PRODUCTS, INC., petitioner,

vs.

NATIONAL LABOR RELATIONS COMMISSION, LABOR ARBITER VIRGINIA G. SON, RENATO ABEJAR, ERNESTO ABELLA,
DOMINADOR ABITONG, PEDRO ALBAYALDE, ELIZABETH ACUZAR, GIL JUAN ADAMOS, ET AL., respondents.

G.R. No. 78739 January 20, 1989

RENATO ABEJAR, ERNESTO ABELLA, DOMINADOR ABITONG, PEDRO ALBAYALDE, EMILIA ACUZAR, GIL JUAN ADAMOS,
ARTURO ALCID, RENATO ALDE, RAMON AMBROCIO, CESAR ANGELES, DIOMEDES ARANDEZ, BENIGNO ATIENZA, ET AL.,
petitioners,

vs.

PLANTERS PRODUCTS, INC., and NATIONAL LABOR RELATIONS COMMISSION (NLRC), respondents.

Sycip, Salazar & Gatmaitan for Planters Products, Inc.

Luis Q. U. Uranza, Jr. and Associates for petitioners and Intervenors-petitioners in G.R. No. 78739.

Cesar C. Pedro for intervenors-petitioners in G.R. No. 78739.

GUTIERREZ, JR., J.:

These are consolidated petitions to review on certiorari the resolution of the National Labor Relations Commission (NLRC)
affirming with modifications the Labor Arbiter's decision.

The dispositive portion of the resolution reads as follows:

WHEREFORE, there being no reversible error in the decision appealed from, We hereby AFFIRM with modifications the
same by (1) declaring respondent Planter's Product GUILTY of unfair labor practice; (2) to direct respondent to pay the
individual complainants, intervenor-complainants, and all others which (sic) are similarly situated an amount equivalent to
one and one-half (1 1/2) months of basic pay, which is subject to adjustment, as far as separation pay or termination
allowance is concerned, for those whose service is less than ten (10) years in accordance with the collective bargaining
agreement for the years 1975 to 1984; (3) that effective upon the service of this Resolution, and until all sums due are
duly paid to the individual complainants, intervenor-complainants and all others which (sic) are similarly situated,
respondent is enjoined from disposing of, or otherwise encumbering a portion or all of its assets to answer for the
obligations or payments as directed herein; and (4) the award for actual, exemplary and moral damages as well as
attorney's fees is hereby set aside. (pp. 55-56, Rollo)

The facts of the case as found by the labor arbiter and adopted by the NLRC are as follows:

xxx xxx xxx

This case involves about 440 retrenched employees of the respondent from its Bataan and Makati-based operations. It
was filed by the complainants as individuals, and jointly with their respective unions, as a class suit on behalf of Bataan-
based Planters Products, Inc. ('PPI' hereafter) employees similarly situated under Section 12, Rule 3 of the Rules of Court,
on January 16, 1986., The intervenors, on June 20, 1986, in their behalf and in behalf of similarly situated Makati-based
employees, moved for leave to intervene because they were similarly situated as the complainants.

Moreover, the Stipulation of Facts entered into by and between the parties herein succinctly disclosed these undisputed
facts, to wit:

STIPULATION OF FACTS

l. The complainants and Complainants-Intervenors were all regular employees of the Respondent until their
respective dates of retirement/retrenchment.

2. All the Complainants, except the Complainants-Intervenors, are members of either one of the following Unions of
workers/employees of the Respondent:
a. Planters Product Employees Union ('PPEU' for brevity);

b. First Line Association of Management Employees ('FLAME' for brevity); and

c. Super 21, and/or were represented by said unions as their respective agents.

3. These Unions of former employees of Respondent have always had collective bargaining agreements (Exhs. A -1975-78
CBA which was formally ratified; 'A l'- 1978-81 and 'A-2'/'8'-1981-84 CBAs which were not formally submitted for
ratification; and 'A-3'/9'-the purported 1984-87 CBA which was not formally submitted for ratification).

4. On October 11, 1982, the Respondent instituted a Retirement and Pension Plan (RPP' hereafter for brevity) for all
employees, which was to be effective retroactive to March 31, 1982, (Exhs. 'P' to 'P-14 a').

5. This non-contributory RPP was funded exclusively by PPI.

6. On February 23, 1984, PPI to institutionalize the RPP, entered into a Trust Agreement with Philippine Trust Co., Inc.
('PTC' for brevity), under the terms of which, PTC shall administer and manage the fund.

7. The initial amount deposited with PTC in accord with the trust agreement, and to fund the RPP initially was
P15,772,421.98 (Exh. 'Q').

8. There were subsequent deposits made into the RPP trust account, so that by December 31, 1984, the trust fund in the
RPP amounted to P23,789,690.00, more or less (Exh. '5').

9. On September 28, 1984 a CBA for 1984-1987 was signed between PPI and the directors and principal officers of its
unions, assisted by their lawyer, Atty. Gabriel Manansala (Exh. 'A-3'/'9').

10. Exh. 'A-3'/'9' modified the provisions in the previous CBAs on 'termination allowance' or benefit, and limited its scope
to separation from the service of PPI by reason solely of disability.

11. The 1984-87 CBA was never formally submitted to the membership of the Unions for ratification.

12. In March 1984 the RPP was submitted to the Bureau of Internal Revenue for qualification as an approved Retirement
and Pension Plan (Exh. '4'/'K').

13. On October 10, 1984, the RPP was approved by BIR Deputy Commissioner Tomas Toledo (Exhs. '6'-' 6-D 'L' and 'L-1').
14. After the RPP was approved by the BIR, on November 21, 1984, PPI issued a circular to all employees announcing the
funding of the RPP (Exh. 'B'/'10) and its approval by the BIR pursuant to R.A. 4917.

15. On September 15, 1985, without formally informing the PPI employees-beneficiaries of the RPP, the RPP was
unilaterally amended by the company, particularly its Part IV, paragraphs 3-5, pursuant to Section J, Part 7 of the RPP and
a copy was later submitted to the BIR for approval on 22 October 1985 and the amendments were approved by the BIR
pursuant to the provisions of R.A. 4197 (Exhs. '4' to '4-F'/'K' to 'K- 2').

16. On September 26, 1985 a circular was issued to all employees of RPI (Exh.'H/'16') announcing that employees laid off
from its Bataan operations on July 8 and August 15, 1985, were being terminated effective as of September 30, 1985;
while those laid off from its Makati office would be terminated effective as of October 15, 1985. Between their lay-off
dates and their announced termination/retirement dates, all of the concerned employees did not render service to PPI.

17. On September 27, 1985, individual letters were sent to each employee notifying them of their formal termination and
the termination benefits that they would be granted (Exh. 'C'/11').

18. On or about October 11, 1985, Mr. Roberto Orig, for PPI, issued to the individual Complainants/Complainants-
Intervenors computer print-outs reflecting the respective computations of their separation benefits for all employees
terminated during the said periods (Exhs. 'I'-'I-123'. 'N- INTERVENOR'-N-20-INTERVENOR). Exhs. 'B' to 'B-8', 'N-
INTERVENOR' to 'N-20-INTERVENOR' AND 'I' to 'I'-133', shows that the separation pay granted to the Bataan-based and
Makati-based employees who were not retireable, was only one (1) month of basic pay for each year of service with one-
half paid from the RPP and the balance from PPI operating funds. As shown by the same Exhibits, all employees entitled to
optional or forced retirement, were granted retirement benefits based on their basic pay. These benefits ranged from
1.02 to 1.43 months of basic pay per year of service as computed in accordance with the RPP. These computations were
used in paying the Complainants and the Complainants-Intervenors the sums indicated on the print outs.

19. The RPP was managed by a Retirement and Pension Committee of PPI (Exh. 'Q-l').

20. Effective 15 September 1985, before the Complainants and Complainants-Intervenors were retired/retrenched, the
company amended PPI's RPP particularly Part. IV, Par. D (4) and (5), pursuant to which Complainants and Complainants-
Intervenors were paid their separation pay/benefits on the basis of their basic salary.

21. Subsequent to the retirement/retrenchment of the Complainants and Complainants-Intervenors, all the remaining
employees were paid their computed retirement/retrenchment benefits from the RPP and the RPP was liquidated on June
23, 1986 (Exhs. 'G/'15'-Caluag letter and Exhs. 'R', ' R-1', 'S') and

22. Some of the employees who were retired/retrenched effective June 1, 1986, have been subsequently re-hired by PPI
under certain conditions. (pp. 42-45, Rollo - 78739)

The labor arbiter rendered judgment against Planters Products, Inc., holding it guilty of unfair labor practice. This was
affirmed on appeal to the NLRC, with the modification that it set aside the award for actual, exemplary and moral
damages, and attorney's fees.
Both parties filed their respective petitions before this Court.

Planters Products, Inc., (PPI) in its petition raised the following assignments of errors:

In rendering the decision/resolution complained of, public respondents acted without or in excess of jurisdiction and/or
grave abuse of discretion in that —

1. The NLRC, and before it, the Labor Arbiter acted without jurisdiction in resolving this case, jurisdiction over which is
vested exclusively on another judicial authority. (p. 10, Rollo- 78524)

2. Assuming arguendo that public respondents have jurisdiction, they miserably failed to make a sufficient and valid
findings of facts upon which they could reasonably base their conclusions. (p. 15, Id.)

3. Assuming arguendo that public respondents made sufficient and valid findings of facts, such findings are clearly and
manifestly erroneous and absolutely devoid of evidentiary support. (p. 16, Id.) .

a. Total absence of evidence to support conclusion of unfair labor practice.

b. The finding of bad faith has no basis; Planters's decision to amend its retirement plan was prompted by its benevolent
desire to give more benefits to its employees. (p. 18, Id.)

4. Public respondents committed gross errors of law in that —

(a) Under its express provision, the Retirement Plan may be amended unilaterally and the validity and enforceability of the
amendment are not nullified by a mere formal defect. (p. 20, Id.)

(b) Private respondents are estopped from questioning the validity of the amendment to the Retirement Plan. (p. 24, Id.)

(c) The rule on non-diminution of benefits does not apply to a modification of a provision in the CBA voluntarily
negotiated and entered into by the parties. (p. 26, Id.)

(d) Continued employment is a condition sine qua non to entitlement to the liquidation proceeds of the Retirement Fund;
non-employees at the time of liquidation are no longer participants in the Retirement Plan and are, therefore, not entitled
to liquidation proceeds. (p. 28, Id.)
5. Public respondents gravely abused their discretion and denied Planters due process when they deliberately ignored
Planter's evidence. (p. 31, Id.)

On the other hand, the individual complainants and intervenors-complainants, in their petition for partial review, raised
the following assignments of errors:

A. THE SETTING ASIDE BY THE HONORABLE NLRC OF THE AWARD OF THE LABOR ARBITER TO THE PETITIONERS AND
INTERVENORS-PETITIONERS OF ACTUAL, MORAL AND EXEMPLARY DAMAGES, AND ATTORNEYS FEES, IS INCONSISTENT
WITH ITS FINDING OF UNFAIR LABOR PRACTICE, BREACH OF TRUST, AND VIOLATION OF THE CBA PROVISIONS ON
TERMINATION ALLOWANCES AND THE PROHIBITION AGAINST THE DIMINUTION OF EMPLOYEE BENEFITS.

B. THE HONORABLE NLRC ERRED IN EXCLUDING NOT INTEGRATING THE 10% SALARY ADJUSTMENT AND THE
ALLOWANCES IN THE COMPUTATION OF THE TERMINATION AND RETIREMENT ENTITLEMENT OF THE PETITIONERS AND
INTERVENORS-PETITIONERS.

C. THE HONORABLE NLRC ERRED IN NOT FINDING FROM THE DOCUMENTARY EVIDENCE THAT PETITIONERS AND
INTERVENORS-PETITIONERS ARE ALSO ENTITLED TO PRO-RATED DEATH BENEFITS. (pp. 3-4, Rollo-78739)

The first issue to resolve is whether or not the NLRC and the Labor Arbiter have jurisdiction over the present suit.

PPI contends that the public respondents have no jurisdiction over the case as there is no longer an existing employer-
employee relationship between the private parties. The relationship having been severed, it is believed that the
complainants should have sought reinstatement for the present action to fall under said respondents' jurisdiction.

The contention is without merit.

An employee need not seek reinstatement in order to file a complaint before the Labor Arbiter. (A. Consteel Construction
Co., Inc. v. Intermediate Appellate Court, G.R. No. 64673, Oct. 21, 1988). Money claims of workers as in the instant case,
fall within the original and exclusive jurisdiction of labor arbiters when these claims have some reasonable causal
connection with the employer-employee relationship (San Miguel Corp. v. National Labor Relations Commission, G.R. No.
80774, May 31, 1988; Oreshoot Mining Co. v. Arellano, G.R. Nos. 75746-48, Dec. 14, 1987; Vargas v. Akai Phils., Inc., UDK-
7927, Dec. 14, 1987; Samahang Manggagawa ng Liberty Commercial Center v. Pimentel, G.R. No. 78621, Dec. 2, 1987;
and Tuvera v. Dayrit, G.R. No. 50096, April 15, 1988).

It is a fact that the complainants and complainants-intervenors were all regular employees of PPI until their respective
dates of retirement/retrenchment (p. 46, Rollo- 78524). They now seek to improve the terminal benefits granted to them
on the allegation that a different computation was used for the other employees. Their claims clearly arose from the
employer-employee relationship.

PPI next contends that this should be a purely civil suit against the duly designated corporate trustee because it is
specifically against the Retirement Fund which was separately administered and managed by said trustee.
We disagree. It is stated in the stipulation of facts that the Retirement and Pension Plan (RPP hereafter) was managed by
a Retirement and Pension Committee of Planters Products, Inc. Moreover, the RPP was solely funded by PPI.

We therefore go along with the findings of the Labor Arbiter who stated:

The RPP was managed by a Retirement and Pension Committee (RPC' hereafter ) of PPI. Exhibits "P", "P-1" and "Q-10"
Identify the RPC members as:

Committee Vice-chairman-the Executive Vice-President and General Manager Members-the Vice-President, Treasurer;
the Vice-President, Corporate Services; the Vice-President, Controller; the Assistant to the President; the Plant Manager;
and Secretary- the Employee Relations Manager.

The incumbents from the start of the RPP until its liquidation, were: Messrs. M.B. Cortes, M.C. Ortega, H.G. Buhay, N.Q.
Dungca, J.L. Montelibano and Roberto Orig (Exh. "P-1") They are agents of PPI. Hence, PPI is the proper party-respondent
in this action. (p. 50, Rollo-78524)

Having determined that the public respondents have jurisdiction over the present case, we now proceed to the other
issues.

PPI questions the findings of fact of the public respondents. The NLRC merely adopted the findings of facts of the Labor
Arbiter.

It is a well-established doctrine that the findings of fact of administrative agencies are binding on this Court if supported
by substantial evidence. (Llobecera v. National Labor Relations Commission, G.R. No. 76271, June 28, 1988; PALEA v.
Calleja, G.R. No. 76673, June 22, 1988; Continental Marble Corp. v. National Labor Relations Commission, G.R. No. L-
43825, May 9, 1988; Casin v. Employees' Compensation Commission, G.R. No. L-46556, May 28, 1988; and Asim B. Castro,
G.R. Nos. 75063-64, June 30, 1988)

After a close perusal of the records of this petition, we find no reason to depart from the factual findings of the Labor
Arbiter. The findings were mainly based upon the stipulation of facts reached by the parties.

PPI alleges that it was denied due process when public respondents deliberately ignored its evidence. This is a
misapprehension.

The essence of due process is simply an opportunity to be heard. (Van-Orient Shipping co., Inc. v. Achacoso, G.R. No.
81805, May 31, 1988; Ong, Sr. v. Parel, G.R. No. 76710, Dec. 21, 1987). PPI was given this opportunity. The fact that the
public respondents gave credit to the other party's evidence and not to the evidence of PPI is not a violation of due
process.
The evidence presented by contesting parties are logically opposing. Necessarily then the agency or court agency or court
tasked to resolve a controversy decides whose evidence shall be given more weight. That a party's evidence was given
more weight does not amount to a denial of due process to the other party. Otherwise, it would give rise to the
incongruous situation where all the losing parties would claim a denial of due process simply because their evidences
were not given the desired weight to resolve the issues in their favor.

The next issue is whether or not PPI was guilty of unfair labor practice.

The Labor Arbiter ruled that PPI committed an unfair labor practice by withdrawing the termination allowance in the
1984-87 CBA. (p. 62, Rollo-78524)

Article 248 of the Labor Code provides inter alia that:

... Unfair labor practices of employers, It shall be unlawful for an employer to commit any of the following unfair labor
practice.

xxx xxx xxx

(i) To violate a collective bargaining agreement.

The questioned provision in the 1984-87 Collective Bargaining Agreement limited the application of the termination
allowance only to those separated from the service due to disability (Sec. 1, Art. XVI, CBA for 1984- 1987). (pp. 7 & 158,
Rollo -78524). The prior CBAs from 1975 upwards granted a termination allowance, upon the employee's separation, of at
least three (3) weeks to one (1) month's pay for each year of service depending upon the total years of service. (p. 76,
Rollo-78524)

The provisions of the 1978-1984 CBAs (Exhibits "A" to "A-2"), Art. XVI, Secs. 1 and 2, uniformly read:

ARTICLE XVI. TERMINATION ALLOWANCE

Section 1. A regular employee who is separated from the service of the COMPANY shall be given a termination pay which
shall depend on the length of his service and shall be computed as follows:

Employees with: Amount of Allowance

1-5 years service 3 weeks pay for each year of service

6-9 years service 4 months plus 1 month for each year of service after the fifth year
10 or more years One month pay for each year

service of service

The termination pay shall be based upon the employee's basic pay at the time of his termination.

Section 2. An employee who is temporarily laid off, discharged for cause, resigns or retires from the service of the
COMPANY will not be entitled to any termination pay. (p. 54, Rollo-78524)

The crux of the petition is to determine whether or not the 1984-1987 CBA was validly entered into and to determine: 1)
the terminal benefits due to the employees, and 2) whether or not there was an unfair labor practice.

If the prior CBA is applied, the complainants/complainants-intervenors who do not fall under the above stated section 2
would be entitled to termination allowance under the CBA, over and above the benefits extended under the RPP.

PPI computed their terminal benefits by considering the 1984-1987 CBA and the amended RPP. All employees terminated
effective as of September 30, 1985 (Bataan Operations) and October 15, 1985 (Makati Office) who were not retireable
were granted a separation pay of one (1) month of basic pay for each year of service with one-half paid from the RPP and
the balance from PPI operating funds. All employees entitled to optional or forced retirement were granted retirement
benefits based on their basic pay ranging from 1.02 to 1.43 months of basic pay per year of service as computed in
accordance with the RPP (p. 48, Rollo-78524).

It is contended that the 1984-1987 CBA was not only negotiated in bad faith but was also not formally ratified. There was
allegedly bad faith in limiting the application of the termination allowance as the company already had plans to retrench
the workers.

We apply the established rule, that a CBA is the Law among the parties, to the 1984-1987 CBA.

Bad faith in the negotiations was not present considering that the provision on termination allowance was made to apply
to everybody including those subsequently retrenched or retired after the complainants' and complainants- intervenors'
retrenchment. There was no singling out of the complainants and intervenors-complainants.

Under Article 231 of the Labor Code and Sec. 1, Rule IX, Book V of the Implementing Rules, the parties to a collective
agreement are required to furnish copies to the appropriate Regional Office with accompanying proof of ratification by
the majority of all the workers in the bargaining unit. This was not done in the case at bar. But we do not declare the
1984-1987 CBA invalid or void considering that the employees have enjoyed benefits from it. They cannot receive benefits
under provisions favorable to them and later insist that the CBA is void simply because other provisions turn out not to
the liking of certain employees. (Stipulation of Facts, No. 3; p. 46, Rollo-78524). Moreover, the two CBAs prior to the
1984-1987 CBA were not also formally ratified, yet the employees are basing their present claims on these CBAs. It is
inequitous to receive benefits from a CBA and later on disclaim its validity.
There is nothing in the records before us to show that PPI was guilty of unfair labor practice.

However, PPI erred in not integrating the allowances with the basic salary in the computation of the separation pay. The
salary base properly used in computing the separation pay should include not just the basic salary but also the regular
allowances that an employee has been receiving. (Insular Life Assurance Co., Ltd. v. National Labor Relations Commission,
156 SCRA 740 [1987]; and Soriano v. National Labor Relations Commission, 155 SCRA 124 [1987]).

The allowances of the remaining PPI employees were made part of their basic pay. This increased the computation bases
for their terminal benefits. (p. 51, Rollo-78524). This should have been the case also for the complainants/complainants-
intervenors.

We adopt the Solicitor General's statement on the questioned death benefits that in any case, the death benefits are
payable only in the event of the death of the employee. Since petitioners and intervenors-petitioners are still alive, they
obviously are not entitled thereto. (p. 99, Rollo - 78739).

Finally, the complainants/complainants-intervenors are not entitled to share in the distribution of the RPP. Under Section
M, Part VII of the RPP only existing employees of the Company have the right to participate in the distribution of the
assets of the fund.

WHEREFORE, the decisions of the Labor Arbiter and the National Labor Relations Commission are hereby SET ASIDE and a
NEW ONE is ENTERED ordering Planters Products, Inc., under the supervision of the National Labor Relations Commission,
to recompute the terminal benefits of the complainants/complainants-intervenors by including their allowances, the
amount of which shall be taken from the assets which the Court enjoined Planters Products, Inc., from disposing. The
temporary restraining orders issued on June 11, 1987 and February 29, 1988 are hereby LIFTED.

SO ORDERED.

Fernan, C.J., Bidin and Cortes, JJ., concur.

Feliciano, J., took no part.

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Republic of the Philippines

SUPREME COURT

Manila

SECOND DIVISION

G.R. No. L-58877 March 15, 1982

PEPSI-COLA BOTTLING COMPANY, COSME DE ABOITIZ, and ALBERTO M. DACUYCUY, petitioners,

vs.

HON. JUDGE ANTONIO M. MARTINEZ, in his official capacity, and ABRAHAM TUMALA, JR., respondents.

ESCOLIN, J.:

This petition for certiorari, prohibition and mandamus raises anew the legal question often brought to this Court: Which
tribunal has exclusive jurisdiction over an action filed by an employee against his employer for recovery of unpaid salaries,
separation benefits and damages — the court of general jurisdiction or the Labor Arbiter of the National Labor Relations
Commission [NLRC]?

The facts that gave rise to this petition are as follows:

On September 19, 1980, respondent Abraham Tumala, Jr. filed a complaint in the Court of First Instance of Davao,
docketed as Civil Case No. 13494, against petitioners Pepsi-Cola Bottling Co., Inc., its president Cosme de Aboitiz and
other company officers. Under the first cause of action, the complaint averred inter alia that Tumala was a salesman of
the company in Davao City from 1977 up to August 21, 1980; that in the annual "Sumakwel" contest conducted by the
company in 1979, Tumala was declared winner of the "Lapu-Lapu Award" for his performance as top salesman of the
year, an award which entitled him to a prize of a house and lot; and that petitioners, despite demands, have unjustly
refused to deliver said prize Under the second cause of action, it was alleged that on August 21, 1980, petitioners, "in a
manner oppressive to labor" and "without prior clearance from the Ministry of Labor", "arbitrarily and ilegally" terminated
his employment. He prayed that petitioners be ordered, jointly and severally, to deliver his prize of house and lot or its
cash equivalent, and to pay his back salaries and separation benefits, plus moral and exemplary damages, attorney's fees
and litigation expenses. He did not ask for reinstatement.

Petitioners moved to dismiss the complaint on grounds of lack of jurisdiction and cause of action. Petitioners further
alleged that Tumala was not entitled to the "Sumakwel" prize for having misled the company into declaring him top
salesman for 1979 through various deceitful and fraudulent manipulations and machinations in the performance of his
duties as salesman and depot in-charge of the bottling company in Davao City, which manipulations consisted of
"unremitted cash collections, fictitious collections of trade accounts, fictitious loaned empties, fictitious product deals,
uncollected loaned empties, advance sales confirmed as fictitious, and route shortages which resulted to the damage and
prejudice of the bottling company in the amount of P381,851.76." The alleged commission of these fraudulent acts was
also advanced by petitioners to justify Tumala's dismissal.

The court below, sustaining its jurisdiction over the case, denied the motion for reconsideration. Hence the present
recourse.

We rule that the Labor Arbiter has exclusive jurisdiction over the case.

Jurisdiction over the subject matter in a judicial proceeding is conferred by the sovereign authority which organizes the
court; and it is given only by law. 1 Jurisdiction is never presumed; it must be conferred by law in words that do not admit
of doubt. 2

Since the jurisdiction of courts and judicial tribunals is derived exclusively from the statutes of the forum, the issue efore
Us should be resolved on the basis of the law or statute now in force. We find that law in Presidential Decree 1691 which
took effect on May 1, 1980, Section 3 of which reads as follows:

SEC. 3. Article 217, 222 and 262 of Book V of the Labor Code are hereby amended to read as follows:

Article 217. Jurisdiction of Labor Arbiters and the Commission. — The Labor Arbiters shall have the original and exclusive
jurisdiction to hear and decide the following cases involving all workers, whether agricultural or non-agricultural:

1. Unfair labor practice cases;

2. Unresolved issues in collective bargaining, including those that involve waged hours of work and other terms and
conditions of employment;

3. All money claims of workers, including those based on non-payment or underpayment of wages, overtime
compensation, separation pay and other benefits provided by law or appropriate agreement, except claims for
employees' compensation, social security, medicare and maternity benefits;

4. Cases involving household services; and

5. All other claims arising from employer-employee relations, unless expressly excluded by this Code.

Under paragraphs 3 and 5 of the above Presidential Decree, the case is exclusively cognizable by the Labor Arbiters of the
National Labor Relations Commission.

It is to be noted that P.D. 1691 is an exact reproduction of Article 217 of the Labor Code (P.D. 442), which took effect on
May 1, 1974. In Garcia vs. Martinez 3, an action filed on August 2, 1976 in the Court of First Instance of Davao by a
dismissed employee against his employer for actual, moral and exemplary damages, We held that under Article 217 of the
Labor Code, the law then in force, the case was within the exclusive jurisdiction of the Labor Arbiters and the National
Labor Relations Commission [NLRC]. This Court, per Justice Aquino, rational this holding thus:

The provisions of paragraph 3 and 5 of Article 217 are broad and comprehensive enough to cover Velasco's [employee's]
claim for damages allegedly arising from his unjustified dismissal by Garcia [employer]. His claim was a consequence of
the termination of their employer-employee relations [Compare with Ruby Industrial Corporation vs. Court of First
Instance of Manila, L- 38893, August 31, 1977, 78 SCRA 499].

Article 217 of the Labor Code words amended by P.D. 1367, which was promulgated on May 1, 1978, the full text of which
is quoted as follows:

SECTION 1. Paragraph [a] of Art, 217 of the Labor Code as amended is hereby further amended to read as follows:

[a] The Labor Arbiters shall have exclusive jurisdiction hear and decide the following cases involving all workers, whether
agricultural or non-agricultural:

1] Unfair labor practice cases;

2] Unresolved issues in collective bargaining, including those which involve wages, hours of work, and other terms
conditions of employment; and

3] All other cases arising from employer-employee relations duly indorsed by the Regional Directors in accordance with
the provisions of this Code.

Provided, that the Regional Directors shall not indorse and Labor Arbiters shall not entertain claims for moral or other
forms of damages.

It will be noted that paragraphs 3 and 5 of Article 217 were deleted from the text of the above decree and a new
provision incorporated therein, to wit: "Provided that the Regional Directors shall not indorse and Labor Arbiters shall not
en certain claims for moral or other forms of damages." This amendatory act thus divested the Labor Arbiters of their
competence to pass upon claims for damages by employees against their employers.
However, on May 1, 1980, Article 217, as amended by P.D. 1367, was amended anew by P.D. 1691. This last decree,
which is a verbatim reproduction of the original test of Article 217 of the Labor Code, restored to the Labor Arbiters of the
NLRC exclusive jurisdiction over claims, money or otherwise, arising from employer-employee relations, except those
expressly excluded therefrom.

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

Respondent Tumala maintains that his action for delivery of the house and lot, his prize as top salesman of the company
for 1979, is a civil controversy triable exclusively by the court of the general jurisdiction. We do not share this view. The
claim for said prize unquestionably arose from an employer-employee relation and, therefore, falls within the coverage of
par. 5 of P.D. 1691, which speaks of "all claims arising from employer-employee relations, unless expressly excluded by
this Code." Indeed, Tumala would not have qualitfied for the content, much less won the prize, if he was not an employee
of the company at the time of the holding of the contest. Besides, the cause advanced by petitioners to justify their
refusal to deliver the prize—the alleged fraudulent manipulations committed by Tumala in connection with his duties as
salesman of the company—involves an inquiry into his actuations as an employee.

Besides, to hold that Tumala's claim for the prize should be passed upon by the regular court of justice, independently
and separately from his claim for back salaries, retirement benefits and damages, would be to sanction split juridiction
and multiplicity of suits which are prejudicial to the orderly administration of justice.

One last point. Petitioners content that Tumala has no cause of action to as for back salaries and damages because his
dimissal was authorized by the Regional Director of the MInistry of Labor. This question calls for the presentaiton of
evidence and the same may well be entilated before the labor Arbiter who has jurisdiction over the case. Besides, the
issue raised is not for Us to determine in this certiorari proceeding. The extraordinary remedy of certiorari proceeding.
The extraordinary remedy of certiorari offers only a limited form of review and its principal function is to keep an inferior
tribunal within its jurisdiction. 5

WHEREFORE, the petition is granted, and respondent judge is hereby directed to dismiss Civil Case No. 13494, without
prejudice to the right of respondent Tumala to refile the same with the Labor Arbiter. No costs.

SO ORDERED.

Barredo (Chairman), Concepcion, Jr., De Castro and Ericta, JJ., concur.

Abad Santos, J., took no part.

Separate Opinions

AQUINO, J., concurring:

I concur. Under Presidential Decree No. 1691, which took effect on May 1, 1980 and which amended article 217 of the
Labor Code by nullifying the amendment intorduced by Presidential Decree No. 1367 (which took effect on May 1, 1978),
that Labor Arbiters shall not etertain claims for moral or other forms of damages," such claims may now be passed upon
by Labor Arbiters just as they had juristiction over such claims when the Labor Code took effect on October 1, 1974.
(Garcia vs. Martinez, L-47806-07, August 3, 1978, 84 SCRA 577, reconsidered in Resolution of May 28, 1979, 90 SCRA 331;
Bengzon vs. Inciong, L-48706-07, June 29, 1979, 91 SCRA 248; Caderon vs. Amor, et al. and Court of Appeals, G.R. No.
52235, October 28, 1980, 100 SCRA 459 and Abad vs. Philippine American General Ins. Co., Inc., G.R. No. 50563, October
30, 1981).

Separate Opinions

AQUINO, J., concurring:

I concur. Under Presidential Decree No. 1691, which took effect on May 1, 1980 and which amended article 217 of the
Labor Code by nullifying the amendment intorduced by Presidential Decree No. 1367 (which took effect on May 1, 1978),
that Labor Arbiters shall not etertain claims for moral or other forms of damages," such claims may now be passed upon
by Labor Arbiters just as they had juristiction over such claims when the Labor Code took effect on October 1, 1974.
(Garcia vs. Martinez, L-47806-07, August 3, 1978, 84 SCRA 577, reconsidered in Resolution of May 28, 1979, 90 SCRA 331;
Bengzon vs. Inciong, L-48706-07, June 29, 1979, 91 SCRA 248; Caderon vs. Amor, et al. and Court of Appeals, G.R. No.
52235, October 28, 1980, 100 SCRA 459 and Abad vs. Philippine American General Ins. Co., Inc., G.R. No. 50563, October
30, 1981).

Footnotes
1 U.S. vs. dela Santa, 9 Phil. 22.

2 Philippine Appliance Corporation Employees Association — NATU vs. Philippine Appliance Corporation, 62 SCRA
495.

3 84 SCRA 577.

4 100 SCRA 495.

5 Alberto vs. Court of First Instance of Manila, 23 SCRA 948.

MORALES, MARIVIC A. Case No. 30

Labor Law II – Block A

PEPSI-COLA BOTTLING COMPANY et. al., vs HON. JUDGE ANTONIO M. MARTINEZ, et. al.,
G.R. No. L-58877 March 15, 1982

FACTS:

Respondent Abraham Tumala, Jr. was salesman petitioner company in Davao City. In the annual “Sumakwel”
contest conducted by the company, he was declared the winner of the “Lapu-Lapu Award” for his performance
as top salesman of the year, an award which entitled him to a prize of a house and lot. Petitioner company,
despite demands, have unjustly refused to deliver said prize.

It was alleged that in 1980, petitioner company, in a manner oppressive to labor and without prior clearance
from the Ministry of Labor, arbitrarily and illegally terminated his employment. Hence, Tumala filed a
complaint in the CFI Davao and prayed that petitioner be ordered to deliver his prize of house and lot or its cash
equivalent, and to pay his back salaries and separation benefits.

Petitioner moved to dismiss the complaint on grounds of lack of jurisdiction. Respondent Tumala maintains that
the controversy is triable exclusively by the court of general jurisdiction

ISSUE:

Whether it is the court of general jurisdiction and not the Labor Arbiter that has exclusive jurisdiction over the
recovery of unpaid salaries, separation and damages

HELD:

NO. SC ruled that the Labor Arbiter has exclusive jurisdiction over the case. Jurisdiction over the subject matter is
conferred by the sovereign authority which organizes the court; and it is given by law. Jurisdiction is never presumed; it
must be conferred by law in words that do not admit of doubt.

Under the Labor Code, the NLRC has the exclusive jurisdiction over claims, money or otherwise, arising from ER-EE
relations, except those expressly excluded therefrom. The claim for the said prize unquestionable arose from an ER-EE
relation and, therefore, falls within the coverage of P.D. 1691, which speaks of “all claims arising from ER-EE relations,
unless expressly excluded by this Code. To hold that Tumala’s claim for the prize should be passed upon by the regular
courts of justice would be to sanction split jurisdiction and multiplicity of suits which are prejudicial to the orderly of
administration of justice.

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Republic of the Philippines

SUPREME COURT

Manila

THIRD DIVISION

G.R. No. 80774 May 31, 1988

SAN MIGUEL CORPORATION, petitioner,

vs.

NATIONAL LABOR RELATIONS COMMISSION and RUSTICO VEGA, respondents.

Siguion Reyna, Montecillo & Ongsiako Law Offices for petitioner.

The Solicitor General for public respondent.

FELICIANO, J.:

In line with an Innovation Program sponsored by petitioner San Miguel Corporation ("Corporation;" "SMC") and under
which management undertook to grant cash awards to "all SMC employees ... except [ED-HO staff, Division Managers and
higher-ranked personnel" who submit to the Corporation Ideas and suggestions found to be beneficial to the Corporation,
private respondent Rustico Vega submitted on 23 September 1980 an innovation proposal. Mr. Vega's proposal was
entitled "Modified Grande Pasteurization Process," and was supposed to eliminate certain alleged defects in the quality
and taste of the product "San Miguel Beer Grande:"

Title of Proposal

Modified Grande Pasteurization Process

Present Condition or Procedure

At the early stage of beer grande production, several cases of beer grande full goods were received by MB as returned
beer fulls (RBF). The RBF's were found to have sediments and their contents were hazy. These effects are usually caused
by underpasteurization time and the pasteurzation units for beer grande were almost similar to those of the steinie.

Proposed lnnovation (Attach necessary information)

In order to minimize if not elienate underpasteurization of beer grande, reduce the speed of the beer grande pasteurizer
thereby, increasing the pasteurization time and the pasteurization acts for grande beer. In this way, the self-life (sic) of
beer grande will also be increased. 1

Mr. Vega at that time had been in the employ of petitioner Corporation for thirteen (1 3) years and was then holding the
position of "mechanic in the Bottling Department of the SMC Plant Brewery situated in Tipolo, Mandaue City.

Petitioner Corporation, however, did not find the aforequoted proposal acceptable and consequently refused Mr. Vega's
subsequent demands for a cash award under the Innovation Program. On 22 February 1983., a Complaint 2 (docketed as
Case No. RAB-VII-0170-83) was filed against petitioner Corporation with Regional Arbitration Branch No. VII (Cebu City) of
the then.", Ministry of Labor and Employment. Frivate respondent Vega alleged there that his proposal "[had] been
accepted by the methods analyst and implemented by the Corporation [in] October 1980," and that the same "ultimately
and finally solved the problem of the Corporation in the production of Beer Grande." Private respondent thus claimed
entitlement to a cash prize of P60,000.00 (the maximum award per proposal offered under the Innovation Program) and
attorney's fees.

In an Answer With Counterclaim and Position Paper, 3 petitioner Corporation alleged that private respondent had no
cause of action. It denied ever having approved or adopted Mr. Vega's proposal as part of the Corporation's brewing
procedure in the production of San Miguel Beer Grande. Among other things, petitioner stated that Mr. Vega's proposal
was tumed down by the company "for lack of originality" and that the same, "even if implemented [could not] achieve the
desired result." Petitioner further alleged that the Labor Arbiter had no jurisdiction, Mr. Vega having improperly bypassed
the grievance machinery procedure prescribed under a then existing collective bargaining agreement between
management and employees, and available administrative remedies provided under the rules of the Innovation Program.
A counterclaim for moral and exemplary damages, attorney's fees, and litigation expenses closed out petitioner's
pleading.

In an Order 4 dated 30 April 1986, the Labor Arbiter, noting that the money claim of complainant Vega in this case is "not
a necessary incident of his employment" and that said claim is not among those mentioned in Article 217 of the Labor
Code, dismissed the complaint for lack of jurisdiction. However, in a gesture of "compassion and to show the
government's concern for the workingman," the Labor Arbiter also directed petitioner to pay Mr. Vega the sum of
P2,000.00 as "financial assistance."

The Labor Arbiter's order was subsequently appealed by both parties, private respondent Vega assailing the dismissal of
his complaint for lack of jurisdiction and petitioner Corporation questioning the propriety of the award of "financial
assistance" to Mr. Vega. Acting on the appeals, the public respondent National Labor Relations Commission, on 4
September 1987, rendered a Decision, 5 the dispositive portion of which reads:

WHEREFORE, the appealed Order is hereby set aside and another udgment entered, order the respondent to pay the
complainant the amount of P60,000.00 as explained above.

SO ORDERED.

In the present Petition for certiorari filed on 4 December 1987, petitioner Corporation, invoking Article 217 of the Labor
Code, seeks to annul the Decision of public respondent Commission in Case No. RAB-VII-01 70-83 upon the ground that
the Labor Arbiter and the Commission have no jurisdiction over the subject matter of the case.

The jurisdiction of Labor Arbiters and the National Labor Relations Commission is outlined in Article 217 of the Labor
Code, as last amended by Batas Pambansa Blg. 227 which took effect on 1 June 1982:

ART. 217. Jurisdiction of Labor Arbiters and the commission. (a) The Labor Arbiters shall have the original and
exclusive jurisdiction to hear and decide within thirty (30) working days after submission of the case by the parties for
decision, the following cases involving are workers, whether agricultural or non-agricultural:

1. Unfair labor practice cases;

2. Those that workers may file involving wages, hours of work and other terms and conditions of employment;

3. All money claims of workers, including those based on non-payment or underpayment of wages, overtime
compensation, separation pay and other benefits provided by law or appropriate agreement, except claims for
employees' compensation, social security, medicare and maternity benefits;
4. Cases involving household services; and

5. Cases arising from any violation of Article 265 of this; Code, including questions involving the legality of strikes
and lockouts.

(b) The Commission shall have exclusive appellate jurisdiction over all cases decided by Labor Arbiters. (Emphasis
supplied)

While paragraph 3 above refers to "all money claims of workers," it is not necessary to suppose that the entire universe of
money claims that might be asserted by workers against their employers has been absorbed into the original and
exclusive jurisdiction of Labor Arbiters. In the first place, paragraph 3 should be read not in isolation from but rather
within the context formed by paragraph 1 related to unfair labor practices), paragraph 2 (relating to claims concerning
terms and conditions of employment), paragraph 4 (claims relating to household services, a particular species of
employer-employee relations), and paragraph 5 (relating to certain activities prohibited to employees or to
employers).<äre||anº•1àw> It is evident that there is a unifying element which runs through paragraphs 1 to 5 and that
is, that they all refer to cases or disputes arising out of or in connection with an employer-employee relationship. This is,
in other words, a situation where the rule of noscitur a sociis may be usefully invoked in clarifying the scope of paragraph
3, and any other paragraph of Article 217 of the Labor Code, as amended. We reach the above conclusion from an
examination of the terms themselves of Article 217, as last amended by B.P. Blg. 227, and even though earlier versions of
Article 217 of the Labor Code expressly brought within the jurisdiction of the Labor Arbiters and the NLRC "cases arising
from employer employee relations," 6 which clause was not expressly carried over, in printer's ink, in Article 217 as it
exists today. For it cannot be presumed that money claims of workers which do not arise out of or in connection with
their employer-employee relationship, and which would therefore fall within the general jurisdiction of the regular courts
of justice, were intended by the legislative authority to be taken away from the jurisdiction of the courts and lodged with
Labor Arbiters on an exclusive basis. The Court, therefore, believes and so holds that the money claims of workers"
referred to in paragraph 3 of Article 217 embraces money claims which arise out of or in connection with the employer-
employee relationship, or some aspect or incident of such relationship. Put a little differently, that money claims of
workers which now fall within the original and exclusive jurisdiction of Labor Arbiters are those money claims which have
some reasonable causal connection with the employer-employee relationship.

Applying the foregoing reading to the present case, we note that petitioner's Innovation Program is an employee
incentive scheme offered and open only to employees of petitioner Corporation, more specifically to employees below
the rank of manager. Without the existing employer-employee relationship between the parties here, there would have
been no occasion to consider the petitioner's Innovation Program or the submission by Mr. Vega of his proposal
concerning beer grande; without that relationship, private respondent Vega's suit against petitioner Corporation would
never have arisen. The money claim of private respondent Vega in this case, therefore, arose out of or in connection with
his employment relationship with petitioner.

The next issue that must logically be confronted is whether the fact that the money claim of private respondent Vega
arose out of or in connection with his employment relation" with petitioner Corporation, is enough to bring such money
claim within the original and exclusive jurisdiction of Labor Arbiters.

In Molave Motor Sales, Inc. v. Laron, 7 the petitioner was a corporation engaged in the sale and repair of motor vehicles,
while private respondent was the sales Manager of petitioner. Petitioner had sued private respondent for non-payment of
accounts which had arisen from private respondent's own purchases of vehicles and parts, repair jobs on cars personally
owned by him, and cash advances from the corporation. At the pre-trial in the lower court, private respondent raised the
question of lack of jurisdiction of the court, stating that because petitioner's complaint arose out of the employer-
employee relationship, it fell outside the jurisdiction of the court and consequently should be dismissed. Respondent
Judge did dismiss the case, holding that the sum of money and damages sued for by the employer arose from the
employer-employee relationship and, hence, fell within the jurisdiction of the Labor Arbiter and the NLRC. In reversing the
order of dismissal and requiring respondent Judge to take cognizance of the case below, this Court, speaking through
Mme. Justice Melencio-Herrera, said:

Before the enactment of BP Blg. 227 on June 1, 1982, Labor Arbiters, under paragraph 5 of Article 217 of the Labor Code
had jurisdiction over" all other cases arising from employer-employee relation, unless, expressly excluded by this Code."
Even then, the principle followed by this Court was that, although a controversy is between an employer and an
employee, the Labor Arbiters have no jurisdiction if the Labor Code is not involved. In Medina vs. Castro-Bartolome, 11
SCRA 597, 604, in negating jurisdiction of the Labor Arbiter, although the parties were an employer and two employees,
Mr. Justice Abad Santos stated:

The pivotal question to Our mind is whether or not the Labor Code has any relevance to the reliefs sought by the
plaintiffs. For if the Labor Code has no relevance, any discussion concerning the statutes amending it and whether or not
they have retroactive effect is unnecessary.

It is obvious from the complaint that the plaintiffs have not alleged any unfair labor practice. Theirs is a simple action for
damages for tortious acts allegedly committed by the defendants. Such being the case, the governing statute is the Civil
Code and not the Labor Code. It results that the orders under review are based on a wrong premise.

And in Singapore Airlines Limited v. Paño, 122 SCRA 671, 677, the following was said:

Stated differently, petitioner seeks protection under the civil laws and claims no benefits under the Labor Code. The
primary relief sought is for liquidated damages for breach of a contractual obligation. The other items demanded are not
labor benefits demanded by workers generally taken cognizance of in labor disputes, such as payment of wages, overtime
compensation or separation pay. The items claimed are the natural consequences flowing from breach of an obligation,
intrinsically a civil dispute.

In the case below, PLAINTIFF had sued for monies loaned to DEFENDANT, the cost of repair jobs made on his personal
cars, and for the purchase price of vehicles and parts sold to him. Those accounts have no relevance to the Labor Code.
The cause of action was one under the civil laws, and it does not breach any provision of the Labor Code or the contract of
employment of DEFENDANT. Hence the civil courts, not the Labor Arbiters and the NLRC should have jurisdiction. 8

It seems worth noting that Medina v. Castro-Bartolome, referred to in the above excerpt, involved a claim for damages by
two (2) employees against the employer company and the General Manager thereof, arising from the use of slanderous
language on the occasion when the General Manager fired the two (2) employees (the Plant General Manager and the
Plant Comptroller). The Court treated the claim for damages as "a simple action for damages for tortious acts" allegedly
committed by private respondents, clearly if impliedly suggesting that the claim for damages did not necessarily arise out
of or in connection with the employer-employee relationship. Singapore Airlines Limited v. Paño, also cited in Molave,
involved a claim for liquidated damages not by a worker but by the employer company, unlike Medina. The important
principle that runs through these three (3) cases is that where the claim to the principal relief sought 9 is to be resolved
not by reference to the Labor Code or other labor relations statute or a collective bargaining agreement but by the
general civil law, the jurisdiction over the dispute belongs to the regular courts of justice and not to the Labor Arbiter and
the NLRC. In such situations, resolution of the dispute requires expertise, not in labor management relations nor in wage
structures and other terms and conditions of employment, but rather in the application of the general civil law. Clearly,
such claims fall outside the area of competence or expertise ordinarily ascribed to Labor Arbiters and the NLRC and the
rationale for granting jurisdiction over such claims to these agencies disappears.

Applying the foregoing to the instant case, the Court notes that the SMC Innovation Program was essentially an invitation
from petitioner Corporation to its employees to submit innovation proposals, and that petitioner Corporation undertook
to grant cash awards to employees who accept such invitation and whose innovation suggestions, in the judgment of the
Corporation's officials, satisfied the standards and requirements of the Innovation Program 10 and which, therefore,
could be translated into some substantial benefit to the Corporation. Such undertaking, though unilateral in origin, could
nonetheless ripen into an enforceable contractual (facio ut des) 11 obligation on the part of petitioner Corporation under
certain circumstances. Thus, whether or not an enforceable contract, albeit implied arid innominate, had arisen between
petitioner Corporation and private respondent Vega in the circumstances of this case, and if so, whether or not it had
been breached, are preeminently legal questions, questions not to be resolved by referring to labor legislation and having
nothing to do with wages or other terms and conditions of employment, but rather having recourse to our law on
contracts.

WEREFORE, the Petition for certiorari is GRANTED. The decision dated 4 September 1987 of public respondent National
Labor Relations Commission is SET ASIDE and the complaint in Case No. RAB-VII-0170-83 is hereby DISMISSED, without
prejudice to the right of private respondent Vega to file a suit before the proper court, if he so desires. No
pronouncement as to costs.

SO ORDERED.

Fernan, Gutierrez, Jr., Bidin and Cortes, JJ., concur.

Footnotes

1 NLRC Records, Vol. I, p. 105.

2 Rollo, pp. 19-20, Annex "A" of Petition.

3 Id., pp. 21-24, Annex "B" of Petition.

4 Id., pp. 30-32, Annex "D" of Petition.

5 Id., pp. 44- 50, Annex "G" of Petition.

6 Article 217 of the Labor Code as it existed prior to 1 May 1978, provided as follows:

Art. 217. Jurisdiction of Labor Arbiters and the Commission.- (a) The Labor Arbiters shall have exclusive jurisdiction to hear
and decide the following cases involving all workers, whether agricultural or non-agricultural:

(1) Unfair labor practice cases;

(2) Unresolved issues in collective bargaining including those which involve wages, hours of work, and other terms
and conditions of employment duly indorsed by the Bureau in accordance within the provisions of this Code;

(3) All money claims of workers involving non-payment or underpayment of wages, overtime or premium
compensation, maternity or service incentive leave, separation pay and other money claims arising from employer-
employee relation, except claims for employee's compensation, social security and medicare benefits and as otherwise
provided in Article 128 of this Code;

(4) Cases involving household services; and

(5) All other cases arising from employer-employee relation unless expressly excluded by this Code.

(b) The Commission shall have exclusive appellant jurisdiction over all cases decided by Labor Arbiters, compulsory
arbitrators, and voluntary arbitrators in appropriate cases provided in Article 263 of this Code. (Emphasis supplied)

On 1 May 1978, Article 217 was amended by P.D. No. 1367 in the following manner-.

Section 1. Paragraph (a) of Art. 217 of the Labor Code as amended is hereby further amended to read as follows:

(a) The Labor Arbiters shall have exclusive jurisdiction to hear and decide the following cases involving all workers,
whether agricultural or non-agricultural:

1) Under labor practice cases;

2) Unresolved issues in collective bargaining, including those which involve wages, hours of work, and other terms and
conditions of employment; and
3) All other cases arising from employer-employeerelations duly indorsed by the Regional Directors in accordance with
the provisions of this Code; Provided, that the Regional Directors shall not indorse and Labor Arbiters shall not entertain
claims for moral or other forms of damages. (Emphasis supplied)

On 1 May 1980, Article 217 was once more amended by P.D. No. 1691, which amendment reads as follows:

"Article 217, Jurisdiction of Labor Arbiters and the Commission. — a) The Labor Arbiters shall have the original and
exclusive jurisdiction to hear and decide the following cases involving all workers, whether agricultural or non-agricultural:

(1) Under labor practice cases;

(2) Unresolved issues in collective bargaining, including those that involve wages, hours of work, and other terms and
conditions of employment;

(3) All money claims of workers, including non-payment or underpayment of wages, overtime compensation, separation
pay and other benefits provided by law or appropriate agreement, except claims for employees compensation, social
security, medicare and maternity benefits;

(4) Cases involving household services; and

(5) All other claim arising from employer-employee relations, unless expressly excluded by this Code.

(b) The Commission shall have exclusive appellate jurisdiction over all cases decided by Labor Arbiters, compulsory
arbitrators, and voluntary arbitrators in appropriate cases provided in Article 263 of this Code. (Emphasis supplied)

In other words, P.D. No. 1691 deleted the proviso winch had been inserted by P.D. No. 1367, which proviso excluded from
the jurisdiction of the Labor Arbiter claims for moral and other forms of damages. Under P.D. No. 1691, therefore, Labor
Arbiters could once more take cognizance of claims for moral and other forms of damages which are incidental to or
necessarily bound up with money claims of workers which are otherwise clearly within the jurisdiction of Labor Arbiters.
(Sagmit v. Sibulo, 133 SCRA 359 [1984]; National Federation of Labor v. Eisma, 127 SCRA 419 F-I9841; Sentinel Insurance
Co., Inc. v. Bautista, 127 SCRA 623 [1984], Getz Corporation, Phils. Inc, vs. Court of Appeals, 116 SCRA 86 [1982]; Ebon v.
de Guzman, 113 SCRA 52 [1982]; Aguda v. Vallejos, 113 SCRA 69 [1982]; and Pepsi-Cola Bottling Co. v. Martinez, 112 SCRA
579 [1982]. See also Cardinal Industries, Inc. vs. Vallejos, 114 SCRA 472 [1982].)

B.P. Blg. 130, which took effect on 21 August 1981, introduced amendments to Article 217 which are not, however,
relevant for present purposes.

7 129 SCRA 485 (1984).

8 129 SCRA at 488-489; emphasis supplied.

9 It is the character of the principal relief sought that appears essential, in this connection. Where such principal
relief is to be granted under labor legislation or a collective bargaining agreement, the case should fall within the
jurisdiction of the Labor Arbiter and the NLRC, even though a claim for damages might be asserted as an incident to such
claim. In such situations, the need to avoid splitting of jurisdiction arises. (Filipinas Life Assurance Co., Inc. v. Bleza, 139
SCRA 565 [1985]; Sentinel Insurance Co., Inc. v. Bautista, supra; Agusan del Norte Electric Cooperative, Inc. v. Suarez, 125
SCRA 437 [1983]; Getz Corporation, Phils., Inc. v. Court of Appeals, supra; Aguda v. Vallejos, supra; Pepsi-Cola Bottling Co.
v. Martinez, supra; and Calderon, Sr. v. Court of Appeals, 100 SCRA 459 [1980] (discussion at 463-466). See also Bengzon
v. Inciong, 91 SCRA 248 [19791; and Quisaba v. Sta. Ines-Melale Veneer & Plywood, Inc., 58 SCRA 771 [1974].)

10 Innovation proposals, to qualify for an award under the Innovation Program of petitioner Corporation, had to
satisfy certain requirements, i.e.: a proposal should be "specific and deliberate," new to San Miguel Corporation," "legal,"
"feasible" and "[capable of] achieving the company's obective more effectively." NLRC Records, Vol. 2, pp. 75-76.

11 See Corpus vs. Court of Appeals, et al., 98 SCRA 424, 439 (1980).<äre||anº•1àw>

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Republic of the Philippines

SUPREME COURT

Manila

THIRD DIVISION
G.R. No. 171212 August 4, 2014

INDOPHIL TEXTILE MILLS, INC., Petitioner,

vs.

ENGR. SALVADOR ADVIENTO, Respondents.

DECISION

PERALTA, J.:

Before the Court is a petition for review on certiorari under Rule 45 of the Revised Rules of Court which seeks to review,
reverse and set-aside the Decision1 of the Court of Appeals (CA), dated May 30, 2005, and its Resolution2 dated January
10, 2006 in the case entitled Jndophil Textile Mills, Inc. v. Hon. Rolando R. Velasco and Engr. Salvador Adviento, docketed
as CA-G.R. SP No. 83099.

The facts are not disputed.

Petitioner Indophil Textile Mills, Inc. is a domestic corporation engaged in the business of manufacturing thread for
weaving.3 On August 21, 1990, petitioner hired respondent Engr. Salvador Adviento as Civil Engineer to maintain its
facilities in Lambakin, Marilao, Bulacan.4 On August 7, 2002, respondent consulted a physician due to recurring weakness
and dizziness.5 Few days later, he was diagnosed with Chronic Poly Sinusitis, and thereafter, with moderate, severe and
persistent Allergic Rhinitis.6 Accordingly, respondent was advised by his doctor to totally avoid house dust mite and textile
dust as it will transmute into health problems.7

Distressed, respondent filed a complaint against petitioner with the National Labor Relations Commission (NLRC), San
Fernando, Pampanga, for alleged illegal dismissal and for the payment of backwages, separation pay, actual damages and
attorney’s fees. The said case, docketed as NLRC Case No. RAB-III-05-5834-03, is still pending resolution with the NLRC at
the time the instant petition was filed.8

Subsequently, respondent filed another Complaint9 with the Regional Trial Court (RTC) of Aparri, Cagayan, alleging that
he contracted such occupational disease by reason of the gross negligence of petitioner to provide him with a safe,
healthy and workable environment.

In his Complaint, respondent alleged that as part of his job description, he conductsregular maintenance check on
petitioner’s facilities including its dye house area, which is very hot and emits foul chemical odor with no adequate safety
measures introduced by petitioner.10 According to respondent, the air washer dampers and all roof exhaust vests are
blown into open air, carrying dust thereto.11 Concerned, respondent recommended to management to place roof
insulation to minimize, if not, eradicate the health hazards attendant in the work place.12 However, said recommendation
was turned down by management due to high cost.13 Respondent further suggested to petitioner’s management that the
engineering office be relocated because ofits dent prone location, such that even if the door of the office is sealed,
accumulated dust creeps in outside the office.14 This was further aggravated by the installation of new filters fronting the
office.15 However, no action was taken by management.16 According to respondent, these healthhazards have been the
persistent complaints of most, if not all, workers of petitioner.17 Nevertheless, said complaints fell on deaf ears as
petitioner callously ignored the health problems of its workers and even tended to be apathetic to their plight, including
respondent.18

Respondent averred that, being the only breadwinner in the family, he made several attempts to apply for a new job, but
to his dismay and frustration, employers who knew ofhis present health condition discriminated against him and turned
down his application.19 By reason thereof, respondent suffered intense moral suffering, mental anguish, serious anxiety
and wounded feelings, praying for the recovery of the following: (1) Five Million Pesos (₱5,000,000.00) asmoral damages;
(2) Two Million Pesos (₱2,000,000.00) as exemplary damages; and (3) Seven Million Three Thousand and Eight Pesos
(₱7,003,008.00) as compensatory damages.20 Claiming to be a pauper litigant, respondent was not required to pay any
filing fee.21

In reply, petitioner filed a Motion to Dismiss22 on the ground that: (1) the RTC has no jurisdiction over the subject matter
of the complaint because the same falls under the original and exclusive jurisdiction of the Labor Arbiter (LA) under Article
217(a)(4) of the Labor Code; and (2) there is another action pending with the Regional Arbitration Branch III of the NLRC in
San Fernando City, Pampanga, involving the same parties for the same cause.

On December 29, 2003, the RTC issued a Resolution23 denying the aforesaid Motion and sustaining its jurisdiction over
the instant case. It held that petitioner’s alleged failure to provide its employees with a safe, healthy and workable
environment is an act of negligence, a case of quasi-delict. As such, it is not within the jurisdiction of the LA under Article
217 of the Labor Code. On the matter of dismissal based on lis pendencia, the RTC ruled that the complaint before the
NLRC has a different cause of action which is for illegal dismissal and prayer for backwages, actual damages, attorney’s
fees and separation pay due to illegal dismissal while in the present case, the cause of action is for quasi-delict.24 The
falloof the Resolution is quoted below:

WHEREFORE, finding the motion to dismiss to be without merit, the Court deniesthe motion to dismiss.

SO ORDERED.25

On February 9, 2004, petitioner filed a motion for reconsideration thereto, which was likewise denied in an Order issued
on even date.

Expectedly, petitioner then filed a Petition for Certiorariwith the CA on the ground that the RTC committed grave abuse of
discretion amounting to lack or excess of jurisdiction in upholding that it has jurisdiction over the subject matter of the
complaint despite the broad and clear terms of Article 217 of the Labor Code, as amended.26

After the submission by the parties of their respective Memoranda, the CA rendered a Decision27 dated May 30, 2005
dismissing petitioner’s Petition for lack of merit, the dispositive portion of which states:

WHEREFORE, premises considered, petition for certiorari is hereby DISMISSEDfor lack of merit. SO ORDERED.28
From the aforesaid Decision, petitioner filed a Motion for Reconsideration which was nevertheless denied for lack of merit
in the CA’s Resolution29 dated January 10, 2006. Hence, petitioner interposed the instant petition upon the solitary
ground that "THE HONORABLE COURT OF APPEALS HAS DECIDED A QUESTION OF SUBSTANCE IN A WAY NOT IN ACCORD
WITH LAW AND WITH APPLICABLE DECISIONS OF THE HONORABLE SUPREME COURT."30 Simply, the issue presented
before us is whether or not the RTC has jurisdiction over the subject matter of respondent’s complaint praying for moral
damages,exemplary damages, compensatory damages, anchored on petitioner’s alleged gross negligence in failing to
provide a safe and healthy working environment for respondent.

The delineation between the jurisdiction of regular courts and labor courts over cases involving workers and their
employers has always been a matter of dispute.31 It is up to the Courts to lay the line after careful scrutiny of the factual
milieu of each case. Here, we find that jurisdiction rests on the regular courts.

In its attempt to overturn the assailed Decision and Resolution of the CA, petitioner argues that respondent’sclaim for
damages is anchored on the alleged gross negligence of petitioner as an employer to provide its employees, including
herein respondent, with a safe, healthy and workable environment; hence, it arose from an employer-employee
relationship.32 The fact of respondent’s employment withpetitioner as a civil engineer is a necessary element of his cause
ofaction because without the same, respondent cannot claim to have a rightto a safe, healthy and workable
environment.33 Thus, exclusive jurisdiction over the same should be vested in the Labor Arbiter and the NLRC pursuant to
Article 217(a)(4) of the Labor Code of the Philippines (Labor Code), as amended.34

We are not convinced.

The jurisdiction of the LA and the NLRC is outlined in Article 217 of the Labor Code, as amended by Section 9 of Republic
Act (R.A.) No. 6715, to wit:

ART. 217. Jurisdiction of Labor Arbiters and the Commission-- (a) Except as otherwise provided under this Code the Labor
Arbiter 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 nonagricultural:

1. Unfair labor practice cases;

2. Termination disputes;

3. If accompanied with a claim for reinstatement, those cases that workers may file involvingwages, 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 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 (₱5,000.00) regardless of whether accompanied with a claim for reinstatement.

x x x.35

While we have upheld the present trend to refer worker-employer controversies to labor courts in light of the
aforequoted provision, we have also recognized that not all claims involving employees can be resolved solely by our
labor courts, specifically when the law provides otherwise.36 For this reason, we have formulated the "reasonable causal
connection rule," wherein if there is a reasonable causal connection between the claim asserted and the employer-
employee relations, then the case is within the jurisdiction of the labor courts; and in the absence thereof, it is the regular
courts that have jurisdiction.37 Such distinction is apt since it cannot be presumed that money claims of workers which do
not arise out of or in connection with their employer-employee relationship, and which would therefore fall within the
general jurisdiction of the regular courts of justice, were intended by the legislative authority to be taken away from the
jurisdiction of the courts and lodged with Labor Arbiters on an exclusive basis.38

In fact, as early as Medina vs. Hon. Castro-Bartolome,39 in negating the jurisdiction of the LA, although the parties
involved were an employer and two employees, the Court succinctly held that:

The pivotal question to Our mind iswhether or not the Labor Code has any relevance to the reliefs sought by the plaintiffs.
For if the Labor Code has no relevance, any discussion concerning the statutes amending it and whether or not they have
retroactive effect is unnecessary.

It is obvious from the complaint that the plaintiffs have not alleged any unfair labor practice. Theirs is a simple action for
damages for tortious acts allegedly committed by the defendants. Such being the case, the governing statute is the Civil
Code and not the Labor Code. It results that the orders under revieware based on a wrong premise.40

Similarly, we ruled in the recent case of Portillo v. Rudolf Lietz, Inc.41 that not all disputes between an employer and his
employees fall within the jurisdiction of the labor tribunals suchthat when the claim for damages is grounded on the
"wanton failure and refusal" without just cause of an employee to report for duty despite repeated notices served upon
him of the disapproval of his application for leave ofabsence, the same falls within the purview of Civil Law, to wit:

As early as Singapore Airlines Limited v. Paño, we established that not all disputes between an employer and his
employee(s) fall within the jurisdiction of the labor tribunals. We differentiated between abandonment per seand the
manner and consequent effects of such abandonment and ruled that the first, is a labor case, while the second, is a civil
law case.

Upon the facts and issues involved, jurisdiction over the present controversy must be held to belong to the civil Courts.
While seemingly petitioner's claim for damages arises from employer-employee relations, and the latest amendment to
Article 217 of the Labor Code under PD No. 1691 and BP Blg. 130 provides that all other claimsarising from employer-
employee relationship are cognizable by Labor Arbiters [citation omitted], in essence, petitioner's claim for damages is
grounded on the "wanton failure and refusal"without just cause of private respondent Cruz to report for duty despite
repeated notices served upon him of the disapproval of his application for leave of absence without pay. This, coupled
with the further averment that Cruz "maliciously and with bad faith" violated the terms and conditions of the conversion
training course agreement to the damage of petitioner removes the present controversy from the coverage of the Labor
Code and brings it within the purview of Civil Law.

Clearly, the complaint was anchored not on the abandonment per seby private respondent Cruz of his job—as the latter
was not required in the Complaint to report back to work—but on the manner and consequent effects of such
abandonmentof work translated in terms of the damages which petitioner had to suffer. x x x.42

Indeed, jurisprudence has evolved the rule that claims for damages under Article 217(a)(4) of the Labor Code, to be
cognizable by the LA, must have a reasonable causal connection withany of the claims provided for in that article.43 Only
if there is such a connection with the other claims can a claim for damages be considered as arising from employer-
employee relations.44

In the case at bench, we find that such connection is nil.

True, the maintenance of a safe and healthy workplace is ordinarily a subject of labor cases. More, the acts complained of
appear to constitute matters involving employee-employer relations since respondent used to be the Civil Engineer of
petitioner. However, it should be stressed that respondent’s claim for damages is specifically grounded on petitioner’s
gross negligenceto provide a safe, healthy and workable environment for its employees −a case of quasi-delict. This is
easily ascertained from a plain and cursory reading of the Complaint,45 which enumerates the acts and/or omissions of
petitioner relative to the conditions in the workplace, to wit:

1. Petitioner’s textile mills have excessive flying textile dust and waste in its operations and no effort was exerted by
petitioner to minimize or totally eradicate it;

2. Petitioner failed to provide adequate and sufficient dust suction facilities;

3. Textile machines are cleaned with air compressors aggravating the dusty work place;

4. Petitioner has no physician specializing in respiratoryrelated illness considering it is a textile company;

5. Petitioner has no device to detectthe presence or density of dust which is airborne;

6. The chemical and color room are not equipped with proper safety chemical nose mask; and

7. The power and boiler plant emit too much smoke with solid particles blown to the air from the smoke stack of the
power plant emitting a brown rust color which engulfs the entire compound.46
In addition, respondent alleged that despite his earnest efforts to suggest to management to place roof insulation to
minimize, if not, eradicate the health hazards attendant in the workplace, the same was not heeded.47

It is a basic tenet that jurisdiction over the subject matter is determined upon the allegations made in the complaint,
irrespective of whether or not the plaintiff is entitled to recover upon the claim asserted therein, which is a matter
resolved only after and as a result of a trial.48 Neither can jurisdiction of a court bemade to depend upon the defenses
made by a defendant in his answer or motion to dismiss.49 In this case, a perusal of the complaint would reveal that the
subject matter is one of claim for damages arising from quasi-delict, which is within the ambit of the regular court's
jurisdiction.

The pertinent provision of Article 2176 of the Civil Code which governs quasi-delictprovides that: Whoever by act or
omissioncauses damageto another, there being fault or negligence, is obliged to pay for the damagedone. Such fault or
negligence, if there is no pre-existing contractual relation between the parties, is called quasi-delict.50

Thus, to sustain a claim liability under quasi-delict, the following requisites must concur: (a) damages suffered by the
plaintiff; (b) fault or negligence of the defendant, or someother person for whose acts he must respond; and (c) the
connection of causeand effect between the fault or negligence of the defendant and the damages incurred by the
plaintiff.51

In the case at bar, respondent alleges that due to the continued and prolonged exposure to textile dust seriously inimical
to his health, he suffered work-contracted disease which is now irreversible and incurable, and deprived him of job
opportunities.52 Clearly, injury and damages were allegedly suffered by respondent, an element of quasi-delict. Secondly,
the previous contract of employment between petitioner and respondent cannot be used to counter the element of "no
pre-existing contractual relation" since petitioner’s alleged gross negligence in maintaining a hazardous work environment
cannot be considered a mere breach of such contract of employment, but falls squarely within the elements of quasi-
delictunder Article 2176 of the Civil Code since the negligence is direct, substantive and independent.53 Hence, we ruled
in Yusen Air and Sea Services Phils., Inc. v. Villamor54 that:

When, as here, the cause of action is based on a quasi-delictor tort, which has no reasonable causal connection with any
of the claims provided for in Article 217, jurisdiction over the action is with the regular courts.55

It also bears stressing that respondent is not praying for any relief under the Labor Code of the Philippines. He neither
claims for reinstatement nor backwages or separation pay resulting from an illegal termination. The cause of action herein
pertains to the consequence of petitioner’s omission which led to a work-related disease suffered by respondent, causing
harm or damage to his person. Such cause of action is within the realm of Civil Law, and jurisdiction over the controversy
belongs to the regular courts.56

Our ruling in Portillo, is instructive, thus:

There is no causal connection between private respondent’s claim for damages and the respondent employers’ claim for
damages for the alleged "Goodwill Clause" violation. Portillo’s claim for unpaid salaries did not have anything to do with
her alleged violation of the employment contract as, in fact, her separation from employmentis not "rooted" in the
alleged contractual violation. She resigned from her employment. She was not dismissed. Portillo’s entitlementto the
unpaid salaries is not even contested. Indeed, Lietz Inc.’s argument about legal compensation necessarily admits that it
owesthe money claimed by Portillo.57

Further, it cannot be gainsaid that the claim for damages occurred afterthe employer-employee relationship of petitioner
and respondent has ceased. Given that respondent no longer demands for any relief under the Labor Code as well as the
rules and regulations pertinent thereto, Article 217(a)(4) of the Labor Code is inapplicable to the instant case, as
emphatically held in Portillo, to wit:

It is clear, therefore, that while Portillo’s claim for unpaid salaries is a money claim that arises out ofor in connection with
an employeremployee relationship, Lietz Inc.’s claim against Portillo for violation of the goodwill clause is a money claim
based on an act done after the cessation of the employment relationship. And, while the jurisdiction over Portillo’s claim
is vested in the labor arbiter, the jurisdiction over Lietz Inc.’s claim rests on the regular courts. Thus:

As it is, petitioner does not ask for any relief under the Labor Code. It merely seeks to recover damages based on the
parties' contract of employment as redress for respondent's breach thereof. Such cause of action is within the realm of
Civil Law, and jurisdiction over the controversy belongs to the regular courts. More so must this be in the present case,
what with the reality that the stipulation refers to the post-employment relations of the parties.58

Where the resolution of the dispute requires expertise, not in labor management relations nor in wage structures and
other terms and conditions of employment, but rather in the application of the general civil law, such claim falls outside
the area of competence of expertise ordinarily ascribed to the LA and the NLRC.59

Guided by the aforequoted doctrines, we find no reason to reverse the findings of the CA.1âwphi1 The RTC has
jurisdiction over the subject matter of respondent's complaint praying for moral damages, exemplary damages,
compensatory damages, anchored on petitioner's alleged gross negligence in failing to provide a safe and healthy working
environment for respondent. WHEREFORE, the petition is DENIED. The Decision of the Court of Appeals, dated May 30,
2005, and its Resolution dated January 10, 2006 in CA-G.R. SP No. 83099 are hereby AFFIRMED.

SO ORDERED.

DIOSDADO M. PERALTA

Associate Justice

WE CONCUR:

PRESBITERO J. VELASCO, JR.

Associate Justice

MARTIN S. VILLARAMA, JR.*

Associate Justice JOSE CATRAL MENDOZA

Associate Justice

MARVIC MARIO VICTOR F. LEONEN

Associate Justice

ATTESTATION

I attest that the conclusions in the above Decision had been reached in consultation before the case was assigned to the
writer of the opinion of the Court's Division.

PRESBITERO J. VELASCO, JR.

Associate Justice

Chairperson, Third Division

CERTIFICATION

Pursuant to Section 13, Article VIII of the Constitution and the Division Chairperson's Attestation, I certify that the
conclusions in the above Decision had been reached in consultation before the case was assigned to the writer of the
opinion of the Court's Division.

MARIA LOURDES P. A. SERENO

Chief Justice

Footnotes

* Designated Acting Member, per Special Order No. 1691 dated May 22, 2014, in view of the vacancy in the Third Division.

1 Penned by Associate Justice Vicente Q. Roxas, with Associate Justices Juan Q. Enriquez, Jr. and Regalado E. Maambong,
concurring; Annex "H" to Petition, rollo, pp. I 03-112.

2 Penned by Associate Justice Vicente Q. Roxas, with Associate Justices Portia Alino-Hormachuelos and Juan Q. Enriquez,
concurring; Annex "K" to Petition, id. at 123-124.

3 Supranote 1, at 104.
4 Id.

5 Annex "E" to Petition, rollo, p. 51.

6 Id. at 51-52.

7 Id. at 52

8 Rollo, p. 10.

9 Supranote 5, at 51-55.

10 Id. at 52

11 Id. at 53.

12 Id.

13 Id.

14 Id.

15 Id.

16 Id.

17 Id.

18 Id.

19 Id.

20 Rollo, pp. 10-11.

21 Id.at 11.

22 Annex "H" to Petition, id. at 61-69.

23 Annex "L" to Petition, id. at 78-81.

24 Id.at 81.

25 Id.(Emphasis in the original)

26 Supranote 5, at 38.

27 Supranote 1.

28 Id.at 112. (Emphasis in the original)

29 Supranote 2.

30 Rollo, p. 18.

31 San Miguel Corporation v. Etcuban, 377 Phil. 733, 745 (1999).

32 Rollo, p. 20.

33 Id.

34 Id.

35 Emphasis ours.

36 San Miguel Corporation v. Etcuban, supranote 31.

37 Id.

38 San Miguel Corporation v. National Labor Relations Commission, 244 Phil. 741, 748 (1988).

39 202 Phil. 163 (1982).

40 Medina v. Hon. Castro-Bartolome, supra,at 170. (Emphasis ours)

41 G.R. No. 196539, 683 SCRA 568 (2012).

42 Portillo v. Rudolf Lietz, Inc., supra, at 577. (Emphasis ours; italics in the original).

43 Id.

44 Id.

45 Supranote 5, at 51-55.

46 Id. at 52-53.

47 Id. at 53.

48 Supranote 37, at 447.

49 Id.

50 Emphasis ours.

51 Huang v. Philippine Hoteliers, Inc., G.R. No. 180440, 687 SCRA 162, 194.

52 Supranote 5, at 53.

53 Supranote 51, at 193.

54 504 Phil. 437 (2005).

55 Yusen Air and Sea Services Phils., Inc. v. Villamor, supra, at 446-447.

56 San Miguel Corporation v. Etcuban, supranote 31, citing Da-Chi Electronics Manufacturing v. Villarama, G.R. No.
112940, November 21, 1994, 238 SCRA 267, 271.

57 Portillo v. Rudolf Lietz, Inc., supranote 41, at 584-585.

58 Id.at 581. (Emphasis ours)

59 San Miguel Corporation v. Etcuban, supra note 31, at 743.

The Lawphil Project - Arellano Law Foundation

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Republic of the Philippines

SUPREME COURT

Manila

THIRD DIVISION

G.R. No. 85517 October 16, 1992

DOROTEO OCHEDA, petitioner,

vs.

THE HONORABLE COURT OF APPEALS and THE HEIRS OF EDUARDO SANTOS, respondents.

DAVIDE, JR., J.:

The trial court's jurisdiction over an action for damages arising from a quasi-delict which resulted in the death of an
employee while in the performance of his duty is challenged in this case.

The late Eduardo Santos was, at the time of his death, employed as a painter by the petitioner who was a sub-contractor
for the painting job on M.J. Building then being constructed along Salcedo Street, Makati, Metro Manila. The C.E.
Construction Corporation, Inc. (CECCI) was the principal contractor thereof by virtue of a contract it entered into with M.J.
Development Corporation, the owner of the building. Another corporation, Fujitec Philippines Industrial Company, Inc.
(FUJITEC), was contracted by M.J. Development Corporation to install two (2) standard scenic elevator units in the
building.

When the painting job was almost complete, i.e., all that remained to be painted was the wall of the shaft for the second
elevator, the petitioner trimmed his work forces to two (2) employees, Hernani Gozun and Eduardo Santos; these
employees were tasked to finish the painting. On 5 February 1981, they started work on the inner wall of the elevator
shaft; to paint the same, they had to stand on top of the elevator which was then on the second floor of the building.
After they finished, they called on the boy operating the elevator to ask him to bring the same down to the first floor.
Instead of lowering the elevator, however, the boy brought it up to the sixth floor. The sudden upward movement caused
the elevator to jerk and the two (2) painters to lose their balance. Hernani was able to cling to the cable but Eduardo fell
off the top, found himself pinned between the shaft and the elevator as the latter was moving upward and then fell to the
ground when the elevator finally stopped on the sixth floor. Hernani rushed to Eduardo's aid upon hearing the latter's cry
for help. The former lifted Eduardo in his arms and, with the help of another man, brought him to the Makati Medical
Center where he later died. While the elevator boy was never identified, it is alleged that he worked for CECCI.

On 11 September 1981, the spouses Catalino and Ester Santos, together with Wilma Palabasan-Santos, parents and
widow, respectively, of Eduardo, filed a Complaint 1 for damages against Doroteo Ocheda and CECCI before the then
Court of First instance (now Regional Trial Court) of Pampanga. The case was docketed as Civil Case No. 6263 and was
assigned to Branch 42 thereof. The complaint alleges the foregoing facts and, in addition, specifically states that while
Eduardo was employed by the petitioner in 1979 and received a daily wage of P35.00, the petitioner did not place him
within "any SSS, Medicare and Workmen's Compensation coverage." It is further averred that the elevator boy was
inexperienced for the work assigned to him. Then they asked for judgment ordering the defendants, jointly and severally,
to pay P10,000.00 as burial expenses, P30,000.00 as moral damages, attorney's fees and compensatory damages as may
be proved at the trial and costs.

Petitioner filed an Answer with a Counterclaim against the plaintiff, and a Cross-Claim against CECCI. 2 He alleges therein
that Eduardo was employed by him only a week before the accident and purely on a casual basis for the particular
painting job. As affirmative defense, he avers that Eduardo's death was due to the negligence and carelessness of the
elevator boy, an employee of CECCI. Thus, the latter is solely liable for the said death and no cause of action exists against
him. Moreover, it is postulated that the trial court has no jurisdiction over the claims involving SSS, Medicare, Workmen's
Compensation and insurance benefits. Such jurisdiction is vested in other administrative or quasi-judicial bodies;
furthermore, he avers that the allegation concerning such claims (paragraph 8 of the complaint) is not essential to the
plaintiffs' cause of action which is the negligent operation of the elevator. In this counterclaim, petitioner asks for an
award of attorney's fees in the amount of P10,000.00, and the expenses of litigation.

In due course, CECCI likewise filed its Answer with a Third-Party Complaint 3 against FUJITEC which it alleged to be liable,
being the employer of the elevator boy. FUJITEC filed its Answer to the said Third-Party Complaint 4 denying the
allegations made therein and asserting that the operation of the elevator was turned over the building owner long before
the fatal accident.

Pre-trial was conducted on 23 September 1983. The pre-trial order issued by the trial court embodies the respective
positions of the parties. As to herein petitioners, the Pre-trial order summarized his stand as follows:

2. Defendant Ocheda's Case:

Defendant Doroteo Ocheda denies liability. He claims that the complaint states no cause of action against him; that the
death of the deceased Eduardo Santos resulted from the operation of the elevator at the construction site; that he had
nothing to do with the operation, or control, or management of the elevator in question, hence, the death of Eduardo
Santos is not attributable to him; that his participation in the construction of the building was limited solely to painting
specific portions thereof; that he filed a cross-claim against defendant C.E. Construction Corp. because the said
corporation was the general contractor of the building, operator/maintainer of the elevator, and employer of the elevator
boy. 5

During the trial of the case on the merits, petitioner presented two (2) witnesses — Josefino Rivera and himself. 6

On 24 February 1986, the trial court rendered its decision 7 finding both the petitioner and CECCI liable for the death of
Eduardo. The dispositive portion of the decision reads as follows:

WHEREFORE, in view of the foregoing considerations, judgment is hereby rendered as follows:

1. The defendant (sic) Doroteo Ocheda and C.E. Construction Corporation, Inc. are ordered to pay jointly and
severally the plaintiffs the following amounts:

a) Seven Thousand Three Hundred Fifty Pesos (P7,350.00) as burial expenses;

b) Thirty Thousand Pesos (P30,000.00) as moral damages;

c) Five Thousand pesos (P5,000.00) as attorney's fees; and

d) Costs of suit.

2. The third-party complaint is hereby dismissed and the third-party plaintiff C.E. Construction Corporation, Inc. is
ordered to pay the third-party defendant Fujitec the sum of Fifteen Thousand Pesos (P15,000.00) as attorney's fees plus
the cost of suit;

3. The cross-claim and counterclaim of defendant Ocheda and the counterclaim of defendant C.E. Construction are
hereby dismissed.

SO ORDERED. 8

This determination of liability is based on the trial court's findings that:

It has been sufficiently established that it was defendant Ocheda who caused the accident to happen. It was defendant
Ocheda who ordered the late Eduardo Santos and Hernani Gozun to use the top of the elevator as stepping board while
painting the wall of the elevator shaft. And defendant Ocheda failed to exercise the diligence of a good father of a family
in the supervision of his employees.

It has likewise been shown that C.E. Construction was, at the time of the incident in question, in full control of the building
since the same was not yet accepted by the owner thereof. C.E. Construction was the general contractor of the building,
hence it was in full management and control of the elevator because the same was already turned over to and accepted
by the building owner from Fujitec. As such C.E. Construction should have guarded against the unauthorized use of the
elevator by people working in the building. At the time of the incident, the late Eduardo Santos was an employee of
defendant Ocheda, a sub-contractor of C.E. Construction. In view of all these, C.E. Construction is equally liable with
defendant Ocheda pursuant to Article 2180, in conjunction with Article 2176 of the civil Code. The elevator which caused
the injury and subsequent death of Eduardo Santos was under the management and control of C.E. Construction.
Consequently, had C.E. Construction used proper care in the management and operation of the elevator, and had it
exercised the diligence of a good father of a family in the supervision of its employees, then the fatal incident would not
have happened. 9

Petitioner and CECCI appealed this adverse decision to the respondent Court of Appeals which docketed the case as C.A.-
G.R. CV No. 09574. In the Brief he submitted, petitioner made the following assignment of errors:

THE LOWER COURT ERRED IN HOLDING THAT THE REGIONAL TRIAL COURT HAD JURISDICTION OVER THE COMPLAINT;

II

THE LOWER COURT ERRED IN HOLDING THAT OCHEDA WAS GUILTY OF NEGLIGENCE FOR THE DEATH OF SANTOS;
III

THE LOWER COURT ERRED IN APPLYING ARTICLE 2180 OF THE NEW CIVIL CODE TO OCHEDA;

IV

THE LOWER COURT ERRED IN HOLDING OCHEDA JOINTLY AND SEVERALLY LIABLE WITH C.E. CONSTRUCTION CORP. TO
THE PLAINTIFFS FOR DAMAGES. 10

On the other hand, CECCI, in its Brief, contended that the trial court gravely erred in finding it solidarily liable with the
herein petitioner for the death of Eduardo, in awarding moral damages, in dismissing the third-party complaint and in not
holding the plaintiffs therein liable for damages, attorney's fees and costs of the suit. 11

On 1 September 1988, the respondent Court promulgated its decision 12 upholding the findings of the trial court but
reducing the amount of damages; it likewise eliminated the grant of attorney's fees in favor of FUJITEC. Thus:

WHEREFORE, the decision appealed from is hereby AFFIRMED in all respects, except as modified herein by reducing the
award for actual or compensatory damages to only P5,880.00; reducing the damage caused by death to only P24,000.00;
and eliminating the award of P15,000.00 attorney's fees to third party defendant Fujitec. No costs.

SO ORDERED. 13

The reduction in the award of damages was based on the respondent Court's finding of contributory negligence on the
part of Eduardo Santos when he failed to heed the order to tie a rope around his waist while working.

As to the issue of lack of jurisdiction on the part of the trial court, the respondent Court held:

The case at bar is being prosecuted in behalf of a deceased, not dismissed, employee for damages arising from the death
of the employee based on quasi-delict founded on an undoubted principle of justice recognized by all legislations that
every injury, loss or damage which a person received in his right (sic), be it by act or by omission, creates a juridical
relation from which is derived the right which the aggrieved party has to be indemnified and the consequent obligation by
the other party.

In the present case of Floresca vs. Philex Mining Corporation, 136 SCRA 141, the Supreme Court ruled that recovery under
the new Civil Code for damages arising from negligence is not barred by Article 173 of the New Labor Code. In this case, it
was further held that an ordinary court has jurisdiction over complaints for damages filed by heirs of mining employees
against the mining corporation for the death of the former allegedly caused by the negligence of their employer. 14
His motion to reconsider the decision having been denied in the resolution of the respondent Court dated 18 October
1988, 15 petitioner took this recourse under Rule 45 of the Rules of Court. He reiterates in the instant petition for review
the assignment of errors submitted before the respondent Court.

This Court grave due course to the petition and required the parties to submit their respective Memoranda 16 after the
submission of the Comment to the petition by the private respondent, the Reply thereto by the petitioner and the
Rejoinder to the latter by the private respondents.

We find no merit in the petition.

Regarding the issue of the factual findings upon which the second, third and fourth assigned errors are based. We find no
cogent reason to disturb such findings of both the trial and respondent courts. Petitioner does not even attempt to show
that this case falls under any of the accepted exceptions to the well-settled and oft-repeated rule that findings of facts of
the Court of Appeals are biding upon this Court. 17

Anent the alleged lack of jurisdiction on the part of the trial court, petitioner admits that the private respondents cause of
action, as expressed in the complaint, is based on a quasi-delict. The former submits, however, that since the monetary
award is sought in connection with the employer-employee relationship which existed between him and the late Eduardo
Santos, only Labor Arbiters, pursuant to Article 217 of the Labor Code of the Philippines as it was then worded, 18 have
original and exclusive jurisdiction over them. Under the said provision, "all money claims of workers" and "all other claims
arising from employer-employee relations" are exclusively cognizable by Labor Arbiters. We ruled in Getz Corp. vs. Court
of Appeals 19 that pursuant to P.D. No. 1691, such claims include moral and exemplary damages. Petitioner further
contends that Floresca vs. Philex Mining Corp., 20 which the respondent Court relied upon, is not applicable because the
cause of action involved therein accrued on 28 June 1967, or before the enactment of the Labor Code and P.D. No. 1691;
he asserts that the decision therein constituted "judicial legislation".

Petitioner's unusual patience and tenacity on the first assigned error merits him no reward. In the first place, he did not
raise in his answer that defense with respect to the claim for damages arising from a quasi-delict. His affirmative defense
of lack of jurisdiction specifically refers to the allegation in paragraph 8 of the complaint concerning the SSS, Medicare,
Workmen's Compensation and insurance benefits the award of which, according to him, falls within the competence and
jurisdiction of other administrative or quasi-judicial bodies. In fact, he even considers such allegation to be non-essential
to the complaint's cause of action — the negligent operation of the elevator. This is how he worded that particular
affirmative defense:

SECOND AFFIRMATIVE DEFENSE

12. He need not deny nor (sic) admit the allegations in paragraph 8 regarding the alleged SSS, Medicare, Workmen's
Compensation, and insurance coverage since this Honorable Court has no jurisdiction over disputes involving cases of
these sorts, jurisdiction thereof being vested in other administrative or quasi-judicial bodies. Furthermore, the allegations
in said paragraph 8 of the plaintiff's cause of action which is the negligent operation of the elevator resulting in the death
of Eduardo (sic) Santos. 21
Obviously, he did not even have Labor Arbiters in mind for such cases. He knew, or at least ought to have known, that
expressly excepted from the broad jurisdiction of labor Arbiters in Section 217 of the Labor Code are "claims for
employees compensation, social security, medicate and maternity benefits."

In the second place, during the pre-trial conference, petitioner failed to raise the issue of jurisdiction. He instead harped
on the lack of a cause of action — his first affirmative defense — which was based on the theory that the proximate cause
of Eduardo's death was the negligence of the elevator boy who was an employee of CECCI; in fact, it was against the latter
that he filed a cross-claim.

In the third place, petitioner openly and unqualifiedly involved and submitted to the jurisdiction of the trial court by
setting up a counterclaim, asking for relief in the concept of attorney's fees and expenses of litigation against the private
respondents and filing a cross-claim against CECCI, whom he alleged to be the employer of the elevator boy.

Finally, he presented evidence to prove that the proximate cause of the accident and resulting death of Eduardo was the
negligence of the elevator boy. He concludes that as employer of the said boy, CECCI is solely liable to the private
respondents for the damages claimed by the latter.

Petitioner was, therefore, effectively estopped from raising the issue of jurisdiction with respect to the damages arising
from a quasi-delict. While it is true that jurisdiction over the subject matter of a case may be raised at any stage of the
proceedings as the same is conferred by law, 22 it is nevertheless settled that a party may be barred from arising it on the
ground of estoppel. 23 The reason for this is that after voluntarily submitting a cause and encountering an adverse
decision on the merits, it would be improper and too late, to say the least, for the lower to question the jurisdiction or
power of the court. It is not correct for a party who has invoked the jurisdiction of a court in a particular matter to secure
affirmative relief, to afterwards deny that very jurisdiction to escape penalty.

And even granting, for the sake of argument, that the issue of jurisdiction can still be raised in connection with its specific
reference to the damages arising out of a quasi-delict, petitioner's thesis would still fail. Such damages may not be
awarded in accordance with Section 217 of the Labor Code, as amended, for there is no reasonable causal connection
with the employer-employee relationship. At the time the cause of action accrued, Article 217 of the Labor Code required
that in order that the Labor Arbiter may adjudicate claims not included in the other paragraphs, the same must arise out
of employer-employee relations.

In San Miguel Corporation vs. National Labor Relations Commission, 24 this Court ruled, with respect to Article 217, as
amended by B.P. Blg. 227:

While paragraph 3 above refers to "all money claims of workers," it is not necessary to suppose that the entire universe of
money claims that might be asserted by workers against their employers has been absorbed into the original and
exclusive jurisdiction of Labor Arbiters. In the first place, paragraph 3 should be read not in isolation from but rather
within the context formed by paragraph 1 (relating to unfair labor practices), paragraph 2 (relating to claims concerning
terms and conditions of employment), paragraph 4 (claims relating to household services, a particular species of
employer-employee relations), and paragraph 5 (relating to certain activities prohibited to employees or to employers). It
is evident that there is a unifying element which runs through paragraphs 1 to 5 and that is, that they all refer to cases or
disputes arising out of or in connection with an employer-employee relationship. This is, in other words, a situation where
the rule of noscitur a sociis may be usefully invoked in clarifying the scope of paragraph 3, and any other paragraph of
Article 217 of the Labor Code, as amended. We reach the above conclusion from an examination of the terms themselves
of Article 217, as last amended by B.P. Blg. 227, and even though earlier versions of Article 217 of the Labor Code
expressly brought within the jurisdiction of the Labor Arbiters and the NLRC "cases arising from employer-employee
relations," which clause was not expressly carried over, in printer's ink, in Article 217 as it exists today. For it cannot be
presumed that money claims of workers which do not arise out of or in connection with their employer-employee
relationships, and which would therefore fall within the general jurisdiction of the courts of justice, were intended by the
legislative authority to be taken away from the jurisdiction of the courts and lodged with Labor Arbiters on an exclusive
basis. The Court, therefore, believes and so holds that the "money claims of workers" referred to in paragraph 3 of Article
217 embraces money claims which arise out of or in connection with the employer-employee relationship, or some aspect
or incident of such relationship. Put a little differently, that money claims of workers which now fall within the original and
exclusive jurisdiction of labor Arbiters are those money claims which have some reasonable causal connection with the
employer-employee relationship.

Said article presently reads as follows: 25

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 of 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 strike 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 involving from the interpretation or implementation of collective bargaining agreement 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 instant case, the source of the obligation upon which the private respondents' cause of action is based is a quasi-
delict or tort which has no reasonable connection with any of the claims provided for in the aforesaid Article 217 of the
Labor Code. It would have been entirely different if the claim for damages arose out of, for instance, the illegal dismissal
of Eduardo, in which case the Labor Arbiter would have exclusive jurisdiction thereon. 26

It would have also been different if the petitioner had grounded his claim of lack of jurisdiction on the basis of the
Workmen's Compensation Law. Unfortunately, he adroitly avoided this issue from the very beginning not only because of
his claim that the allegation on this matter is irrelevant to the private respondents' theory but, and more importantly, he
did not, as revealed by the latter, register Eduardo with the Social Security System pursuant to the Amended Rules on
Employees Compensation in relation to Chapter II, Title II, Book IV of the Labor Code of the Philippines (P.D. No. 442), as
amended. To avoid possible liability thereunder, and more particularly the criminal and civil sanctions under Section 4,
Rule II of said Rules which reads:

Sec. 4. Penalty. — Any violation of this Rule shall be penalized as follows:

(1) In case of failure or refusal to register employees, the employer or responsible official who committed the
violation shall be punished with a fine of not less than P1,000 nor more than P10,000 and/or imprisonment for the
duration of the violation or noncompliance or until such time that rectification of the violation has been made, at the
discretion of the court.

(2) In case a compensable contingency occurs after 30 days from employment and before the System receives any
report for coverage about the employee or EC contribution on his behalf, his employer shall be liable to the System for
the lump sum equivalent to the benefits to which he or his dependents may be entitled.

petitioner unabashedly asserted in his Answer that the late Eduardo Santos was his employee for barely a week and that
he was hired on a casual basis only for the particular painting job on the M.J. Building. Having done so, he cannot now be
heard to make a strained and tenuous analysis of Floresca vs. Philex mining Corporation. 27

WHEREFORE, for lack of merit, the instant petition is DENIED with costs against the petitioner.

This decision is immediately executory.

SO ORDERED.

Gutierrez, Jr., Bidin, Romero and Melo, JJ., concur.

Footnotes
1 Rollo, 38-41.

2 Rollo, 42-45.

3 Rollo, 46-52.

4 Id., 53-59.

5 Rollo, 61.

6 Id., 63.

7 Id., 61-84.

8 Rollo, 84.

9 Id., 82-83.

10 Rollo, 25.

11 Id., 25-26.

12 Id., 23-31; per Associate Justice Luis L. Victor, concurred in by Associate Justices Ricardo P. Tensuan and Venancio
D. Aldecoa, Jr.

13 Rollo, 30.

14 Id., 26.

15 Rollo, 34-36.

16 Id., 183.

17 Remalante vs. Tibe, 158 SCRA 138 [1988]; Medina vs. Asistio, 191 SCRA 218 [1990].
18 Amended by P.D. No. 1691; B.P. Blg. 227 subsequently amended the former by, inter alia, deleting paragraph 6 of
Article 217 which contained the phrase "all other claims arising from employer-employee relations.

19 116 SCRA 86 [1982]

20 136 SCRA 141 [1985].

21 Rollo, 44-45.

22 Lagman vs. Court of Appeals, 44 SCRA 228 [1972]; see also People vs. Eduarte, 182 SCRA 750 [1990].

23 Tijam vs. Sibonghanoy, 23 SCRA 29 [1968]; Quimpo vs. De la Victoria, 46 SCRA 139 [1972]; Zulueta vs. Pan
American World Airways, Inc., 49 SCRA 1 [1973]; People vs. Munar, 53 SCRA 278 [1973]; Capilitan vs. De la Cruz, 55 SCRA
706 [1974]; Balais vs. Balais, 159 SCRA 37 [1988]; Tejones vs. Gironella, 159 SCRA 100 [1988]; Marquez vs. Secretary of
Labor, 171 SCRA 337 [1989]; Bañaga vs. Commission on the Settlement of Land Problems, 181 SCRA 599 [1990].

24 161 SCRA 719, 724-727 [1988].

25 As amended by Section 9, R.A. No. 6715.

26 Vargas vs. Akai Philippines, Inc., 156 SCRA 531 [1987]; Victorias Milling Co., Inc. vs. Intermediate Appellate Court,
200 SCRA 1 [1991].

27 Supra.

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SECOND DIVISION

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

PURIFICACION G. TABANG, petitioner, vs. NATIONAL LABOR RELATIONS COMMISSION and PAMANA GOLDEN CARE
MEDICAL CENTER FOUNDATION, INC., respondents.

DECISION

REGALADO, J.:

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. [1]

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. [2]

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. [3]

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. [4]

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.[6]

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.[8]

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. [12]

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. [14]

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.

Romero, Puno, Mendoza, and Torres, Jr., JJ., concur.

[1] Rollo, 31-35.

[2] Ibid., 37.

[3] Ibid., 37-45.

[4] Rollo, 189.

[5] 2 Fletcher Cyc. Corp., 1982 rev. ed., Sec. 2690, as cited in R.N. Lopez, The Corporation Code of the Philippines
Annotated, Vol. I, 423; see also Sec. 25 of the Corporation Code.

[6] SEC Opinion, dated March 25, 1983, Mr. Edison Alba, op cit.; see also J. Campos, Jr., The Corporation Code, Comments,
Notes and Selected Cases, Vol. I, 383-384.

[7] 2 Fletcher Cyc. Corp., Ch. II, Sec. 266.

[8] Fletcher, op cit., citing Aldritt vs. Kansas Centennial Global Exposition, Inc., 189 Kan 649, 371 P2d 818, 424.

[9] Rollo, 46.

[10] Ibid., id.

[11] Fortune Cement Corporation vs. NLRC, et al., G.R. No. 79762, January 24, 1991, 193 SCRA 258.

[12] SEC, et al. vs. Court of Appeals, et al., G.R. No. 93832, August 23, 1991, 201 SCRA 124.

[13] Rollo, 113-119.

[14] Rollo, 852-853.

[15] Civil Case No. 2006-93-C; Rollo, 897-908.

[16] Rollo, 906-907.

[17] G.R. No. 71589, December 17, 1990, 192 SCRA 315; see also Dy, et al., vs. NLRC, et al., G.R. No. 68544, October 27,
1986, 145 SCRA 211.THIRD DIVISION

[G.R. No. 141093. February 20, 2001]

PRUDENTIAL BANK and TRUST COMPANY, petitioner, vs. CLARITA T. REYES, respondent.

DECISION

GONZAGA-REYES, J.:

Before the Court is a petition for review on certiorari of the Decision,[1] dated October 15, 1999 of the Court of Appeals in
C.A.-G.R. SP No. 30607 and of its Resolution, dated December 6, 1999 denying petitioners motion for reconsideration of
said decision. The Court of Appeals reversed and set aside the resolution[2] of the National Labor Relations Commission
(NLRC) in NLRC NCR CA No. 009364-95, reversing and setting aside the labor arbiters decision and dismissing for lack of
merit private respondents complaint.[3]

The case stems from NLRC NCR Case No. 00-06-03462-92, which is a complaint for illegal suspension and illegal dismissal
with prayer for moral and exemplary damages, gratuity, fringe benefits and attorneys fees filed by Clarita Tan Reyes
against Prudential Bank and Trust Company (the Bank) before the labor arbiter. Prior to her dismissal, private respondent
Reyes held the position of Assistant Vice President in the foreign department of the Bank, tasked with the duties, among
others, to collect checks drawn against overseas banks payable in foreign currency and to ensure the collection of foreign
bills or checks purchased, including the signing of transmittal letters covering the same.

After proceedings duly undertaken by the parties, judgment was rendered by Labor Arbiter Cornelio L. Linsangan, the
dispositive portion of which reads:

WHEREFORE, finding the dismissal of complainant to be without factual and legal basis, judgment is hereby rendered
ordering the respondent bank to pay her back wages for three (3) years in the amount of P540,000.00 (P15,000.00 x 36
mos.). In lieu of reinstatement, the respondent is also ordered to pay complainant separation pay equivalent to one
month salary for every year of service, in the amount of P420,000.00 (P15,000 x 28 mos.). In addition, the respondent
should also pay complainant profit sharing and unpaid fringe benefits. Attorneys fees equivalent to ten (10%) percent of
the total award should likewise be paid by respondent.
SO ORDERED.[4]

Not satisfied, the Bank appealed to the NLRC which, as mentioned at the outset, reversed the Labor Arbiters decision in
its Resolution dated 24 March 1997. Private respondent sought reconsideration which, however, was denied by the NLRC
in its Resolution of 28 July 1998. Aggrieved, private respondent commenced on October 28, 1998, a petition for certiorari
before the Supreme Court.[5] The subject petition was referred to the Court of Appeals for appropriate action and
disposition per resolution of this Court dated November 25, 1998, in accordance with the ruling in St. Martin Funeral
Homes vs. NLRC.[6]

In its assailed decision, the Court of Appeals adopted the following antecedent facts leading to Reyess dismissal as
summarized by the NLRC:

The auditors of the Bank discovered that two checks, No. 011728-7232-146, in the amount of US$109,650.00, and No.
011730-7232-146, in the amount of US$115,000.00, received by the Bank on April 6, 1989, drawn by the Sanford Trading
against Hongkong and Shanghai Banking Corporation, Jurong Branch, Singapore, in favor of Filipinas Tyrom, were not sent
out for collection to Hongkong Shanghai Banking Corporation on the alleged order of the complainant until the said
checks became stale.

The Bank created a committee to investigate the findings of the auditors involving the two checks which were not
collected and became stale.

On March 8, 1991, the president of the Bank issued a memorandum to the complainant informing her of the findings of
the auditors and asked her to give her side. In reply, complainant requested for an extension of one week to submit her
explanation. In a subsequent letter, dated March 14, 1991, to the president, complainant stated that in view of the refusal
of the Bank that she be furnished copies of the pertinent documents she is requesting and the refusal to grant her a
reasonable period to prepare her answer, she was constrained to make a general denial of any misfeasance or
malfeasance on her part and asked that a formal investigation be made.

As the complainant failed to attend and participate in the formal investigation conducted by the Committee on May 24,
1991, despite due notice, the Committee proceeded with its hearings and heard the testimonies of several witnesses.

The Committees findings were:

a) The two (2) HSBC checks were received by the Foreign Department on 6 April 1989. On the same day, complainant
authorized the crediting of the account of Filipinas Tyrom in the amount of P4,780,102.70 corresponding to the face value
of the checks, (Exhibits 6, 22 to 22-A and 23 to 23-A). On the following day, a transmittal letter was prepared by Ms.
Cecilia Joven, a remittance clerk then assigned in the Foreign Department, for the purpose of sending out the two (2)
HSBC checks for collection. She then requested complainant to sign the said transmittal letters (Exhibits 1, 7 and 25; TSN,
11 March 1993, pp. 42-52), as it is complainant who gives her instructions directly concerning the transmittal of foreign
bills purchased. All other transmittal letters are in fact signed by complainant.
b) After Ms. Joven delivered the transmittal letters and the checks to the Accounting Section of the Foreign Department,
complainant instructed her to withdraw the same for the purpose of changing the addressee thereon from American
Express Bank to Bank of Hawaii (ibid.) under a special collection scheme (Exhibits 4 and 5 to 5-B).

c) After complying with complainants instruction, Ms. Joven then returned to complainant for the latter to sign the new
transmittal letters. However, complainant told Ms. Joven to just hold on to the letters and checks and await further
instructions (ibid.). Thus, the new transmittal letters remained unsigned. (See Exhibits 5 to 5-B).

d) In June 1989, Ms. Joven was transferred to another department. Hence, her duties, responsibilities and functions,
including the responsibility over the two (2) HSBC checks, were turned over to another remittance clerk, Ms. Analisa
Castillo (Exhibit 14; TSN, 4 June 1993, pp. 27-29).

e) When asked by Ms. Castillo about the two (2) HSBC checks, Ms. Joven relayed to the latter complainants instruction
(Exhibit 14; TSN, 4 June 1993, p. 42).

f) About fifteen (15) months after the HSBC checks were received by the Bank, the said checks were discovered in the
course of an audit conducted by the Banks auditors. Atty. Pablo Magno, the Banks legal counsel, advised complainant to
send the checks for collection despite the lapse of fifteen (15) months.

g) Complainant, however, deliberately withheld Atty. Magnos advice from her superior, the Senior Vice-President, Mr.
Renato Santos and falsely informed the latter that Atty. Magno advised that a demand letter be sent instead, thereby
further delaying the collection of the HSBC checks.

h) On 10 July 1990, the HSBC checks were finally sent for collection, but were returned on 16 July 1990 for the reason
account closed (Exhibits 2-A and 3-A).

After a review of the Committees findings, the Board of Directors of the Bank resolved not to re-elect complainant any
longer to the position of assistant president pursuant to the Banks By-laws.

On July 19, 1991, complainant was informed of her termination of employment from the Bank by Senior Vice President
Benedicto L. Santos, in a letter the text of which is quoted in full:

Dear Mrs. Reyes:

After a thorough investigation and appreciation of the charges against you as contained in the Memorandum of the
President dated March 8, 1991, the Fact Finding Committee which was created to investigate the commission and/or
omission of the acts alluded therein, has found the following:

1. You have deliberately held the clearing of Checks Nos. 11728 and 11730 of Hongkong and Shanghai Banking
Corporation in the total amount of US$224,650.00 by giving instructions to the collection clerk not to send the checks for
collection. In view thereof, when the said checks were finally sent to clearing after the lapse of 15 months from receipt of
said checks, they were returned for the reason Account closed. To date, the value of said checks have not been paid by
Filipinas Tyrom, which as payee of the checks, had been credited with their peso equivalent;

2. You tried to influence the decision of Atty. Pablo P. Magno, Bank legal counsel, by asking him to do something allegedly
upon instructions of a Senior Vice President of the Bank or else lose his job when in truth and in fact no such instructions
was given; and

3. You deliberately withheld from Mr. Santos, Senior Vice President, the advice given by the legal counsel of the Bank
which Mr. Santos had asked you to seek. As a matter of fact, you even relayed a false advice which delayed further the
sending of the two checks for collection. Likewise, you refused to heed the advice of the Banks legal counsel to send the
checks for collection.

These findings have given rise to the Banks loss of trust and confidence in you, the same being acts of serious misconduct
in the performance of your duties resulting in monetary loss to the Bank. In view thereof, the Board has resolved not to
re-elect you to the position of Assistant Vice President of the Bank. Accordingly, your services are terminated effective
immediately. In relation thereto, your monetary and retirement benefits are forfeited except those that have vested in
you.

In her position paper, complainant alleged that the real reason for her dismissal was her filing of the criminal cases against
the bank president, the vice president and the auditors of the Bank, such filing not being a valid ground for her dismissal.
Furthermore, she alleged that it would be self-serving for the respondent to state that she was found guilty of gross
misconduct in deliberately withholding the clearing of the two dollar checks. She further alleged that she was not
afforded due process as she was not given the chance to refute the charges mentioned in the letter of dismissal. Hence,
she was illegally dismissed.

On the other hand, respondent argues that there were substantial bases for the Bank to lose its trust and confidence on
the complainant and, accordingly, had just cause for terminating her services. Moreover, for filing the clearly unfounded
suit against the respondents officers, complainant is liable to pay moral and exemplary damages and attorneys fees.[7]

The Court of Appeals found that the NLRC committed grave abuse of discretion in ruling that the dismissal of Reyes is
valid. In effect, the Court of Appeals reinstated the judgment of the labor arbiter with modification as follows:

WHEREFORE, in the light of the foregoing, the decision appealed from is hereby REVERSED and SET ASIDE. In lieu thereof,
judgment is hereby rendered ordering respondent Bank as follows:

1. To pay petitioner full backwages and other benefits from July 19, 1991 up to the finality of this judgment;

2. To pay petitioner separation pay equivalent to one (1) month salary for every year of service in lieu of reinstatement;
and
3. To pay attorneys fee equivalent to ten (10%) percent of the total award.

SO ORDERED.[8]

Hence, the Banks recourse to this Court contending in its memorandum that:

IN SETTING ASIDE THE DECISION DATED 24 MARCH 1997 AND THE RESOLUTION DATED 28 JULY 1998 OF THE NLRC AND
REINSTATING WITH MODIFICATION THE DECISION DATED 20 JULY 1995 OF LABOR ARBITER CORNELIO L. LINSANGAN, THE
HONORABLE COURT OF APPEALS SERIOUSLY ERRED, IN VIEW OF THE FOLLOWING:

I.

IT IS THE SEC (NOW THE REGIONAL TRIAL COURT) AND NOT THE NLRC WHICH HAS ORIGINAL AND EXCLUSIVE
JURISDICTION OVER CASES INVOLVING THE REMOVAL FROM OFFICE OF CORPORATE OFFICERS.

II.

EVEN ASSUMING ARGUENDO THAT THE NLRC HAS JURISDICTION, THERE WAS SUBSTANTIAL EVIDENCE OF RESPONDENTS
MISCONDUCT JUSTIFYING THE BANKS LOSS OF TRUST AND CONFIDENCE ON (sic) HER.

III.

EVEN ASSUMING ARGUENDO THAT RESPONDENT WAS ENTITLED TO BACKWAGES, THE HONORABLE COURT OF APPEALS
ERRED IN AWARDING UNLIMITED AND UNQUALIFIED BACKWAGES THEREBY GOING FAR BEYOND THE LABOR ARBITERS
DECISION LIMITING THE SAME TO THREE YEARS, WHICH DECISION RESPONDENT HERSELF SOUGHT TO EXECUTE.[9]

In sum, the resolution of this petition hinges on (1) whether the NLRC has jurisdiction over the complaint for illegal
dismissal; (2) whether complainant Reyes was illegally dismissed; and (3) whether the amount of back wages awarded was
proper.

On the first issue, petitioner seeks refuge behind the argument that the dispute is an intra-corporate controversy
concerning as it does the non-election of private respondent to the position of Assistant Vice-President of the Bank which
falls under the exclusive and original jurisdiction of the Securities and Exchange Commission (now the Regional Trial
Court) under Section 5 of Presidential Decree No. 902-A. More specifically, petitioner contends that complainant is a
corporate officer, an elective position under the corporate by-laws and her non-election is an intra-corporate controversy
cognizable by the SEC invoking lengthily a number of this Courts decisions.[10]

Petitioner Bank can no longer raise the issue of jurisdiction under the principle of estoppel. The Bank participated in the
proceedings from start to finish. It filed its position paper with the Labor Arbiter. When the decision of the Labor Arbiter
was adverse to it, the Bank appealed to the NLRC. When the NLRC decided in its favor, the bank said nothing about
jurisdiction. Even before the Court of Appeals, it never questioned the proceedings on the ground of lack of jurisdiction. It
was only when the Court of Appeals ruled in favor of private respondent did it raise the issue of jurisdiction. The Bank
actively participated in the proceedings before the Labor Arbiter, the NLRC and the Court of Appeals. While it is true that
jurisdiction over the subject matter of a case may be raised at any time of the proceedings, this rule presupposes that
laches or estoppel has not supervened. In this regard, Baaga vs. Commission on the Settlement of Land Problems,[11] is
most enlightening. The Court therein stated:

This Court has time and again frowned upon the undesirable practice of a party submitting his case for decision and then
accepting the judgment, only if favorable, and attacking it for lack of jurisdiction when adverse. Here, the principle of
estoppel lies. Hence, a party may be estopped or barred from raising the question of jurisdiction for the first time in a
petition before the Supreme Court when it failed to do so in the early stages of the proceedings.

Undeterred, the Bank also contends that estoppel cannot lie considering that from the beginning, petitioner Bank has
consistently asserted in all its pleadings at all stages of the proceedings that respondent held the position of Assistant Vice
President, an elective position which she held by virtue of her having been elected as such by the Board of Directors. As
far as the records before this Court reveal however, such an assertion was made only in the appeal to the NLRC and raised
again before the Court of Appeals, not for purposes of questioning jurisdiction but to establish that private respondents
tenure was subject to the discretion of the Board of Directors and that her non-reelection was a mere expiration of her
term. The Bank insists that private respondent was elected Assistant Vice President sometime in 1990 to serve as such for
only one year. This argument will not do either and must be rejected.

It appears that private respondent was appointed Accounting Clerk by the Bank on July 14, 1963. From that position she
rose to become supervisor. Then in 1982, she was appointed Assistant Vice-President which she occupied until her illegal
dismissal on July 19, 1991. The banks contention that she merely holds an elective position and that in effect she is not a
regular employee is belied by the nature of her work and her length of service with the Bank. As earlier stated, she rose
from the ranks and has been employed with the Bank since 1963 until the termination of her employment in 1991. As
Assistant Vice President of the foreign department of the Bank, she is tasked, among others, to collect checks drawn
against overseas banks payable in foreign currency and to ensure the collection of foreign bills or checks purchased,
including the signing of transmittal letters covering the same. It has been stated that the primary standard of determining
regular employment is the reasonable connection between the particular activity performed by the employee in relation
to the usual trade or business of the employer.[12] Additionally, an employee is regular because of the nature of work and
the length of service, not because of the mode or even the reason for hiring them.[13] As Assistant Vice-President of the
Foreign Department of the Bank she performs tasks integral to the operations of the bank and her length of service with
the bank totaling 28 years speaks volumes of her status as a regular employee of the bank. In fine, as a regular employee,
she is entitled to security of tenure; that is, her services may be terminated only for a just or authorized cause.[14] This
being in truth a case of illegal dismissal, it is no wonder then that the Bank endeavored to the very end to establish loss of
trust and confidence and serious misconduct on the part of private respondent but, as will be discussed later, to no avail.

This brings us to the second issue wherein the Bank insists that it has presented substantial evidence to prove the breach
of trust on the part of private respondent warranting her dismissal. On this point, the Court of Appeals disagreed and set
aside the findings of the NLRC that Reyes deliberately withheld the release of the two dollar checks; that she is guilty of
conflict of interest that she waived her right to due process for not attending the hearing; and that she was dismissed
based on loss of trust and confidence. We quote pertinent portions of the decision, to wit:

FIRST: Respondent Bank heavily relied on the testimony and affidavit of Remittance Clerk Joven in trying to establish loss
of confidence. However, Jovens allegation that petitioner instructed her to hold the subject two dollar checks amounting
to $224,650.00 falls short of the requisite proof to warrant petitioners dismissal. Except for Jovens bare assertion to
withhold the dollar checks per petitioners instruction, respondent Bank failed to adduce convincing evidence to prove bad
faith and malice. It bears emphasizing that respondent Banks witnesses merely corroborate Jovens testimony.

Upon this point, the rule that proof beyond reasonable doubt is not required to terminate an employee on the charge of
loss of confidence and that it is sufficient that there is some basis for such loss of confidence, is not absolute. The right of
an employer to dismiss employees on the ground that it has lost its trust and confidence in him must not be exercised
arbitrarily and without just cause. For loss of trust and confidence to be valid ground for an employees dismissal, it must
be substantial and not arbitrary, and must be founded on clearly established facts sufficient to warrant the employees
separation from work (Labor vs. NLRC, 248 SCRA 183).

SECOND. Respondent Banks charge of deliberate withholding of the two dollar checks finds no support in the testimony of
Atty. Jocson, Chairman of the Investigating Committee. On cross examination, Atty. Jocson testified that the documents
themselves do not show any direct withholding (pp. 186-187, Rollo). There being conflict in the statement of witnesses,
the court must adopt the testimony which it believes to be true (U.S. vs. Losada, 18 Phil. 90).

THIRD. Settled is the rule that when the conclusions of the Labor Arbiter are sufficiently substantiated by the evidence on
record, the same should be respected by appellate tribunals since he is in a better position to assess and evaluate the
credibility of the contending parties (Ala Mode Garments, Inc. vs. NLRC, 268 SCRA 497). In this regard, the Court quotes
with approval the following disquisition of Labor Arbiter Linsangan, thus:

This Office has repeatedly gone over the records of the case and painstakingly examined the testimonies of respondent
banks witnesses. One thing was clearly established: that the legality of complainants dismissal based on the first ground
stated in respondents letter of termination (exh. 25-J, supra) will rise or fall on the credibility of Miss Joven who
undisputedly is the star witness for the bank. It will be observed that the testimonies of the banks other witnesses, Analiza
Castillo, Dante Castor and Antonio Ragasa pertaining to the non-release of the dollar checks and their corresponding
transmittal letters were all anchored on what was told them by Ms. Joven, that is: she was instructed by complainant to
hold the release of subject checks. In a nutshell, therefore, the issue boils down to who between complainant and Ms.
Joven is more credible.

After painstakingly examining the testimonies of Ms. Joven and respondents other witnesses this Office finds the evidence
still wanting in proof of complainants guilt. This Office had closely observed the demeanor of Ms. Joven while testifying on
the witness stand and was not impressed by her assertions. The allegation of Ms. Joven in that her non-release of the
dollar checks was upon the instruction of complainant Reyes is extremely doubtful. In the first place, the said instruction
constitutes a gross violation of the banks standard operating procedure. Moreover, Ms. Joven was fully aware that the
instruction, if carried out, will greatly prejudice her employer bank. It was incumbent upon Ms. Joven not only to disobey
the instruction but even to report the matter to management, if same was really given to her by complainant.

Our doubt on the veracity of Ms. Jovens allegation even deepens as we consider the fact that when the non-release of the
checks was discovered by Ms. Castillo the former contented herself by continuously not taking any action on the two
dollar checks. Worse, Ms. Joven even impliedly told by Ms. Castillo (sic) to ignore the two checks and just withhold their
release. In her affidavit Ms. Castillo said:

4. When I asked Cecille Joven what I was supposed to do with those checks, she said the same should be held as per
instruction of Mrs. Reyes. (Exh. 14, supra).
The evidence shows that it was only on 16 May 1990 that Ms. Joven broke her silence on the matter despite the fact that
on 15 November 1989, at about 8:00 p.m. the complainant, accompanied by driver Celestino Banito, went to her
residence and confronted her regarding the non-release of the dollar checks. It took Ms. Joven eighteen (18) months
before she explained her side on the controversy. As to what prompted her to make her letter of explanation was not
even mentioned.

On the other hand, the actions taken by the complainant were spontaneous. When complainant was informed by Mr.
Castor and Ms. Castillo regarding the non-release of the checks sometime in November, 1989 she immediately reported
the matter to Vice President Santos, Head of the Foreign Department. And as earlier mentioned, complainant went to the
residence of Ms. Joven to confront her. In this regard, Celestino Bonito, complainants driver, stated in his affidavit, thus:

1. Sometime on November 15, 1989 at about 7:00 oclock in the evening, Mrs. Clarita Tan Reyes and I were in the
residence of one Ms. Cecille Joven, then a Processing Clerk in the Foreign Department of Prudential Bank;

2. Ms. Cecille Joven, her mother, myself, and Mrs. Clarita Tan Reyes were seated in the sala when the latter asked the
former, Ms. Cecille Joven, how it came about that the two dollar checks which she was then holding with the transmittal
letters, were found in a plastic envelope kept day-to-day by the former;

3. Hesitatingly, Cecille Joven said: Eh, Mother (Mrs. Tan Reyes had been intimately called Mother in the Bank) akala ko
bouncing checks yon mga yon.

4. Mrs. Clarita Tan Reyes, upon hearing those words, was surprised and she said: Ano, papaano mong alam na bouncing
na hindi mo pa pinadadala;

5. Mrs. Cecille Joven turned pale and was not able to answer.

There are other factors that constrain this Office to doubt even more the legality of complainants dismissal based on the
first ground stated in the letter of dismissal. The non-release of the dollar checks was reported to top management
sometime on 15 November 1989 when complainant, accompanied by Supervisor Dante Castor and Analiza Castillo,
reported the matter to Vice President Santos. And yet, it was only on 08 March 1991, after a lapse of sixteen (16) months
from the time the non-release of the checks was reported to the Vice President, that complainant was issued a
memorandum directing her to submit an explanation. And it took the bank another four (4) months before it dismissed
complainant.

The delayed action taken by respondent against complainant lends credence to the assertion of the latter that her
dismissal was a mere retaliation to the criminal complaints she filed against the banks top officials.

It clearly appears from the foregoing that the complainant herein has no knowledge of, much less participation in, the
non-release of the dollar checks under discussion. Ms. Joven is solely responsible for the same. Incidentally, she was not
even reprimanded by the bank.
FOURTH. Respondent Bank having failed to furnish petitioner necessary documents imputing loss of confidence,
petitioner was not amply afforded opportunity to prepare an intelligent answer. The Court finds nothing confidential in
the auditors report and the affidavit of Transmittal Clerk Joven. Due process dictates that management accord the
employees every kind of assistance to enable him to prepare adequately for his defense, including legal representation.

The issue of conflict of interest not having been covered by the investigation, the Court finds it irrelevant to the
charge.[15]

We uphold the findings of the Court of Appeals that the dismissal of private respondent on the ground of loss of trust and
confidence was without basis. The charge was predicated on the testimony of Ms. Joven and we defer to the findings of
the Labor Arbiter as confirmed and adopted by the Court of Appeals on the credibility of said witness. This Court is not a
trier of facts and will not weigh anew the evidence already passed upon by the Court of Appeals.[16]

On the third issue, the Bank questions the award of full backwages and other benefits from July 19, 1991 up to the finality
of this judgment; separation pay equivalent to one (1) month salary for every year of service in lieu of reinstatement; and
attorneys fees equivalent to ten (10%) percent of the total award. The Bank argues, in the main, that private respondent
is not entitled to full backwages in view of the fact that she did not bother to appeal that portion of the labor arbiters
judgment awarding back wages limited to three years. It must be stressed that private respondent filed a special civil
action for certiorari to review the decision of the NLRC[17] and not an ordinary appeal. An ordinary appeal is distinguished
from the remedy of certiorari under Rule 65 of the Revised Rules of Court in that in ordinary appeals it is settled that a
party who did not appeal cannot seek affirmative relief other than the ones granted in the decision of the court
below.[18] On the other hand, resort to a judicial review of the decisions of the National Labor Relations Commission in a
petition for certiorari under Rule 65 of Rules of Court is confined to issues of want or excess of jurisdiction and grave
abuse of discretion.[19] In the instant case, the Court of Appeals found that the NLRC gravely abused its discretion in
finding that the private respondents dismissal was valid and so reversed the same. Corollary to the foregoing, the
appellate court awarded backwages in accordance with current jurisprudence.

Indeed, jurisprudence is clear on the amount of backwages recoverable in cases of illegal dismissal. Employees illegally
dismissed prior to the effectivity of Republic Act No. 6715 on March 21, 1989 are entitled to backwages up to three (3)
years without deduction or qualification, while those illegally dismissed after are granted full backwages inclusive of
allowances and other benefits or their monetary equivalent from the time their actual compensation was withheld from
them up to the time of their actual reinstatement.[20] Considering that private respondent was terminated on July 19,
1991, she is entitled to full backwages from the time her actual compensation was withheld from her (which, as a rule, is
from the time of her illegal dismissal) up to the finality of this judgment (instead of reinstatement) considering that
reinstatement is no longer feasible as correctly pointed out by the Court of Appeals on account of the strained relations
brought about by the litigation in this case. Since reinstatement is no longer viable, she is also entitled to separation pay
equivalent to one (1) month salary for every year of service.[21] Lastly, since private respondent was compelled to file an
action for illegal dismissal with the labor arbiter, she is likewise entitled to attorneys fees[22] at the rate above-
mentioned. There is no room to argue, as the Bank does here, that its liability should be mitigated on account of its good
faith and that private respondent is not entirely blameless. There is no showing that private respondent is partly at fault
or that the Bank acted in good faith in terminating an employee of twenty-eight years. In any event, Article 279 of
Republic Act No. 6715[23] clearly and plainly provides for full backwages to illegally dismissed employees.

WHEREFORE, the instant petition for review on certiorari is DENIED, and the assailed Decision of the Court of Appeals,
dated October 15, 1999, is AFFIRMED.

SO ORDERED.
Melo, (Chairman), Vitug, Panganiban, and Sandoval-Gutierrez, JJ., concur.

[1] Penned by Associate Justice Artemio G. Tuquero and concurred in by Associate Justices Eubolo G. Verzola and Elvi John
S. Asuncion.

[2] Penned by Presiding Commissioner Bartolome S. Carale and concurred in by Commissioners Vicente S.E. Veloso and
Alberto R. Quimpo.

[3] Docketed as NLRC NCR-00-06-03462-92.

[4] CA Rollo, p. 61.

[5] Docketed as G.R. No. 135883.

[6] 295 SCRA 494 (1998).

[7] Rollo, pp. 47-51.

[8] Ibid., pp. 56-57.

[9] Rollo, p. 136.

[10] Espino vs. NLRC, 240 SCRA 52; Philippine School of Business Administration vs. Leao, 127 SCRA 778; Dy vs. NLRC, 145
SCRA 211; Fortune Cement Corporation vs. NLRC, 193 SCRA 258; Armando de Rossi vs. NLRC, G.R. No. 108710, September
14, 1999.

[11] 181 SCRA 599 (1990).

[12] Bernardo vs. NLRC, 310 SCRA 186 (1999).

[13] Ibid.

[14] Bernardo, supra.

[15] Rollo, pp. 52-56.

[16] Valmonte vs. Court of Appeals, 303 SCRA 278 (1999).

[17] St. Martin Funeral Home, supra.

[18] Saltiga de Romero vs. Court of Appeals, 319 SCRA 180 (1999).

[19] Secon Philippines, Ltd., vs. NLRC, 319 SCRA 685 (1999).

[20] Bustamante vs. NLRC, 265 SCRA 61 (1996).

[21] Globe-Mackay Cable and Radio Corporation vs. NLRC, 206 SCRA 701 (1992).

[22] Asian Center for Career and Employment System and Services, Inc. (ACCESS) vs. NLRC, 297 SCRA 727 (1998).

[23] Art. 279. Security of Tenure. An employee who is unjustly dismissed from work shall be entitled to reinstatement
without loss of seniority rights and other privileges and to his full backwages, inclusive of allowances, and to his other
benefits or their monetary equivalent computed from the time his compensation is withheld from him up to the time of
his actual reinstatement.

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Republic of the Philippines

SUPREME COURT

Manila

SECOND DIVISION
G.R. No. 82211-12 March 21, 1989

TERESITA MONTOYA, petitioner,

vs.

TERESITA ESCAYO, JOY ESCAYO, AIDA GANANCIAL, MARY ANN CAPE, CECILIA CORREJADO, ERLINDA PAYPON and ROSALIE
VERDE, AND NATIONAL LABOR RELATIONS COMMISSION, respondents.

Rolando N. Medalla and Segundo Y Chua for petitioner.

The Solicitor General for public respondent.

Archie S. Baribar for private respondents.

SARMIENTO, J.:

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

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

The private respondents were all formerly employed as salesgirls in the petitioner's store, the "Terry's Dry Goods Store,"
in Bacolod City. On different dates, they separately filed complaints for the collection of sums of money against the
petitioner for alleged unpaid overtime pay, holiday pay, 13th month pay, ECOLA, and service leave pay: for violation of the
minimum wage law, illegal dismissal, and attorney's fees. The complaints, which were originally treated as separate cases,
were subsequently consolidated on account of the similarity in their nature. On August 1, 1984, the petitioner-employer
moved (Annex "C" of Petition) for the dismissal of the complaints, claiming that among others, the private respondents
failed to refer the dispute to the Lupong Tagapayapa for possible settlement and to secure the certification required from
the Lupon Chairman prior to the filing of the cases with the Labor Arbiter. These actions were allegedly violative of the
provisions of P.D. No. 1508, which apply to the parties who are all residents of Bacolod City.

Acting favorably on the petitioner's motion, Labor Arbiter Ethelwoldo R. Ovejera, on September 27, 1985, ordered the
dismissal of the complaints. The private respondents sought the reversal of the Labor Arbiter's order before the
respondent NLRC. On August 20, 1987, the public respondent rendered the assailed resolution reversing the order of
Ovejera, and remanded the case to the Labor Arbiter for further proceedings. A motion for reconsideration was filed by
the petitioner but this was denied for lack of merit on October 28, 1987. Hence, this petition.
It is the petitioner's contention that the provisions of the Katarungang Pambarangay Law (P.D. No. 1508) relative to the
prior amicable settlement proceedings before the Lupong Tagapayapa as a jurisdictional requirement at the trial level
apply to labor cases. More particularly, the petitioner insists that the failure of the private respondents to first submit
their complaints for possible conciliation and amicable settlement in the proper barangay court in Bacolod City and to
secure a certification from the Lupon Chairman prior to their filing with the Labor Arbiter, divests the Labor Arbiter, as
well as the respondent Commission itself, of jurisdiction over these labor controversies and renders their judgments
thereon null and void.

On the other hand, the Solicitor General, as counsel for the public respondent NLRC, in his comment, strongly argues and
convincingly against the applicability of P.D. No. 1508 to labor cases.

We dismiss the petition for lack of merit, there being no satisfactory showing of any grave abuse of discretion committed
by the public respondent.

The provisions of P.D. No. 1508 requiring the submission of disputes before the barangay Lupong Tagapayapa prior to
their filing with the court or other government offices are not applicable to labor cases.

For a better understanding of the issue in this case, the provisions of P.D. No. 1508 invoked by the petitioner are quoted:

SEC. 6. Conciliation pre-condition to filing of complaint. No complaint, petition, action or proceeding involving any matter
within the authority of the Lupon as provided in Section 2 hereof shall be filed or instituted in court or any other
government office for adjudication unless there has been a confrontation of the parties before the Lupon Chairman or the
Pangkat and no conciliation or settlement has been reached as certified by the Lupon Secretary or the Pangkat Secretary,
attested by the Lupon or Pangkat Chairman, or unless the settlement has been repudiated. However, the parties may go
directly to court in the following cases:

(1) Where the accused is under detention;

(2) Where a person has otherwise been deprived of per sonal liberty calling for habeas corpus proceedings;

(3) Actions coupled with provisional remedies such as preliminary injunction, attachment, delivery of personal
property and support pendente lite; and

(4) Where the action may otherwise be barred by the Statute of Limitations.

As correctly pointed out by the Solicitor General in his comment to the petition, even from the three "WHEREAS" clauses
of P.D. No. 1508 can be gleaned clearly the decree's intended applicability only to courts of justice, and not to labor
relations commissions or labor arbitrators' offices. The express reference to "judicial resources", to "courts of justice",
"court dockets", or simply to "courts" are significant. On the other band, there is no mention at all of labor relations or
controversies and labor arbiters or commissions in the clauses involved.
These "WHEREAS" clauses state:

WHEREAS, the perpetuation and official recognition of the time-honored tradition of amicably settling disputes among
family and barangay members at the barangay level without judicial resources would promote the speedy administration
of justice and implement the constitutional mandate to preserve and develop Filipino culture and to strengthen the family
as a basic social institution;

WHEREAS, the indiscriminate filing of cases in the courts of justice contributes heavily and unjustifiably to the congestion
of court dockets, thus causing a deterioration in the quality of justice;

WHEREAS, in order to help relieve the courts of such docket congestion and thereby enhance the quality of Justice
dispensed by the courts, it is deemed desirable to formally organize and institutionalize a system of amicably settling
disputes at the barangay level; (Emphasis supplied.)

In addition, Letter of Instructions No. 956 and Letter of Implementation No. 105, both issued on November 12, 1979 by
the former President in connection with the implementation of the Katarungang Pambarangay Law, affirm this
conclusion. These Letters were addressed only to the following officials: all judges of the Courts of first Instance, Circuit
Criminal Courts, Juvenile and Domestic Relations Courts, Courts of Agrarian Relations, City Courts and Municipal Courts,
and all Fiscals and other Prosecuting Officers. These presidential issuances make clear that the only official directed to
oversee the implementation of the provisions of the Katarungang Pambarangay Law (P.D. No. 1508) are the then Minister
of Justice, the then Minister of Local Governments and Community Development, and the Chief Justice of the Supreme
Court. If the contention of the petitioner were correct, the then Minister (now Secretary) of Labor and Employment would
have been included in the list, and the two presidential issuances 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. 4

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

SO ORDERED.

Melencio-Herrera, (Chairperson), Paras, Padilla and Regalado, JJ., concur.

Footnotes

1 Presiding Commissioner Ceferino E. Dulay, ponente; Commissioners Mirasol Viniega-Corleto and Roberto P.
Tolentino, concurring.

2 Constitution (1987), Art. XIII, sec. 3; The Labor Code of the Philippines, P.D. No. 442, as amended, Art. 3.
3 Article 221, The Labor Code of the Philippines, as amended; see also Acda vs. Minister of Labor, No. 51607, December
15, 1982, 119 SCRA 306.

4 The Labor Code of the Philippines, as amended, Art. 4.

# Cross Reference: Volume 171 Page 442

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Republic of the Philippines

SUPREME COURT

Manila

SECOND DIVISION

G.R. No. 86773 February 14, 1992

SOUTHEAST ASIAN FISHERIES DEVELOPMENT CENTER-AQUACULTURE DEPARTMENT (SEAFDEC-AQD), DR. FLOR

LACANILAO (CHIEF), RUFIL CUEVAS (HEAD, ADMINISTRATIVE DIV.), BEN DELOS REYES (FINANCE OFFICER), petitioners,

vs.
NATIONAL LABOR RELATIONS COMMISSION and JUVENAL LAZAGA, respondents.

Ramon Encarnacion for petitioners.

Caesar T. Corpus for private respondent.

NOCON, J.:

This is a petition for certiorari to annul and set aside the July 26, 1988 decision of the National Labor Relations
Commission sustaining the labor arbiter, in holding herein petitioners Southeast Asian Fisheries Development Center-
Aquaculture Department (SEAFDEC-AQD), Dr. Flor Lacanilao, Rufil Cuevas and Ben de los Reyes liable to pay private
respondent Juvenal Lazaga the amount of P126,458.89 plus interest thereon computed from May 16, 1986 until full
payment thereof is made, as separation pay and other post-employment benefits, and the resolution denying the
petitioners' motion for reconsideration of said decision dated January 9, 1989.

The antecedent facts of the case are as follows:

SEAFDEC-AQD is a department of an international organization, the Southeast Asian Fisheries Development Center,
organized through an agreement entered into in Bangkok, Thailand on December 28, 1967 by the governments of
Malaysia, Singapore, Thailand, Vietnam, Indonesia and the Philippines with Japan as the sponsoring country (Article 1,
Agreement Establishing the SEAFDEC).

On April 20, 1975, private respondent Juvenal Lazaga was employed as a Research Associate an a probationary basis by
the SEAFDEC-AQD and was appointed Senior External Affairs Officer on January 5, 1983 with a monthly basic salary of
P8,000.00 and a monthly allowance of P4,000.00. Thereafter, he was appointed to the position of Professional III and
designated as Head of External Affairs Office with the same pay and benefits.

On May 8, 1986, petitioner Lacanilao in his capacity as Chief of SEAFDEC-AQD sent a notice of termination to private
respondent informing him that due to the financial constraints being experienced by the department, his services shall be
terminated at the close of office hours on May 15, 1986 and that he is entitled to separation benefits equivalent to one
(1) month of his basic salary for every year of service plus other benefits (Rollo, p. 153).

Upon petitioner SEAFDEC-AQD's failure to pay private respondent his separation pay, the latter filed on March 18, 1987 a
complaint against petitioners for non-payment of separation benefits plus moral damages and attorney's fees with the
Arbitration Branch of the NLRC (Annex "C" of Petition for Certiorari).

Petitioners in their answer with counterclaim alleged that the NLRC has no jurisdiction over the case inasmuch as the
SEAFDEC-AQD is an international organization and that private respondent must first secure clearances from the proper
departments for property or money accountability before any claim for separation pay will be paid, and which clearances
had not yet been obtained by the private respondent.
A formal hearing was conducted whereby private respondent alleged that the non-issuance of the clearances by the
petitioners was politically motivated and in bad faith. On the other hand, petitioners alleged that private respondent has
property accountability and an outstanding obligation to SEAFDEC-AQD in the amount of P27,532.11. Furthermore,
private respondent is not entitled to accrued sick leave benefits amounting to P44,000.00 due to his failure to avail of the
same during his employment with the SEAFDEC-AQD (Annex "D", Id.).

On January 12, 1988, the labor arbiter rendered a decision, the dispositive portion of which reads:

WHEREFORE, premises considered, judgment is hereby rendered ordering respondents:

1. To pay complainant P126,458.89, plus legal interest thereon computed from May 16, 1986 until full payment
thereof is made, as separation pay and other post-employment benefits;

2. To pay complainant actual damages in the amount of P50,000, plus 10% attorney's fees.

All other claims are hereby dismissed.

SO ORDERED. (Rollo, p. 51, Annex "E")

On July 26, 1988, said decision was affirmed by the Fifth Division of the NLRC except as to the award of P50,000.00 as
actual damages and attorney's fees for being baseless. (Annex "A", p. 28, id.)

On September 3, 1988, petitioners filed a Motion for Reconsideration (Annex "G", id.) which was denied on January 9,
1989. Thereafter, petitioners instituted this petition for certiorari alleging that the NLRC has no jurisdiction to hear and
decide respondent Lazaga's complaint since SEAFDEC-AQD is immune from suit owing to its international character and
the complaint is in effect a suit against the State which cannot be maintained without its consent.

The petition is impressed with merit.

Petitioner Southeast Asian Fisheries Development Center-Aquaculture Department (SEAFDEC-AQD) is an international

agency beyond the jurisdiction of public respondent NLRC.

It was established by the Governments of Burma, Kingdom of Cambodia, Republic of Indonesia, Japan, Kingdom of Laos,
Malaysia. Republic of the Philippines, Republic of Singapore, Kingdom of Thailand and Republic of Vietnam (Annex "H",
Petition).
The Republic of the Philippines became a signatory to the Agreement establishing SEAFDEC on January 16,1968. Its
purpose is as follows:

The purpose of the Center is to contribute to the promotion of the fisheries development in Southeast Asia by mutual co-
operation among the member governments of the Center, hereinafter called the "Members", and through collaboration
with international organizations and governments external to the Center. (Agreement Establishing the SEAFDEC, Art. 1;
Annex "H" Petition) (p.310, Rollo)

SEAFDEC-AQD was organized during the Sixth Council Meeting of SEAFDEC on July 3-7, 1973 in Kuala Lumpur, Malaysia as
one of the principal departments of SEAFDEC (Annex "I", id.) to be established in Iloilo for the promotion of research in
aquaculture. Paragraph 1, Article 6 of the Agreement establishing SEAFDEC mandates:

1. The Council shall be the supreme organ of the Center and all powers of the Center shall be vested in the Council.

Being an intergovernmental organization, SEAFDEC including its Departments (AQD), enjoys functional independence and
freedom from control of the state in whose territory its office is located.

As Senator Jovito R. Salonga and Former Chief Justice Pedro L. Yap stated in their book, Public International Law (p. 83,
1956 ed.):

Permanent international commissions and administrative bodies have been created by the agreement of a considerable
number of States for a variety of international purposes, economic or social and mainly non-political. Among the notable
instances are the International Labor Organization, the International Institute of Agriculture, the International Danube
Commission. In so far as they are autonomous and beyond the control of any one State, they have a distinct juridical
personality independent of the municipal law of the State where they are situated. As such, according to one leading
authority "they must be deemed to possess a species of international personality of their own." (Salonga and Yap, Public
International Law, 83 [1956 ed.])

Pursuant to its being a signatory to the Agreement, the Republic of the Philippines agreed to be represented by one
Director in the governing SEAFDEC Council (Agreement Establishing SEAFDEC, Art. 5, Par. 1, Annex "H", ibid.) and that its
national laws and regulations shall apply only insofar as its contribution to SEAFDEC of "an agreed amount of money,
movable and immovable property and services necessary for the establishment and operation of the Center" are
concerned (Art. 11, ibid.). It expressly waived the application of the Philippine laws on the disbursement of funds of
petitioner SEAFDEC-AQD (Section 2, P.D. No. 292).

The then Minister of Justice likewise opined that Philippine Courts have no jurisdiction over SEAFDEC-AQD in Opinion No.
139, Series of 1984 —

4. One of the basic immunities of an international organization is immunity from local jurisdiction, i.e., that it is
immune from the legal writs and processes issued by the tribunals of the country where it is found. (See Jenks, Id., pp. 37-
44) The obvious reason for this is that the subjection of such an organization to the authority of the local courts would
afford a convenient medium thru which the host government may interfere in there operations or even influence or
control its policies and decisions of the organization; besides, such subjection to local jurisdiction would impair the
capacity of such body to discharge its responsibilities impartially on behalf of its member-states. In the case at bar, for
instance, the entertainment by the National Labor Relations Commission of Mr. Madamba's reinstatement cases would
amount to interference by the Philippine Government in the management decisions of the SEARCA governing board; even
worse, it could compromise the desired impartiality of the organization since it will have to suit its actuations to the
requirements of Philippine law, which may not necessarily coincide with the interests of the other member-states. It is
precisely to forestall these possibilities that in cases where the extent of the immunity is specified in the enabling
instruments of international organizations, jurisdictional immunity from the host country is invariably among the first
accorded. (See Jenks, Id.; See also Bowett, The Law of International Institutions, pp. 284-1285).

Respondent Lazaga's invocation of estoppel with respect to the issue of jurisdiction is unavailing because estoppel does
not apply to confer jurisdiction to a tribunal that has none over a cause of action. Jurisdiction is conferred by law. Where
there is none, no agreement of the parties can provide one. Settled is the rule that the decision of a tribunal not vested
with appropriate jurisdiction is null and void. Thus, in Calimlim vs. Ramirez, this Court held:

A rule, that had been settled by unquestioned acceptance and upheld in decisions so numerous to cite is that the
jurisdiction of a court over the subject matter of the action is a matter of law and may not be conferred by consent or
agreement of the parties. The lack of jurisdiction of a court may be raised at any stage of the proceedings, even on
appeal. This doctrine has been qualified by recent pronouncements which it stemmed principally from the ruling in the
cited case of Sibonghanoy. It is to be regretted, however, that the holding in said case had been applied to situations
which were obviously not contemplated therein. The exceptional circumstances involved in Sibonghanoy which justified
the departure from the accepted concept of non-waivability of objection to jurisdiction has been ignored and, instead a
blanket doctrine had been repeatedly upheld that rendered the supposed ruling in Sibonghanoy not as the exception, but
rather the general rule, virtually overthrowing altogether the time-honored principle that the issue of jurisdiction is not
lost by waiver or by estoppel. (Calimlim vs. Ramirez, G.R. No. L-34362, 118 SCRA 399; [1982])

Respondent NLRC'S citation of the ruling of this Court in Lacanilao v. De Leon (147 SCRA 286 [1987]) to justify its
assumption of jurisdiction over SEAFDEC is misplaced. On the contrary, the Court in said case explained why it took
cognizance of the case. Said the Court:

We would note, finally, that the present petition relates to a controversy between two claimants to the same position;
this is not a controversy between the SEAFDEC on the one hand, and an officer or employee, or a person claiming to be an
officer or employee, of the SEAFDEC, on the other hand. There is before us no question involving immunity from the
jurisdiction of the Court, there being no plea for such immunity whether by or on behalf of SEAFDEC, or by an official of
SEAFDEC with the consent of SEAFDEC (Id., at 300; emphasis supplied).

WHEREFORE, finding SEAFDEC-AQD to be an international agency beyond the jurisdiction of the courts or local agency of
the Philippine government, the questioned decision and resolution of the NLRC dated July 26, 1988 and January 9, 1989,
respectively, are hereby REVERSED and SET ASIDE for having been rendered without jurisdiction. No costs.

SO ORDERED.

Melencio-Herrera, Paras, Padilla and Regalado, JJ., concur.

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